Xerox Holdings Corporation Annual Report 2014

FY2014 Annual Report · Xerox Holdings Corporation
Loading PDF…
Xerox Corporation

45 Glover Avenue

P.O. Box 4505

Norwalk, CT  06856-4505

United States

203.968.3000

www.xerox.com

Paper from responsible sources

2014  
Annual Report 

X

e

r

o

x

2

0

1

4

A

n

n

u

a

l

R

e

p

o

r

t

© 2015 Xerox Corporation. All rights reserved. Xerox®, Xerox and Design®, 

ColorQube®, ConnectKey®, Maven®, iGen®, iGen4®, CiPress®, DocuColor®, 

Xerox FreeFlow®, Xerox Nuvera®, Phaser® and WorkCentre® are trademarks 

of Xerox Corporation in the U.S. and/or other countries. BR13936

002CSN47A1

XER410ABTS_AnnualReport_Cover_v1_150316.indd   1

3/20/15   1:43 PM

 
 
 
 
Inside

Inside

1  Letter to Shareholders

6  Financial Measures

7  Non-GAAP Measures

  8  Board of Directors
  9  Officers
 10  FYI

1  Letter to Shareholders
6  Financial Measures
7  Non-GAAP Measures

  8  Board of Directors
  9  Officers
 10  FYI

  2014 Form 10-K Insert

  2014 Form 10-K Insert

Financial Highlights

Financial Highlights

(in millions, except EPS)

(in millions, except EPS)

Total revenue

Total revenue

Equipment sales

Annuity revenue

Equipment sales

Annuity revenue

Net income from continuing operations – Xerox

Net income from continuing operations – Xerox

Adjusted net income* – Xerox

Adjusted net income* – Xerox

Diluted earnings per share from continuing operations

Diluted earnings per share from continuing operations

Adjusted earnings per share*

Adjusted earnings per share*

Net cash provided by operating activities

Net cash provided by operating activities

Adjusted operating margin*

Adjusted operating margin*

2014

 $19,540 

 3,104 

 16,436 

 1,084 

 1,280 

 0.90 

 1.07 

 2,063 

9.6%

2013

2014

 $20,006 

 $19,540 

 3,358 

 16,648 

 1,139 

 1,328 

 0.89 

 1.04 

 2,375 

9.0%

 3,104 

 16,436 

 1,084 

 1,280 

 0.90 

 1.07 

 2,063 

9.6%

2013

 $20,006 

 3,358 

 16,648 

 1,139 

 1,328 

 0.89 

 1.04 

 2,375 

9.0%

*     See Non-GAAP Measures on Page 7 for the reconciliation of the difference between this financial measure that is not in compliance with Generally Accepted 
Accounting Principles (GAAP) and the most directly comparable financial measure calculated in accordance with GAAP.

*     See Non-GAAP Measures on Page 7 for the reconciliation of the difference between this financial measure that is not in compliance with Generally Accepted 
Accounting Principles (GAAP) and the most directly comparable financial measure calculated in accordance with GAAP.

Note:  Income Statement items have been revised for all periods to reflect our Discontinued Operations. Refer to Note 4 – Divestitures – in our Consolidated  

Note:  Income Statement items have been revised for all periods to reflect our Discontinued Operations. Refer to Note 4 – Divestitures – in our Consolidated  
Financial Statements.

Financial Statements.

XER410ABTS_AnnualReport_Cover_v1_150316.indd   2

XER410ABTS_AnnualReport_Cover_v1_150316.indd   2

3/20/15   1:44 PM

3/20/15   1:44 PM

 
 
 
 
 
 
Ursula M. Burns
Chairman and Chief Executive Ofﬁcer

Fellow Shareholders: 
In my letters to you over the last several years, I have updated you on the steps we have taken 
to position Xerox for the future. Since the acquisition of Afﬁliated Computer Services ﬁve years 
ago, we have taken Xerox from a company focused primarily on document and information 
management to one that supports critical business processes for enterprises of all sizes, 
including over 90 percent of the Fortune 100. While the composition of our portfolio has 
changed signiﬁcantly, our core mission has not. Xerox has always been focused on helping 
companies and governments innovate and engineer the way they work for greater 
productivity, efﬁciency, work capacity and personalization.

Rethinking the Way Work is Done 
Xerox is best known for the innovation we brought to the 
sharing of information. Invented just over 75 years ago, 
xerography dramatically scaled the way organizations 
could communicate. It solved a major barrier to the way 
organizations shared information, yielding a range of 
operational beneﬁts. It remains a core communication 
technology in every business, government ofﬁce and 
educational institution today. Since then, Xerox innovation 
has been at the core of today’s digital world – from the 
invention of some of the earliest personal computers to 
being instrumental in 3-D print-head technology.

And today, that same mission to apply technology and 
innovation to improve business process and workﬂow is 
relevant to a range of functional domains across almost 
every industry. Consider the following:

(cid:135) (cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:79)(cid:68)(cid:76)(cid:80)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:85)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:82)(cid:83)(cid:3)(cid:21)(cid:19)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)

(cid:75)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:85)(cid:86)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:20)(cid:21)(cid:3)(cid:37)(cid:79)(cid:88)(cid:72)(cid:3)(cid:38)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:37)(cid:79)(cid:88)(cid:72)(cid:3)
(cid:54)(cid:75)(cid:76)(cid:72)(cid:79)(cid:71)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:15)(cid:3)(cid:87)(cid:82)(cid:88)(cid:70)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:21)(cid:3)(cid:82)(cid:88)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:92)(cid:3)(cid:22)(cid:3)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:79)(cid:76)(cid:89)(cid:72)(cid:86)(cid:17)(cid:3)

(cid:135) (cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:83)(cid:82)(cid:85)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:16)

related services including automated tolling and parking. 

(cid:135) (cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:82)(cid:85)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:75)(cid:88)(cid:81)(cid:71)(cid:85)(cid:72)(cid:71)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)
accounts payables and receivables for blue-chip clients, 
automating their order-to-cash life cycle.

(cid:135) (cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:68)(cid:79)(cid:92)(cid:87)(cid:76)(cid:70)(cid:86)(cid:3)

(cid:86)(cid:82)(cid:73)(cid:87)(cid:90)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:20)(cid:15)(cid:28)(cid:19)(cid:19)(cid:3)(cid:75)(cid:82)(cid:86)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:86)(cid:17)

(cid:135) (cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:71)(cid:80)(cid:76)(cid:81)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:82)(cid:85)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:43)(cid:53)(cid:3)(cid:87)(cid:72)(cid:68)(cid:80)(cid:86)(cid:3)(cid:85)(cid:88)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)

industry-leading health, welfare and deﬁned beneﬁts plans 
for over 14 million employees and retirees.

(cid:135) (cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:72)(cid:68)(cid:70)(cid:75)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)(cid:68)(cid:76)(cid:71)(cid:72)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:81)(cid:16)(cid:87)(cid:75)(cid:72)(cid:16)(cid:74)(cid:82)(cid:3)
so that educators and students can print and share from 
mobile devices.

In each of these examples, we are working side-by-side with 
our clients to innovate and engineer business processes that 
are automated, agile and lean.

Xerox 2014 Annual Report

1

Customer Care

Finance and Accounting

Improving the customer experience at every 
interaction and touchpoint. 

Providing insights and improving operational cash 
ﬂow – as well as managing payments.

As I look at today’s business environment, it is clear that the 
world is rich with opportunity for Xerox to help organizations 
rethink the way they are operating. Organizations of all sizes, all 
around the world, are faced with the challenge of doing more 
things while simultaneously satisfying a growing list of more 
vocal stakeholders. For example, businesses aspire to operate 
at a greater scale, but they also need to provide increasingly 
personal experiences. Their available information and data 
are expanding, and yet there is a need for more powerful 
and actionable insights. Their markets are demanding more 
transparency and openness, and yet information and processes 
must be more secure than ever. 

(cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:70)(cid:85)(cid:72)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:87)(cid:72)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:86)(cid:3)
organizations to continually transform the way they perform 
work. At Xerox, we are applying our expertise in business 
process, imaging, user-experience and analytics to help 
clients become more productive, efﬁcient, secure and precise 
across a wide range of domains and industries. 

(cid:43)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:86)(cid:82)(cid:80)(cid:72)(cid:3)(cid:72)(cid:91)(cid:68)(cid:80)(cid:83)(cid:79)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:83)(cid:88)(cid:87)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:83)(cid:72)(cid:85)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:29)(cid:3)

(cid:135) (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:88)(cid:81)(cid:76)(cid:70)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:71)(cid:76)(cid:86)(cid:72)(cid:68)(cid:86)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:72)(cid:86)(cid:87)(cid:3)
levels of coordination across multiple players to ensure 
prevention, protection and recovery for those at risk. Our 
(cid:48)(cid:68)(cid:89)(cid:72)(cid:81)®(cid:3)(cid:39)(cid:76)(cid:86)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:54)(cid:88)(cid:85)(cid:89)(cid:72)(cid:76)(cid:79)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:88)(cid:87)(cid:69)(cid:85)(cid:72)(cid:68)(cid:78)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)
Software helps to manage this complex coordination 
for health professionals through an offering from one 
(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:76)(cid:79)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:82)(cid:73)(cid:87)(cid:90)(cid:68)(cid:85)(cid:72)(cid:17)(cid:3)(cid:48)(cid:68)(cid:89)(cid:72)(cid:81)(cid:3)
(cid:86)(cid:87)(cid:85)(cid:72)(cid:68)(cid:80)(cid:79)(cid:76)(cid:81)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:81)(cid:92)(cid:3)(cid:86)(cid:87)(cid:72)(cid:83)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:92)(cid:15)(cid:3)(cid:80)(cid:82)(cid:81)(cid:76)(cid:87)(cid:82)(cid:85)(cid:15)(cid:3)
(cid:83)(cid:82)(cid:86)(cid:86)(cid:76)(cid:69)(cid:79)(cid:92)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:68)(cid:81)(cid:87)(cid:76)(cid:81)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:85)(cid:72)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:76)(cid:81)(cid:73)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:11)(cid:82)(cid:85)(cid:3)(cid:83)(cid:82)(cid:86)(cid:86)(cid:76)(cid:69)(cid:79)(cid:92)(cid:3)
infected). A shared platform coordinates activities among 
government health agencies, medical providers and people 
(cid:68)(cid:87)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:17)(cid:3)(cid:39)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:15)(cid:3)(cid:48)(cid:68)(cid:89)(cid:72)(cid:81)(cid:3)(cid:83)(cid:79)(cid:68)(cid:92)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:78)(cid:72)(cid:92)(cid:3)(cid:85)(cid:82)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:40)(cid:69)(cid:82)(cid:79)(cid:68)(cid:3)(cid:70)(cid:68)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:68)(cid:70)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)

2

(cid:135) (cid:55)(cid:75)(cid:72)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:87)(cid:85)(cid:88)(cid:70)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)(cid:3)(cid:80)(cid:88)(cid:86)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:72)(cid:81)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:85)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)
(cid:82)(cid:73)(cid:3)(cid:86)(cid:68)(cid:73)(cid:72)(cid:87)(cid:92)(cid:15)(cid:3)(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:177)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)
which vary state by state. 
(cid:43)(cid:40)(cid:47)(cid:51)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:15)(cid:3)(cid:68)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:83)(cid:85)(cid:82)(cid:191)(cid:87)(cid:15)(cid:3)
public-private partnership 
dedicated to motor-carrier 
safety, turned to Xerox to 
(cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:51)(cid:85)(cid:72)(cid:51)(cid:68)(cid:86)(cid:86)(cid:17)(cid:3)(cid:51)(cid:85)(cid:72)(cid:51)(cid:68)(cid:86)(cid:86)(cid:3)
saves the trucking industry 
time, fuel and money by 
(cid:72)(cid:81)(cid:68)(cid:69)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:191)(cid:72)(cid:71)(cid:3)(cid:80)(cid:82)(cid:87)(cid:82)(cid:85)(cid:3)
carriers to electronically 
(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:92)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:177)(cid:3)(cid:72)(cid:79)(cid:76)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)
(cid:86)(cid:87)(cid:82)(cid:83)(cid:3)(cid:68)(cid:87)(cid:3)(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:43)(cid:40)(cid:47)(cid:51)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:82)(cid:73)(cid:73)(cid:72)(cid:85)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:82)(cid:81)(cid:76)(cid:70)(cid:3)
prepayment of truck tolls on 78 roads, turnpikes, tunnels 
and bridges in 15 states. 

“ As I look at today’s business 
environment, it is clear that  
the world is rich with 
opportunity for Xerox to help 
organizations rethink the way 
they are operating.”

(cid:135) (cid:55)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:82)(cid:70)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)
never been so important as it is in today’s “always-on” 
workplace. Grohe, a global supplier of luxury bathroom 
ﬁxtures based in Germany, selected Xerox to manage 
the way it prints, shares and processes documents. 
With our market-leading managed print services, Grohe 
strengthened document security and reduced print 
(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:21)(cid:24)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:90)(cid:75)(cid:76)(cid:79)(cid:72)(cid:3)(cid:71)(cid:72)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:76)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:72)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)
(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:24)(cid:19)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:21)(cid:27)(cid:19)(cid:17)(cid:3)(cid:55)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:82)(cid:88)(cid:87)(cid:3)(cid:42)(cid:85)(cid:82)(cid:75)(cid:72)(cid:182)(cid:86)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)
(cid:49)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:15)(cid:3)(cid:42)(cid:72)(cid:85)(cid:80)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:46)(cid:76)(cid:81)(cid:74)(cid:71)(cid:82)(cid:80)(cid:15)(cid:3)(cid:45)(cid:68)(cid:83)(cid:68)(cid:81)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
(cid:49)(cid:72)(cid:87)(cid:75)(cid:72)(cid:85)(cid:79)(cid:68)(cid:81)(cid:71)(cid:86)(cid:15)(cid:3)(cid:36)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:15)(cid:3)(cid:51)(cid:82)(cid:85)(cid:87)(cid:88)(cid:74)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:90)(cid:76)(cid:87)(cid:93)(cid:72)(cid:85)(cid:79)(cid:68)(cid:81)(cid:71)(cid:15)(cid:3)(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)
delivers customized document production, IT infrastructure 
planning and implementation, device maintenance and 
supplies replacement.

 
Government Beneﬁts

Graphic Communications

Modernizing beneﬁts delivery while enabling improved 
access and greater security. 

Enabling new levels of personalization while maximizing  
print efﬁciency, uptime and return on assets.

(cid:135) (cid:48)(cid:68)(cid:81)(cid:92)(cid:3)(cid:70)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:69)(cid:88)(cid:85)(cid:71)(cid:72)(cid:81)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:87)(cid:76)(cid:84)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:15)(cid:3)(cid:70)(cid:82)(cid:76)(cid:81)(cid:16)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)
parking systems that frustrate drivers and can impede 
business in urban areas. The City of Indianapolis selected 
(cid:51)(cid:68)(cid:85)(cid:78)(cid:44)(cid:81)(cid:71)(cid:92)(cid:15)(cid:3)(cid:68)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:16)(cid:83)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:76)(cid:87)(cid:92)(cid:3)
and Xerox, to modernize its old coin-operated parking 
meters to help make parking stress free, improve trafﬁc and 
increase business for local merchants. As one of the ﬁrst 
(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:70)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:90)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:80)(cid:72)(cid:87)(cid:72)(cid:85)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:70)(cid:68)(cid:81)(cid:3)(cid:69)(cid:72)(cid:3)(cid:80)(cid:68)(cid:71)(cid:72)(cid:3)(cid:69)(cid:92)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)
card or phone, Indianapolis has seen substantial growth in 
(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:80)(cid:82)(cid:87)(cid:82)(cid:85)(cid:76)(cid:86)(cid:87)(cid:86)(cid:3)(cid:70)(cid:75)(cid:82)(cid:82)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:51)(cid:68)(cid:85)(cid:78)(cid:44)(cid:81)(cid:71)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:81)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)
(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:80)(cid:72)(cid:87)(cid:75)(cid:82)(cid:71)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:86)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:86)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)
maintenance, is solar powered and reduces emissions as a 

“ We are helping the world 
work better in today’s highly 
connected, agile economy.”

result of improved trafﬁc 
ﬂow. In addition, Xerox 
uses analytics to improve 
compliance and provide 
policy recommendations 
to the city. Xerox has

successfully implemented and operated intelligent parking 
(cid:86)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:21)(cid:24)(cid:3)(cid:70)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)

(cid:135) (cid:37)(cid:88)(cid:70)(cid:78)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:79)(cid:87)(cid:68)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:79)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:72)(cid:71)(cid:3)(cid:54)(cid:68)(cid:89)(cid:44)(cid:81)(cid:70)(cid:72)(cid:81)(cid:87)(cid:140)(cid:15)(cid:3)(cid:68)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)
ﬁnancial wellness program that improves employees’ 
ﬁnancial health and retirement readiness. SavIncent is a 
(cid:88)(cid:81)(cid:76)(cid:84)(cid:88)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:79)(cid:76)(cid:81)(cid:78)(cid:86)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:72)(cid:71)(cid:88)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
to a company’s retirement savings plan. Employees who 
complete various elements of the program are rewarded 
with employer contributions to their savings plan, thus 
motivating them to improve their ﬁnancial health.

(cid:135) (cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:82)(cid:88)(cid:87)(cid:75)(cid:3)(cid:38)(cid:68)(cid:85)(cid:82)(cid:79)(cid:76)(cid:81)(cid:68)(cid:3)(cid:39)(cid:72)(cid:83)(cid:68)(cid:85)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:82)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)
Services to improve the delivery of government assistance 
(cid:87)(cid:82)(cid:3)(cid:81)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:68)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:54)(cid:82)(cid:88)(cid:87)(cid:75)(cid:3)(cid:38)(cid:68)(cid:85)(cid:82)(cid:79)(cid:76)(cid:81)(cid:76)(cid:68)(cid:81)(cid:86)(cid:17)(cid:3)(cid:37)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:76)(cid:83)(cid:76)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)
access beneﬁts from the Supplemental Nutrition Assistance 
(cid:51)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:3)(cid:11)(cid:54)(cid:49)(cid:36)(cid:51)(cid:12)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:81)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:82)(cid:81)(cid:76)(cid:70)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:86)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:72)(cid:85)(cid:3)
cards. We are also delivering a Web-based data warehouse 
to aid the state’s fraud unit in detecting suspicious behavior. 
Xerox is a leader in government card services with programs 
(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:80)(cid:68)(cid:78)(cid:72)(cid:3)(cid:76)(cid:87)(cid:3)(cid:72)(cid:68)(cid:86)(cid:76)(cid:72)(cid:85)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:81)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:21)(cid:24)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:72)(cid:82)(cid:83)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:28)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)
to get cost-effective and convenient access to their beneﬁts. 

(cid:48)(cid:88)(cid:79)(cid:87)(cid:76)(cid:83)(cid:79)(cid:92)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:72)(cid:91)(cid:68)(cid:80)(cid:83)(cid:79)(cid:72)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:75)(cid:88)(cid:81)(cid:71)(cid:85)(cid:72)(cid:71)(cid:86)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:92)(cid:82)(cid:88)(cid:3)(cid:69)(cid:72)(cid:74)(cid:76)(cid:81)(cid:3)
to see how we are helping the world work better in today’s 
highly connected, agile economy – and the extraordinary 
opportunities for growth. 

Performance in 2014
(cid:58)(cid:72)(cid:3)(cid:71)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:17)(cid:3)(cid:43)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)
some highlights: 

(cid:135) (cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:20)(cid:17)(cid:20)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)

(cid:135) (cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:192)(cid:82)(cid:90)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:21)(cid:17)(cid:19)(cid:25)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)

(cid:135) (cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:80)(cid:68)(cid:85)(cid:74)(cid:76)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:28)(cid:17)(cid:25)(cid:233)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:88)(cid:83)(cid:3)(cid:19)(cid:17)(cid:25)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:16)(cid:82)(cid:89)(cid:72)(cid:85)(cid:16)(cid:92)(cid:72)(cid:68)(cid:85)(cid:17)

(cid:135) (cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:20)(cid:28)(cid:17)(cid:24)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)

(cid:135) (cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)

(cid:28)(cid:19)(cid:3)(cid:70)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)

(cid:135) (cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:20)(cid:17)(cid:19)(cid:26)(cid:233)(cid:15)(cid:3)(cid:88)(cid:83)(cid:3)(cid:22)(cid:3)(cid:70)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:16)

over-year.

(cid:135) (cid:53)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:72)(cid:71)(cid:3)(cid:7)(cid:20)(cid:17)(cid:23)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)

(cid:85)(cid:72)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:86)(cid:15)(cid:3)(cid:68)(cid:3)(cid:23)(cid:19)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)(cid:17)

Xerox 2014 Annual Report

3

 
Healthcare

Ofﬁce Products

Supporting healthcare’s new patient-centric landscape:   
payer, provider, pharmacy, government and employer.

Delivering powerful ofﬁce systems at the hub of 
today’s digital communications network.

As proud as we are of our results, we know that even stronger 
(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:88)(cid:76)(cid:79)(cid:71)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)
and for you. That is why we continue to lead an aggressive 
agenda to better strengthen our offering portfolio, improve 
productivity and target segments where we are best 
(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:87)(cid:72)(cid:17)(cid:3)(cid:43)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:86)(cid:82)(cid:80)(cid:72)(cid:3)
examples illustrating the steps we are taking along those lines: 

(cid:135) (cid:58)(cid:72)(cid:3)(cid:68)(cid:81)(cid:81)(cid:82)(cid:88)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:76)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
Technology Outsourcing business to Atos, an international 
leader in digital services. This will allow us to focus our 
(cid:54)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:86)(cid:84)(cid:88)(cid:68)(cid:85)(cid:72)(cid:79)(cid:92)(cid:3)(cid:82)(cid:81)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:88)(cid:87)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)
and document outsourcing, and provide additional 
capacity to invest further in these businesses. 

(cid:135)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:38)(cid:68)(cid:81)(cid:68)(cid:71)(cid:76)(cid:68)(cid:81)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)

multimillion-dollar managed print services deal with the 
government of Canada.

(cid:135)(cid:3)(cid:58)(cid:72)(cid:3)(cid:68)(cid:71)(cid:71)(cid:72)(cid:71)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:87)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:85)(cid:72)(cid:86)(cid:75)(cid:3)(cid:83)(cid:72)(cid:85)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)

team through internal promotions and external hires.

(cid:135)(cid:3)(cid:58)(cid:72)(cid:3)(cid:79)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:74)(cid:82)(cid:16)(cid:87)(cid:82)(cid:16)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:80)(cid:82)(cid:71)(cid:72)(cid:79)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)
our Services business and aligned our delivery resources 
along functional capabilities such as customer care, human 
resources, consulting and analytics, and transaction 
processing, essentially reorienting our entire Services 
(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:177)(cid:3)(cid:20)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:83)(cid:72)(cid:82)(cid:83)(cid:79)(cid:72)(cid:3)(cid:68)(cid:85)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:79)(cid:82)(cid:69)(cid:72)(cid:3)(cid:177)(cid:3)(cid:90)(cid:75)(cid:76)(cid:79)(cid:72)(cid:3)
continuing to run and drive operational improvements 
across the business.

(cid:135) (cid:58)(cid:72)(cid:3)(cid:69)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:23)(cid:19)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:192)(cid:82)(cid:90)(cid:3)
solutions that increase productivity, mobility, security and 
sustainability – and remind the market of our innovation 
power. Our continued focus on Document Technology gave 
(cid:88)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:88)(cid:71)(cid:3)(cid:71)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:72)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)
leader for the ﬁfth consecutive year.

(cid:135)(cid:3)(cid:58)(cid:72)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:81)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:7)(cid:22)(cid:24)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:76)(cid:70)(cid:3)
partnerships in attractive markets like business process and 
software platforms and services to maximize our strengths 
and expand our global reach. For example, through our 
(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:44)(cid:54)(cid:42)(cid:3)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)
position in the workers’ 
compensation claims 
processing market. We also 
(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:43)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:54)(cid:83)(cid:82)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
will be their exclusive business 
process outsourcing provider 
as they endeavor to offer 
groundbreaking telehealth
to patients at convenient 
neighborhood locations. 

“ We continue to lead an 
aggressive agenda to better 
strengthen our offering port-
folio, improve productivity 
and target segments where 
we are best positioned to 
compete and differentiate.”

