Ursula Burns - Chairman and CEO Kathy Mikells - Executive Vice President and CFO Jim Lesko - Vice President, Investor Relations Bob Zapfel - EVP, President, Xerox Services Jeff Jacobson - President, Document Technology

Brian Essex - Morgan Stanley Ben Reitzes - Barclays Shannon Cross - Cross Research Jim Suva - Citigroup George Tong - Piper Jaffray Keith Bachman - BMO Capital Markets Tien-tsin Huang - JPMorgan Ananda Baruah - Brean Capital Bill Shope - Goldman Sachs James Friedman - Susquehanna

Good morning. And welcome to the Xerox Corporation Second Quarter 2014 Earnings Release Conference Call hosted by Ursula Burns, Chairman of the Board and Chief Executive Officer. She is joined by Kathy Mikells, Executive Vice President and Chief Financial Officer. During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor. At the request of Xerox Corporation, today's conference call is being recorded. Other recording and/or rebroadcasting of this call are prohibited without the express permission of Xerox. After the presentation, there will be a question-and-answer session. (Operator Instructions) During this conference call, Xerox executives will make comments that contain forward-looking statements, which by their nature address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein. At this time, I would like to turn the meeting over to Ms. Burns. Ms. Burns, you may begin.

Good morning and thanks for joining our call. Today we are reporting second quarter 2014 earnings that continued to reflect the benefits of our diversified portfolio and strong cash flow. We remain focused on our priorities and we are making progress. This quarter we saw a return to growth in Services and the business is well-positioned for sustained improvement. Services is now 57% of revenue and we are on track to reach our target of two-third by 2017. This important shift will drive overall revenue growth. Our Document Technology business drove strong profits again this quarter and continues to be an important for us, generating cash and profits above expectation. We continue our initiatives to improve Services profitability. We are seeing good profitability improvement especially within areas like document outsourcing, our commercial BPO business and ITO businesses, including healthcare and international services. We know that more need to be done especially in government healthcare, where we continue to stand-up a new Medicaid platform and deal with a couple of challenging contracts. So this remains a top priority. And of course, both segments, Services and Technology we remained focused on our important stakeholder with the keen attention on supporting our customers, delivering value for our investors and making Xerox a great place to work for our people. In the quarter we invested $227 million in acquisitions. Welcoming into Xerox the employees and customers of Smart Data Consulting and ISG Holdings. ISG is a leading provider of workers compensation software in the U.S. This acquisition will expand our significant present in the healthcare payor and insurance BPO markets, and we continue to invest organically in areas where we see good market opportunity, such as in private health exchanges, we have a differentiated offering for large employers through Buck Consultants at Xerox. We have a business that delivers strong cash flow. This gives us flexibility to not only invest for growth, but also build short and long-term shareholder value through a balanced approach to capital allocation that includes share repurchases and dividends. To execute on our direction, we have a strong team. Jeff Jacobson was recently named the President of our Document Technology business, taking over from Armando Zagalo de Lima, who is retiring after 31 years at Xerox. I want to thank Armando for everything that he has done for Xerox. He has put our document technology business on a solid foundation by transforming the organization to be more customer-focused, profitable and well-positioned to adapt to changes in the market. Here to look our results and my perspective. As I mentioned earlier, there are bright spots and positive trends, but we still have work -- more work to do. We reported adjusted EPS of $0.27, which is at the high-end of the range that we said. In the quarter we saw improvement in Services revenue growth. Services revenue was up 2%, that’s up from flat growth last quarter and the business is trending well. Document Technology revenue had higher declines in the quarter as expected given timing of last year’s product launches. It is in the range of expectations for the first half and we are very excited about upcoming product launches. Our operating margin is up year-over-year, driven by strong margins in Document Technology, the result of continue good operational discipline and focused on productivity. As anticipated, though, we did see margin decline in Services, due to the pressures that we are experiencing in government healthcare. We took a non-cash charge in the quarter and are making progress transitioning out of some challenging contracts. Kathy will provide you with more details in a few minutes. We are continuing our activities to create shareholder value, using our strong cash flow, which is up over $150 million for the first half to repurchase shares at a steady pace, supporting a growing dividend and acquiring companies that enhance our Services capability. We have a talented and dedicated team and we are keeping our stakeholders at the center of all that we do. Our goal is to provide excellent product and services, and deliver the operational results that are expected of us. With that, I will turn it over to Kathy. Then I will wrap up and we will open the call to your questions. Kathy?