(cid:135) (cid:58)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:88)(cid:76)(cid:79)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:70)(cid:82)(cid:86)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)

(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:20)(cid:15)(cid:20)(cid:20)(cid:23)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:83)(cid:68)(cid:87)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:17)(cid:3)(cid:38)(cid:79)(cid:82)(cid:86)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:82)(cid:73)(cid:3)
our patent ﬁlings were in services software and included 
innovations to improve automation of labor intensive 
work, analytics to extract actionable insights from data, 
and personalization to increase relevance of products and 
services like customized packaging and 3-D printing. We 
even introduced an intelligent virtual customer care agent 
(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:70)(cid:68)(cid:81)(cid:3)(cid:71)(cid:76)(cid:68)(cid:74)(cid:81)(cid:82)(cid:86)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:82)(cid:79)(cid:89)(cid:72)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:84)(cid:88)(cid:76)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
same way – if not better – than a human agent would. 

4

Retail and Consumer

Transportation

Integrating in-store and on-line channels for  
a better customer experience. 

Easing congestion and improving urban economies   
as a market leader in transportation solutions.

As a result of this kind of work, we are on track to drive 
greater growth and margin in our Services business, while 
simultaneously strengthening our leadership in Document 
Technology. I have great conﬁdence in our future potential, and 
I can assure you that all of us at Xerox are taking a targeted 
approach to capture the rich opportunity in front of us.

the company that is helping to change the way the world 
parks… shops… learns… publishes… gets beneﬁts… receives 
medical care… I could go on and on. We not only perform 
this work on a massive scale – and beneﬁt our clients in the
process – but we also touch billions of people by improving 
key moments in their lives every day.

Ready for the Future
(cid:44)(cid:81)(cid:3)(cid:70)(cid:79)(cid:82)(cid:86)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:86)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:80)(cid:82)(cid:80)(cid:72)(cid:81)(cid:87)(cid:88)(cid:80)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
heightened conﬁdence. We clearly see that tomorrow’s 
enterprise will be nothing like today’s. And, while it is difﬁcult 
to predict with certainty what the future business climate will 
be like, I do know that businesses and governments, large 
and small, will continue to face a growing list of challenges 
(cid:87)(cid:75)(cid:72)(cid:92)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:81)(cid:72)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:81)(cid:84)(cid:88)(cid:72)(cid:85)(cid:17)(cid:3)(cid:36)(cid:81)(cid:71)(cid:15)(cid:3)(cid:83)(cid:72)(cid:82)(cid:83)(cid:79)(cid:72)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:81)(cid:72)(cid:72)(cid:71)(cid:3)
better transportation, healthcare, education, mobility and 
customer service.

Xerox is here to help. As I mentioned earlier, helping 
organizations rethink the way they work has been a core 
mission since our founding. We will always be known as 
the company that helped change the way the world shares 
(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:37)(cid:88)(cid:87)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:87)(cid:76)(cid:80)(cid:72)(cid:15)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:74)(cid:82)(cid:68)(cid:79)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)

(cid:44)(cid:3)(cid:78)(cid:81)(cid:82)(cid:90)(cid:3)(cid:44)(cid:3)(cid:86)(cid:83)(cid:72)(cid:68)(cid:78)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:87)(cid:72)(cid:68)(cid:80)(cid:3)(cid:177)(cid:3)(cid:20)(cid:23)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:16)(cid:83)(cid:79)(cid:88)(cid:86)(cid:3)(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:3)(cid:177)(cid:3)
when I say that today’s business challenges are made for our 
(cid:88)(cid:81)(cid:76)(cid:84)(cid:88)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:68)(cid:83)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:79)(cid:68)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)
strengths and ushering in a period of growth for our business 
and for creating more value for our clients, our people and you.

Ursula M. Burns
Chairman and Chief Executive Ofﬁcer

(cid:233) (cid:58)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:88)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:17)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:69)(cid:72)(cid:79)(cid:76)(cid:72)(cid:89)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:81)(cid:68)(cid:79)(cid:92)(cid:93)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:182)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:85)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:76)(cid:82)(cid:85)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:182)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:17)(cid:3)(cid:43)(cid:82)(cid:90)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:86)(cid:75)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:69)(cid:72)(cid:3)(cid:89)(cid:76)(cid:72)(cid:90)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:68)(cid:86)(cid:3)
(cid:68)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:87)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:42)(cid:36)(cid:36)(cid:51)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:80)(cid:72)(cid:68)(cid:81)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:76)(cid:86)(cid:82)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:85)
(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:87)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:75)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:69)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:71)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:77)(cid:88)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:42)(cid:36)(cid:36)(cid:51)(cid:17)
(cid:50)(cid:88)(cid:85)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:88)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:15)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:78)(cid:72)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:71)(cid:72)(cid:70)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:88)(cid:86)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:70)(cid:68)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:17)(cid:3)(cid:36)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:81)(cid:70)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)
(cid:81)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:79)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:86)(cid:72)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:82)(cid:81)(cid:3)(cid:51)(cid:68)(cid:74)(cid:72)(cid:3)(cid:26)(cid:17)

Xerox 2014 Annual Report

5

(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)

Net Income from Continuing 
Operations – Xerox
(in millions)

1,470*

1,219

1,338*

1,152

1,328*

1,139

1,280*

1,084,

1,213*

544

Total Revenue
(in millions)

20,638

20,421

19,650

20,006

19,540

Total Services Segment Revenue
(in millions – percent of total revenue)

10,271

50%

10,479

10,584

52%

54%

9,652

47%

8,502

43%

10

11

12

13

14

10

11

12

13

14

10

11

12

13

14

Annuity Revenue
(in millions – percent of total revenue)

16,782

81%

16,945

83%

16,648

83%

16,436

84%

15,793

80%

Net Cash from Operating Activities
(in millions)
2,726

2,580

1,961

2,375

2,063

Adjusted Operating Margin*

9.9%

10.0%

9.7%

9.6%

9.0%

10

11

12

13

14

10

11

12

13

14

10

11

12

13

14

(cid:13) (cid:54)(cid:72)(cid:72)(cid:3)(cid:49)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:51)(cid:68)(cid:74)(cid:72)(cid:3)(cid:26)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:81)(cid:70)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:36)(cid:70)(cid:70)(cid:72)(cid:83)(cid:87)(cid:72)(cid:71)(cid:3)

(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:3)(cid:11)(cid:42)(cid:36)(cid:36)(cid:51)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:79)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:42)(cid:36)(cid:36)(cid:51)(cid:17)

(cid:49)(cid:82)(cid:87)(cid:72)(cid:29)(cid:3)(cid:3)(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:87)(cid:72)(cid:80)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:192)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:53)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:49)(cid:82)(cid:87)(cid:72)(cid:3)(cid:23)(cid:3)(cid:177)(cid:3)(cid:39)(cid:76)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:177)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)
Financial Statements.

6

(cid:49)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)

Adjusted Earnings Per Share (EPS)

(cid:11)(cid:76)(cid:81)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:86)(cid:30)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:83)(cid:87)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:12)
As Reported(1)
Adjustments:
Amortization of intangible assets
(cid:47)(cid:82)(cid:86)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:72)(cid:91)(cid:87)(cid:76)(cid:81)(cid:74)(cid:88)(cid:76)(cid:86)(cid:75)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:72)(cid:69)(cid:87)
Xerox and Fuji Xerox restructuring charge
(cid:36)(cid:38)(cid:54)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:16)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)
ACS shareholders litigation settlement
Venezuela devaluation costs
(cid:48)(cid:72)(cid:71)(cid:76)(cid:70)(cid:68)(cid:85)(cid:72)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:92)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:79)(cid:68)(cid:90)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)

Adjusted
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:40)(cid:51)(cid:54)(cid:11)(cid:21)(cid:12)

2014

2013

Net Income
 $1,084 

EPS Net Income
$ 1,139

 $ 0.90 

Year Ended December 31,
2010
EPS Net Income Net Income Net Income
$   544

$ 1,152

$ 1,219

2011

2012

$ 0.89

 (cid:20)(cid:28)(cid:25) 
– 
– 
 – 
 – 
– 
 – 
 (cid:20)(cid:28)(cid:25) 
 $1,280 

 (cid:19)(cid:17)(cid:20)(cid:26) 
– 
– 
–
 – 
 – 
–
(cid:19)(cid:17)(cid:20)(cid:26) 
$ 1.07
1,199

189
–
–
–
–
–
–
189
$ 1,328

(cid:3)(cid:19)(cid:17)(cid:20)(cid:24)
–
–
–
–
–
–
(cid:19)(cid:17)(cid:20)(cid:24)(cid:3)
$ 1.04
(cid:20)(cid:15)(cid:21)(cid:26)(cid:23)

(cid:20)(cid:27)(cid:25)
–
–
–
–
–
–
(cid:20)(cid:27)(cid:25)
 $ 1,338

(cid:21)(cid:22)(cid:20)(cid:3)
(cid:21)(cid:19)
–
–
–
–
–
(cid:21)(cid:24)(cid:20)
$ 1,470 

178
(cid:20)(cid:19)
(cid:22)(cid:24)(cid:19)
58
(cid:22)(cid:25)
(cid:21)(cid:20)
(cid:20)(cid:25)
(cid:25)(cid:25)(cid:28)
$1,213

(cid:11)(cid:20)(cid:12)(cid:3) (cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:51)(cid:54)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:17)
(cid:11)(cid:21)(cid:12)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:40)(cid:51)(cid:54)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:3)(cid:21)(cid:26)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:36)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:85)(cid:87)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)

(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:17)

Operating Margin (cid:11)(cid:76)(cid:81)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:86)(cid:12)

Total Revenues(1)
Pre-tax Income(1)
Adjustments:
Amortization of intangible assets
Xerox restructuring charge
Curtailment gain
(cid:36)(cid:38)(cid:54)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:16)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)
Other expenses, net
Adjusted Operating Income
Pre-tax Income Margin
Adjusted Operating Margin

2014
 $19,540 
 $  1,206 

2013
 $20,006
 $  1,243

2012
$20,421
 $  1,284 

Year Ended December 31,
2010
$19,650
 $      718

2011
$20,638 
$  1,450 

 315 
 (cid:20)(cid:21)(cid:27) 
– 
–
 (cid:21)(cid:22)(cid:21) 
 $  1,881 
6.2% 
9.6% 

(cid:22)(cid:19)(cid:24)
115
– 
–
(cid:20)(cid:23)(cid:25)
$  1,809
6.2%
9.0% 

(cid:22)(cid:19)(cid:20)
149
–
– 
(cid:21)(cid:24)(cid:26)
$  1,991 
6.3% 
9.7%

371
31
(cid:11)(cid:20)(cid:19)(cid:26)(cid:12)
–
(cid:22)(cid:21)(cid:19)
$  2,065
7.0%
10.0%

(cid:21)(cid:27)(cid:26)
(cid:23)(cid:26)(cid:25)
–
77
385
$  1,943 
3.7% 
9.9%

(cid:11)(cid:20)(cid:12)(cid:3) (cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:85)(cid:82)(cid:191)(cid:87)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:17)

(cid:49)(cid:82)(cid:87)(cid:72)(cid:29)(cid:3)(cid:3)(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:87)(cid:72)(cid:80)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:192)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:53)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:49)(cid:82)(cid:87)(cid:72)(cid:3)(cid:23)(cid:3)(cid:177)(cid:3)(cid:39)(cid:76)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:177)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)
Financial Statements.

Xerox 2014 Annual Report

7

(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)

(cid:36)(cid:29)(cid:3)(cid:48)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:37)(cid:29)(cid:3)(cid:48)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:38)(cid:29)(cid:3)(cid:48)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:39)(cid:29)(cid:3)(cid:48)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)
(cid:40)(cid:29)(cid:3)(cid:47)(cid:72)(cid:68)(cid:71)(cid:3)(cid:44)(cid:81)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)

Ursula M. Burns
Chairman and Chief 
Executive Ofﬁcer
Xerox Corporation
Norwalk, CT

Richard J. Harrington A
(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)
Chief Executive Ofﬁcer
The Thomson Corporation
Stamford, CT

William Curt Hunter A, D
Dean Emeritus,
(cid:55)(cid:76)(cid:83)(cid:83)(cid:76)(cid:72)(cid:3)(cid:38)(cid:82)(cid:79)(cid:79)(cid:72)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)
(cid:56)(cid:81)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:44)(cid:82)(cid:90)(cid:68)
Iowa City, IA

Robert J. Keegan (cid:36)(cid:15)(cid:3)(cid:37)
(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:15)(cid:3)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:40)(cid:50)
The Goodyear Tire &
(cid:53)(cid:88)(cid:69)(cid:69)(cid:72)(cid:85)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)
(cid:36)(cid:78)(cid:85)(cid:82)(cid:81)(cid:15)(cid:3)(cid:50)(cid:43)

Charles Prince (cid:37)(cid:15)(cid:3)(cid:38)
(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
Chief Executive Ofﬁcer
Citigroup Inc.
New York, NY

Ann N. Reese (cid:37)(cid:15)(cid:3)(cid:38)(cid:15)(cid:3)(cid:39)(cid:15)(cid:3)(cid:40)
Executive Director
(cid:38)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:36)(cid:71)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:51)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)
(cid:53)(cid:92)(cid:72)(cid:15)(cid:3)(cid:49)(cid:60)

Stephen H. Rusckowski
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)
Executive Ofﬁcer
Quest Diagnostics Inc.
(cid:48)(cid:68)(cid:71)(cid:76)(cid:86)(cid:82)(cid:81)(cid:15)(cid:3)(cid:49)(cid:45)

Sara Martinez Tucker C, D
(cid:53)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:40)(cid:50)
(cid:49)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:48)(cid:68)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)
Science Initiative
Dallas, TX

Mary Agnes Wilderotter C, D
Executive Chairman
Frontier Communications 
Corporation
Stamford, CT

8

Ofﬁcers

Ursula M. Burns
Chairman and Chief Executive Ofﬁcer

James A. Firestone
(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:54)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)
Asia Operations

Jeffrey Jacobson
(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)

Don H. Liu
(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
General Counsel and Secretary

Kathryn A. Mikells
(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Chief Financial Ofﬁcer

Armando Zagalo de Lima
(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)

Robert K. Zapfel
(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:54)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)

Thomas J. Maddison
(cid:54)(cid:72)(cid:81)(cid:76)(cid:82)(cid:85)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:43)(cid:88)(cid:80)(cid:68)(cid:81)(cid:3)(cid:53)(cid:72)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)

Hervé Tessler
(cid:54)(cid:72)(cid:81)(cid:76)(cid:82)(cid:85)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

David Amoriell
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3)(cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:54)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)
(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)
Xerox Services

Thomas Blodgett
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3)(cid:47)(cid:68)(cid:87)(cid:76)(cid:81)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)
Xerox Services

Andrew Copley
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:42)(cid:85)(cid:68)(cid:83)(cid:75)(cid:76)(cid:70)(cid:3)
Communications Operations 
Xerox Technology

John Corley
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:38)(cid:75)(cid:68)(cid:81)(cid:81)(cid:72)(cid:79)(cid:3)(cid:51)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)
Xerox Technology

Richard M. Dastin
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Chief Development Engineer
Xerox Services

Kathleen S. Fanning
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:58)(cid:82)(cid:85)(cid:79)(cid:71)(cid:90)(cid:76)(cid:71)(cid:72)(cid:3)(cid:55)(cid:68)(cid:91)

Michael D. Feldman
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:47)(cid:68)(cid:85)(cid:74)(cid:72)(cid:3)(cid:40)(cid:81)(cid:87)(cid:72)(cid:85)(cid:83)(cid:85)(cid:76)(cid:86)(cid:72)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Xerox Services

Michael R. Festa
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Chief Financial Ofﬁcer
Xerox Services

Grant Fitz
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Chief Financial Ofﬁcer
Xerox Technology

Jacques H. Guers
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

Connie Harvey
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:43)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:70)(cid:68)(cid:85)(cid:72)
(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)
Xerox Services

Xavier Heiss
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)
and Global Finance Shared Services

John L. Kennedy
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)

James H. Lesko
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:51)(cid:85)(cid:82)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)

Stephen Little
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Chief Information Ofﬁcer

Yehia Maaty
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:39)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:76)(cid:81)(cid:74)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Xerox Technology

Joseph H. Mancini Jr.
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Chief Accounting Ofﬁcer

Ivy Thomas McKinney
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Deputy General Counsel and Chief Ethics Ofﬁcer

Russell M. Peacock
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:39)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:92)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)
Xerox Technology

Rhonda L. Seegal
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Treasurer

Sophie V. Vandebroek
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)
Xerox Innovation Group

Leslie F. Varon
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

Ann Vezina
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:43)(cid:88)(cid:80)(cid:68)(cid:81)(cid:3)(cid:53)(cid:72)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)
Xerox Services

Kevin M. Warren
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:44)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:15)(cid:3)(cid:53)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:43)(cid:82)(cid:86)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)
(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)
Xerox Services

Susan A. Watts
(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
Chief Operating Ofﬁcer, Global Capabilities
Xerox Services 

Douglas H. Marshall
Assistant Secretary

Carol A. McFate
Chief Investment Ofﬁcer

Xerox 2014 Annual Report

9

FYI

Shareholder Information

How to Reach Us

Xerox Corporation
www.xerox.com
45 Glover Avenue
(cid:49)(cid:82)(cid:85)(cid:90)(cid:68)(cid:79)(cid:78)(cid:15)(cid:3)(cid:38)(cid:55)(cid:3)(cid:3)(cid:19)(cid:25)(cid:27)(cid:24)(cid:25)(cid:16)(cid:23)(cid:24)(cid:19)(cid:24)
(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)
(cid:21)(cid:19)(cid:22)(cid:17)(cid:28)(cid:25)(cid:27)(cid:17)(cid:22)(cid:19)(cid:19)(cid:19)

Xerox Europe
(cid:50)(cid:91)(cid:73)(cid:82)(cid:85)(cid:71)(cid:3)(cid:53)(cid:82)(cid:68)(cid:71)
(cid:56)(cid:91)(cid:69)(cid:85)(cid:76)(cid:71)(cid:74)(cid:72)
(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:46)(cid:76)(cid:81)(cid:74)(cid:71)(cid:82)(cid:80)
(cid:56)(cid:37)(cid:27)(cid:3)(cid:20)(cid:43)(cid:54)
(cid:14)(cid:23)(cid:23)(cid:17)(cid:20)(cid:27)(cid:28)(cid:24)(cid:17)(cid:21)(cid:24)(cid:20)(cid:20)(cid:22)(cid:22)

Fuji Xerox Co., Ltd.
(cid:55)(cid:82)(cid:78)(cid:92)(cid:82)(cid:3)(cid:48)(cid:76)(cid:71)(cid:87)(cid:82)(cid:90)(cid:81)(cid:3)(cid:58)(cid:72)(cid:86)(cid:87)
(cid:28)(cid:16)(cid:26)(cid:16)(cid:22)(cid:3)(cid:36)(cid:78)(cid:68)(cid:86)(cid:68)(cid:78)(cid:68)(cid:15)(cid:3)(cid:48)(cid:76)(cid:81)(cid:68)(cid:87)(cid:82)(cid:16)(cid:78)(cid:88)
(cid:55)(cid:82)(cid:78)(cid:92)(cid:82)(cid:15)(cid:3)(cid:45)(cid:68)(cid:83)(cid:68)(cid:81)(cid:3)(cid:20)(cid:19)(cid:26)(cid:16)(cid:19)(cid:19)(cid:24)(cid:21)
(cid:14)(cid:27)(cid:20)(cid:17)(cid:22)(cid:17)(cid:25)(cid:21)(cid:26)(cid:20)(cid:17)(cid:24)(cid:20)(cid:20)(cid:20)

Products and Services
www.xerox.com
(cid:27)(cid:19)(cid:19)(cid:17)(cid:36)(cid:54)(cid:46)(cid:17)(cid:59)(cid:40)(cid:53)(cid:50)(cid:59)(cid:3)(cid:11)(cid:27)(cid:19)(cid:19)(cid:17)(cid:21)(cid:26)(cid:24)(cid:17)(cid:28)(cid:22)(cid:26)(cid:25)(cid:12)

For investor information, including
comprehensive earnings releases:
www.xerox.com/investor or call
888.979.8378.

For shareholder services, call
(cid:27)(cid:19)(cid:19)(cid:17)(cid:27)(cid:21)(cid:27)(cid:17)(cid:25)(cid:22)(cid:28)(cid:25)(cid:3)(cid:11)(cid:55)(cid:39)(cid:39)(cid:29)(cid:3)(cid:27)(cid:19)(cid:19)(cid:17)(cid:22)(cid:25)(cid:27)(cid:17)(cid:19)(cid:22)(cid:21)(cid:27)(cid:12)
(cid:82)(cid:85)(cid:3)(cid:26)(cid:27)(cid:20)(cid:17)(cid:24)(cid:26)(cid:24)(cid:17)(cid:22)(cid:21)(cid:21)(cid:21)(cid:30)(cid:3)(cid:82)(cid:85)(cid:3)(cid:90)(cid:85)(cid:76)(cid:87)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)
Computershare Trust Company, N.A.
(cid:51)(cid:17)(cid:50)(cid:17)(cid:3)(cid:37)(cid:50)(cid:59)(cid:3)(cid:22)(cid:19)(cid:20)(cid:26)(cid:19)(cid:15)(cid:3)(cid:38)(cid:82)(cid:79)(cid:79)(cid:72)(cid:74)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:55)(cid:59)(cid:3)
(cid:26)(cid:26)(cid:27)(cid:23)(cid:21)(cid:16)(cid:22)(cid:20)(cid:26)(cid:19)(cid:30)(cid:3)(cid:82)(cid:85)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:72)(cid:80)(cid:68)(cid:76)(cid:79)(cid:3)(cid:68)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)
at www.computershare.com

Annual Meeting

(cid:58)(cid:72)(cid:71)(cid:81)(cid:72)(cid:86)(cid:71)(cid:68)(cid:92)(cid:15)(cid:3)(cid:48)(cid:68)(cid:92)(cid:3)(cid:21)(cid:19)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:15)(cid:3)(cid:28)(cid:29)(cid:19)(cid:19)(cid:3)(cid:68)(cid:17)(cid:80)(cid:17)(cid:3)(cid:40)(cid:39)(cid:55)
(cid:59)(cid:72)(cid:85)(cid:82)(cid:91)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:43)(cid:72)(cid:68)(cid:71)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:86)
45 Glover Avenue
(cid:49)(cid:82)(cid:85)(cid:90)(cid:68)(cid:79)(cid:78)(cid:15)(cid:3)(cid:38)(cid:55)(cid:3)(cid:3)(cid:19)(cid:25)(cid:27)(cid:24)(cid:25)

(cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:68)(cid:76)(cid:79)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:36)(cid:83)(cid:85)(cid:76)(cid:79)(cid:3)(cid:25)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:87)(cid:82)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:3)(cid:48)(cid:68)(cid:85)(cid:70)(cid:75)(cid:3)(cid:21)(cid:22)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:17)

Investor Contacts

(cid:45)(cid:72)(cid:81)(cid:81)(cid:76)(cid:73)(cid:72)(cid:85)(cid:3)(cid:43)(cid:82)(cid:85)(cid:86)(cid:79)(cid:72)(cid:92)
jennifer.horsley@xerox.com

Troy Anderson
troy.anderson@xerox.com

This annual report is also available online
at www.xerox.com/investor.

Electronic Delivery Enrollment

Xerox offers shareholders the convenience of 
electronic delivery including:

(cid:135) (cid:44)(cid:80)(cid:80)(cid:72)(cid:71)(cid:76)(cid:68)(cid:87)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:83)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)

(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)

(cid:135) (cid:50)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3)(cid:89)(cid:82)(cid:87)(cid:76)(cid:81)(cid:74)

Registered Shareholders, visit
www.eTree.com/xerox 
You are a registered shareholder if you have
your stock certiﬁcate in your possession or
if the shares are being held by our transfer
agent, Computershare.

Beneficial Shareholders, visit
http://enroll.icsdelivery.com/xrx
You are a beneﬁcial shareholder if you
maintain your position in Xerox within
a brokerage account.

10

Additional Information

The Xerox Foundation
www.xerox.com/foundation
(cid:48)(cid:68)(cid:85)(cid:78)(cid:3)(cid:38)(cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:15)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)
(cid:21)(cid:19)(cid:22)(cid:17)(cid:27)(cid:23)(cid:28)(cid:17)(cid:21)(cid:23)(cid:24)(cid:22)
mark.conlin@xerox.com

Global Diversity and Inclusion 
Programs and EEO-1 Reports
www.xerox.com/diversity
(cid:39)(cid:68)(cid:80)(cid:76)(cid:78)(cid:68)(cid:3)(cid:36)(cid:85)(cid:81)(cid:82)(cid:79)(cid:71)(cid:15)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:39)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:81)(cid:70)(cid:79)(cid:88)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:47)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)
(cid:24)(cid:27)(cid:24)(cid:17)(cid:23)(cid:21)(cid:22)(cid:17)(cid:22)(cid:20)(cid:24)(cid:19)
damika.arnold@xerox.com 

Minority and Women Owned 
Business Suppliers
www.xerox.com/supplierdiversity

Ethics Helpline
(cid:49)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:29)(cid:3)(cid:27)(cid:25)(cid:25)(cid:17)(cid:59)(cid:53)(cid:59)(cid:17)(cid:19)(cid:19)(cid:19)(cid:20)
International numbers and online submission tool:
www.xerox.com/ethics

Environment, Health, Safety and 
Sustainability
www.xerox.com/environment

Global Citizenship
www.xerox.com/citizenship

Governance
www.xerox.com/governance

Students and Educators
View openings/internships and apply: 
www.xerox.com/careers

(cid:53)(cid:72)(cid:84)(cid:88)(cid:72)(cid:86)(cid:87)(cid:3)(cid:70)(cid:79)(cid:68)(cid:86)(cid:86)(cid:85)(cid:82)(cid:82)(cid:80)(cid:3)(cid:71)(cid:82)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:29)(cid:3)
www.xerox.com/foundation

(cid:36)(cid:79)(cid:79)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:84)(cid:88)(cid:72)(cid:86)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:29)(cid:3)
(cid:54)(cid:87)(cid:88)(cid:71)(cid:72)(cid:81)(cid:87)(cid:55)(cid:72)(cid:68)(cid:70)(cid:75)(cid:72)(cid:85)(cid:53)(cid:72)(cid:84)(cid:88)(cid:72)(cid:86)(cid:87)(cid:86)(cid:35)(cid:91)(cid:72)(cid:85)(cid:82)(cid:91)(cid:17)(cid:70)(cid:82)(cid:80)

Xerox Innovation
www.xerox.com/innovation

Independent Auditors
(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:90)(cid:68)(cid:87)(cid:72)(cid:85)(cid:75)(cid:82)(cid:88)(cid:86)(cid:72)(cid:38)(cid:82)(cid:82)(cid:83)(cid:72)(cid:85)(cid:86)(cid:3)(cid:47)(cid:47)(cid:51)
(cid:22)(cid:19)(cid:19)(cid:3)(cid:36)(cid:87)(cid:79)(cid:68)(cid:81)(cid:87)(cid:76)(cid:70)(cid:3)(cid:54)(cid:87)(cid:85)(cid:72)(cid:72)(cid:87)
(cid:54)(cid:87)(cid:68)(cid:80)(cid:73)(cid:82)(cid:85)(cid:71)(cid:15)(cid:3)(cid:38)(cid:55)(cid:3)(cid:19)(cid:25)(cid:28)(cid:19)(cid:20)
(cid:21)(cid:19)(cid:22)(cid:17)(cid:24)(cid:22)(cid:28)(cid:17)(cid:22)(cid:19)(cid:19)(cid:19)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________  
FORM 10-K
_________________________________________________  

(Mark One) 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2014    

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: ______  to: _______

Commission File Number 001-04471
_________________________________________________  

XEROX CORPORATION
(Exact Name of Registrant as specified in its charter)
_________________________________________________  

New York

(State of incorporation)

P.O. Box 4505, 45 Glover Avenue,
Norwalk, Connecticut 06856-4505

(Address of principal executive offices)

16-0468020

(IRS Employer Identification No.)

(203) 968-3000

(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common Stock, $1 par value

Name of each exchange on which registered

New York Stock Exchange

Chicago Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None 
____________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing 
requirements for the past 90 days. Yes 

 No 
 No 

 No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File 
required to be submitted and posted pursuant to Rule 405 of Regulation S-T  during the preceding 12 months (or for such shorter period that the registrant 
was required to submit and post such files). Yes 

 No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to 
this Form 10-K. 

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. 

See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer 

Smaller reporting company 

Non-accelerated filer 

   Accelerated filer 

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes 
 No 
The aggregate market value of the voting stock of the registrant held by non-affiliates as of June 30, 2014 was $14,345,220,956.
Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:

Class

Common Stock, $1 par value

Outstanding at January 31, 2015

1,112,199,705

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document are incorporated herein by reference:

Document

Xerox Corporation Notice of 2015 Annual Meeting of Shareholders and Proxy Statement (to be filed
no later than 120 days after the close of the fiscal year covered by this report on Form 10-K)

Part of Form 10-K in which Incorporated

III

 
 
 
 
 
 
FORWARD-LOOKING STATEMENTS

From time to time, we and our representatives may provide information, whether orally or in writing, including certain 
statements in this Annual Report on Form 10-K, which are deemed to be "forward-looking" within the meaning of the 
Private Securities Litigation Reform Act of 1995 (the "Litigation Reform Act"). These forward-looking statements and 
other information are based on our beliefs as well as assumptions made by us using information currently available.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they 
relate to us, are intended to identify forward-looking statements. These statements reflect our current views with 
respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of 
these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary 
materially from those described herein as anticipated, believed, estimated, expected or intended or using other 
similar expressions. We do not intend to update these forward-looking statements, except as required by law.

In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-
looking statements, because they relate to future events, are by their very nature subject to many important factors 
that could cause actual results to differ materially from those contemplated by the forward-looking statements 
contained in this Annual Report on Form 10-K, any exhibits to this Form 10-K and other public statements we make. 
Such factors include, but are not limited to: changes in economic conditions, political conditions, trade protection 
measures, licensing requirements and tax matters in the United States and in the foreign countries in which we do 
business; changes in foreign currency exchange rates; our ability to successfully develop new products, 
technologies and service offerings and to protect our intellectual property rights; the risk that multi-year contracts 
with governmental entities could be terminated prior to the end of the contract term and that civil or criminal 
penalties and administrative sanctions could be imposed on us if we fail to comply with the terms of such contacts 
and applicable law; the risk that our bids do not accurately estimate the resources and costs required to implement 
and service very complex, multi-year governmental and commercial contracts, often in advance of the final 
determination of the full scope and design of such contracts or as a result of the scope of such contracts being 
changed during the life of such contracts; the risk that subcontractors, software vendors and utility and network 
providers will not perform in a timely, quality manner; service interruptions; actions of competitors and our ability to 
promptly and effectively react to changing technologies and customer expectations; our ability to obtain adequate 
pricing for our products and services and to maintain and improve cost efficiency of operations, including savings 
from restructuring actions and the relocation of our service delivery centers; the risk that individually identifiable 
information of customers, clients and employees could be inadvertently disclosed or disclosed as a result of a 
breach of our security systems; the risk in the hiring and retention of qualified personnel; the risk that unexpected 
costs will be incurred; our ability to recover capital investments; the risk that our Services business could be 
adversely affected if we are unsuccessful in managing the start-up of new contracts; the collectibility of our 
receivables for unbilled services associated with very large, multi-year contracts; reliance on third parties, including 
subcontractors, for manufacturing of products and provision of services; our ability to expand equipment 
placements; interest rates, cost of borrowing and access to credit markets; the risk that our products may not 
comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives; the 
outcome of litigation and regulatory proceedings to which we may be a party; and other factors that are set forth in 
the “Risk Factors” section, the “Legal Proceedings” section, the “Management's Discussion and Analysis of 
Financial Condition and Results of Operations” section and other sections of this Annual Report on Form 10-K, as 
well as in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

On December 18, 2014, Xerox Corporation announced that it had entered into an agreement to sell its Information 
Technology Outsourcing (“ITO”) business to Atos S.E. The transaction is subject to customary closing conditions 
and regulatory approval and is expected to close in the first half of 2015. As a result of the pending sale of the ITO 
business and having met applicable accounting requirements, Xerox is reporting the ITO business as a 
discontinued operation.  The forward looking statements contained in this report are subject to the risk that the sale 
of the ITO business may not occur on the terms, within the time frame and/or in the manner previously disclosed, if 
at all.   

XEROX CORPORATION
FORM 10-K
DECEMBER 31, 2014 

TABLE OF CONTENTS

Page

Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Part II
Item 5.

Item 6.
Item 7.

Item 7A.
Item 8.
Item 9.

Item 9A.
Item 9B.

Part III
Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors, Executive Officers and Corporate Governance. . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Certain Relationships, Related Transactions and Director Independence . . . . . . . . . .
Principal Auditor Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IV
Item 15.
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule II Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1
13
20
20
20
20

21
24

25
58
59

125
125
125

126
127

127
127
127

128
129
130
131

 
PART I

ITEM 1. BUSINESS

Xerox is the world's leading enterprise for business process and document management solutions. We provide 
services, technology and expertise to enable our customers - from small businesses to large global enterprises - to 
focus on their core business and operate more effectively.

We are a leader across large, diverse and growing markets estimated at nearly $650 billion. The global business 
process outsourcing market is very broad, encompassing multi-industry business processes as well as industry-
specific business processes, and our addressable market is estimated at almost $300 billion.  The document 
management market is estimated at roughly $100 billion and is comprised of the document systems, software, 
solutions and services that our customers have relied upon for years to help run their businesses and reduce their 
costs. Xerox led the establishment of the managed print services market, and continues today as the industry 
leader in this expanding market segment.  The global information technology outsourcing market segments 
where we participate are estimated to be roughly $250 billion in aggregate.

Market estimates are derived from third-party forecasts produced by firms such as Gartner and Nelson Hall, and from our internal assumptions.

The following are some additional insights into these business areas:

Business Process Outsourcing (BPO): We are the largest diversified business process outsourcing company 
worldwide, with an expertise in managing transaction-intensive processes. This includes services that support 
enterprises through multi-industry offerings such as customer care, transaction processing, finance and accounting, 
and human resources, as well as industry-focused offerings in areas such as healthcare, transportation, financial 
services, retail and telecommunications.

Document Technology and Document Outsourcing (DO): Our document technology products and solutions 
support the work processes of our customers by providing them with an efficient, cost effective printing and 
communications infrastructure. Our DO service offerings help customers ranging from small businesses to global 
enterprises optimize their use of document systems and also their related document workflow and business 
processes.

Information Technology Outsourcing (ITO):  Our specialty is the design, development and delivery of flexible IT 
solutions, mapped to each client's needs and standards. Our secure data centers, help desks and managed storage 
facilities around the world provide a reliable IT infrastructure to our clients.

On December 18, 2014, we announced an agreement to sell our ITO business to Atos SE (Atos). Atos is a leading 
international IT services company. The transaction is subject to customary closing conditions and regulatory 
approval and is expected to close in the first half of 2015. As a result of this pending transaction and having met 
applicable accounting requirements, we reported the ITO business as held for sale and a discontinued operation at 
December 31, 2014 and reclassified its results from the Services segment to Discontinued Operations.

Subsequent to the closing of this transaction, Xerox will no longer directly market stand-alone IT services. Atos will 
provide IT services to our current BPO customers and will support much of Xerox's internal IT requirements. They 
will also be part of a broad network of IT providers with whom we can partner to provide world-class IT services as 
part of our future BPO offerings. This transaction is part of our ongoing portfolio management strategy and enables 
Xerox to increase our focus on our leading BPO and DO solutions where we can deliver the most value and 
expertise to our clients. 

Our Strategy and Business Model

Our strategy is to apply technology and innovation to transform the way people work and live, and to create 
sustained shareholder value through growth in business services and continued leadership in document technology. 
We also create value through expanding margins and profits as well as a balanced capital allocation strategy that 
returns cash to shareholders, while investing for growth and competitive advantage. To accomplish this, we have 
established the following strategic priorities:

1

Leverage Brand Strength and Market Position
We have a strong and valuable brand that continues to be ranked in the top percentile of the most valuable global 
brands. Well-recognized and respected, our brand is associated worldwide with delivering innovative solutions, and 
industry-leading business process and document management services and technology. 

Xerox has a broad, diverse set of offerings in Services and a strong, well-positioned product portfolio in Document 
Technology. We are strengthening our market positions by constantly evaluating our businesses and focusing our 
investments in areas where we have an advantage, and where the greatest market opportunities exist. We expect 
to accomplish this by targeting acquisitions and investing in businesses that will enhance our Services offerings and 
capabilities, capitalize on our deep industry expertise and expand services globally, while maintaining our Document 
Technology leadership in attractive market segments.

Geographically, our footprint spans more than 180 countries and allows us to serve customers of all sizes to deliver 
superior technology and services regardless of complexity or number of customer locations. 

Profitably Grow Services in Attractive Markets
Over half of our revenue was derived from business services in 2014. The business services markets have 
attractive market growth rates of mid-single digits or above and we believe we can grow our Services revenue at or 
above the market growth rates over time through both organic and inorganic growth. Across our business, we serve 
industry verticals where we have deep expertise resulting from years of experience, strong customer relationships, 
global scale and renowned innovation. Capitalizing on the opportunities that these strengths provide will continue to 
be key to our growth.  

We are also focusing on international markets for Services growth.  Currently, our BPO revenues are largely derived 
from services provided to customers in the U.S. By leveraging our existing global presence and customer 
relationships, we are actively expanding our BPO services internationally, and we will also grow globally through 
acquisitions.  

Lead in Document Technology
We are focused on maintaining our leadership position in the Document Technology market and continuing to 
innovate around our software, hardware and services offerings. For example, in 2014 we expanded the software 
and application capabilities of Xerox® ConnectKey®, a major new software and solutions capability we launched 
in 2013, and also broadened the number of devices that are enabled with this capability.  In 2014, we expanded our 
product portfolio by introducing over twenty new devices and also launched over twenty new workflow and software 
solutions.  These include products and solutions in the growing graphic communications market, and expanding 
upon our investments in the production inkjet market and further building upon our 2013 Impika acquisition.  
Continuing to bring innovative new products and solutions to market while also enhancing existing products and 
solutions will enable us to sustain our Document Technology market leadership.

Innovate to Differentiate Our Offerings
Differentiating our offerings is key to our strategy. A critical role of our research is to envision the future and define 
new research and competency areas for that future. We direct our research & development (R&D) investments to 
areas such as data analytics, business process automation, and improving the quality and reducing the 
environmental impact of digital printing.  The proportion of our annual U.S. patent filings related to software, 
solutions and analytics oriented capabilities has increased each of the last five years and they represented almost 
forty percent of our filings in 2014. We are investing in attractive markets, such as healthcare, to create 
differentiation. In addition, our acquisitions target companies providing new capabilities and offering access to 
adjacent services, solutions and technologies. We expect this will deliver incremental value for our customers and 
drive profitable revenue growth for our business. 

Drive Operational Excellence Across Our Businesses
Our operational excellence model leverages our global delivery capabilities, production model, incentive-based 
compensation process, proprietary systems and financial discipline to deliver increased productivity and lower costs 
for our customers and for our own business. Margin expansion is a key priority within Services and an overall 
opportunity for Xerox that we will achieve through specific initiatives aimed at improving our cost structure and 
portfolio mix. As markets shift, we undertake restructuring to optimize our workforce and facilities to best align our 
resources with the growth areas of our business, and to maximize profitability and cash flow in businesses that are 
declining. In Services, we realigned our delivery resources into global capability organizations in order to maximize 

Xerox 2014 Annual Report

2

our global scale and ensure service delivery excellence across our BPO offerings. We also have initiatives 
underway to continue improving our software platform implementation capability, which includes establishing 
strategic partnerships to supplement our internal capabilities. With our ongoing efforts and targeted initiatives in 
both Services and Document Technology, we look to maintain or increase our profitability and overall competitive 
positioning.

Engage, Develop and Support Our People
Our Services and Document Technology offerings and know-how are a powerful combination, and are supported by 
a talented global workforce focused on delivering value to our customers. We continue to nurture and develop our 
employees’ talents by investing in processes and systems to equip them with modern tools that will make it easier 
for them to perform their jobs more effectively and manage their careers, and by providing them opportunities for 
growth and development throughout their careers. 

Annuity-Based Business Model and Shareholder-Centered Capital Allocation
Our business is based on an annuity model that provides significant recurring revenue and cash generation. In 
2014, 84 percent of our total revenue was annuity-based; this includes contracted services, equipment 
maintenance, consumable supplies and financing, among other elements. The remaining 16 percent of our revenue 
comes from equipment sales, either from lease agreements that qualify as sales for accounting purposes or outright 
cash sales.

We remain committed to using our strong cash flow to deliver shareholder returns now and in the future through a 
balanced capital allocation strategy that includes share repurchase, acquisitions and dividends.

Acquisitions and Divestitures
The following is a summary of our acquisitions and divestitures in 2014.  Additional details can be found in Note 3 - 
Acquisitions and Note 4 - Divestitures, in the Consolidated Financial Statements.

Services Acquisitions and Divestiture
In the Services segment, consistent with our strategy to expand our offerings and geographic reach through 
acquisitions and to actively manage our product portfolio, we acquired or divested the following companies:

• 

Invoco Holding GmbH (Invoco), a German-based customer care services provider.

•  Smart Data Consulting, a New York-based provider of hosted and on-site e-discovery services. 

• 

ISG Holdings, Inc. (ISG), a provider of bill review software and services and managed care programs for the 
workers compensation industry which are offered through two subsidiaries; California-based StrataCare and 
Florida-based Bunch CareSolutions.

•  Consilience Software, Inc. (Consilience), an Austin-based company providing case management and workflow 

automation software to the public sector. 

•  The learning services unit of Seattle-based Intrepid Learning Solutions (closed January 2015).  

•  Truckload Management Services (TMS) business was divested.  This was a non-core business that provided 
document capture and submission solutions as well as campaign management, media buying and digital 
marketing services to the long haul trucking and transportation industry. 

Document Technology and Other Acquisitions and Divestiture:
In the Document Technology segment, consistent with our strategy to expand distribution to under-penetrated 
markets, we acquired Las Vegas, NV based Elan Office Systems and Birmingham, Alabama based Stewart of 
Alabama.

Within the Other segment, we completed the closure of Xerox Audio Visual Solutions, Inc. (XAV), a non-core audio 
visual business within our Global Imaging Systems subsidiary (GIS). XAV provided audio visual equipment and 
services to enterprise and government customers. 

3

?
Innovation and Research
Xerox has a rich heritage of innovation, and innovation continues to be a core strength of the Company as well as a 
competitive differentiator. Our aim is to create value for our customers, our shareholders, and our people by driving 
innovation in key areas. Our investments in innovation align with our growth opportunities in areas like business 
process services, color printing and customized communication. Our research efforts can be categorized under four 
themes:

1.  Usable Analytics - Transform big data into useful information resulting in better business decisions:
Competitive advantage can be achieved by better utilizing available and real-time information. Today, 
information resides in an ever increasing universe of servers, repositories and formats. The vast majority of 
information is unstructured, including text, images, voice and videos. One key research area is making sense of 
unstructured information using natural language processing and semantic analysis. A second major research 
area focuses on developing proprietary methods for prescriptive analytics applied to business processes. Here, 
we seek to better manage very large data systems in order to extract business insights and use those insights 
to provide our clients with actionable recommendations. Tailoring these methods to various vertical applications 
leads to new customer value propositions.

2.  Agile Enterprise - Create simple, automated and touch-less business processes resulting in lower cost, 

higher quality and increased agility:
Businesses require agility in order to quickly respond to market changes and new business requirements. To 
enable greater business process agility, our research goals are to simplify, automate and enable business 
processes on the cloud via flexible platforms that run on robust and scalable infrastructures. Automation of 
business processes benefits from our research on image, video and natural language processing as well as 
machine learning. Application of these methods to business processes enables technology to perform tasks that 
today are performed manually, thus allowing workers to focus on higher level tasks.

3.  Personalization @ Scale - Augment humans by providing secure, real-time, context-aware personalized 

products, solutions and services:
Whether talking about business correspondence, personal communication, manufactured items or an 
information service, personalization increases the value to the recipient. Our research leads to technologies that 
improve the efficiency, economics and relevance of business services, such as customer care, benefits and 
educational services. Our proprietary printing technologies give us a strong platform to research and develop 
methods that create affordable, ubiquitous color printing. We also research how to expand the application of 
digital printing to cover new applications such as packaging and printing directly on end-use products.

4.  Sustainable Enterprise & Society - Enhance the environmental and societal benefits of our offerings:
Global demand for energy, and the environmental consequences of products used by enterprises and 
consumers, have elevated customer interest in sustainable solutions. Our research develops technologies that 
minimize the environmental impact of document systems and business processes. We seek opportunities to 
utilize processes and components that minimize life-cycle footprint and waste, and create zero bioaccumulation. 
We also actively seek to incorporate bio-based materials into our printing consumables. To help our customers 
optimize their operations, research is creating new enterprise-wide energy optimization tools, and user 
sustainability feedback systems.

Global Research Centers
We have four global research centers, each with a unique area of focus. They are places where creativity and 
entrepreneurship are truly valued. Our leadership has empowered employees to deliver leading-edge research and 
high-impact innovations that make a difference to our clients and the world. Our research centers are:

•  Palo Alto Research Center (PARC): A wholly-owned subsidiary of Xerox located in Silicon Valley and Webster 
NY, PARC provides Xerox commercial and government clients with R&D and open innovation services. PARC 
scientists have deep technological expertise in big data analytics, intelligent sensing, computer vision, 
networking, printed electronics, energy, and digital design and manufacturing. In 2014 we consolidated our 
Webster research center operations into PARC.

•  Xerox Research Center of Canada (XRCC): Located in Mississauga, Ontario, Canada, XRCC is our materials 
research center that focuses on imaging and consumable materials. These include toners, inks and smart 
materials for our Document Technology business, as well as materials for digital manufacturing.

Xerox 2014 Annual Report

44

 
•  Xerox Research Center Europe (XRCE): Located in Grenoble, France, XRCE research aims to differentiate 

Xerox business process service offerings by simplifying them and making them more automated, intelligent and 
agile. The center combines its world-class expertise in imaging, text and data analytics, with insights from its 
ethnographic studies to create and design innovative and disruptive technology.

•  Xerox Research Center India (XRCI): Located in Bangalore, India, XRCI explores, develops, and incubates 

innovative solutions and services for our global customers, with a special focus on emerging markets.

Investment in R&D is critical for competitiveness in our fast-paced markets. We have aligned our R&D investment 
portfolio with our growth initiatives, including enhancing customer value by building on our business process 
services leadership and accelerating our color leadership. One of the ways that we maintain our market leadership 
is through strategic coordination of our R&D with Fuji Xerox (an equity investment in which we maintain a 25 
percent ownership interest). 

Our total research, development and engineering expenses (RD&E), which includes sustaining engineering 
expenses for hardware engineering and software development after we launch a product, totaled $577 million in 
2014, $603 million in 2013 and $655 million in 2012. Fuji Xerox R&D expenses were $654 million in 2014, $724 
million in 2013 and $860 million in 2012.

Segment Information

Our reportable segments are Services, Document Technology and Other. We present operating segment financial 
information in Note 2 - Segment Reporting in the Consolidated Financial Statements, which we incorporate by 
reference here. We have a broad and diverse base of customers by both geography and industry, ranging from 
small and midsize businesses (SMBs) to graphic communications companies, governmental entities, educational 
institutions and Fortune 1000 corporate accounts. None of our business segments depends upon a single customer, 
or a few customers, the loss of which would have a material adverse effect on our business.

Revenues by Business Segment
Our Services segment is the largest segment, with $10,584 million in revenue in 2014, representing 54 percent of 
total revenue. Note that Services segment revenue excludes ITO revenue due to ITO being reported as a 
discontinued operation as a result of the pending sale of this business to Atos. The Document Technology segment 
contributed $8,358 million in revenue, representing 43 percent of total revenue. The Other segment contributed 
$598 million in revenue, representing 3 percent of total revenue. 

Services Segment
We provide comprehensive business services in global markets across all major industries and government 
agencies. These services help our clients simplify the way work gets done, providing them more time and resources 
to allocate to their core operations, enabling them to respond rapidly to changing technologies and reducing 
expenses associated with their business processes.

Our Services segment currently comprises two types of service offerings: Business Process Outsourcing (BPO) and 
Document Outsourcing (DO).  This segment no longer includes Information Technology Outsourcing (ITO) as a 
result of the previously referenced announcement about our agreement to sell our ITO business to Atos and the 
reclassification of the business to Discontinued Operations in 2014.  

Selling the ITO business gives us the opportunity to bring greater focus to our BPO and DO businesses where we 
are competitively positioned and can truly differentiate through our domain knowledge, industry expertise and 
innovation.  Following the close of the transaction, we will have an ongoing relationship with Atos to provide IT 
services to our current BPO customers.  

Business Process Outsourcing 
BPO represented 68 percent of our total Services segment revenue in 2014. We are the largest diversified business 
process outsourcing company worldwide, with expertise in managing transaction-intensive processes. We provide 
multi-industry offerings such as customer care, transaction processing, finance and accounting, and human 
resources, as well as industry focused offerings in areas such as healthcare, transportation, financial services, retail 
and telecommunications. We bring our BPO solutions to market through Industry Business Groups and we deliver 
our solutions to our customers through Global Capability Organizations.