Thanks, Ursula, and good morning, everyone. Overall, we feel about our sequential program with the number of the themes from quarter one carrying through to quarter two. We continue to show operating profit growth, driven by strong margin expansion in Document Technology and we had good operational performance in the majority of our Services businesses. As expected, the government healthcare business continues to pressure Services margin, as we invest in rolling out our Medicaid platform. Additionally, we took incremental non-cash impairment charges, driven by the transition out of the Nevada Health Insurance Exchange. I will cover all of these dynamics in much greater detail when I review segment performance. First, I'd like to begin by walking through our earnings. Revenue in the quarter was down 2% at actual currency and down 2.5% in constant currency. Segment revenue trends were as expected, with Services revenue growth improving and Document Technology weaker as we face a challenging year-over-year compare due to last year’s product launch timing. Gross margin of 30.8% was down 70 basis points year-over-year, driven by the Services margin decline, as well as the greater mix of Services. We again saw a significant improvement in both SAG and RD&E as we benefit from productivity initiative, as well as lower pension expense. These improvements more than offset below our gross margin and resulted in operating margin expansion of 30 basis points year-over-year and 110 basis points sequentially, and enabled higher operating profit year-over-year. Moving down to income statement, adjusted other net was $14 million higher year-over-year. The increase was split between OID, which was $9 million higher year-over-year, reflecting a real estate gain in the prior year and restructuring which is $38 million was $5 million higher year-over-year and in line with our guidance. Adjusted tax rate of 27.7% was 360 basis points higher year-over-year and just above our guidance range of 25% to 27%. So, overall, there was a modest year-over-year headwind below operating profit. Adjusted EPS of $0.27 was flat year-over-year and at the high end of our guidance range of $0.25 to $0.27. Looking at the first half, adjusted EPS of $0.54 was also flat year-over-year, operating profit grew 6% in the first half, despite the pressure we are seeing in our government healthcare business and when combined with lower share count more than offset higher restructuring costs, OID and a higher tax rate. So, all in all, I believe we are making progress, obviously, with more work yet to do. With that, I will move to the Services segment slide to review those results in a little bit more detail. Services revenue growth once again improved sequentially and was up year-over-year 2% or 1% in constant currency, driven by a pick up in BPO which went from down 2% in Q1, so up 1% in Q2. Good growth in commercial healthcare and internationally, and better inorganic contribution was partially offset by a negative 1 point impact from the continued June loan run-off, as well as headwinds from lower customer care volume. Trends in document outsourcing up 3% and ITO up 1% were largely consistent with prior period. Turning to signings, signings were lower year-over-year especially renewal. The combination of a low renewal rate that was below target due to the Texas Medicaid law and the lower overall renewal opportunity resulted in renewal signings contract value down more than 35% in the quarter. New business signs were better story, up double-digit sequentially, but down 4% year-over-year and flat on a trailing 12-month basis. It should be noted that we did see some contract shift to the second half and we had a couple of large contract awards that won’t be close until later this year. New York Medicaid, for instance, is not in these numbers. Our new business pipeline remains healthy, up 4% year-over-year and we expect better signings result in the second half. Shifting the profitability, segment margin was 8.6% in the second quarter which was flat sequentially and down 160 basis points year-over-year. A year-over-year decline was expected but we’re below our guidance of sequential margin improvement. The miss was due solely to the impairment charges we took in the quarter associated with our health insurance exchange platform including non-cash charges related to the Nevada contract. We didn’t formally adjust out the $20 million net impairment charges, but if we exclude it, our segment margin would be 9.2%, which is in line with our expectation for continued sequential improvement. So, we’re beginning to get closure on our Nevada HIX contract and will be working with the state to continue to support the 2014 annual release and comply with their decisions to transition to the federal exchange for the next year's open enrollment. Turning to our Medicaid business, the second quarter performance was largely in line with our expectation as we continue to incur higher cost associated with launching our Medicaid platform and getting it to operational maturity. We’re making progress. We had positive references and we’re winning new business in the market. This is an area where we expect lower margins in the intermediate term as we drive improvements in our other implementation. Within the rest of services, we’re seeing improved performance. I was very pleased with our margin performance in areas like commercial healthcare, document outsourcing and IPO. So our five-plank strategy and cost initiatives are driving improvements in many parts of the business and should continue to ramp as we move through the second half of the year. Turning to Services guidance. On revenue, second half growth will be negatively impacted by the losses of the Texas Medicaid contract, which is worth roughly 1.5 points of revenue growth. The rest of BPO improved and will also benefit by greater in organic contribution. We now expect to exit the year with a lower single-digit growth rate. On margin, our expectations are largely intact. We expect sequential improvement through the year putting aside non-cash impairment charges. The third quarter should coming in above 9.2% and we expect to exit the year comfortably above 10%. In terms of full year Services margin, we expect to come in at the lower end of the 9.4% to 9.8% range, reflecting the non-cash charges that we took in the second quarter. I’ll now turn to Document Technology. Revenue in Document Technology was down 6% at actual currency and 7% at constant currency. This was higher than last quarter's rate of decline and as we highlighted during our first quarter earnings call, this was anticipated given the timing of last year's product launches. That impact drove the higher rate of decline for equipment revenue with annuity revenue showing a consistent 4% decline in both quarters. Looking at the first