5

Industry Business Groups
To enable deep client engagement and to optimize cross-selling of our broad portfolio of services solutions, we have 
organized our go-to-market resources into six global industry business groups. The industry groups have primary 
responsibility for client relationships and sales, developing industry thought leadership and industry specific 
solutions, and ensuring service delivery meets client requirements. The industry business groups are as follows:

•  Commercial Healthcare: We have innovative solutions and subject matter expertise across the healthcare 

ecosystem including providers, payers, employers and government agencies. We help these customers focus 
on delivering better, more accessible and more affordable healthcare, which leads to better health and wellness 
for their constituencies. In the commercial segment of the market, we primarily serve the following 
constituencies:

Healthcare Payer and Pharma: We deliver administrative efficiencies to our healthcare payer and 
pharmaceutical clients through scalable and flexible transactional business solutions, which encompass our 
global delivery model and domestic payer service centers. We support the top 20 U.S. commercial health plans, 
touching nearly two-thirds of the insured population in the U.S. 

Healthcare Provider Solutions: We serve hospitals, doctors and other care providers, including every large 
health system in the U.S., with contracts in all 50 states. Our services help our clients improve access to patient 
data, achieve tighter regulatory compliance, realize greater operational efficiencies, reduce administrative costs 
and provide better health outcomes.

•  Commercial Industries - High Tech and Communications, Financial Services, and Industrial, Retail and 

Hospitality: We have deep expertise, targeted business process solutions, and a large, diverse client base in a 
broad range of commercial industries including communications and media, high tech and software, banking 
and capital markets, insurance, manufacturing, automotive, travel and leisure, food and beverage, 
transportation and logistics and others.

•  Public Sector: We provide services to many constituencies across the public sector space. This includes 

services uniquely focused on Transportation related entities as well as our broad portfolio of BPO solutions to all 
governmental entities. 

Transportation Services: We provide revenue-generating solutions for our government clients in over 35 
countries. Our services include public transit and fare collection, electronic toll collection, parking management, 
photo enforcement and commercial vehicle operations. We create simple and reliable processes for operators 
and government agencies, and we are differentiated by the breadth of our offerings and innovative technology.

State, Local and Federal Government Services: We support our government clients with services targeting 
key agencies within federal, state, county and municipal governments including Health and Human Services, 
Veterans Administration, Treasury, Safety and Justice, and Government Administration. Our competitive 
advantage is our depth of agency-specific expertise and we have the scale required to deliver and manage 
programs at all levels of government. Our services span benefits collection and disbursement and electronic 
payment cards, tax and revenue systems, eligibility systems and services, unclaimed property services, and a 
broad range of other business process services.

•  Government Healthcare: We provide administrative and care management solutions to state Medicaid 

programs and federally-funded U.S. government healthcare programs. We provide a broad range of innovative 
solutions to 36 states and the District of Columbia, which includes providing Health Insurance Exchange 
support services. Our services include processing Medicaid claims, pharmacy benefits management, clinical 
program management, supporting health information exchanges, eligibility application processing and 
determination, management of long-term care programs, delivering public and private health insurance 
exchange services and care and quality management.

Global Capability Organizations
To leverage our global scale and ensure service delivery excellence across our BPO offerings, we have organized 
our delivery resources into six global capability groups. The capability organizations have primary responsibility for 
implementing new client contracts and delivering service excellence to existing clients, best practice identification to 

Xerox 2014 Annual Report

6

improve cost competitiveness and innovating and implementing our next generation offerings. The global capability 
groups are as follows:

•  Customer Care: Our teams across the globe provide expertise in customer service, technical support, sales, 

collections and other services via multiple channels including phone, SMS, chat, interactive voice response, 
social networks and email. 

•  Transaction Processing: We have a broad array of transaction processing capabilities across many different 
client types.  These broad capabilities include data entry, scanning, image processing, enrollment processing, 
claims processing, high volume offsite print and mail services, file indexing and others.  

•  Human Resources Services: Our capabilities cover a wide range of HR outsourcing services including health, 

pension and retirement administration and outsourcing, private healthcare exchanges, employee service 
centers, learning solutions and welfare services, global mobility and relocation, payroll and others.

•  Finance and Accounting: We serve clients in many industries by managing their critical finance, accounting 
and procurement processes. Our services span corporate finance and decision support, prepaid cards, 
payment processing, loan and banking process support, and student loan servicing.

•  Communication and Marketing Services: We provide end-to-end outsourcing for content design, creation, 

marketing, fulfillment and distribution services that help clients communicate with their customers and 
employees more effectively. We deliver communications through print and multimedia channels, including SMS, 
web, email and mobile media.

•  Consulting and Analytics Services: Our consulting services help clients identify and capture strategic 

opportunities in their businesses often in conjunction with the deployment of BPO services such as those 
defined above. Our analytics capabilities provide clients with deep business insights on an ongoing basis, as an 
add-on or embedded service offering in conjunction with BPO contracts.

Document Outsourcing
We are the industry leader in document outsourcing services. We help companies optimize their printing 
infrastructure and simplify their communication and business processes so that they can grow revenue, reduce 
costs and operate more efficiently. Document Outsourcing represented 32 percent of our total Services segment 
revenue in 2014.

Our two primary offerings within Document Outsourcing are Managed Print Services (MPS) and Centralized Print 
Services (CPS).  The MPS offering targets clients ranging from large, global enterprises to mid-size and small 
businesses and governmental entities, while the CPS offering targets the on-demand, production printing, 
publishing and mailroom operations needs of governments, large enterprises and mid-size businesses.

We provide the most comprehensive portfolio of MPS services in the industry and are recognized as an industry 
leader by several major analyst firms, including Gartner, IDC, Quocirca, Info Trends and Forrester. As the market 
leader in MPS, Xerox helps clients cut costs, increase productivity and meet their environmental sustainability goals 
while supporting their mobile and security needs. Xerox® MPS complements and provides opportunities to expand 
existing BPO services. Within BPO and other accounts, Xerox® MPS helps to automate workflow and enhance 
employee productivity.

In 2013 we launched our next generation MPS and CPS offerings, which were built upon a three stage approach:

Assess and Optimize: We use best-in-class tools and processes to create a baseline of a client's current 
spend, then we design a solution that reduces costs and supports sustainability goals. We assess both the office 
and production environments to create a holistic view of the client's printing needs.

Secure and Integrate: We ensure that everything in our clients’ optimized print environment is connected to their IT 
environment in a secure and compliant way. We activate solutions for enhanced security, printing from mobile 
devices and streamlining the IT environment by managing print servers and print queues. 

7

Automate and Simplify: With the right technology in place and securely integrated into our clients' IT environment, 
we improve employee productivity through automating paper-based processes by digitizing paper documents and 
leveraging content management, thus creating better workflows and reducing print.

In 2014 we continued to innovate and expand upon the solutions within the three stage approach to increase 
mobility, security, efficiency and productivity. Significant new enhancements launched in 2014 include the following:
•  Xerox Document Analytics Service: Analyzes how and why documents are printed and uses that intelligence 

to digitize content and change the way information is accessed and utilized.

•  Xerox Secure Print Manager Suite: Effectively integrates print information security into existing IT 

infrastructure.

•  Xerox Workflow Assessment Services: Demonstrates how documents move within an organization and 

provides insights to create more efficient processes.

•  Xerox Digital Alternatives: A simple desktop and mobile technology that automates paper-based workflows.  
Allows users to easily sign, annotate, share, save and read documents from one interface thus increasing 
productivity across the enterprise.

•  Xerox ePublishing Services: Provides a digital file output suitable for multiple types of mobile devices and 

computer displays.  Includes built-in analytics tools to measure and collect valuable usage data.

•  Xerox Print Awareness Tool: Patented system that actively encourages workers to be more environmentally 

responsible.

Information Technology Outsourcing
We provide ITO services across all industries and have developed deep expertise in several key verticals including 
Healthcare, Retail, Manufacturing, Financial Services and Public Sector. Our ITO services include managed IT 
services, end user computing and IT solutions like cloud services, utility computing and desktop virtualization.

We specialize in designing, developing and delivering effective IT solutions. Our secure data centers, help desks 
and managed storage facilities around the world provide a reliable IT infrastructure that minimizes the risk of 
disruption to our clients' daily operations.

As a result of the pending sale of the ITO business to Atos and having met applicable accounting requirements, this 
business is being reported as a discontinued operation for financial reporting purposes. Subsequent to the closing 
of the ITO sale to Atos, Xerox will no longer directly market stand-alone IT services.  

Document Technology Segment 
Document Technology includes the sale of products and supplies, as well as the associated technical service and 
financing of those products (which are not related to document outsourcing contracts). Our Document Technology 
business is centered around strategic product groups that share common technology, manufacturing and product 
platforms. The strategic product groups are: Entry, Mid-Range and High-End.

In 2013 we launched Xerox® ConnectKey® technology, a software system and set of solutions embedded in many 
of our Entry and Mid-Range multifunction printers (MFP's).  To further enhance the platform, in September 2014 we 
launched ConnectKey version 1.5, which provides even more mobility, security and cloud access, to support the 
growing productivity needs for today’s SMB and professional users.  Additionally, we enabled ConnectKey 1.5 into 
four new multifunction printers (MFPs) - including the WorkCentre 3655 Mono and WorkCentre 6655 Color A4/letter 
MFPs, and the WorkCentre 5945 Mono and WorkCentre 7970 Color A3 MFPs. 

Entry
Entry comprises desktop monochrome and color printers and multifunction printers ranging from small personal 
devices to workgroup printers and MFPs that serve the needs of office workgroups. Entry products represented 20 
percent of our total Document Technology segment revenue in 2014 and are sold to customers in all segments from 
SMB to enterprise, principally through a global network of reseller partners and service providers as well as through 
our direct sales force.

In 2014, we continued to build on our position in the market:
•  Expanded our ConnectKey 1.5 technology into more A4 MFP devices to respond to customer needs for smaller, 

lower cost devices that maintain network access and solution compatibility. 

Xerox 2014 Annual Report

8

•  Upgraded the functionality of many of our existing products to be more efficient and cost effective to deploy in 

conjunction with our managed services offerings.

• 

Launched twelve new products, primarily in the second half of the year, that help our customers optimize their 
print infrastructure.  In color, we launched the 36 page per minute (ppm) WorkCentre® 6655 A4 MFP which 
expanded our ConnectKey technology into this important product class.  In monochrome, we launched several 
MFPs ranging from the compact WorkCentre® 3215, 3225 and 3025 A4 MFPs to the WorkCentre® 4265 A4 
MFP, which is a 55 ppm desktop capable MFP with available finishing and high capacity input tray options 
optimized for demanding workgroups where space is a premium.  We also launched several Phaser® 
Monochrome printers, which offer increased productivity for work teams with new and enhanced features 
including wireless connectivity, automatic two-sided printing, mobile printing, and higher output speeds and 
paper input capacity.

Mid-Range
Mid-Range comprises products for enterprises of all sizes. These products are sold through dedicated Xerox 
branded partners, our direct sales force, indirect multi-branded channel partners and resellers worldwide. Our Mid-
Range products represented 57 percent of our total Document Technology segment revenue in 2014. We are a 
leader in this product segment and offer a wide range of multifunction printers, copiers, digital printing presses and 
light production devices, and solutions that deliver flexibility and advanced features.

In 2014 we continued to innovate and expand upon the ConnectKey® platform that was initially launched in 2013.  
We increased the number of ConnectKey® enabled devices and continued expanding the security, workflow and 
software application capabilities to enable superior print quality, mobility and security solutions, and cost control. For 
example, we introduced Xerox Secure Access Version 5.0, a print management solution, which is a modular, 
software-only solution allowing customers to use authentication features at a lower cost. We also added new 
features to our Xerox Mobile Print Solution 3.0 that offer greater convenience, increased security and greater 
flexibility in print job submission. Additionally, we launched Xerox App Studio 2.0, enabling new ConnectKey apps 
to provide scanning to and printing from cloud repositories such as Microsoft Office 365, Dropbox and DocuShare. 
Customers can also use an app to print from their own URL - whether contained in a firewall or the cloud - creating 
a convenient, easy-to-use 'print-on-demand' environment.

Overall, we launched seven new devices in the second half of 2014 which included the 70 ppm WorkCentre® 7970 
Color A3 MFP and the 55 ppm WorkCentre 5945/5955 Monochrome A3 MFP.  We also launched the 70 ppm 
Xerox® Color C60/C70 Printer light production devices, which include updated EFI and FreeFlow print controllers 
that enhance productivity, reduce time intensive tasks and deliver high impact and vibrant images.

High-End
Our High-End digital color and monochrome solutions are designed for customers in the graphic communications 
industry and large enterprises with high-volume printing requirements. Our High-End products comprised 23 
percent of our total Document Technology segment revenue in 2014. Our High-End solutions enable full-color, on-
demand printing of a wide range of applications, including variable data for personalized content and 1:1 marketing.

During 2014, a significant initiative in the High-End segment was the continued development and growth of our 
portfolio of workflow software offerings.  Workflow automation is essential to our customers’ success, and our 
workflow platforms are an outstanding complement to our world-class hardware offerings.  We launched updates to 
all of our major workflow components including FreeFlow® Core, FreeFlow® Digital Publisher, FreeFlow 
Variable Information Suite, IntegratedPLUS Automated Finishing and IntegratedPLUS Automated Color 
Management.

Within the High-End hardware portfolio, in 2014 we continued the integration and growth of our production inkjet 
business, led by the Impika inkjet platforms as well as the Xerox® CiPress Production Inkjet Systems.  The 
newest Impika offering is the Impika® eVolution, which joins the Impika® Compact and Impika® Reference
in the Impika portfolio. These presses utilize proprietary, aqueous inkjet technology, and print at speeds as fast as 
832 feet (254 meters) per minute, producing a wide range of commercial and industrial print applications.  The 
CiPress platform is based on Xerox solid ink technology, and provides unique value as the industry’s only waterless 
production inkjet printing system.

While production inkjet is an important and growing segment, we currently remain the worldwide leader in the cut-
sheet production color and monochrome industry segments.  In 2014, our most significant new product was the 

9

Xerox® Versant™ 2100 Press.  The 2100 enables full color printing at speeds up to 100 pages per minute, with 
outstanding Ultra HD Resolution print quality.  The press also incorporates a wide range of automated tools, 
including the Production Accurate Registration and the Xerox® Automated Color Quality Suite.  These unique 
features allow our customers to achieve increased performance, higher quality and better results.

Along with the new Versant 2100 Press, in 2014 we delivered a number of feature enhancements across our entire 
cut sheet line which includes the Xerox iGen™, Xerox Color Presses, Xerox Nuvera™, DocuTech™ and 
DocuPrint™ series, and Xerox® Wide Format IJP 2000.

Other Segment
The Other segment includes paper sales in our developing market countries, wide-format systems, licensing 
revenue, Global Imaging Systems network integration solutions and non-allocated corporate items, including Other 
expenses, net. Paper comprised approximately one-third of the revenues in the Other segment in 2014, which is 
roughly the same as in 2013.

Geographic Information
Our global presence is one of our core strengths. Overall, 33 percent of our revenue is generated by customers 
outside the U.S. We have a significant opportunity to leverage our global presence and customer relationships to 
expand our Services business in Europe and developing markets.

In 2014, our revenues by geography were as follows: U.S. - $13,041 million (67 percent of total revenue), Europe - 
$4,428 million (23 percent of total revenue), and Other areas - $2,071 million (10 percent of total revenue). 
Revenues by geography are based on the location of the unit reporting the revenue and include export sales.

Patents, Trademarks and Licenses
Xerox and its subsidiaries were awarded 1,114 U.S. utility patents in 2014. On that basis, we rank 30th on the list of 
companies that were awarded the most U.S. patents during the year. Including our research partner Fuji Xerox, we 
were awarded about 1,950 U.S. utility patents in 2014. Our patent portfolio evolves as new patents are awarded to 
us and as older patents expire. As of December 31, 2014, we held almost 12,600 U.S. design and utility 
patents. These patents expire at various dates up to 20 years or more from their original filing dates. While we 
believe that our portfolio of patents and applications has value, in general no single patent is essential to our 
business or any individual segment. In addition, any of our proprietary rights could be challenged, invalidated or 
circumvented, or may not provide significant competitive advantages.

In the U.S., we are party to numerous patent-licensing agreements and, in a majority of them, we license or assign 
our patents to others in return for revenue and/or access to their patents. Most patent licenses expire concurrently 
with the expiration of the last patent identified in the license. In 2014 we added 11 new agreements to our portfolio 
of patent-licensing and sale agreements, and Xerox and its subsidiaries were licensor or seller in 7 of the 
agreements. We are also a party to a number of cross-licensing agreements with companies that hold substantial 
patent portfolios, including Canon, Microsoft, IBM, Hewlett-Packard, Oce, Sharp, Samsung, Seiko Epson, Toshiba 
TEC and R.R. Donnelley. These agreements vary in subject matter, scope, compensation, significance and time.

In the U.S., we own more than 450 U.S. trademarks, either registered or applied for. These trademarks have a 
perpetual life, subject to renewal every 10 years. We vigorously enforce and protect our trademarks.

Marketing and Distribution
We operate in over 180 countries, providing the industry's broadest portfolio of document technology, services and 
software, and the most diverse array of business processes outsourcing solutions, through a variety of distribution 
channels around the world. We manage our business based on the principal segments described earlier. We have 
organized the marketing, selling and distribution of our products and services by geography, channel type and line 
of business.

We go to market with a services-led approach and sell our products and services directly to customers through our 
world-wide sales force and through a network of independent agents, dealers, value-added resellers, systems 
integrators and the Web. In addition, our wholly-owned subsidiary, Global Imaging Systems (GIS), an office 
technology dealer which is comprised of regional core companies in the U.S., sells document management and 
network integration systems and services. We continued to expand our distribution to small and mid-size 
businesses in 2014 through GIS's acquisition of two companies.

Xerox 2014 Annual Report

10

  
Our brand is a valuable resource and continues to be ranked in the top percentile of the most valuable global 
brands. In Europe, Africa, the Middle East and parts of Asia, we distribute our products through Xerox Limited, a 
company established under the laws of England, as well as through related non-U.S. companies. Xerox Limited 
enters into distribution agreements with unaffiliated third parties to distribute our products in many of the countries 
located in these regions, and previously entered into agreements with unaffiliated third parties who distribute our 
products in Sudan. Sudan, among others, has been designated as a state sponsor of terrorism by the U.S. 
Department of State and is subject to U.S. economic sanctions. We maintain an export and sanctions compliance 
program, and believe that we have been and are in compliance with U.S. laws and government regulations for 
Sudan. We have no assets, liabilities or operations in Sudan other than liabilities under the distribution 
agreements. After observing required prior notice periods, Xerox Limited terminated its distribution agreements with 
distributors servicing Sudan in August 2006. Now, Xerox has only legacy obligations to third parties, such as 
providing spare parts and supplies to these third parties. In 2014, total Xerox revenues of $19.5 billion included less 
than $10 thousand attributable to Sudan.

Competition
Although we encounter competition in all areas of our business, we are the leader -- or among the leaders -- in each 
of our principal business segments. We compete on the basis of technology, performance, price, quality, reliability, 
brand, distribution and customer service and support.

In the Services business, our larger competitors include Accenture, Aon, Computer Sciences Corporation, 
Convergys, Genpact, Hewlett-Packard, IBM and Teletech. In addition, we compete with in-house departments that 
perform the functions that could be outsourced to us.

In the Document Technology business, our larger competitors include Canon, Hewlett-Packard, Konica Minolta, 
Lexmark and Ricoh.

Our brand recognition, positive reputation for business process and document management expertise, innovative 
technology and service delivery excellence are our competitive advantages. These advantages, combined with our 
breadth of product offerings, global distribution channels and customer relationships, position us as a strong 
competitor going forward.

Global Employment
Globally, we have approximately 147,500 direct employees, including approximately 5,300 sales professionals, 
approximately 10,200 technical service employees and approximately 102,300 employees serving our customers 
through on-site operations or off-site delivery centers. Approximately 9,800 of these employees are associated with 
the ITO business and are expected to transition to Atos upon closure of the sale of the ITO business.   

Customer Financing
We finance a large portion of our direct channel customer purchases of Xerox equipment through bundled lease 
agreements. Financing facilitates customer acquisition of Xerox technology and enhances our value proposition, 
while providing Xerox an attractive gross margin and a reasonable return on our investment in this business. 
Additionally, because we primarily finance our own products and have a long history of providing financing to our 
customers, we are able to minimize much of the risk normally associated with a finance business.

Because our lease contracts permit customers to pay for equipment over time rather than at the date of installation, 
we maintain a certain level of debt to support our investment in these lease contracts. We fund our customer 
financing activity through a combination of cash generated from operations, cash on hand, proceeds from capital 
market offerings and on occasion the sale of selected finance receivables. There were no finance receivable sales 
in 2014. At December 31, 2014, we had $4.3 billion of finance receivables and $0.5 billion of equipment on 
operating leases, or Total Finance assets of $4.8 billion. We maintain an assumed 7:1 leverage ratio of debt to 
equity as compared to our Finance assets, which results in the majority of our $7.7 billion of debt being allocated to 
our financing business.

Refer to "Customer Financing Activities" in the Capital Resources and Liquidity section of Management's Discussion 
and Analysis included in Item 7 of this 2014 Form 10-K, which is incorporated here by reference, for additional 
information.

11

Manufacturing and Supply  
Our manufacturing and distribution facilities are located around the world. The Company's largest manufacturing 
site is in Webster, N.Y., where we produce the Xerox® iGen and Nuvera systems, components, EA Toner, 
consumables, fusers, photoreceptors, and other products. Our other primary manufacturing operations are located 
in: Dundalk, Ireland, for our High-End production products and consumables; Wilsonville, OR, for solid ink 
consumable supplies and components for our mid-range and entry products; and Aubagne, France, for Impika 
aqueous-ink production ink-jet systems. We also have a facility in Venray, Netherlands, that provides supplies 
manufacturing and supply chain management for the Eastern Hemisphere.

Our master supply agreement with Flextronics, a global electronics manufacturing services company, to outsource 
portions of manufacturing for our mid-range and entry businesses, continues through December 2015 (exclusive of 
extension rights). We also acquire products from various third parties in order to increase the breadth of our product 
portfolio and meet channel requirements.

We have arrangements with Fuji Xerox under which we purchase and sell products, some of which are the result of 
mutual research and development agreements. Refer to Note 9 - Investments in Affiliates, at Equity in the 
Consolidated Financial Statements, which is incorporated here by reference, for additional information regarding our 
relationship with Fuji Xerox.

Services Global Production Model
Our global services production model is one of our key competitive advantages. We have approximately 130 
Strategic Delivery Centers located around the world, including India, Philippines, Jamaica, Mexico, Guatemala,  
Colombia, Brazil, Chile, Argentina, Ireland, Spain, Poland and Romania. These locations are comprised of 
Customer Care Centers, Mega IT Data Centers, Finance and Accounting Centers, Resource Centers and 
Document Process Centers. Our global production model is enabled by the use of proprietary technology, which 
allows us to securely distribute client transactions within data privacy limits across a global workforce. This global 
production model allows us to make the most of lower-cost production locations, consistent methodology and 
processes, and time zone advantages.  Approximately 15 of these centers are associated with the ITO business 
and are expected to be transferred to Atos upon closure of the sale of the ITO business.

Fuji Xerox
Fuji Xerox is an unconsolidated entity in which we own a 25 percent interest, and FUJIFILM Holdings Corporation 
(FujiFilm) owns a 75 percent interest. Fuji Xerox develops, manufactures and distributes document processing 
products in Japan, China, Hong Kong, other areas of the Pacific Rim, Australia and New Zealand. We retain 
significant rights as a minority shareholder. Our technology licensing agreements with Fuji Xerox ensure that the 
two companies retain uninterrupted access to each other's portfolio of patents, technology and products.

International Operations
The financial measures by geographical area for 2014, 2013 and 2012 that are included in Note 2 - Segment 
Reporting in the Consolidated Financial Statements, are incorporated here by reference. See also the risk factor 
entitled “Our business, results of operations and financial condition may be negatively impacted by economic 
conditions abroad, including local economies, political environments, fluctuating foreign currencies and shifting 
regulatory schemes” in Part I, Item 1A included herein.

Backlog
Backlog, or the value of unfilled orders, is not a meaningful indicator of future business prospects because of the 
significant proportion of our revenue that follows contract signing and/or equipment installation, the large volume of 
products we deliver from shelf inventories and the shortening of product life cycles.

Seasonality
Our revenues are affected by such factors as the introduction of new products, the length of sales cycles and the 
seasonality of technology purchases and services unit volumes. These factors have historically resulted in lower 
revenues, operating profits and operating cash flows in the first quarter and the third quarter.

Xerox 2014 Annual Report

12

Other Information
Xerox is a New York corporation, organized in 1906, and our principal executive offices are located at 45 Glover 
Avenue, P.O. Box 4505, Norwalk, Connecticut 06856-4505. Our telephone number is (203) 968-3000.

In the Investor Information section of our Internet website, you will find our Annual Reports on Form 10-K, Quarterly 
Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports. We make these 
documents available as soon as we can after we have filed them with, or furnished them to, the U.S. Securities and 
Exchange Commission.

Our Internet address is www.xerox.com.

ITEM 1A. RISK FACTORS 

Our business, results of operations and financial condition may be negatively impacted by conditions 
abroad, including local economics, political environments, fluctuating foreign currencies and shifting 
regulatory schemes. 

A significant portion of our revenue is generated from operations outside the United States. In addition, we maintain 
significant operations and acquire or manufacture many of our products and/or their components outside the United 
States. Our future revenues, costs and results of operations could be significantly affected by changes in foreign 
currency exchange rates - particularly the Japanese Yen to U.S. Dollar and Japanese Yen to Euro exchange rates, 
as well as by a number of other factors, including changes in economic conditions from country to country, changes 
in a country's political conditions, trade protection measures, licensing requirements, local tax issues, capitalization 
and other related legal matters. We generally hedge foreign currency denominated assets, liabilities and anticipated 
transactions primarily through the use of currency derivative contracts. The use of derivative contracts is intended to 
mitigate or reduce transactional level volatility in the results of foreign operations, but does not completely eliminate 
volatility. We do not hedge the translation effect of international revenues and expenses, which are denominated in 
currencies other than our U.S. parent functional currency, within our consolidated financial statements. If our future 
revenues, costs and results of operations are significantly affected by economic conditions abroad and we are 
unable to effectively hedge these risks, they could materially adversely affect our results of operations and financial 
condition.

If we fail to successfully develop new products, technologies and service offerings and protect our 
intellectual property rights, we may be unable to retain current customers and gain new customers and our 
revenues would decline. 

The process of developing new high technology products and solutions is inherently complex and uncertain. It 
requires accurate anticipation of customers' changing needs and emerging technological trends. We must make 
long-term investments and commit significant resources before knowing whether these investments will eventually 
result in products that achieve customer acceptance and generate the revenues required to provide desired returns. 
In developing these new technologies and products, we rely upon patent, copyright, trademark and trade secret 
laws in the United States and similar laws in other countries, and agreements with our employees, customers, 
suppliers and other parties, to establish and maintain our intellectual property rights in technology and products 
used in our operations. However, the laws of certain countries may not protect our proprietary rights to the same 
extent as the laws of the United States and we may be unable to protect our proprietary technology adequately 
against unauthorized third-party copying or use, which could adversely affect our competitive position. In addition, 
some of our products rely on technologies developed by third parties. We may not be able to obtain or to continue to 
obtain licenses and technologies from these third parties at all or on reasonable terms, or such third parties may 
demand cross-licenses to our intellectual property. It is also possible that our intellectual property rights could be 
challenged, invalidated or circumvented, allowing others to use our intellectual property to our competitive 
detriment. We also must ensure that all of our products comply with existing and newly enacted regulatory 
requirements in the countries in which they are sold, particularly European Union environmental directives. If we fail 
to accurately anticipate and meet our customers' needs through the development of new products, technologies and 
service offerings or if we fail to adequately protect our intellectual property rights or if our new products are not 
widely accepted or if our current or future products fail to meet applicable worldwide regulatory requirements, we 
could lose market share and customers to our competitors and that could materially adversely affect our results of 
operations and financial condition.

13

Our government contracts are subject to termination rights, audits and investigations, which, if exercised, 
could negatively impact our reputation and reduce our ability to compete for new contracts. 

A significant portion of our revenues is derived from contracts with U.S. federal, state and local governments and 
their agencies, as well as international governments and their agencies. Government entities typically finance 
projects through appropriated funds. While these projects are often planned and executed as multi-year projects, 
government entities usually reserve the right to change the scope of or terminate these projects for lack of approved 
funding and/or at their convenience. Changes in government or political developments, including budget deficits, 
shortfalls or uncertainties, government spending reductions (e.g., Congressional sequestration of funds under the 
Budget Control Act of 2011) or other debt or funding constraints, such as those recently experienced in the United 
States and Europe, could result in lower governmental sales and in our projects being reduced in price or scope or 
terminated altogether, which also could limit our recovery of incurred costs, reimbursable expenses and profits on 
work completed prior to the termination. Additionally, government contracts are generally subject to audits and 
investigations by government agencies. If the government finds that we inappropriately charged any costs to a 
contract, the costs are not reimbursable or, if already reimbursed, the cost must be refunded to the government. If 
the government discovers improper or illegal activities or contractual non-compliance in the course of audits or 
investigations, we may be subject to various civil and criminal penalties and administrative sanctions, which may 
include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions or debarment 
from doing business with the government. Any resulting penalties or sanctions could have a material adverse effect 
on our business, financial condition, results of operations and cash flows. Further, the negative publicity that arises 
from findings in such audits, investigations or the penalties or sanctions therefore could have an adverse effect on 
our reputation in the industry and reduce our ability to compete for new contracts and may also have a material 
adverse effect on our business, financial condition, results of operations and cash flow.

We derive significant revenue and profit from commercial and federal government contracts awarded 
through competitive bidding processes, including renewals, which can impose substantial costs on us, and 
we will not achieve revenue and profit objectives if we fail to accurately and effectively bid on such 
projects.

Many of these contracts are extremely complex and require the investment of significant resources in order to  
prepare accurate bids and proposals.  Competitive bidding imposes substantial costs and  presents a number of 
risks, including: (i) the substantial cost and managerial time and effort that we spend to prepare bids and proposals 
for contracts that may or may not be awarded to us; (ii) the need to estimate accurately the resources and costs that 
will be required to implement and service any contracts we are awarded, sometimes in advance of the final 
determination of their full scope and design; (iii) the expense and delay that may arise if our competitors protest or 
challenge awards made to us pursuant to competitive bidding, and the risk that such protests or challenges could 
result in the requirement to resubmit bids, and in the termination, reduction, or modification of the awarded 
contracts; and (iv) the opportunity cost of not bidding on and winning other contracts we might otherwise pursue. 
Adverse events or developments in any of these bidding risks and uncertainties could materially and negatively 
impact our business, financial condition, results of operations and cash flow.

For our services contracts, we rely to a significant extent on third-party providers, such as subcontractors, 
a relatively small number of primary software vendors, utility providers and network providers; if they 
cannot deliver or perform as expected or if our relationships with them are terminated or otherwise change, 
our business, results of operations and financial condition could be materially adversely affected. 

Our ability to service our customers and clients and deliver and implement solutions depends to a large extent on 
third-party providers such as subcontractors, a relatively small number of primary software vendors and utility 
providers and network providers meeting their obligations to us and our expectations in a timely, quality manner.  
Our business, revenues, profitability and cash flows could be materially and adversely affected and we might incur 
significant additional liabilities if these third-party providers do not meet these obligations or our or our clients' 
expectations or if they terminate or refuse to renew their relationships with us or were to offer their products to us 
with less advantageous prices and other terms than we previously had. In addition, a number of our facilities are 
located in jurisdictions outside of the United States where the provision of utility services, including electricity and 
water, may not be consistently reliable and, while there are backup systems in many of our operating facilities, an 
extended outage of utility or network services could have a material adverse effect on our operations, revenues, 
cash flow and profitability. 

Xerox 2014 Annual Report

14

We face significant competition and our failure to compete successfully could adversely affect our results 
of operations and financial condition. 

We operate in an environment of significant competition, driven by rapid technological developments, changes in 
industry standards, and demands of customers to become more efficient. Our competitors range from large 
international companies to relatively small firms. Some of the large international companies have significant 
financial resources and compete with us globally to provide document processing products and services and/or 
business process services in each of the markets we serve. We compete primarily on the basis of technology, 
performance, price, quality, reliability, brand, distribution and customer service and support. Our success in future 
performance is largely dependent upon our ability to compete successfully in the markets we currently serve, to 
promptly and effectively react to changing technologies and customer expectations and to expand into additional 
market segments. To remain competitive, we must develop services, applications and new products; periodically 
enhance our existing offerings; and attract and retain key personnel and management. If we are unable to compete 
successfully, we could lose market share and important customers to our competitors and that could materially 
adversely affect our results of operations and financial condition. 

Our profitability is dependent upon our ability to obtain adequate pricing for our products and services and 
to improve our cost structure. 

Our success depends on our ability to obtain adequate pricing for our services and products and that will provide a 
reasonable return to our shareholders. Depending on competitive market factors, future prices we obtain for our 
services and products may decline from previous levels. In addition, pricing actions to offset the effect of currency 
devaluations may not prove sufficient to offset further devaluations or may not hold in the face of customer 
resistance and/or competition. If we are unable to obtain adequate pricing for our services and products, it could 
materially adversely affect our results of operations and financial condition. In addition, our services contracts are 
increasingly requiring tighter timelines for implementation as well as more stringent service level metrics. This 
makes the bidding process for new contracts much more difficult and requires us to adequately consider these 
requirements in the pricing of our services.    

We continually review our operations with a view towards reducing our cost structure, including reducing our 
employee base, exiting certain businesses, improving process and system efficiencies and outsourcing some 
internal functions. We from time to time engage in restructuring actions to reduce our cost structure. If we are 
unable to continue to maintain our cost base at or below the current level and maintain process and systems 
changes resulting from prior restructuring actions, it could materially adversely affect our results of operations and 
financial condition. 

In addition, in order to continually meet the service requirements of our customers, which often includes 24/7 
service, and to optimize our employee cost base, we often locate our delivery service centers in lower-cost 
locations, including several developing countries. Concentrating our delivery service centers in these locations 
presents a number of operational risks, many of which are beyond our control, including the risks of political 
instability, natural disasters, safety and security risks, labor disruptions and rising labor rates. These risks could 
impair our ability to effectively provide services to our customers and keep our costs aligned to our associated 
revenues and market requirements. 

Our ability to sustain and improve profit margins is dependent on a number of factors, including our ability to 
continue to improve the cost efficiency of our operations through such programs as Lean Six Sigma, the level of 
pricing pressures on our services and products, the proportion of high-end as opposed to low-end equipment sales 
(product mix), the trend in our post-sale revenue growth and our ability to successfully complete information 
technology initiatives. If any of these factors adversely materialize or if we are unable to achieve and maintain 
productivity improvements through design efficiency, supplier and manufacturing cost improvements and 
information technology initiatives, our ability to offset labor cost inflation, potential materials cost increases and 
competitive price pressures would be impaired, all of which could materially adversely affect our results of 
operations and financial condition. 

15

We are subject to laws of the United States and foreign jurisdictions relating to individually identifiable 
information, and failure to comply with those laws, whether or not inadvertent, could subject us to legal 
actions and negatively impact our operations. 

We receive, process, transmit and store information relating to identifiable individuals, both in our role as a service 
and technology provider and as an employer. As a result, we are subject to numerous United States (both federal 
and state) and foreign jurisdiction laws and regulations designed to protect individually identifiable information, 
including the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the HIPAA regulations 
governing, among other things, the privacy, security and electronic transmission of individually identifiable health 
information, and the European Union Directive on Data Protection (Directive 95/46/EC). Other United States (both 
federal and state) and foreign jurisdiction laws apply to our processing of individually identifiable information and 
these laws have been subject to frequent changes, and new legislation in this area may be enacted at any time. 
Changes to existing laws, introduction of new laws in this area, or failure to comply with existing laws that are 
applicable to us  may subject us to, among other things, additional costs or changes to our business practices, 
liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to 
obtain and process information and allegations by our customers and clients that we have not performed our 
contractual obligations, any of which may have a material adverse effect on our profitability and cash flow.

We are subject to breaches of our security systems and service interruptions which could expose us to 
liability, impair our reputation or temporarily render us unable to fulfill our service obligations under our 
contracts.

We have implemented security systems with the intent of maintaining the physical security of our facilities and 
protecting our customers', clients' and suppliers' confidential information and information related to identifiable 
individuals against unauthorized access through our information systems or by other electronic transmission or 
through the misdirection, theft or loss of physical media. These include, for example, the appropriate encryption of 
information. Despite such efforts, we are subject to breach of security systems which may result in unauthorized 
access to our facilities and/or the information we are trying to protect. Because the techniques used to obtain 
unauthorized access are constantly changing and becoming increasingly more sophisticated and often are not 
recognized until launched against a target, we may be unable to anticipate these techniques or implement sufficient 
preventative measures. If unauthorized parties gain physical access to one of our facilities or electronic access to 
our information systems or such information is misdirected, lost or stolen during transmission or transport, any theft 
or misuse of such information could result in, among other things, unfavorable publicity, governmental inquiry and 
oversight, difficulty in marketing our services, allegations by our customers and clients that we have not performed 
our contractual obligations, litigation by affected parties and possible financial obligations for damages related to the 
theft or misuse of such information, any of which could have a material adverse effect on our profitability and cash 
flow. We also maintain various systems and data centers for our customers. Often these systems and data centers 
must be maintained worldwide and on a 24/7 basis.  Although we endeavor to ensure that there is adequate back-
up and maintenance of these systems and centers, we could experience service interruptions that could result in 
curtailed operations and loss of customers, which would reduce our revenue and profits in addition to impairing our 
reputation.  

Our ability to recover capital investments in connection with our contracts is subject to risk. 

In order to attract and retain large outsourcing contracts, we sometimes make significant capital investments to 
enable us to perform our services under the contracts, such as purchases of information technology equipment and 
costs incurred to develop and implement software. The net book value of such assets recorded, including a portion 
of our intangible assets, could be impaired, and our earnings and cash flow could be materially adversely affected in 
the event of the early termination of all or a part of such a contract or a reduction in volumes and services 
thereunder for reasons such as a customer's or client's merger or acquisition, divestiture of assets or businesses, 
business failure or deterioration, or a customer's or client's exercise of contract termination rights.

Our services business could be adversely affected if we are unsuccessful in managing the start-up of new 
contracts. 

In order for our services business to continue its growth, we must successfully manage the start-up of services 
related to new contracts. If a client is not satisfied with the quality of work performed by us or a subcontractor, or 
with the type of services or solutions delivered, then we could incur additional costs to address the situation, the 
profitability of that work might be impaired and the client's dissatisfaction with our services could damage our ability 
to obtain additional work from that client or obtain new work from other potential clients. In particular, clients who are 
not satisfied might seek to terminate existing contracts prior to their scheduled expiration date, which may result in 

Xerox 2014 Annual Report

16

our inability to fully recover our up-front investments. In addition, clients could direct future business to our 
competitors. We could also trigger contractual credits to clients or a contractual default. Failure to properly transition 
new clients to our systems, properly budget transition costs or accurately estimate new contract operational costs 
could result in delays in our contract performance, trigger service level penalties, impair fixed or intangible assets or 
result in contract profit margins that do not meet our expectations or our historical profit margins. 

In addition, we incur significant expenditures for the development and construction of system software platforms 
needed to support our clients' needs.  Our failure to fully understand client requirements or implement the 
appropriate operating systems or databases or solutions which enable the use of other supporting software may 
delay the project and result in cost overruns or potential impairment of the related software platforms.

If we are unable to collect our receivables for unbilled services, our results of operations, financial 
condition and cash flows could be adversely affected.

The profitability of certain of our large services contracts depends on our ability to successfully obtain payment from 
our clients of the amounts they owe us for work performed. Actual losses on client balances could differ from current 
estimates and, as a result, may require adjustment of our receivables for unbilled services. Our receivables include 
long-term contracts and over the course of a long-term contract, our customers' financial condition may change 
such that their ability to pay their obligations, and our ability to collect our fees for services rendered, is adversely 
affected. Additionally, we may perform work for the federal, state and local governments, with respect to which we 
must file requests for equitable adjustment or claims with the proper agency to seek recovery in whole or in part, for 
out-of-scope work directed or caused by the government customer in support of its project, and the amounts of such 
recoveries may not meet our expectations or cover our costs. Macroeconomic conditions could result in financial 
difficulties, including limited access to the credit markets, insolvency or bankruptcy, for our clients and, as a result, 
could cause clients to delay payments to us, request modifications to their payment arrangements that could 
increase our receivables balance, or default on their payment obligations to us. Timely collection of client balances 
also depends on our ability to complete our contractual commitments (for example, achieve specified milestones in 
percentage-of-completion contracts) and bill and collect our contracted revenues. If we are unable to meet our 
contractual requirements, we might experience delays in collection of and/or be unable to collect our client 
balances, and if this occurs, our results of operations and cash flows could be adversely affected. In addition, if we 
experience an increase in the time to bill and collect for our services, our cash flows could be adversely affected.

We have outsourced a significant portion of our overall worldwide manufacturing operations and 
increasingly are relying on third-party manufacturers, subcontractors and external suppliers. 

We have outsourced a significant portion of our overall worldwide manufacturing operations to third parties and 
various service providers. To the extent that we rely on third-party manufacturing relationships, we face the risk that 
those manufacturers may not be able to develop manufacturing methods appropriate for our products, they may not 
be able to quickly respond to changes in customer demand for our products, they may not be able to obtain 
supplies and materials necessary for the manufacturing process, they may experience labor shortages and/or 
disruptions, manufacturing costs could be higher than planned and the reliability of our products could decline. If 
any of these risks were to be realized, and assuming similar third-party manufacturing relationships could not be 
established, we could experience interruptions in supply or increases in costs that might result in our being unable 
to meet customer demand for our products, damage our relationships with our customers and reduce our market 
share, all of which could materially adversely affect our results of operations and financial condition. 

In addition, in our services business we may partner with other parties, including software and hardware vendors, to 
provide the complex solutions required by our customers. Therefore, our ability to deliver the solutions and provide 
the services required by our customers is dependent on our and our partners' ability to meet our customers' 
requirements and schedules. If we or our partners fail to deliver services or products as required and on time, our 
ability to complete the contract may be adversely affected, which may have an adverse impact on our revenue and 
profits. 

We need to successfully manage changes in the printing environment and market because our operating 
results may be negatively impacted by lower equipment placements and usage trends.

The printing market and environment is changing significantly as a result of new technologies, shifts in customer 
preferences in office printing and the expansion of new printing markets. Examples include mobile printing, color 
printing, continuous feed inkjet printing and the expansion of the market for entry products (A4 printers) and high-
end products (B1/B2 printers). A significant part of our strategy and ultimate success in this changing market is our 
ability to develop and market technology that produces products and services that meet these changes. Our future 

17

success in executing on this strategy depends on our ability to make the investments and commit the necessary 
resources in this highly competitive market. If we are unable to develop and market advanced and competitive 
technologies, it may negatively impact expansion of our worldwide equipment placements, as well as sales of 
services and supplies occurring after the initial equipment placement (post sale revenue) in the key growth markets 
of digital printing, color and multifunction systems. We expect that revenue growth can be further enhanced through 
our document management and consulting services in the areas of personalized and product life cycle 
communications, enterprise managed print services and document content and imaging. The ability to achieve 
growth in our equipment placements is subject to the successful implementation of our initiatives to provide 
advanced systems, industry-oriented global solutions and services for major customers, improve direct and indirect 
sales productivity and expand and successfully manage our indirect distribution channels in the face of global 
competition and pricing pressures. Our ability to increase post sale revenue is largely dependent on our ability to 
increase the volume of pages printed, the mix and price of color pages, equipment utilization and color adoption, as 
well as our ability to retain a high level of supplies sales in unbundled contracts. Equipment placements typically 
occur through leases with original terms of three to five years. There will be a lag between the increase in 
equipment placements and an increase in post sale revenues. In addition, with respect to our indirect distribution 
channels, many of our partners may sell competing products, further increasing the need to successfully manage 
our relationships with our partners to ensure they meet our specific sale and distribution requirements for equipment 
placements and post sale revenues. If we are unable to maintain a consistent trend of revenue growth, it could 
materially adversely affect our results of operations and financial condition. 

Our ability to fund our customer financing activities at economically competitive levels depends on our 
ability to borrow and the cost of borrowing in the credit markets. 

The long-term viability and profitability of our customer financing activities is dependent, in part, on our ability to 
borrow and the cost of borrowing in the credit markets. This ability and cost, in turn, is dependent on our credit 
ratings and is subject to credit market volatility. We primarily fund our customer financing activity through a 
combination of cash generated from operations, cash on hand, capital market offerings, sales and securitizations of 
finance receivables and commercial paper borrowings. Our ability to continue to offer customer financing and be 
successful in the placement of equipment with customers is largely dependent on our ability to obtain funding at a 
reasonable cost. If we are unable to continue to offer customer financing, it could materially adversely affect our 
results of operations and financial condition. 

Our ability to deliver services could be impaired if we are unable to hire or retain qualified personnel in 
certain areas of our business, which could result in decreased revenues or additional costs.

At times, we have experienced difficulties in hiring personnel with the desired levels of training or experience. In 
regard to the labor-intensive business of the Company, quality service and adequate internal controls depend on our 
ability to retain employees and manage personnel turnover. An increase in the employee turnover rate or our 
inability to recruit and retain qualified personnel could increase recruiting and training costs and potentially decrease 
revenues or decrease our operating effectiveness and productivity. We may not be able to continue to hire, train and 
retain a sufficient number of qualified personnel to adequately staff new client projects.  Additionally, we need to  
identify managerial personnel in emerging markets and lower-cost locations where the depth of skilled employees is 
often limited and competition for these resources is intense.  If we are unable to develop and retain these 
managerial employees with leadership capabilities our ability to successfully manage our business units could be 
impaired.

Our significant debt could adversely affect our financial health and pose challenges for conducting our 
business. 

We have and will continue to have a significant amount of debt and other obligations, the majority of which support 
our customer financing activities. Our substantial debt and other obligations could have important consequences. 
For example, it could (i) increase our vulnerability to general adverse economic and industry conditions; (ii) limit our 
ability to obtain additional financing for future working capital, capital expenditures, acquisitions and other general 
corporate requirements; (iii) increase our vulnerability to interest rate fluctuations because a portion of our debt has 
variable interest rates; (iv) require us to dedicate a substantial portion of our cash flows from operations to service 
debt and other obligations thereby reducing the availability of our cash flows from operations for other purposes; 
(v) limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we 
operate; (vi) place us at a competitive disadvantage compared to our competitors that have less debt; and 
(vii) become due and payable upon a change in control. If new debt is added to our current debt levels, these 
related risks could increase. 

Xerox 2014 Annual Report

18

We need to maintain adequate liquidity in order to meet our operating cash flow requirements, repay 
maturing debt and meet other financial obligations, such as payment of dividends to the extent declared by 
our Board of Directors. If we fail to comply with the covenants contained in our various borrowing 
agreements, it may adversely affect our liquidity, results of operations and financial condition. 

Our liquidity is a function of our ability to successfully generate cash flows from a combination of efficient operations 
and continuing operating improvements, access to capital markets and funding from third parties. We believe our 
liquidity (including operating and other cash flows that we expect to generate) will be sufficient to meet operating 
requirements as they occur; however, our ability to maintain sufficient liquidity going forward depends on our ability 
to generate cash from operations and access to the capital markets and funding from third parties, all of which are 
subject to the general liquidity of and on-going changes in the credit markets as well as general economic, financial, 
competitive, legislative, regulatory and other market factors that are beyond our control. 

The Credit Facility contains financial maintenance covenants, including maximum leverage (debt for borrowed 
money divided by consolidated EBITDA, as defined) and a minimum interest coverage ratio (consolidated EBITDA 
divided by consolidated interest expense, as defined). At December 31, 2014, we were in full compliance with the 
covenants and other provisions of the Credit Facility. Failure to comply with material provisions or covenants in the 
Credit Facility could have a material adverse effect on our liquidity, results of operations and financial condition.  

Our business, results of operations and financial condition may be negatively impacted by legal and 
regulatory matters. 

We have various contingent liabilities that are not reflected on our balance sheet, including those arising as a result 
of being involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; 
governmental entity contracting, servicing and procurement laws; intellectual property law; environmental law; 
employment law; the Employee Retirement Income Security Act (ERISA); and other laws and regulations, as 
discussed in the “Contingencies” note in the Consolidated Financial Statements. Should developments in any of 
these matters cause a change in our determination as to an unfavorable outcome and result in the need to 
recognize a material accrual or materially increase an existing accrual, or should any of these matters result in a 
final adverse judgment or be settled for significant amounts above any existing accruals, it could have a material 
adverse effect on our results of operations, cash flows and financial position in the period or periods in which such 
change in determination, judgment or settlement occurs. 