half, Document Technology revenue was down 5% or 6% at constant currency, which is in line with expectations from mid-single digit decline and includes an approximate one point negative impact associated with our previous finance receivable transactions. From a geographic perspective, trends were generally consistent with our last quarter with the U.S stable, Europe improving and developing markets still weak. Looking at our product group, activity levels were lower as we save the challenging ConnectKey compare and some large wins in the prior year on graphic communications. In addition, the timing of this year's product launches are more back half weighted, which we believe will position us well later in the second half and into 2015. Planned launches include the recently announced Versant's entry production color product, extension of our ConnectKey platform within our mid range portfolio and into entry as well as a refresh of the number of entry desktop product. Document Technology margin in the quarter was 14.4%, which was 360 basis points higher year-over-year and continues to run above our long-term expectations. Our strong profit performance reflects ongoing benefits from restructuring and cost initiatives. In addition, transaction currency and lower pension expenses boosted our performance by 200 basis points. This quarter we also experienced more favorable mix and lower pricing impact. The strong margin performance resulted in operating profit growth of 25% despite a revenue decline. So overall it was a good quarter for Document Technology. Looking towards the third quarter, we continue to expect Document Technology to have revenue down mid-single digit with good margins although below the first half as we invest in the launch of new products that I mentioned earlier and also expect to have a less favorable impact from mix and some of other variable factors. With that, let’s turn to the cash flow. Cash flow from operations was strong at $325 million in the quarter following a good Q1 results. Through the first half, cash from operations was $611 million, which was $165 million higher year-over-year. Underlying cash flow which excludes the impact from prior year finance receivable sales was $437 million in the second quarter and $846 million for the first half. It should be noted that the timing of operating cash flow generation was more balanced between Q1 and Q2 for the first half of this year versus last. And we're continuing to work to smooth out our working capital flows. The drivers of the higher year-over-year first half cash flow improvement include lower uses of cash for accounts receivable and inventory and higher cash earning. Partially, offsetting this positive is less contribution of cash flows from finance receivable, which reflects the negative impact of the prior-year finance receivable sales. Moving down the cash flow statement, investing cash flows were $326 million used in the quarter. We spent $123 million on CapEx and $227 million on acquisition. We closed in May on ISG, which complements Xerox’s current business with the top 20 U.S. property, casualty and commercial health insurance company. The acquisition pipeline continues to look good and our full year expectation to spend up to $500 million in 2014 is unchanged. Consistent with our portfolio management strategy, this quarter we divested truck load management solutions, a small non-core business within services transportation. Cash from financing with the use of $561 million in the quarter and included $299 million in net debt payment, $204 million in share repurchased, and $79 million in preferred and common stock dividends. Ramping up cash flow we had a good first half and our full year guidance remain at $1.8 billion to $2.0 billion of operating cash flow, with the more event distribution through the year. Second half cash flow will be down year-over-year as the prior year included $384 million in proceeds from finance receivable sales in the third quarter and $270 million and $247 million in proceeds in the fourth quarter with no sales activities planned in 2014. That said second half underlying cash flow should be more consistent on a year-over-year basis. Now I’ll walk through capital structure. We ended the quarter with $7.7 billion in debt and in line with our original guidance, we continue to expect to end the year with about 7.8 billion in total debt. Applying 7 to 1 leverage on customer financing assets, our allocated financing debt is $4.4 billion, leaving core debt of $3.3 billion. We managed our core debt to maintain a leverage ratio consistent with our investment grade rating. Our financing debt has come down the past few years, driven by the finance receivable transactions as well as lower origination. So we feel good about our stable capital structure and if we move through the next slide, I’ll review where we’re at on share repurchases and dividends. With a strong first half cash flow performance and relatively high beginning of the year cash position, we’ve been able to steadily repurchase shares during the first half for a total of $480 million or 42 million shares. We continue to view our shares as a good investment and anticipate doing at least $700 million in share repurchases for the year. Our full year guidance for dividend payments remains $300 million in 2014 and reflects our current quarterly dividend of $6.25 per share. When combined with the share repurchases, we expect at least a $1 billion to be returned to shareholders this year. Before I turn it back to Ursula, I just like to summarize our expectations for the third quarter and the full year. We were once again pleased with the performance of Document Technology and for the third quarter we expect margins to be at the high end of our target range with mid-single digit revenue declines. Given the strong first half profit performance, we expect full year margins to be at least a point above our target range of 9% to 11%, and up a similar level year-over-year. Within Services, we expect to make may further gains in the second half. The Texas Medicaid contract loss temporarily flows sequential revenue growth improvement and results in an exit revenue growth rate for Services in the low single digits. We feel good about delivering sequential margin improvement and exiting the year comfortably above 10%. And as I mentioned earlier, we expect full year Services margin to be at the lower end of our 9.4% to 9.8% range as a result of the non-cash charges that we took in the second quarter. At consolidated level for the first quarter, we expect revenue to decline about two point and adjusted earnings per share of $0.25 to $0.27, which includes approximately $0.02 of restructuring. And for the full year, we’re narrowing our adjusted EPS guidance range to $1.09.to $1.13. And with that, I’ll hand it back to you, Ursula.