Our operations and our products are subject to environmental regulations in each of the jurisdictions in which we 
conduct our business and sell our products. Some of our manufacturing operations use, and some of our products 
contain, substances that are regulated in various jurisdictions. For example, various countries and jurisdictions have 
adopted or are expected to adopt restrictions on the types and amounts of chemicals that may be present in 
electronic equipment or other items that we use or sell. If we do not comply with applicable rules and regulations in 
connection with the use of such substances and the sale of products containing such substances, then we could be 
subject to liability and could be prohibited from selling our products in their existing forms, which could have a 
material adverse effect on our results of operations and financial condition. Further, various countries and 
jurisdictions have adopted or are expected to adopt, programs that make producers of electrical goods, including 
computers and printers, responsible for certain labeling, collection, recycling, treatment and disposal of these 
recovered products. If we are unable to collect, recycle, treat and dispose of our products in a cost-effective manner 
and in accordance with applicable requirements, it could materially adversely affect our results of operations and 
financial condition. Other potentially relevant initiatives throughout the world include proposals for more extensive 
chemical registration requirements and/or possible bans on the use of certain chemicals, various efforts to limit 
energy use in products and other environmentally related programs impacting products and operations, such as 
those associated with climate change accords, agreements and regulations. For example, the European Union's 
Energy-Related Products Directive (ERP) has led to the adoption of “implementing measures” or "voluntary 
agreements" that require certain classes of products to achieve certain design and/or performance standards, in 
connection with energy use and potentially other environmental parameters and impacts. A number of our products 
are already required to comply with ERP requirements and further regulations are being developed by the EU 
authorities. Another example is the European Union “REACH” Regulation (Registration, Evaluation, Authorization 
and Restriction of Chemicals), a broad initiative that requires parties throughout the supply chain to register, assess 
and disclose information regarding many chemicals in their products. Depending on the types, applications, forms 
and uses of chemical substances in various products, REACH could lead to restrictions and/or bans on certain 
chemical usage. Xerox continues its efforts toward monitoring and evaluating the applicability of these and 
numerous other regulatory initiatives in an effort to develop compliance strategies. As these and similar initiatives 
and programs become regulatory requirements throughout the world and/or are adopted as public or private 

19

procurement requirements, we must comply or potentially face market access limitations that could have a material 
adverse effect on our operations and financial condition. Similarly, environmentally driven procurement 
requirements voluntarily adopted by customers in the marketplace (e.g., U.S. EPA EnergyStar) are constantly 
evolving and becoming more stringent, presenting further market access challenges if our products fail to comply.

ITEM 1B. UNRESOLVED STAFF COMMENTS 

None

ITEM 2. PROPERTIES 

We own several manufacturing, engineering and research facilities and lease other facilities. Our principal 
manufacturing and engineering facilities, located in New York, California, Oklahoma, Oregon, Canada, U.K., Ireland 
and the Netherlands, are used primarily by the Document Technology segment. Our principal research facilities are 
located in California, New York, Canada, France and India. The research activities in our principal research centers 
benefit all of our operating segments. We lease and own several facilities worldwide to support our Services 
segment with larger concentrations of space in Texas, Kentucky, New Jersey, California, Mexico, Guatemala, 
Philippines, Jamaica, Romania and India. Our Corporate Headquarters is a leased facility located in Norwalk, 
Connecticut.

As a result of implementing our restructuring programs (refer to Note 11 - Restructuring and Asset Impairment 
Charges in the Consolidated Financial Statements, which is incorporated here by reference) as well as various 
productivity initiatives, several leased and owned properties became surplus. We are obligated to maintain our 
leased surplus properties through required contractual periods. We have disposed or subleased certain of these 
properties and are actively pursuing the successful disposition of remaining surplus properties. 

In December 2014 we announced an agreement to sell our Information Technology Outsourcing (ITO) business to 
Atos SE (Atos). The transaction is subject to customary closing conditions and regulatory approval and is expected 
to close in the first half of 2015. As part of the announcement, 9,800 Xerox employees, located in 330 facilities in 45 
countries, will be transferring to Atos. However, a substantial number of these facilities are customer sites not 
leased or owned by Xerox. The following is the expected impact of the ITO divestiture on Xerox's worldwide 
property portfolio. ITO occupies about 1.3 million square feet out of 2.8 million square feet in 61 primarily owned or 
leased buildings. There are an additional 84 owned or leased buildings in which ITO has 21 or less employees in 
each building. These properties are part of the due diligence/closing process and appropriate actions will be agreed 
and taken to transfer some properties to the buyer; the buyer will exit some properties and relocate to their property 
portfolio; and some properties will be shared.  

We also own or lease numerous facilities globally, which house general offices, sales offices, service locations, data 
centers, call centers and distributions centers. It is our opinion that our properties have been well maintained, are in 
sound operating condition and contain all the necessary equipment and facilities to perform their functions. We 
believe that our current facilities are suitable and adequate for our current businesses.

ITEM 3. LEGAL PROCEEDINGS

The information set forth under Note 18 "Contingencies and Litigation" in the Consolidated Financial Statements is 
incorporated here by reference.

ITEM 4. MINE SAFETY DISCLOSURES 

Not applicable.

Xerox 2014 Annual Report

20

Part II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS 

AND ISSUER PURCHASES OF EQUITY SECURITIES

Stock Exchange Information 
Xerox common stock (XRX) is listed on the New York Stock Exchange and the Chicago Stock Exchange.

Xerox Common Stock Prices and Dividends

New York Stock Exchange composite prices * 

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

2014

High

Low

Dividends declared per share

2013

High

Low

Dividends declared per share

 _____________
*  Price as of close of business. 

$

$

12.44

$

12.92

$

14.05

$

10.30

0.0625

11.06

0.0625

12.20

0.0625

$

8.76

7.11

$

9.49

8.33

0.0575

0.0575

10.51

$

9.23

0.0575

14.32

12.21

0.0625

12.23

9.61

0.0575

In January 2015, the Board of Directors approved an increase in the Company's quarterly cash dividend from 
6.25 cents per share to 7.00 cents per share, beginning with the dividend payable on April 30, 2015.

Common Shareholders of Record
See Item 6 - Selected Financial Data, Five Years in Review, Common Shareholders of Record at Year-End, 
which is incorporated here by reference.

PERFORMANCE GRAPH

21

 
 
 
 
 
 
 
 
Total Return To Shareholders

(Includes reinvestment of dividends)

2009

2010

2011

2012

2013

2014

Xerox Corporation

S&P 500 Index

S&P 500 Information Technology Index

$

100.00

$

138.56

$

97.62

$

85.56

$

156.26

$

100.00

100.00

115.06

110.19

117.49

112.85

136.30

129.57

180.44

166.41

181.51

205.14

199.89

Year Ended December 31,

Source:  Standard & Poor's Investment Services
Notes:    Graph assumes $100 invested on December 31, 2009 in Xerox, the S&P 500 Index and the S&P 500 Information 

Technology Index, respectively, and assumes dividends are reinvested.

SALES OF UNREGISTERED SECURITIES DURING THE QUARTER ENDED  DECEMBER 31, 2014 

During the quarter ended December 31, 2014, Registrant issued the following securities in transactions that were 
not registered under the Securities Act of 1933, as amended (the “Act”).

Dividend Equivalent
(a)  Securities issued on October 31, 2014: Registrant issued 3,105 deferred stock units (DSUs), representing the 

right to receive shares of Common stock, par value $1 per share, at a future date.

(b)  No underwriters participated. The shares were issued to each of the non-employee Directors of Registrant: 
Richard J. Harrington, William Curt Hunter, Robert J. Keegan, Charles Prince, Ann N. Reese, Sara Martinez 
Tucker and Mary Agnes Wilderotter.
The DSUs were issued at a deemed purchase price of $13.24 per DSU (aggregate price $41,110), based 
upon the market value of our Common Stock on the date of record, in payment of the dividend equivalents 
due to DSU holders pursuant to Registrant’s 2004 Equity Compensation Plan for Non-Employee Directors.
(d)  Exemption from registration under the Act was claimed based upon Section 4(2) as a sale by an issuer not 

(c) 

involving a public offering.

Issuer Purchases of Equity Securities During the Quarter Ended December 31, 2014  

Repurchases of Xerox Common Stock, par value $1 per share include the following:

Board Authorized Share Repurchase Program:

Total Number of
Shares
Purchased

Average Price 
Paid per Share(1)

10,801,000

$

7,200,000

7,609,500

25,610,500

12.84

13.35

13.85

Total Number of 
Shares Purchased 
as Part of Publicly 
Announced Plans or 
Programs(2)

Maximum Approximate 
Dollar Value of Shares 
That May Yet Be 
Purchased Under the 
Plans or Programs(2)

10,801,000

$

246,259,695

7,200,000

7,609,500

25,610,500

1,650,139,158

1,544,724,362

October 1 through 31

November 1 through 30

December 1 through 31

Total

_____________

(1)  Exclusive of fees and costs.
(2) 

In November 2014, the Board of Directors authorized an additional $1.5 billion in share repurchase. Of the cumulative $8.0 billion of share 
repurchase authority granted by our Board of Directors, exclusive of fees and expenses, approximately $6.5 billion has been used through 
December 31, 2014. Repurchases may be made on the open market, or through derivative or negotiated transactions. Open-market 
repurchases will be made in compliance with the Securities and Exchange Commission’s Rule 10b-18, and are subject to market 
conditions, as well as applicable legal and other considerations.

Xerox 2014 Annual Report

22

 
Repurchases Related to Stock Compensation Programs(1):

Total Number of
Shares
Purchased

Average Price 
Paid per Share(2)

16,696

$

13.08

—

—

16,696

—

—

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs

Maximum Number
(or Approximate Dollar Value)
of Shares That May Yet Be
Purchased under the Plans or
Programs

n/a

n/a

n/a

n/a

n/a

n/a

October 1 through 31

November 1 through 30

December 1 through 31

Total

 ______________

(1)  These repurchases are made under a provision in our stock-based compensation programs and represent the indirect repurchase of shares 

through a net-settlement feature upon the vesting of shares in order to satisfy minimum statutory tax-withholding requirements.

(2)  Exclusive of fees and costs.

23

ITEM 6. SELECTED FINANCIAL DATA 

FIVE YEARS IN REVIEW 
(in millions, except per-share data)

Per-Share Data

Income from continuing operations

Basic

Diluted

Earnings

Basic

Diluted

Common stock dividends declared

Operations

Revenues

Sales

Outsourcing, maintenance and rentals

Financing

Income from continuing operations

Income from continuing operations - Xerox

Net income

Net income - Xerox

Financial Position

Working capital

Total Assets

Consolidated Capitalization

Short-term debt and current portion of long-term debt

Long-term debt
Total Debt(3)

Liability to subsidiary trust issuing preferred securities

Series A convertible preferred stock

Xerox shareholders' equity

Noncontrolling interests

2014

2013 (1)

2012(1)

2011(1)

2010(1),(2)

$

$

0.92

0.90

0.82

0.81

0.25

$

0.91

0.89

0.93

0.91

0.23

$

0.87

0.85

0.90

0.88

0.17

$

0.86

0.84

0.92

0.90

0.17

0.39

0.39

0.44

0.43

0.17

$

19,540

$

20,006

$

20,421

$

20,638

$

19,650

5,288

13,865

387

1,107

1,084

992

969

5,582

13,941

483

1,159

1,139

1,179

1,159

5,827

13,997

597

1,180

1,152

1,223

1,195

6,265

13,741

632

1,252

1,219

1,328

1,295

6,297

12,693

660

575

544

637

606

$

$

2,798

$

2,825

$

2,363

$

1,531

$

2,222

27,658

29,036

30,015

30,116

30,600

1,427

$

1,117

$

1,042

$

1,545

$

6,314

7,741

—

349

10,634

75

6,904

8,021

—

349

12,300

119

7,447

8,489

—

349

11,521

143

7,088

8,633

—

349

11,876

149

1,370

7,237

8,607

650

349

12,006

153

Total Consolidated Capitalization

$

18,799

$

20,789

$

20,502

$

21,007

$

21,765

Selected Data and Ratios

Common shareholders of record at year-end

Book value per common share

Year-end common stock market price

Employees at year-end

Gross margin

Sales gross margin

Outsourcing, maintenance and rentals gross margin

Finance gross margin

35,307

9.52

13.86

37,552

10.35

12.17

$

$

$

$

39,397

41,982

$

$

9.41

6.82

$

$

8.88

7.96

$

$

43,383

8.59

11.52

147,500

143,100

147,600

139,700

136,500

32.0%

38.2%

28.7%

63.8%

32.4%

36.4%

29.6%

66.3%

33.2%

36.5%

30.4%

66.8%

34.5%

36.8%

32.2%

63.4%

36.4%

37.7%

34.4%

62.7%

___________
(1) 

Income Statement items have been revised for all periods to reflect our Discontinued Operations. Refer to Note 4 - Divestitures in our 
Consolidated Financial Statements, which is incorporated here by reference, for additional information.

(2)  2010 results include the acquisition of ACS as of February 5, 2010.
(3) 

Includes capital lease obligations. 

Xerox 2014 Annual Report

24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 

OPERATIONS 

The following Management’s Discussion and Analysis (MD&A) is intended to help the reader understand the results 
of operations and financial condition of Xerox Corporation. MD&A is provided as a supplement to, and should be 
read in conjunction with, our Consolidated Financial Statements and the accompanying notes. Throughout the 
MD&A, we refer to various notes to our Consolidated Financial Statements which appear in Item 8 of this 2014 
Form 10-K, and the information contained in such notes is incorporated by reference into the MD&A in the places 
where such references are made.

Throughout this document, references to “we,” “our,” the “Company,” and “Xerox” refer to Xerox Corporation and its 
subsidiaries. References to “Xerox Corporation” refer to the stand-alone parent company and do not include its 
subsidiaries.

Executive Overview

With revenues of $19.5 billion, we are the world's leading global enterprise for business process and document 
management solutions. We provide services, technology and expertise to enable our customers - from small 
businesses to large global enterprises - to focus on their core business and operate more effectively. 

Headquartered in Norwalk, Connecticut, the 147,500 people of Xerox serve customers in more than 180 countries 
providing business services, printing equipment and software for commercial and government organizations. In 
2014, 33% of our revenue was generated outside the U.S. 

We are a leader across large, diverse and growing markets estimated at over $650 billion. The global business 
process outsourcing market is very broad, encompassing multi-industry business processes as well as industry-
specific business processes, and our addressable market is estimated at almost $300 billion. The document 
management market is estimated at roughly $100 billion and is comprised of the document systems, software, 
solutions and services that our customers have relied upon for years to help run their businesses and reduce their 
costs. The remaining market is the global information technology outsourcing market segment, which is 
estimated to be roughly $250 billion in aggregate - see the following paragraph.

On December 18, 2014, we announced an agreement to sell our Information Technology Outsourcing (ITO) 
business to Atos SE (Atos). The transaction is subject to customary closing conditions and regulatory approval and 
is expected to close in the first half of 2015. As a result of this pending transaction and having met applicable 
accounting requirements, in 2014 we reported the ITO business as a Discontinued Operation and reclassified its 
results from the Services segment to Discontinued Operations. Subsequent to the closing of this transaction, Xerox 
will no longer directly market stand-alone IT services. This transaction is part of our on-going effort to evolve our 
portfolio in line with our business and financial strategy. It gives us the opportunity to make further investments and 
acquisitions in our remaining Services business - strengthening our competitive positioning and supporting our 
global expansion goals. Refer to Note 4 - Divestitures in our Consolidated Financial Statements for additional 
information regarding Discontinued Operations.

We organize our business around two main reportable segments: Services and Document Technology.

•  Our Services segment is comprised of business process outsourcing (BPO) and document outsourcing 

(DO) services. 

In 2014 we focused on improving our cost infrastructure and evolving our Services portfolio to enable increased 
revenue growth and margin expansion. Revenue from Services grew 1% in 2014, reflecting growth in both 
service offerings, BPO and DO, and represented 54% of our total revenues. Revenue growth was below the 
prior year growth rate of 2% and our longer-term expectations of mid-to-high single digit growth; however, we 
did deliver improvements in revenue growth and profit margin through the year. Services signings in 2014 
declined by 13% but were up 20% year-over-year in fourth quarter 2014. During 2014, we implemented 
initiatives to improve our go-to-market effectiveness, software platform implementation and global service 
delivery capabilities. Across our services portfolio, the diversity of our offerings and the differentiated solutions 
we provide, enable us to deliver greater value to our customers.

25

•  Our Document Technology segment is comprised of our document technology and related supplies, technical 
service and equipment financing (excluding contracts related to document outsourcing). Our product groups 
within this segment include Entry, Mid-Range and High-End products. 

In 2014 we focused on maintaining our market leadership in Document Technology as well as continuing to 
reduce our cost base. This strategy included expanding the software and application capabilities of Xerox® 
ConnectKey®, a major new software and solutions capability we launched in 2013. In 2014 we broadened the 
number of devices that are enabled with this capability and grew our indirect sales channels to expand our 
reach to small and mid-sized businesses (SMB). Document Technology revenues declined 6% in 2014, in line 
with expectations. 

Annuity-Based Business Model 

In 2014, 84% of our total revenue was annuity-based, which includes contracted services, equipment maintenance, 
consumable supplies and financing, among other elements. Our annuity revenue significantly benefits from growth 
in Services. Some of the key indicators of annuity revenue growth include:

•  Services signings, which reflects the estimated future revenues from contracts signed during the period.

•  Services renewal rate, which is defined as the annual recurring revenue (ARR) on contracts that are renewed 
during the period, calculated as a percentage of ARR on all contracts where a renewal decision was made 
during the period.

•  Services pipeline growth, which measures the increase in new business opportunities.

• 

Installations of printers and multifunction printers as well as the number of machines in the field (MIF) and the 
page volume and mix of pages printed on color devices, where available. 

Acquisitions 

Consistent with our strategy to enhance our Services offerings and global presence and to expand our distribution 
capabilities in Document Technology, we completed several acquisitions during 2014. Refer to Acquisitions and 
Divestitures section in Item 1. Business in this Form 10-K as well as Note 3 - Acquisitions in our Consolidated 
Financial Statements for additional information regarding our 2014 acquisitions.

Financial Overview

Total revenue of $19.5 billion in 2014 declined 2% from the prior year. Services segment revenues increased 1%, 
reflecting growth in both of our Services offerings - BPO and DO. Services segment margin of 9.0% decreased 1.1-
percentage points from 2013, reflecting a decline in gross margin of 1.1-percentage points as productivity 
improvements and restructuring benefits were not enough to offset higher expenses in our government healthcare 
business and the run-off of high margin contracts. Document Technology segment revenues declined 6%, reflecting 
weakness in developing markets, timing of new product introductions, lower financing revenues, price declines, and 
the continued migration of customers to Xerox managed print services, which is included in our Services segment. 
These declines were partially offset by the benefits from refreshes across our product portfolio and improving high-
end product revenues. Document Technology segment margin of 13.7% increased 2.9-percentage points from 
2013, reflecting ongoing benefits from productivity and restructuring actions as well as favorable benefits from 
transaction currency, pension costs and bad debt expense. 

2014 Net income from continuing operations attributable to Xerox was $1,084 million and included $196 million of 
after-tax amortization of intangible assets. Net income for 2014 reflects the margin decline in the Services segment 
primarily due to higher costs associated with investments to mature our healthcare medicaid platform and the 
operational performance of our government healthcare business as well as revenue declines in Document 
Technology. These impacts were partially offset by productivity improvements and cost reductions from restructuring 
actions as well as favorable benefits from transaction currency, pension costs and bad debt expense. Net income 
from continuing operations attributable to Xerox for 2013 was $1,139 million and included $189 million of after-tax 
amortization of intangible assets. 

Xerox 2014 Annual Report

26

Cash flow from operations was $2.1 billion in 2014 as compared to $2.4 billion in 2013. The decrease in cash was 
primarily due to the impacts from the prior year finance receivables sales and higher pension contributions. These 
decreases were partially offset by working capital improvements (accounts receivable, inventory and accounts 
payable), lower contract spending and lower income tax payments. Cash used in investing activities of $703 million 
primarily reflects capital expenditures of $452 million and acquisitions of $340 million partially offset by proceeds 
from the sale of businesses and assets of $80 million. Cash used in financing activities was $1.6 billion, which 
primarily reflects $1.1 billion for stock repurchases, $175 million of net payments on debt and $313 million for 
dividends. 

We reported a net loss from discontinued operations in 2014 of $115 million primarily related to the loss on the 
pending disposal of the ITO business as previously noted. Refer to Note 4 - Divestitures in our Consolidated 
Financial Statements for additional information regarding discontinued operations.

2015 Outlook

We expect total revenues to be flat in 2015, excluding the impact of currency. We expect currency to have about a 3 
to 4 percentage point negative impact on total revenues in 2015, reflecting the significant weakening of our major 
foreign currencies against the U.S. dollar. Earnings in 2015 are likewise expected to be negatively impacted by 
translation currency as well as higher pension costs.

In our Services business, we expect revenue growth between 2 and 4%, excluding the impact of currency, with 
revenue growth improving through the year. Revenue growth is expected to be driven by portfolio management, 
global expansion, sales investments to acquire new customers and increase our revenue with current customers 
and additional acquisitions which increase our service capabilities and global footprint. Services margins are 
expected to improve approximately 0.5-percentage points in 2015 as we continue to focus on portfolio mix as well 
as productivity and cost improvements. 

In our Document Technology business, we expect revenue to decline 4 to 5%, excluding the impact of currency, 
reflecting improvements from second half 2014 product launches and moderation of the negative impact from prior 
period finance receivable sales. We also expect to capitalize on growth opportunities in the most advantaged 
segments of the market including color, high-end graphic communications and SMB markets. Margins in Document 
Technology are expected to be in the range of 11 to 13%, down from the 2014 margin of 13.7%, reflecting higher 
pension costs and negative impacts from translation currency partially offset by our continued focus on productivity 
and cost improvements.

Our capital allocation plan for 2015 includes the following:
•  Share repurchase – we plan to spend about $1 billion on share repurchases. 
•  Acquisitions – we expect to spend up to $900 million. In keeping with our portfolio management strategy, we are 

focusing on acquiring companies that will expand our capabilities in attractive services areas as well as extend 
our global reach in Services.  Despite the increased capital allocation for acquisitions, we will maintain the 
disciplined approach we have established for evaluating and completing acquisitions.

•  Debt – we are comfortable with our leverage position and expect to end the year with debt about flat at $7.7 

billion.

•  Dividends - we recently announced a 12% increase in the quarterly dividend to 7 cents per share effective with 
our April 30th dividend. This will result in common dividends of just over $300 million in 2015, which is only 
modestly higher than the prior year as share repurchases effectively self-fund the increase.

27

Currency Impact

To understand the trends in our business, we believe that it is helpful to analyze the impact of changes in the 
translation of foreign currencies into U.S. Dollars on revenue and expenses. We refer to this analysis as “currency 
impact” or “the impact from currency.” This impact is calculated by translating current period activity in local currency 
using the comparable prior year period's currency translation rate. This impact is calculated for all countries where 
the functional currency is the local country currency. Revenues and expenses from our developing market countries 
(Latin America, Brazil, the Middle East, India, Eurasia and Central-Eastern Europe) are analyzed at actual 
exchange rates for all periods presented, since these countries generally have unpredictable currency and 
inflationary environments, and our operations in these countries have historically implemented pricing actions to 
recover the impact of inflation and devaluation. We do not hedge the translation effect of revenues or expenses 
denominated in currencies where the local currency is the functional currency.

Approximately 33% of our consolidated revenues are derived from operations outside of the United States where 
the U.S. Dollar is normally not the functional currency. When compared with the average of the major European 
currencies and Canadian Dollar on a revenue-weighted basis, the U.S. Dollar was flat in 2014 and 1% weaker in 
2013, each compared to the prior year. As a result, the foreign currency translation had no impact on revenue in 
2014 and a 1% positive impact on revenue in 2013. 

During the fourth quarter 2014 and through January 2015, the U.S. Dollar strengthened significantly against our 
major foreign currencies. Foreign currency translation had no impact on our revenue during the first three quarters 
of 2014 but resulted in a 2-percentage point negative impact in the fourth quarter 2014. Our major foreign 
currencies continued to weaken in January 2015 - declines since December 31, 2014 include the Euro by 7%, the 
Canadian Dollar by 9% and the Pound Sterling by 3%. As result of this continued weakening, we expect currency to 
have about a 3 to 4 percentage point negative impact on full-year 2015 revenues, assuming rates at the end of 
January 2015. 