Thanks, Kathy. I want to get to your questions. So I’ll summarize quickly. Our second quarter shows progress, growing revenue in our Services business, operating profit in our technology business, and reaping the benefits of our strong cash flow. Our profits in Document Technology help offset the headwinds that we’re seeing in some of our Services businesses. Our focus on implementing the Services strategy is showing positive results, and we are seeing good progress internationally and in areas like document outsourcing and commercial healthcare. Our strong cash flow allows us the flexibility to make strategic investments that will enhance opportunities in the future. Our 2014 priorities and focus are consistent. In Services, improving growth through portfolio management and profitability by driving cost efficiencies through the business. In Document Technology, capitalizing on the most advantaged segments of the business to maintain our leadership positions in the industry while maintaining strong profitability. And we’ll continue to generate healthy cash flow to deliver shareholder value. Thank you. And now I'll turn you over to Jim.

Thanks, Ursula. Joining Ursula and Kathy today are Bob Zapfel, head of our services and Jeff Jacobson, head of our Document Technology business. Also let me point out that we had several supplemental slides at the end of our deck. They provide more financial detail to support today's presentation and complement our prepared remarks. For the Q&A, I ask participants to please limit follow-on and multipart questions, so we can get to everyone today. At the end of our Q&A session, I'll turn it back to Ursula for closing comments. Operator, please open the line for questions now.

(Operator Instruction) Our first question comes from the line Brian Essex from Morgan Stanley. Brian Essex - Morgan Stanley: Good morning. And thank you for taking my questions. Maybe start off with a question for Bob, so you had some nice sequential margin improvement, ex the restructuring or ex charge-off, it was 9.2% over 8.6% last quarter. What kind of -- I guess, the first part of the question is what kind of milestones do you need to hurdle for the remainder of the year, exit the year at a 10% or better than 10% margin run rate? And then I have a follow-up?

Brian, thanks. I would appreciate that we did make -- we did make progress. I think we’ve got a good clear game plan relative to cost management. We’ve moved to a capability centered organization which has allowed us to look at our businesses and where we have a chance to leverage some cost advantages or cost businesses. So I wouldn’t view it necessarily as some key milestones and jump over it. It’s really more executing our overall plan. And I think we’ve got a very clear line of sight to the track that Kathy laid out that gets us to comfortably at 10% plus as we exit the year. Brian Essex - Morgan Stanley: Okay. And I understand, when we had the call last quarter, you had only been there for about 21 days. Since then I imagine you have the opportunity to peek under the covers to a little bit greater extent. If you look at the guidance prior quarter of exiting the year better than a 10% run rate, have you been able to identify additional low-hanging fruit and is that going for -- I guess, along the lines of cost improvements or operational improvements. And would that potentially lead to upside to that number and then going into 2015, do we expect sequential improvement again through the year or there is certain factors that could lead to additional lumpiness in margin performance in 2015?

Well, we’ll be more in 2015 at the Investor Day session in November. But again, I would say our track through year end, we’ve got a pretty clear line of -- I wouldn't call it low-hanging fruit. But I would say that -- it never feels that way when you’re operating the business. But I would say we’ve got a very, very clear plan that is broadly owned by the team. And some of this is, that news that we’ve had that’s affected our margin. So it won’t repeat. So we get a little better lift in the second half versus the first half because of some of the challenges that we specifically called out. But we’ve got a good solid operating plan to deliver those kind of margin as we exit the year. And we certainly are looking -- we certainly are looking at next year as though now we want to fall back in the wrong direction. But we’ll get more detail on the 2015 roadmap when we’re together for the investor session in November.

Brian, if you think about -- this is Ursula, all the business lines that Bob manages and he has been leading into in the last couple of months, we manage all of them to try to show us margin expansion on a business-by-business basis. And in the second quarter, we saw that and we expect and literally the plan is to continue to drive those actions through the business so that we see the same kind of margin expansion in the third quarter and in the fourth quarter. So just reiterating what you said, there is no miracle here. It is literally just operating the business on a line-by-line basis and getting better control over government help, which I think we have the foundation for it today. Brian Essex - Morgan Stanley: Thanks.

We can have the next question please.

Our next question comes from the line of Ben Reitzes from Barclays. Ben Reitzes - Barclays: Hi. I just want to kind of go on to the margin question a little more and ask about the two segments as we go throughout the year and maybe a little bit of a different way. In services, you mentioned renewals down quite a bit and the bookings look like they are below your expectations. So I wanted to just -- I was under the impression renewals, you probably have higher margin than new business. And in light of that, just how that plays out on the margin line with you guys getting above your -- above 10%. And then on the technology side, I just want to know, you guys talked about margin coming down from 14.4, just how abruptly like does it stabilized in the 12-ish type range because the upside there was about $0.05 in the quarter on that technology margin that was quite staggering. So I just want to see how much that comes back in and why. So it's just a little more detail in both margins in the big segments?

Sure. So Ben, I’ll start with just talking about overall kind of booking and how we see bookings impacting our margins. If we look forward to the second half, clearly we’re expecting bookings to improve in the second half fiscals because they’ve got bigger renewal opportunity as well as additional new bookings expected on top of that. In terms of renewals versus new-- we wouldn’t expect to see a negative mix implication overall. We always anticipate adding renewals, we have price downs. We’re anticipating that overall and so we don't see any negative mix. And overall if you look at how the mix of the portfolio is changing. Out ITO growth has slowed a little bit. BPO growth is picking up. That’s generally a positive for us on mix overall. If I flip to the second part of your question which was really about technology margin, if we look at what happened in this quarter, I’d say, three months ago, we underestimated the level of pension improvement we were going to get. We got a little bit more currency improvement and overall mix turned out to be more favorable and we had a little less pricing pressure than we would typically see. If I go to talk about that in second half, our expectations for our technology margins, we’ll see a dip in the third quarter because we’ve got a lot of new product launches and so that’s mainly the impact there. We don’t get quite as much pension benefit in the third quarter. So pension benefits are a little bit lumpy for us because we have pension settlement cost. But overall if you look at the second half and certainly the guidance we gave for the full year, at least 100 basis points above the high end of our 9% to 11% range, I feel really good about technology margins but I feel great about our ability to continue to well-manage this business to produce very strong profit and very strong cash flow.

Thanks Ben. If we could move to the next question please?

Certainly, our next question comes from the line of Shannon Cross from Cross Research. Shannon Cross - Cross Research: Thank you very much. Jeff, I had a question for you. Could you talk a bit about what you're seeing in the printing market? I mean, you’ve got rollout of significantly more product in the second half of this year. Do you expect market share gains? What markets are you sort of focused on and if you can give any color in terms of geography because it seems like Europe was pretty strong? And then I had a quick follow-up. Thanks.

Sure. Shannon. So let me just say in terms of our activity, our activity has been strong for the past year and we gained a share point in 2013. And in Q1 and as Kathy said we knew we would have a tough Q2 compare, due to ConnectKey, our entry production color high launch. However Kathy mentioned our product launch is coming in the second half, which I think will really start seeing more of a benefit in Q4 and certainly into 2015 where we have about 20 new launches in the second half. We’re benefiting entire company but I think it will especially benefit our developing markets, our channels organization and certainly document outsourcing. And I think it’s also important to mention that even in this quarter where we had a tough compare in our median high segments, we had sequential growth in both color and mono, and in entry, we were essentially flat in color.

Let me take some of the geographies. We’re seeing pretty stable business environment in the U.S., very predictable for us. We manage it well. And so you were right -- Europe, last quarter, we saw improvement. This quarter, Europe is hanging in there for us and doing well. Developing market continues to be a precious place for us. My expectation is that U.S. and Europe will continue to trend that they are on and unfortunately developing economies will continue to trend that they want to be. It would be tough for us. The product launch that Jeff talked about should help us, giving them more optionality to sell and deal. But it’s not clear that the environment they will actually pick it all up. Shannon Cross - Cross Research: Okay. Great and then just my follow-up question for Bob or Ursula, I'm not sure which. When you think about New York State in the contract that you've -- I know it's not finalized, but it appears you're going to be awarded. How do we think about that in light of some of the startup costs that we saw with California Medi-Cal? I mean, is this something where you're going to be able to leverage some of your newer platforms, so perhaps not as many startup costs or just how do we sort of think about that as we look through the year?

Bob will take it.

Yeah, Shannon, I think the way to think about New York is obviously first we have to -- we have to move from award to contracts. So we are excited for the opportunity to do that after the protest cycle and our view would be we’ve really learned a lot through the prior implementations. We think that we will be able to execute New York well for the citizens in the state and for us. It won’t be, all of these new implementations start with not huge margins. You make your money over time, but that’s the way we built it into all of our guidance. So, that’s plan for us. We understand we don’t expect to have big unrecovered costs, but we do know that they don’t start at higher margin that that’s the business model designed. It’s not unique to any individual state that services broadly and that’s part of what we’ve accounted for in our commitments as we go forward.

Thanks, Jim. If we could have the next question please.

Thank you. Our next question comes from the line of Jim Suva from Citigroup. Jim Suva - Citigroup: Thank you. And congratulations to you and your team there at Xerox. If we’re to look at several of the metrics such as signings and bookings and margins -- and I am looking more forward-looking. Should we then expect them to no longer come up? Or given the timing of when the decisions were made from Texas, Nevada, California, and New York that there might be some impact to those? And I think that maybe help us filter through the magnitude of what we should expect.

So on signing, the loss of Texas is basically behind us. It was reflected overall in our renewal rate. What we’re expecting going forward as we talked about signings improvements in the second half and so New York isn’t included in our numbers today, but we would expect to see that in the future. We have another award, that’s under protest for a tolling deal that we did in Florida, again not included in our numbers, part of the reason why we have a good amount optimism in the second half. So overall, we feel good about looking forward in signings improvements in the second half.