Application of Critical Accounting Policies 

In preparing our Consolidated Financial Statements and accounting for the underlying transactions and balances, 
we apply various accounting policies. Senior management has discussed the development and selection of the 
critical accounting policies, estimates and related disclosures included herein with the Audit Committee of the Board 
of Directors. We consider the policies discussed below as critical to understanding our Consolidated Financial 
Statements, as their application places the most significant demands on management's judgment, since financial 
reporting results rely on estimates of the effects of matters that are inherently uncertain. In instances where different 
estimates could have reasonably been used, we disclosed the impact of these different estimates on our operations. 
In certain instances, like revenue recognition for leases, the accounting rules are prescriptive; therefore, it would not 
have been possible to reasonably use different estimates. Changes in assumptions and estimates are reflected in 
the period in which they occur. The impact of such changes could be material to our results of operations and 
financial condition in any quarterly or annual period. 

Specific risks associated with these critical accounting policies are discussed throughout the MD&A, where such 
policies affect our reported and expected financial results. For a detailed discussion of the application of these and 
other accounting policies, refer to Note 1 - Summary of Significant Accounting Policies in the Consolidated Financial 
Statements. 

Revenue Recognition 

Application of the various accounting principles in GAAP related to the measurement and recognition of revenue 
requires us to make judgments and estimates. Complex arrangements with nonstandard terms and conditions may 
require significant contract interpretation to determine the appropriate accounting. Refer to Note 1 - Summary of 
Significant Accounting Policies - Revenue Recognition, in the Consolidated Financial Statements for additional 
information regarding our revenue recognition policies. Specifically, the revenue related to the following areas 
involves significant judgments and estimates:

•  Bundled Lease Arrangements,
•  Sales to Distributors and Resellers, and
•  Services - Percentage-of-Completion

Xerox 2014 Annual Report

28

Bundled Lease Arrangements - We sell our equipment under bundled lease arrangements, which typically include 
the equipment, service, supplies and a financing component for which the customer pays a single negotiated 
monthly fixed price for all elements over the contractual lease term. Approximately 35% of our equipment sales 
revenue is related to sales made under bundled lease arrangements. Recognizing revenues under these 
arrangements requires us to allocate the total consideration received to the lease and non-lease deliverables 
included in the bundled arrangement, based upon the estimated fair values of each element. 

Sales to Distributors and Resellers - We utilize distributors and resellers to sell many of our technology products, 
supplies and services to end-user customers. Sales to distributors and resellers are generally recognized as 
revenue when products are sold to such distributors and resellers. Distributors and resellers participate in various 
rebate, price-protection, cooperative marketing and other programs, and we record provisions and allowances for 
these programs as a reduction to revenue when the sales occur. Similarly, we also record estimates for sales 
returns and other discounts and allowances when the sales occur. We consider various factors, including a review 
of specific transactions and programs, historical experience and market and economic conditions when calculating 
these provisions and allowances. Approximately 11% of our revenues include sales to distributors and resellers and 
provisions and allowances recorded on these sales are approximately 20% of the associated gross revenues.

Revenue Recognition for Services - Percentage-of-Completion - A portion of our Services revenue is recognized 
using the percentage-of-completion (POC) accounting method. This method requires the use of estimates and 
judgment. Approximately 3% of our Services revenues were recognized using the POC accounting method. 
Although not significant to total Services revenue, the POC methodology is normally applied to certain of our larger 
and longer term outsourcing contracts involving system development and implementation services, primarily in 
government healthcare and certain government transportation contracts. In addition, we had unbilled receivables 
totaling $360 and $345 at December 31, 2014 and 2013, respectively, representing revenues recognized but not yet 
billable under the terms of our POC contracts.  

The POC accounting methodology involves recognizing probable and reasonably estimable revenue using the 
percentage of services completed based on a current cumulative cost incurred to estimated total cost basis and a 
reasonably consistent profit margin over the period. Due to the long-term nature of these arrangements, developing 
the estimates of cost often requires significant judgment. Factors that must be considered in estimating the progress 
of work completed and ultimate cost of the projects include, but are not limited to, the availability of labor and labor 
productivity, the nature and complexity of the work to be performed and the impact of delayed performance. If 
changes occur in delivery, productivity or other factors used in developing the estimates of costs or revenues, we 
revise our cost and revenue estimates, which may result in increases or decreases in revenues and costs. Such 
revisions are reflected in income in the period in which the facts that give rise to that revision become known. We 
perform ongoing profitability analysis of our POC services contracts in order to determine whether the latest 
estimates require updating. Key factors reviewed by the company to estimate the future costs to complete each 
contract are future labor costs, future product costs, expected productivity efficiencies, achievement of contracted 
milestones and performance goals as well as potential penalties for milestone and system implementation delays. 

If at any time our estimates indicate the POC contract will be unprofitable, the entire estimated loss for the 
remainder of the contract is recorded immediately in cost of services and results in the contract being recorded at a 
zero profit margin with recognition of an equal amount of revenues and costs. 

Allowance for Doubtful Accounts and Credit Losses

We continuously monitor collections and payments from our customers and maintain a provision for estimated credit 
losses based upon our historical experience adjusted for current conditions. We recorded bad debt provisions of 
$53 million, $120 million and $119 million in SAG expenses in our Consolidated Statements of Income for the years 
ended December 31, 2014, 2013 and 2012, respectively. 

Bad debt provisions declined in 2014 reflecting improved trends in write-offs throughout the year as well as a 
continued disciplined credit process. Reserves, as a percentage of trade and finance receivables, were 3.1% at 
December 31, 2014, as compared to 3.4% and 3.3% at December 31, 2013 and 2012. We continue to assess our 
receivable portfolio in light of the current economic environment and its impact on our estimation of the adequacy of 
the allowance for doubtful accounts. 

29

As discussed above, we estimated our provision for doubtful accounts based on historical experience and 
customer-specific collection issues. This methodology was consistently applied for all periods presented. During the 
five year period ended December 31, 2014, our reserve for doubtful accounts ranged from 3.1% to 3.4% of gross 
receivables. Holding all assumptions constant, a 0.5-percentage point increase or decrease in the reserve from the 
December 31, 2014 rate of 3.1% would change the 2014 provision by approximately $36 million.

Refer to Note 5 - Accounts Receivables, Net and Note 6 - Finance Receivables, Net in the Consolidated Financial 
Statements for additional information regarding our allowance for doubtful accounts.

Pension Plan Assumptions 

We sponsor defined benefit pension plans in various forms in several countries covering employees who meet 
eligibility requirements. Several statistical and other factors that attempt to anticipate future events are used in 
calculating the expense, liability and asset values related to our defined benefit pension plans. These factors include 
assumptions we make about the expected return on plan assets, discount rate, lump-sum settlement rates, the rate 
of future compensation increases and mortality. Differences between these assumptions and actual experiences are 
reported as net actuarial gains and losses and are subject to amortization to net periodic benefit cost over future 
periods. Over the past several years, we have amended several of our major defined benefit pension plans to 
freeze current benefits and eliminate benefit accruals for future service. The freeze of current benefits is the primary 
driver of the reduction in pension service costs since 2012. In certain plans we are required by law or statute to 
continue to reflect salary increases and inflation in determining the benefit obligation related to prior service. 

Cumulative net actuarial losses for our defined benefit pension plans of $3.3 billion as of December 31, 2014 
increased by $924 million from December 31, 2013, reflecting the increase in our benefit obligations as a result of 
lower discount rates and changes in U.S. mortality assumptions partially offset by actual asset returns exceeding 
expected returns and settlement losses in the U.S. In October 2014, the Society of Actuaries issued new mortality 
tables and a mortality improvement scale specifically intended for use in estimating retirement plan liabilities for 
U.S. plans. The new tables reflect a longer life expectancy for retirees than projected in past tables, which 
accordingly resulted in an increase to our U.S. defined benefit plan obligations. The total actuarial loss at December 
31, 2014 is subject to offsetting gains or losses in the future due to changes in actuarial assumptions and will be 
recognized in future periods through amortization or settlement losses. 

We used a consolidated weighted average expected rate of return on plan assets of 6.7% for 2014, 6.7% for 2013 
and 6.9% for 2012, on a worldwide basis. During 2014, the actual return on plan assets was $1,297 million as 
compared to an expected return of $632 million. When estimating the 2015 expected rate of return, in addition to 
assessing recent performance, we considered the historical returns earned on plan assets, the rates of return 
expected in the future, particularly in light of current economic conditions, and our investment strategy and asset 
mix with respect to the plans' funds. The weighted average expected rate of return on plan assets we will use in 
2015 is 6.0%. The decline in the 2015 rate reflects the increased investment in fixed income securities as we 
reposition our investment portfolios in light of the freeze of plan benefits. 

Another significant assumption affecting our defined benefit pension obligations and the net periodic benefit cost is 
the rate that we use to discount our future anticipated benefit obligations. In the U.S. and the U.K., which comprise 
approximately 75% of our projected benefit obligation, we consider the Moody's Aa Corporate Bond Index and the 
International Index Company's iBoxx Sterling Corporate AA Cash Bond Index, respectively, in the determination of 
the appropriate discount rate assumptions. The consolidated weighted average discount rate we used to measure 
our pension obligations as of December 31, 2014 and to calculate our 2015 expense was 3.4%; the rate used to 
calculate our obligations as of December 31, 2013 and our 2014 expense was 4.4%. The weighted average 
discount rate we used to measure our retiree health obligation as of December 31, 2014 and to calculate our 2015 
expense was 3.8%; the rate used to calculate our obligation at December 31, 2013 and our 2014 expense was 
4.5%.

Holding all other assumptions constant, a 0.25% increase or decrease in the discount rate would change the 2015 
projected net periodic pension cost by approximately $30 million. Likewise, a 0.25% increase or decrease in the 
expected return on plan assets would change the 2015 projected net periodic pension cost by $18 million.

One of the most significant and volatile elements of our net periodic defined benefit pension plan expense is 
settlement losses. Our primary domestic plans allow participants the option of settling their vested benefits through 
the receipt of a lump-sum payment. 

Xerox 2014 Annual Report

30

We have elected to apply settlement accounting to these plans and, therefore, we recognize the losses associated 
with these settlements immediately upon the settlement of the vested benefits. Settlement accounting requires us to 
recognize a pro rata portion of the aggregate unamortized net actuarial losses upon settlement. As noted above, 
cumulative unamortized net actuarial losses were $3.3 billion at December 31, 2014, of which the U.S. primary 
domestic plans represented approximately $1,149 million. The pro rata factor is computed as the percentage 
reduction in the projected benefit obligation due to the settlement of a participant's vested benefit. Settlement 
accounting is only applied when the event of settlement occurs - i.e. the lump-sum payment is made. Since 
settlement is dependent on an employee's decision and election, the level of settlements and the associated losses 
can fluctuate significantly period to period. In 2014, settlement losses associated with our primary domestic pension 
plans amounted to $51 million. Currently, on average, approximately $100 million of plan settlements will result in 
settlement losses of approximately $25 million. During the three years ended December 31, 2014, U.S. plan 
settlements were $250 million, $838 million and $481 million, respectively.

The following is a summary of our benefit plan costs and funding for the three years ended December 31, 2014 as 
well as estimated amounts for 2015: 

(in millions)
Defined benefit pension plans(1)

U.S. settlement losses
Defined contribution plans (2)

Retiree health benefit plans

Total Benefit Plan Expense

 ___________

Estimated

2015

2014

Actual

2013

62

$

164

101

16

$

31

51

102

3

105

162

89

1

2012

$

343

$

187

$

357

$

$

$

218

82

61

11

372

(1)  Excludes U.S. settlement losses.
(2)  Excludes an estimated $7 million for 2015; and $8 million, $7 million and $2 million for the three years ended December 31, 2014, 

respectively, related to our ITO business, which is held for sale and reported as a discontinued operation at December 31, 2014. Refer to 
Note 4 - Divestitures for additional information regarding this pending sale.

Our estimated 2015 defined benefit pension plan cost is expected to be approximately $144 million higher than 
2014, primarily driven by higher projected U.S. settlement losses of $113 million and higher amortization of actuarial 
losses. These increases are primarily the result of lower discount rates and lump-sum settlement rates. Benefit plan 
costs are included in several income statement components based on the related underlying employee costs.

(in millions)

Defined benefit pension plans:

Cash

Stock

Total

Defined contribution plans (1)

Retiree health benefit plans

Total Benefit Plan Funding

 ___________

Estimated

2015

2014

Actual

2013

2012

$

$

340

$

284

$

230

$

—

340

101

71

—

284

102

70

—

230

89

77

512

$

456

$

396

$

364

130

494

61

84

639

(1)  Excludes an estimated $7 million for 2015; and $8 million, $7 million and $2 million for the three years ended December 31, 2014, 

respectively, related to our ITO business, which is held for sale and reported as a discontinued operation at December 31, 2014. Refer to 
Note 4 - Divestitures for additional information regarding this pending sale. 

The increase in contributions to our worldwide defined benefit pension plans in 2015, largely in the U.S., is to 
gradually address the underfunded liability in the U.S. Refer to Note 16 - Employee Benefit Plans in the 
Consolidated Financial Statements for additional information regarding defined benefit pension plan assumptions, 
expense and funding. 

Income Taxes

We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgments are required in 
determining the consolidated provision for income taxes. Our provision is based on nonrecurring events as well as 
recurring factors, including the taxation of foreign income. In addition, our provision will change based on discrete or 
other nonrecurring events such as audit settlements, tax law changes, changes in valuation allowances, etc., that 
may not be predictable. 

31

We record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities 
and amounts reported in our Consolidated Balance Sheets, as well as operating loss and tax credit carryforwards. 
We follow very specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets 
recorded in our Consolidated Balance Sheets and provide valuation allowances as required. We regularly review 
our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the 
expected timing of the reversals of existing temporary differences and tax planning strategies. Adjustments to our 
valuation allowance, through (credits) charges to income tax expense, were $(20) million, $2 million and $(9) million 
for the years ended December 31, 2014, 2013 and 2012, respectively. There were other decreases to our valuation 
allowance, including the effects of currency, of $56 million, $42 million and $14 million for the years ended 
December 31, 2014, 2013 and 2012, respectively. These did not affect income tax expense in total as there was a 
corresponding adjustment to deferred tax assets or other comprehensive income. Gross deferred tax assets of $3.4 
billion and $3.4 billion had valuation allowances of $538 million and $614 million at December 31, 2014 and 2013, 
respectively. 

We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, we may incur 
additional tax expense based upon our assessment of the more-likely-than-not outcomes of such matters. In 
addition, when applicable, we adjust the previously recorded tax expense to reflect examination results. Our 
ongoing assessments of the more-likely-than-not outcomes of the examinations and related tax positions require 
judgment and can materially increase or decrease our effective tax rate, as well as impact our operating results. 
Unrecognized tax benefits were $240 million, $267 million and $201 million at December 31, 2014, 2013 and 2012, 
respectively.

Refer to Note 17 - Income and Other Taxes in the Consolidated Financial Statements for additional information 
regarding deferred income taxes and unrecognized tax benefits. 

Business Combinations and Goodwill 

The accounting for business combinations requires the use of significant estimates and assumptions in the 
determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price 
consideration between assets that are depreciated and amortized from goodwill. Our estimates of the fair values of 
assets and liabilities acquired are based upon assumptions believed to be reasonable, and when appropriate, 
include assistance from independent third-party valuation firms. Refer to Note 3 - Acquisitions in the Consolidated 
Financial Statements for additional information regarding the allocation of the purchase price consideration for our 
acquisitions.

As a result of our acquisition of Affiliated Computer Services, Inc. (ACS) in 2010, as well as other acquisitions 
including GIS, we have a significant amount of goodwill. Goodwill at December 31, 2014 was $8.8 billion. Goodwill 
is not amortized but rather is tested for impairment annually or more frequently if an event or circumstance indicates 
that an impairment may have been incurred. Events or circumstances that might indicate an interim evaluation is 
warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific 
economic factors, supply costs, unanticipated competitive activities and acts by governments and courts. 

Application of the annual goodwill impairment test requires judgment, including the identification of reporting units, 
assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and the assessment 
- qualitatively or quantitatively - of the fair value of each reporting unit against its carrying value. At December 31, 
2014, $6.5 billion and $2.3 billion of goodwill was allocated to reporting units within our Services and Document 
Technology segments, respectively. Our Services segment is comprised of five reporting units while our Document 
Technology segment is comprised of one reporting unit for a total of six reporting units with goodwill balances. 

Our annual impairment test of goodwill was performed in the fourth quarter of 2014. Consistent with 2013, we 
elected to utilize a quantitative assessment of the recoverability of our goodwill balances for each of our reporting 
units.

In our quantitative test, we estimate the fair value of each reporting unit by weighting the results from the income 
approach (discounted cash flow methodology) and market approach. These valuation approaches require 
significant judgment and consider a number of factors that include, but are not limited to, expected future cash 
flows, growth rates and discount rates, and comparable multiples from publicly traded companies in our industry 
and require us to make certain assumptions and estimates regarding the current economic environment, industry 
factors and the future profitability of our businesses.

Xerox 2014 Annual Report

32

When performing our discounted cash flow analysis for each reporting unit, we incorporate the use of projected 
financial information and discount rates that are developed using market participant-based assumptions. The cash-
flow projections are based on three-year financial forecasts developed by management that include revenue and 
expense projections, capital spending trends, and investment in working capital to support anticipated revenue 
growth or other changes in the business. The selected discount rates consider the risk and nature of the respective 
reporting units' cash flows and an appropriate capital structure and rates of return that market participants would 
require to invest their capital in our reporting units. 

In performing our 2014 impairment test, the following were the 3-year compounded assumptions for Document 
Technology and the five reporting units within our Services segment with respect to revenue, operating income and 
margins, which formed the basis for estimating future cash flows used in the discounted cash flow model: 

•  Document Technology - revenue decline in 2015 moderating in 2016-2017, operating income growth: flat-1%, 
and operating margin: 10%-11% - as we continue to manage costs as a result of an expected decline in 
revenues.

•  Services - revenue growth: 5%-6%, operating income growth: 10%-12%, and operating margin: 10%-12% - as 
we benefit from recurring revenue and strong renewals while improving the mix of services and improving the 
performance of our government healthcare business as well as restructuring the businesses to achieve 
operating margin growth.

We believe these assumptions are appropriate and reflect our forecasted long-term business model, giving 
appropriate consideration to our historical results as well as the current economic environment and markets that we 
serve. The average discount rate applied to our projected cash flows was approximately 9.5%, which we considered 
reasonable based on the estimated capital costs of applicable market participants. Although the sum of the fair 
values of our reporting units was in excess of our market capitalization, we believe the difference is reasonable 
when market-based control premiums and other factors are taken into consideration, including the evolution of our 
business to be predominantly services-based.

When performing our market approach for each reporting unit, we rely specifically on the guideline public company 
method. Our guideline public company method incorporates revenues and earnings multiples from publicly traded 
companies with operations and other characteristics similar to each reporting unit. The selected multiples consider 
each reporting unit’s relative growth, profitability, size and risk relative to the selected publicly traded companies.

After completing our annual impairment reviews for each reporting unit in the fourth quarter of 2014 and 2013, we 
concluded that goodwill was not impaired in either of these years. In 2014, no reporting unit had an excess of fair 
value over carrying value of less than 20%. 

Our impairment assessment methodology includes the use of outside valuation experts and the inclusion of factors 
and assumptions related to third-party market participants. In connection with the announced sale of the ITO 
business in the fourth quarter 2014, since that business comprised a portion of several reporting units, we tested 
the retained goodwill of those reporting units for impairment and concluded that the goodwill remaining was not 
impaired since the fair values of those reporting units exceeded their carrying values.

Refer to Note 4 - Divestitures in the Consolidated Financial Statements for additional information regarding the ITO 
disposition as well as Note 10 - Goodwill and Intangible Assets, Net in the Consolidated Financial Statements for 
additional information regarding goodwill by reportable segment.

33

Revenue Results Summary 

Total Revenue
Revenue for the three years ended December 31, 2014 was as follows:

(in millions)

Equipment sales

Annuity revenue

Total Revenue

Reconciliation to
Consolidated Statements of
Income:

Sales

Less: Supplies, paper and other
sales

Equipment Sales

Outsourcing, maintenance and
rentals

Add: Supplies, paper and other
sales

Add: Financing

Annuity Revenue

$

$

$

$

$

Revenues

 Change

Percent of Total Revenue

2014

2013

2012

2014

2013

2014

2013

2012

3,104

$

3,358

$

3,476

16,436

16,648

16,945

19,540

$

20,006

$

20,421

(8)%

(1)%

(2)%

(3)%

(2)%

(2)%

16%

84%

100%

17%

83%

100%

17%

83%

100%

5,288

$

5,582

$

5,827

$

$

(2,184)

3,104

13,865

2,184

387

$

$

(2,224)

3,358

13,941

2,224

483

(2,351)

3,476

13,997

2,351

597

$

16,436

$

16,648

$

16,945

(8)%

(1)%

(2)%

(20)%

(1)%

(3)%

— %

(5)%

(19)%

(2)%

16%

71%

11%

2%

84%

17%

70%

11%

2%

83%

17%

69%

11%

3%

83%

Revenue 2014
Total revenues decreased 2% compared to the prior year with no impact from currency. Total revenues included the 
following:

•  Annuity revenue decreased 1% compared to prior year with no impact from currency. Annuity revenue is 

comprised of the following:
  Outsourcing, maintenance and rentals revenue includes outsourcing revenue within our Services segment 

and maintenance revenue (including bundled supplies) and rental revenue, both primarily within our 
Document Technology segment. Revenues of $13,865 million decreased 1% from the prior year with a 1-
percentage point negative impact from currency. The decrease was due to a decline in the Document 
Technology segment partially offset by growth in outsourcing revenue within our Services segment. 

  Supplies, paper and other sales includes unbundled supplies and other sales, primarily within our 

Document Technology segment. Revenues of $2,184 million decreased 2% from the prior year with no 
impact from currency. The decrease was primarily driven by moderately lower supplies demand and a 
decline in other sales revenue.
Financing revenue is generated from financed sale transactions primarily within our Document Technology 
segment.  Financing revenues decreased 20% from the prior year due primarily to $40 million in pre-tax 
gains on finance receivable sales in the second half of 2013 as well as a lower finance receivable balance 
mostly as a result of prior period sales of finance receivables and lower originations due to decreased 
equipment sales. Refer to the discussion on Sales of Finance Receivable in the Capital Resources and 
Liquidity section as well as Note 6 - Finance Receivables, Net in the Consolidated Financial Statements for 
additional information.

•  Equipment sales revenue is reported primarily within our Document Technology segment and the Document 
Outsourcing business within our Services segment. Equipment sales revenue decreased 8% from the prior 
year, including a 1-percentage point negative impact from currency. Lower installs across the majority of our 
product groupings, lower sales in entry products due to product launch timing and overall price declines that 
were at the low-end of our historical 5% to 10% range contributed to the decline. Equipment sales were also 
impacted by lower sales in developing markets, and particularly lower sales in Russia due to economic 
instability.

Xerox 2014 Annual Report

34

 
Revenue 2013 
Total revenues decreased 2% compared to the prior year and included 1-percentage point positive impact from 
currency. Total revenues included the following:

•  Annuity revenue decreased 2% compared to prior year with no impact from currency. Annuity revenue is 

comprised of the following:
  Outsourcing, maintenance and rentals revenue includes outsourcing revenue within our Services segment 
and technical service revenue (including bundled supplies) and rental revenue, both primarily within our 
Document Technology segment. Revenues of $13,941 million remained flat from the prior year and included 
a 1-percentage point positive impact from currency. This was primarily driven by growth in our Services 
segment offset by a decline in maintenance revenue due to moderately lower page volumes and revenue 
per page. 

  Supplies, paper and other sales includes unbundled supplies and other sales, primarily within our 

Document Technology segment. Revenues of $2,224 million decreased 5% from the prior year with no 
impact from currency. The decrease was primarily driven by a reduction in channel supplies inventories in 
the U.S. and developing markets, moderately lower supplies and paper demand, and lower licensing sales.
  Financing revenue is generated from financed sale transactions primarily within our Document Technology 
segment. Financing revenues decreased 19% from the prior year reflecting a lower balance of finance 
receivables as a result of prior period sales of receivables and lower originations due to decreased 
equipment sales. Financing revenues in 2013 include gains of $40 million from the sales of finance 
receivables as compared to $44 million in 2012. Refer to the discussion on Sales of Finance Receivable in 
the Capital Resources and Liquidity section as well as Note 6 - Finance Receivables, Net in the 
Consolidated Financial Statements for additional information.

•  Equipment sales revenue is reported primarily within our Document Technology segment and the Document 
Outsourcing business within our Services segment. Equipment sales revenue decreased 3% from the prior 
year, including a 1-percentage point positive impact from currency. Benefits from new product introductions and 
a positive mix impact were more than offset by lower sales in developing markets and price declines ranging 
from 5% to 10%, which is consistent with prior years.