And our renewal rate without the Texas loss would be in the range that we wanted to be in the 85% to 90% range. So the Texas loss is a singular event, but our business flows are fairly consistent with all the quarters previously, particular on renewals. Jim Suva - Citigroup: Okay. And then as a quick follow-up, when we think about there has been a lot of public information about the New York contract and the California contract. When those are ramping, are those fully considered in your margin profile outlook, or are you building in a little additional stand-up costs? I at least want to make sure that we're just not then going to be seeing some additional pressure from those ramping.

Both of those are fully contemplated in the guidance. Jim Suva - Citigroup: Great. That’s good to hear. Thank you and congratulations again.

Thanks, Jim. If we could have the next question please.

Thank you. Our next question comes from the line of George Tong from Piper Jaffray. George Tong - Piper Jaffray: Good morning. Thanks for taking my questions. I will just start out with Kathy. Could you provide the impact or expected impact on the various government healthcare contracts you have rolling on and off over the next several quarters? Specifically, what the timing is for when New York MMIS will come online and whether the expected impact for Texas MMIS will be a very consistent 150 basis points year-over-year? Then I have a follow-up. Thanks.

And so take New York first. New York is a little bit hard to call perfectly right is we are going to a protest period and we then have to contract. Our expectation would be that we start to see a little bit of New York coming on towards the tail end of this year, but it has a more material impact in 2015. And then with respect to Texas, Texas is going to tail off pretty quickly. And so we have a little bit of transition in Texas, but we expect to see Texas tail off pretty fast.

Kathy, if I could add, so that 150 basis points on the top line, we would be dealing with that if you will for roughly for a quarter. So, that is it will hit us to start. As Kathy has mentioned, as we kind of go through the third and fourth quarters. And then on a quarter year-over-year basis we would be looking at that still in the first half of next year as well. George Tong - Piper Jaffray: That’s very helpful. Thanks. And lastly, Ursula and Bob, could you share color on how the other parts of the services business is performing, so commercial BPO, commercial ITO and document outsourcing?

I will start at the highest level. Let’s say I am pleased with all of them and let me let Bob go into a little bit more color.

Yeah, I would say we really had -- we’ve got the challenge obviously what we talked about in government healthcare, but if you look at the rest of the portfolio, our business in Europe was up double digits organically, even more sizably with the benefit of an acquisition earlier in the year. Our commercial healthcare business is growing at double-digit rates with very strong margins. Our HR and learning business is performing very well for the most part the mix. I mean not everybody is perfect, but the mix across the rest of those businesses in aggregate we are very pleased with.

And one -- if I can add one point on ITO, very specifically, our revenue growth in ITO is half for the last few quarters, last two quarters at least slowed to low-single digits and we spoke about this in last year’s Investor Conference, and I am sure in some calls before about how we look at our ITO business. It’s a good business for us. It is a relatively small business for us and it operates at the lower end of our margin range. And so we are focusing on margin expansion, an improvement in ITO and not so much on revenue growth there. We are putting most our bullets or guns in the -- bullets in the gun around BPO and document outsourcing from a revenue growth perspective and that will continue.

And that’s part of the portfolio mix strategy that the team covered last November at the Investor meeting. So that’s part of our five-plank strategy is really around trying to grow more rapidly in our most 'advantage' businesses. And Ursula’s comments are right to that point.

Thanks, George. If we could have our next question please.

Thank you. Our next question comes from the line of Keith Bachman from BMO Capital Markets. Keith Bachman - BMO Capital Markets: Hi. Thank you, guys. I have two questions as well. The first is philosophical growth rate. And what I mean by that is, Bob, I was hoping you could address BPO and ITO. And the recent data points around BPO have been very mixed. A lot of your competitors and even some of the leading consulting organizations have suggested that the BPO market has indeed slowed. Now Xerox is in a slightly different segment or at least a slightly different segment than some of the leading organizations, but I was hoping you could address on the market level if you are seeing a slowdown in BPO? Related to that is the ITO side. Ursula just mentioned, your strategy is different, which I think is completely appropriate, but can you grow the ITO side, or does that become a negative growth rate as you look out? And then I have a follow-on question on margins, please.

Yeah, I would say on the BPO market, we are in the middle of our strategy cycle. We see that market, obviously it’s a broad $200 billion plus market. It breaks into horizontal, multi-industry components and industry-specific components. Overall, we see it at mid-single-digits and there is a little bit different mix depending on what area, but it’s a very attractive market from our standpoint. And I would view it as a more favorable from a market dynamic standpoint, more favorable than ITO which is -- it was earlier in the maturity cycle, grew to be a very large market more rapidly. So we still feel very good. Obviously segment by segment, we look at each of them, but if you just macro to BPO broadly, we see mid-single-digit growth through the strategic horizon in that business area. Keith Bachman - BMO Capital Markets: Okay. Well, I will transition to my second question. Although, Bob, I'd love you to come back on and say can ITO grow or does it go negative? But my second question is for you, Ursula, as well as for Bob. You do seem to be doing well in the commercial side of your services business, which the healthcare or government side, more specifically the government side of healthcare continues to struggle, why not deemphasize that business? Nobody makes any money who serves the healthcare industry in the government side, it doesn't seem. CSC has been pretty vocal that they did not follow up with a bid for the New York side because they didn't think they would make money in it. So just philosophically, why not focus more on the commercial side and deemphasize the government healthcare related activities and thereby improve your sustainable profit levels?

I don’t think that we are not focused more or focused a lot on the commercial side we are, but we also -- the government healthcare market is a very attractive market. We went through one cycle when this market started many, many years ago that shows that we could invest in a new platform, stay in that platform up and have it last for many, many years and continue to drive growth on topline and profitability on the bottomline. That is -- that remains our expectation. And if you look at some of the contracts that are more mature, moving towards more maturity, California, for example, we have been able to literally move that contract from investment phase to flat profitability now to looking for growing profitability in a very predictable kind of a standard way, took a little bit longer but on a go forward basis California is going to be beautiful. And we expect as we implement New York to be beautiful as well. So we’re not deemphasizing commercial in favor of government, not at all. We’re focused on all of them at a demographic show that we should be focused on them as well.

If I could just add one point a color, we’re above 10% operating margins and the majority of roughly 70% of our government healthcare business. So our experience, I can’t speak to the competitor, but our experience is once you get this stabilized, you can have a great value proposition for the client and good for the shareowners. And one of client just yesterday came out and reference that we’ve been working through some issues, but they expect the system to have a 20 year longevity. So, that’s the reason that we don’t view it as an area to exit or deemphasize.

Thanks, Keith. If we can move on to next question please.

Our next question comes from the line of Tien-tsin Huang from JPMorgan. Tien-tsin Huang - JPMorgan: Great. Thanks for sharing that commercial margin in the size. I didn't realize how big it was. Actually I just wanted to ask first about signings and the outlook for the second half. Can you be more specific there? Can you get to a book-to-bill north of say 1 in the second half without New York?

Yes. So I’ll get a little more specific. When we look at the second half, we’re expecting improvements and we think roughly we should end the year flattish on a 12-month trailing basis. So we clearly have expectations make up for some of the softness in the first half. Tien-tsin Huang - JPMorgan: Understood. And then just my follow-up, the outlook on Document Technology margins, same question there, maybe you can be a little more specific. It sounds like you could stay above your target range in the second half. You called out the 2 points around pension and transaction effects, but it feels like with some of the changes, is it possible we can assume that your longer-term margin target 9% to 11% could be elevated given some of the -- given the run rate?

So I’m going to put aside sort to 2015 and long term, but if you just look at the second half, we guided specifically to being at call it the high end of that 9% to 11% target range for the third quarter. We typically are a fourth quarter stronger just from a seasonality perspective in the technology business. And if you look at some of the kind of year-over-year things that are going on, one of the things we had last year where these receivable sales or financing receivable sales. And so year-over-year we have a little less headwind in the fourth quarter from that than we do in the third quarter. So we would expect seasonally better performance in the fourth quarter there. Tien-tsin Huang - JPMorgan: Yeah. Now it seems like it’s in a good place, that’s why I asked. Thank you.

Great.

Thank you, Tien-tsin. If we could have the next question please.

Certainly, our next question comes from the line of Ananda Baruah from Brean Capital. Ananda Baruah - Brean Capital: Hi. Good morning, guys. Thanks for taking the question. Two if I could. The first is on services rev growth. Bob, can you just kind of walk through what -- given that there has been some choppiness this year in both revenue growth and in signing, can you give us a sense of what the headwinds are going into 2015? And how we should think about those kind of layering in and falling off as we exit the year?

Yeah. I guess from a headwind standpoint, we’re still have the student loan runoff, that’s more of a factor in the second half of the year, the next year. Texas will be a headwind as we’ve talked about more in the first half of next year than as we exit the year. We’ve got -- as we’ve referenced, we’ve got some substantial contract award potential for us as we close out this year that will then lead to filling in some of those gaps. And we view the market, as I briefly said earlier at a mid-single-digit growth rate and we think that we can get roughly that range as part of our overall sales strategy. So there are a few headwinds, they are not unknown headwinds though. And we’ve got a team that wants to be successful on the marketplace and that’s our focus.

If I can just put an umbrella on top of that, so BPO, Bob has talked about it, I have mentioned it, higher growth rates, document outsourcing higher growth rate. The part of the market that we are, that we’ll continue to have a low growth rate for us is the ITO business, that is not something that the market should panic on, that is literally the strategy. One actually focus on profitability there, be very selective with our contract plans and we’re doing that. Our renewals and our renewal rate continues to be strong. Loss of 85%, we continue to have that as an expectation. Decisions are slow, a little bit -- well they were little bit slower in the second quarter. A lot of them have moved to the third quarter and fourth and we expect to sign the ones that coming up then. We have a very good win rate on new business there, the 10 or so that we were pursuing in the quarter. We lost two and signed eight. We expect to have that kind of a flow going forward. So I think that the revenue portion of the picture, there are puts and takes and there are of course some ups and down, Texas down, etcetera, etcetera. But I think on a macro basis, it looks good.

Thanks, Ananda. If we could have the next question please.

Thank you. Our next question comes from the line of Bill Shope from Goldman Sachs. Bill Shope - Goldman Sachs: Okay. Thank you. So my first question is on services. So you have the Nevada issue out of the way, which obviously gives you room for improvement into the back half. But given some of the other contract challenges you've had and some of the unexpected challenges in recent months, is there a risk that we could see further write-downs in the second half or do you feel like the model is pretty fully scrubbed at this point? And then my second question, a broader question would be on your restructuring plans, how is it going relative to your original targets? And as you refine the services strategy, are you finding any new opportunities arising in the restructuring category? That’s it for me.

So overall on the first piece, the impairment charges that we took in the quarter were associated with our state (indiscernible) platform, right? And we basically completely cleansed our balance sheet with regard to that. As you look then at our Medicaid platform, I mean, we’re winning new business in the marketplace. So, we don’t really see any issue there in terms of some future shoe to drop type of thing. Overall, I’d also mention in this quarter that we settled with another state in terms of just our execution plan associated with their implementation and more specifics around the design and functionality. And so that’s another one that I’d say, we really kind of tucked away in this quarter. So we feel pretty good about our grip on what we need to do in order to continue to mature the implementations. And I would say kind of kudos to the Government Health Solutions group in terms of pretty well predicting outside of the impairment charge. What we’re going to see in this quarter which is why when I exclude the impairment charge, we’ve really had the profitability in margin progression that we were expecting. On the second question on restructuring, we’ve been very consistent about restructuring. I’d expect to continue to see about $0.02 a quarter at the very beginning of the year. We said, we expect that restructuring charges to be pretty similar year-over-year and I think we did about a $115 million in total in restructuring charges last year. So maybe we would be a tad higher this year, but we’re going to continue to be pretty consistent in our overall approach to restructuring.

And one of the things that we talked about in this infamous or famous five-plank strategy, one of the major things we talked about was cost improvement in services. So we have a lot of focus on restructuring in the technology business and have a good reason there. And Bob is developing that same level of discipline and rhythm in the services business, so I expect the restructuring to participate and drive margin expansion, portion of the margin expansion that Bob is counting on and continue to be strong margin contributors in the technology business as well.

Thanks, Bill. And operator, I think we have time for one last question.

Certainly, our final question for today comes from the line of James Friedman from Susquehanna. James Friedman - Susquehanna: Hi. Thanks for sneaking me in and I'll ask my two upfront. First for Ursula, second for Kathy. Ursula, when you look across the services portfolio, which do you emphasize more, is it revenue growth or margins? And then, Kathy, I'll just ask you upfront, could you share some color on the margin characteristics of ISG and Smart Data? And are there other dispositions, meaning asset sales that you have planned in the second half? Thank you.

By the way your first question is a good question and unfortunately it doesn’t have a singular answer. It depends on the section of the business and markets that we’re speaking about. I just talked about ITO for example. And in ITO, I emphasized margin expansion over revenue growth. It doesn’t mean I want them to walk away from good business that we can get and we can stand up in a margin expanding way, but I actually tell them more focus on margin than on revenue. In government healthcare, it’s both. I want to make sure we do not lose any large contracts and in places like in MMIS where we have a platform go hard to what’s growing that business, why would you expand margins. So it’s a mix of discussions and it’s different across the word transportation, revenue growth, etcetera. Our advantaged businesses revenue growth and our businesses that are not performing at the level that we want from a margin perspective, its margin on focus, so it’s a mix of things. And the good news is that Bob can actually walk and chew gum at the same time. So he can actually manage too many different signals that I gave him.

And then just on the second question, generally as we’ve talked about one plank of our overall services strategy as it’s just portfolio management and we’re trying to improve the overall mix of our business, right. So as you look at the things that we’re acquiring, they’re very strategically aligned with that strategy. And I would say, ISG and Smart Data absolutely fall into that category. Smart Data gives us a little bit of added scale in the litigation space, litigation services, which is the great business for us, it’s a high margin business. And ISG got added into our insurance overall portfolio and so again, looking to mix up and not looking to dilute margin.

Great. Thank you. That’s all the time we have for questions today. We generally thank you for your interest. Ursula, anything more to wrap up.

Thanks, Jim. And I’m confident that we have the right strategy and the right team in place to deliver on that strategy. We’re making progress and we have a lot of work to do to continue to create greater value for our employees, our customers and our shareholders and we are up to the challenge.

Thanks, Ursula. That concludes our call today. If you have any further questions, please contact me or any members from our Investor Relations team. Thank so much for joining us today.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day.