An analysis of the change in revenue for each business segment is included in the “Operations Review of Segment 
Revenue and Profit” section.

Costs, Expenses and Other Income

Summary of Key Financial Ratios

Total Gross Margin

RD&E as a % of Revenue

SAG as a % of Revenue
Operating Margin(1)
Pre-tax Income Margin

Operating Margin

Year Ended December 31,

Change

2014

2013

2012

2014

2013

32.0%

3.0%

19.4%

9.6%

6.2%

32.4%

3.0%

20.4%

9.0%

6.2%

33.2%

3.2%

20.3%

9.7%

6.3%

(0.4) pts

— pts

(1.0) pts

0.6 pts

— pts

(0.8) pts

(0.2) pts

0.1 pts

(0.7) pts

(0.1) pts

Operating margin1 for the year ended December 31, 2014 of 9.6% increased 0.6-percentage points as compared to 
2013. The increase was driven primarily by a 1.0-percentage point improvement in SAG as a percent of revenue 
partially offset by a decline in gross margin of 0.4-percentage points. The operating margin improvement reflects 
restructuring savings and productivity improvements, continued benefits from currency on yen based purchases and 
lower bad debt expense. As anticipated, operating margin also benefited from lower year-over-year pension 
expense and settlement losses (collectively referred to as "pension expense"). We anticipate pension expense will 
increase in 2015 as a result of expected changes in the discount rate and the estimated impact it will have on 
settlement losses. Refer to the discussion on Pension Plan Assumptions in the Application of Critical accounting 
Policies section as well as Note 16 - Employee Benefit Plans in the Consolidated Financial Statements for 
additional information. Services margins decreased in 2014 due to higher government healthcare platform 
expenses, including net non-cash impairment charges, as well as platform and resource investments across the 
Services segment and the continued run-off of the student loan business. 

35

 
 
The operating margin1 for the year ended December 31, 2013 of 9.0% decreased 0.7-percentage points as 
compared to 2012. The decline was driven primarily by a decline in gross margin of 0.8-percentage points partially 
offset by a moderate improvement in operating expenses as a percent of revenue. The operating margin decline 
reflects continued pressure on Services margins from higher healthcare platform expenses and the run-off of the 
student loan business, as well as from higher pension settlement costs impacting Document Technology.
 _____________

(1)  See the "Non-GAAP Financial Measures" section for an explanation of the Operating Margin non-GAAP financial measure.

Gross Margins

Total Gross Margin
Total gross margin for year ended December 31, 2014 of 32.0% decreased 0.4-percentage points as compared to 
2013. The decrease was driven by margin declines within the Services segment as well as the impact of a higher 
proportion of our revenue from Services (which historically has a lower gross margin than Document Technology) 
partially offset by a higher gross margin within the Document Technology segment.  

Gross margin for year ended December 31, 2013 of 32.4% decreased 0.8-percentage points as compared to 2012. 
The decrease was driven by margin declines within the Services segment as well as the continued increase in 
services revenue as a percent of total revenue.

Services Gross Margin
Services gross margin for the year ended December 31, 2014 decreased 1.1-percentage points as compared to 
2013. The decrease is primarily due to higher expenses associated with our public sector and government 
healthcare businesses, including costs for the Medicaid and Health Insurance Exchange (HIX) platforms, the 
anticipated run-off of our student loan business and price declines that were consistent with prior periods. These 
impacts were only partially offset by productivity improvements and restructuring benefits.

Services gross margin for the year ended December 31, 2013 decreased 0.7-percentage points as compared to 
2012. The decrease is primarily due to revenue mix in the segment, the run-off of our student loan business, lower 
volumes in some areas of the business and higher healthcare platform costs. These impacts were only partially 
offset by productivity improvements and restructuring benefits.

Document Technology Gross Margin
Document Technology gross margin for the year ended December 31, 2014 increased by 1.5-percentage points as 
compared to 2013. The increase, driven by cost productivity and restructuring savings, favorable transaction 
currency on our Yen-based purchases, lower pension expense and favorable revenue mix, was partially offset by 
moderate price declines and the impact of the prior year finance receivable gain.

Document Technology gross margin for the year ended December 31, 2013 increased by 0.1-percentage points as 
compared to 2012. The increase was driven by cost productivities and favorable transaction currency on our Yen- 
based purchases, which more than offset the impact of price declines and mix. 

Research, Development and Engineering Expenses (RD&E) 

(in millions)

R&D

Sustaining engineering

Total RD&E Expenses
R&D Investment by Fuji Xerox(1)

______________

Year Ended December 31,

Change

2014

2013

2012

2014

2013

$

$

$

445

$

481

$

545

$

132

577

654

$

$

122

603

724

$

$

110

655

860

$

$

(36) $

10

(26) $

(70) $

(64)

12

(52)

(136)

(1)  Fluctuation in Fuji Xerox R&D was primarily due to changes in foreign exchange rates.

RD&E as a percent of revenue for the year ended December 31, 2014 of 3.0% remained flat, reflecting the impact 
of restructuring and productivity improvements and a higher mix of Services revenue (which historically has a lower 
RD&E as a percentage of revenue), offset by increased investments in Services RD&E and the overall total 
company revenue decline.

RD&E of $577 million for the year ended December 31, 2014, was $26 million lower than 2013 reflecting the impact 
of restructuring and productivity improvements.

Xerox 2014 Annual Report

36

 
Innovation is one of our core strengths and we continue to invest at levels that enhance this core strength, 
particularly in services, color and software. During 2014 we managed our investments in R&D to align with growth 
opportunities in areas like business services, color printing and customized communication. Our R&D is also 
strategically coordinated with Fuji Xerox.

RD&E as a percent of revenue for the year ended December 31, 2013 of 3.0% decreased 0.2-percentage points. 
The decrease was driven by the higher mix of Services revenue (which historically has a lower RD&E as a 
percentage of revenue) lower spending and productivity improvements.

RD&E of $603 million for the year ended December 31, 2013, was $52 million lower, reflecting the impact of 
restructuring and productivity improvements.

Selling, Administrative and General Expenses (SAG)

SAG as a percent of revenue of 19.4% decreased 1.0-percentage point for the year ended December 31, 2014. The 
decrease was driven by the higher mix of Services revenue (which historically has lower SAG as a percentage of 
revenue), restructuring and productivity improvements, and lower pension and bad debt expense. The net reduction 
in SAG spending exceeded the overall revenue decline on a percentage basis.  

SAG expenses of $3,788 million for the year ended December 31, 2014 were $285 million lower than the prior year 
period. The decrease in SAG expense reflects the following:

• 
• 
• 

$125 million decrease in selling expenses. 
$93 million decrease in general and administrative expenses. 
$67 million decrease in bad debt expenses to $53 million, reflecting the favorable trend in write-offs and 
recoveries experienced throughout the year. Full year 2014 bad debt expense remained less than one percent 
of receivables.

SAG as a percent of revenue of 20.4% increased 0.1-percentage points for the year ended December 31, 2013. 

SAG expenses of $4,073 million for the year ended December 31, 2013 was $68 million lower than the prior year 
period. The SAG expense decrease reflects the following:

• 

• 

• 

$52 million decrease in selling expenses reflecting the benefits from restructuring and productivity 
improvements, as well as lower compensation-related expenses and advertising spending partially offset by the 
impact of acquisitions.
$17 million decrease in general and administrative expenses as restructuring savings and productivity 
improvements were partially offset by the impact of acquisitions and increased consulting costs.
$1 million increase in bad debt expense to $120 million.

Restructuring and Asset Impairment Charges 

During the year ended December 31, 2014, we recorded net restructuring and asset impairment charges of $128 
million ($91 million after-tax). Approximately 30% of the charges were related to our Services segment, 59% to our 
Document Technology segment, and 11%  to our Other segment and included the following:

• 

• 

• 

$143 million of severance costs related to headcount reductions of approximately 4,000 employees globally. 
The actions impacted several functional areas, with approximately 53% of the costs focused on gross margin 
improvements, 42% on SAG and 5% on the optimization of RD&E investments.
$5 million for lease termination costs primarily reflecting continued optimization of our worldwide operating 
locations.
$7 million of asset impairment losses.

The above charges were partially offset by $27 million of net reversals for changes in estimated reserves from prior 
period initiatives.

We expect 2015 pre-tax savings of approximately $100 million from our 2014 restructuring actions. 

During the year ended December 31, 2013, we recorded net restructuring and asset impairment charges of $115 
million ($82 million after-tax). Approximately 33% of the charges were related to our Services segment and 67% to 
our Document Technology segment and included the following:

37

• 

• 

• 

$141 million of severance costs related to headcount reductions of approximately 4,800 employees globally. 
The actions impacted several functional areas, with approximately 65% of the costs focused on gross margin 
improvements, 34% on SAG and 1% on the optimization of RD&E investments.
$2 million for lease termination costs primarily reflecting continued optimization of our worldwide operating 
locations.
$1 million of asset impairment losses.

The above charges were partially offset by $29 million of net reversals for changes in estimated reserves from prior 
period initiatives. 

Restructuring Summary 
The restructuring reserve balance as of December 31, 2014 for all programs was $97 million, of which 
approximately $94 million is expected to be spent over the next twelve months. In the first quarter 2015, we expect 
to incur additional restructuring charges of approximately $0.02 per diluted share for actions and initiatives that have 
not yet been finalized. 

Refer to Note 11 - Restructuring and Asset Impairment Charges in the Consolidated Financial Statements for 
additional information regarding our restructuring programs.

Amortization of Intangible Assets 
During the year ended December 31, 2014, we recorded $315 million of expense related to the amortization of 
intangible assets, which is $10 million higher than the prior year reflecting an increase in acquisitions in 2014. 

During the year ended December 31, 2013, we recorded $305 million of expense related to the amortization of 
intangible assets, which was $4 million higher than the prior year reflecting the increase in acquisitions in 2012.

Refer to Note 10 - Goodwill and Intangible assets, Net in the Consolidated Financial Statements for additional 
information regarding our intangible assets.

Worldwide Employment
Worldwide employment of approximately 147,500 as of December 31, 2014 increased by approximately 4,400 from 
December 31, 2013, due primarily to the impact of acquisitions and seasonal fluctuations in Services, partially offset 
by restructuring actions and productivity improvements. Total headcount includes approximately 9,800 employees 
who are expected to transfer to Atos upon closure of the sale of our ITO business. Worldwide employment was 
approximately 143,100 and 147,600 at December 2013 and 2012, respectively.

Other Expenses, Net 

(in millions)

Non-financing interest expense

Interest income

(Gains) losses on sales of businesses and assets

Currency losses (gains), net

Litigation matters

Loss on sales of accounts receivables

Deferred compensation investment gains

All other expenses, net

Total Other Expenses, Net

Year Ended December 31,

2014

2013

2012

237

$

240

$

(10)

(50)

5

11

15

(7)

31

(11)

(64)

(7)

(34)

17

(15)

20

232

$

146

$

229

(13)

2

3

(1)

21

(10)

26

257

$

$

Note: With the exception of Deferred compensation investment gains, all items comprising Other Expense, Net are 
reported in the Other segment. Deferred compensation investment gains are reported in the Services segment as 
an offset to the associated compensation expense - see below. 

Xerox 2014 Annual Report

38

 
Non-Financing Interest Expense: Non-financing interest expense for the year ended December 31, 2014 of $237 
million was $3 million lower than prior year primarily due to the benefit of lower borrowing costs achieved as a result 
of refinancing existing debt.  When non-financing interest expense is combined with financing interest expense (cost 
of financing), total company interest expense declined by $26 million from the prior year, primarily driven by a lower 
total average debt balance and lower average cost of debt.

Non-financing interest expense for the year ended December 31, 2013 of $240 million was $11 million higher than 
prior year primarily due to a higher average cost of debt. When non-financing interest expense is combined with 
financing interest expense (cost of financing), total company interest expense declined by $24 million from the prior 
year, primarily driven by a lower total average debt balance partially offset by a higher average cost of debt.

Refer to Note 13 - Debt in the Consolidated Financial Statements for additional information regarding our allocation 
of interest expense.  

(Gains) Losses on Sales of Businesses and Assets: The 2014 gains on sales of businesses and assets was 
primarily related to the sales of surplus properties with $39 million related to sales in Latin America and $8 million 
related to a sale in the U.S.

The 2013 gains on sales of businesses and assets include the following transactions:

•  A $29 million gain on the $32.5 million cash sale of a portion of our Wilsonville, Oregon product design, 

engineering and chemistry group and related assets that were surplus to our needs.

•  A $23 million gain on the sale of a surplus facility in the U.S.
•  An $8 million gain on the sale of a surplus facility in Latin America.

Currency Losses (Gains), Net: Currency losses (gains) primarily result from the re-measurement of foreign 
currency-denominated assets and liabilities, the cost of hedging foreign currency-denominated assets and liabilities 
and the mark-to-market of foreign exchange contracts utilized to hedge those foreign currency-denominated assets 
and liabilities. 2014 currency losses are primarily related to significant volatility in exchange rates in Russia in the 
fourth quarter.

Litigation Matters: 2014 litigation matters reflect probable losses and reserves for various legal matters partially 
offset by the favorable resolution of our securities litigation matter. 

Litigation matters for 2013 primarily reflect the benefit resulting from a reserve reduction associated with litigation 
developments. 

Refer to Note 18 - Contingencies and Litigation, in the Consolidated Financial Statements for additional information 
regarding litigation against the Company.

Loss on Sales of Accounts Receivables: Represents the loss incurred on our sales of accounts receivables.  
Refer to Sales of Accounts Receivables section below and Note 5 - Accounts Receivables, Net in the Consolidated 
Financial Statements for additional information regarding our sales of receivables.

Deferred Compensation Investment Gains: Represents gains on investments supporting certain of our deferred 
compensation arrangements. These gains or losses are offset by an increase or decrease, respectively, in 
compensation expense recorded in SAG in our Services segment as a result of the increase or decrease in the 
liability associated with these arrangements.

Income Taxes 

The 2014 effective tax rate was 21.5% or 24.9% on an adjusted basis1. The adjusted tax rate for 2014 was lower 
than the U.S. statutory tax rate primarily due to a net benefit of approximately 2.4% resulting from the 
redetermination of certain unrecognized tax positions upon conclusion of several audits, 2.5% from foreign tax 
credits resulting from actual and anticipated dividends from our foreign subsidiaries, 1.1% from the retroactive 
impact from the U.S. Tax Increase Prevention Act of 2014, and 1.0% from the reversal of a valuation allowance on 
deferred tax assets associated with capital losses as well as the geographical mix of profits. 

The 2013 effective tax rate was 20.4% or 23.8% on an adjusted basis1. The adjusted tax rate for  2013 was lower 
than the U.S. statutory tax rate primarily due to foreign tax credits resulting from actual and anticipated dividends 
from our foreign subsidiaries, the geographical mix of income  and the retroactive tax benefits from the American 
Taxpayer Relief Act of 2012 tax law change of approximately $19 million. These benefits were partially offset by the 

39

discrete impact of $12 million for the U.K. corporate income tax rate reduction and the corresponding adjustment to 
our U.K. deferred tax assets. 

The 2012 effective tax rate was 19.9% or 23.4% on an adjusted basis1. The adjusted tax rate for 2012 was lower 
than the U.S. statutory rate primarily due to foreign tax credits resulting from anticipated dividends and other foreign 
transactions as well as the geographical mix of profits. In addition, a net tax benefit from adjustments of certain 
unrecognized tax positions and deferred tax valuation allowances was offset by a similar impact on deferred tax 
assets from the 2012 reduction in the U.K. corporate income tax rate.

Xerox operations are widely dispersed. The statutory tax rate in most non U.S. jurisdictions is lower than the 
combined U.S. and state tax rate. The amount of income subject to these lower foreign rates relative to the amount 
of U.S. income will impact our effective tax rate. However, no one country outside of the U.S. is a significant factor 
to our overall effective tax rate. Certain foreign income is subject to U.S. tax net of any available foreign tax credits. 
Our full year effective tax rate for 2014 includes a benefit of 9.6-percentage points from these non-U.S. operations. 
Refer to Note 17 - Income and Other Taxes, in the Consolidated Financial Statements for additional information 
regarding the geographic mix of income before taxes and the related impacts on our effective tax rate. 

Our effective tax rate is based on nonrecurring events as well as recurring factors, including the taxation of foreign 
income. In addition, our effective tax rate will change based on discrete or other nonrecurring events (e.g. audit 
settlements, tax law changes, changes in valuation allowances, etc.) that may not be predictable. Excluding the 
effects of intangibles amortization and other discrete items, we anticipate that our adjusted effective tax rate will be 
approximately 25% to 27% for 2015.
 _____________

(1)  See the "Non-GAAP Financial Measures" section for an explanation of the adjusted effective tax rate non-GAAP financial measure.

Equity in Net Income of Unconsolidated Affiliates

(in millions)

Year Ended December 31,

2014

2013

2012

Total equity in net income of unconsolidated affiliates

$

Fuji Xerox after-tax restructuring costs

160

$

3

169

$

9

152

16

Equity in net income of unconsolidated affiliates primarily reflects our 25% share of Fuji Xerox. 

Refer to Note 9 - Investment in Affiliates, at Equity, in the Consolidated Financial Statements for additional 
information regarding our investment in Fuji Xerox. 

Net Income From Continuing Operations 

Net income from continuing operations attributable to Xerox for the year ended December 31, 2014 was $1,084 
million, or $0.90 per diluted share. On an adjusted basis1, net income attributable to Xerox was $1,280 million, or 
$1.07 per diluted share, and included adjustments for the amortization of intangible assets. The increase in earnings 
per diluted share reflects a lower average share count as a result of share repurchases over the last three years.  

Net income from continuing operations attributable to Xerox for the year ended December 31, 2013 was $1,139 
million, or $0.89 per diluted share. On an adjusted basis1, net income attributable to Xerox was $1,328 million, or 
$1.04 per diluted share, and included adjustments for the amortization of intangible assets. 

Net income from continuing operations attributable to Xerox for the year ended December 31, 2012 was $1,152 
million, or $0.85 per diluted share. On an adjusted basis1, net income attributable to Xerox was $1,338 million, or 
$0.99 per diluted share, and included adjustments for the amortization of intangible assets.
_____________

(1)  See the "Non-GAAP Financial Measures" section for a reconciliation of reported net income from continuing operations to adjusted net 

income.

Discontinued Operations 

Refer to Note 4 - Divestitures in the Consolidated Financial Statements for additional information regarding 
Discontinued Operations.

Xerox 2014 Annual Report

40

 
Other Comprehensive (Loss) Income

Other comprehensive loss attributable to Xerox was $1,380 million in 2014 as compared to income of $448 million 
in 2013. The decrease of $1,828 million from 2013 is primarily the result of losses of $662 million from changes in 
our defined benefit plans in 2014 as compared to gains of $632 million in 2013. The benefit plan losses in 2014 are 
primarily due to a decrease in the discount rates used to measure our benefit obligations in 2014 as compared to an 
increase in rates in 2013. (Refer to our discussion of Pension Plan Assumptions in the Application of Critical 
Accounting Policies section of the MD&A as well as Note 16 - Employee Benefit Plans in the Consolidated Financial 
Statements for additional information). The remainder of the year-over-year decrease in other comprehensive 
income is related to the $549 million increase in losses from the translation of our foreign currency denominated net 
assets as a result of the increased weakening in 2014 of our major foreign currencies as compared to the U.S. 
Dollar. 

2013 Other comprehensive income attributable to Xerox of $448 million increased $959 million from 2012. The 
increase was primarily the result of gains associated with our defined benefit plans due to an increase in the 
discount rates used to measure our benefit obligations (Refer to our discussion of Pension Plan Assumptions in the 
Application of Critical Accounting Policies section of the MD&A as well as Note 16 - Employee Benefit Plans in the 
Consolidated Financial Statements for additional information). These gains were partially offset by losses from the 
translation of our foreign currency-denominated net assets in 2013 as compared to translation gains in 2012. The 
translation losses are the result of the weakening of our major foreign currencies against the U.S. Dollar in 2013 as 
compared to a strengthening of those same currencies in 2012.

Recent Accounting Pronouncements

Refer to Note 1 - Summary of Significant Accounting Policies in the Consolidated Financial Statements for a description 
of recent accounting pronouncements including the respective dates of adoption and the effects on results of operations 
and financial conditions.

Operations Review of Segment Revenue and Profit

Our reportable segments are consistent with how we manage the business and view the markets we serve. Our 
reportable segments are Services, Document Technology and Other. Revenues by segment for the three years 
ended December 31, 2014 were as follows:

Total Revenue

% of Total
Revenue

Segment Profit
(Loss)

Segment
Margin

$

$

$

$

$

$

10,584

8,358

598

19,540

10,479

8,908

619

20,006

10,271

9,462

688

20,421

54% $

43%

3%

100% $

52%

45%

3%

100% $

50% $

46%

4%

100% $

956

1,149

(272)

1,833

$

1,055

964

(217)

1,802

1,091

1,065

(254)

1,902

9.0 %

13.7 %

(45.5)%

9.4 %

10.1 %

10.8 %

(35.1)%

9.0 %

10.6 %

11.3 %

(36.9)%

9.3 %

(in millions)

2014

Services

Document Technology

Other

Total

2013

Services

Document Technology

Other

Total

2012

Services

Document Technology

Other

Total

41

Note:  The above table has been revised to reflect the reclassification of the ITO business to Discontinued 
Operations. Segment profit associated with the ITO business reclassified from the Services segment to 
Discontinued Operations was $107 million, $100 million and $82 million for 2014, 2013 and 2012, respectively.

Services Segment

Our Services segment is comprised of two service offerings: Business Process Outsourcing (BPO) and Document 
Outsourcing (DO).

Services segment revenues for the three years ended December 31, 2014 were as follows:

(in millions)

Business processing outsourcing

Document outsourcing

Less: Intra-segment elimination

Total Services Revenue

__________

2014

Revenue

2013

Change

2012

2014

2013

$

$

7,304

$

7,244

$

3,388

(108)

3,337

(102)

7,162

3,210

(101)

10,584

$

10,479

$

10,271

1%

2%

6%

1%

1%

4%

1%

2%

Note:  The above table has been revised to reflect the reclassification of the ITO business to Discontinued 
Operations. Additionally, 2013 and 2012 BPO revenues have been revised to conform to the 2014 presentation of 
revenues. 

Revenue 2014

Services revenue of $10,584 million increased 1% with no impact from currency. 
•  BPO revenue increased 1% and represented 68% of total Services revenue. Growth from acquisitions along 
with organic growth in commercial healthcare and litigation services as well as growth internationally were 
partially offset by declines in portions of customer care. In addition, the anticipated declines in the student loan 
business and the Texas Medicaid contract termination had a combined 2.6-percentage point negative impact 
on BPO revenue growth and a 1.8-percentage point negative impact on total Services revenue. These 
negative year-over-year impacts are expected to end in the second half of 2015. 

In 2014, BPO revenue mix across the major business areas was as follows: Commercial - 45%; 
Government and Transportation - 25%; Commercial Healthcare - 18%; and Government Healthcare - 
12%.

•  DO revenue increased 2% and represented 32% of total Services revenue. The increase in DO revenue was 

primarily driven by growth in our partner print services offerings offset by declines in Europe and other markets 
due to contract run-off and new contract ramp timing. 

Segment Margin 2014

Services segment margin of 9.0% decreased 1.1-percentage points from the prior year due primarily to a 1.1-
percentage point decline in gross margin, as margin improvements in DO, commercial healthcare, human 
resources and commercial European businesses were more than offset by decreased margin in government 
healthcare and government and transportation. Productivity improvements and restructuring benefits were 
insufficient to offset higher expenses associated with our government healthcare Medicaid and Health Insurance 
Exchange (HIX) platforms, net non-cash impairment charges for the HIX platform, higher compensation expenses, 
the anticipated run-off of the student loan business and price declines consistent with prior years. The gross 
margin decline was partially offset by improvements in SAG reflecting restructuring benefits.

Metrics

Pipeline
Our total Services sales pipeline at December 31, 2014 declined 5% over the prior year. The pipeline has been 
adjusted to remove the ITO business and to reflect the realignment of our Services go-to-market resources into 
industry focused business groups. Additionally, the pipeline qualification criteria has been revised. The sales 
pipeline includes the Total Contract Value (TCV) of new business opportunities that potentially could be contracted 
within the next six months and excludes business opportunities with estimated annual recurring revenue in excess 
of $100 million.  

Xerox 2014 Annual Report

42

 
Signings
Signings are defined as estimated future revenues from contracts signed during the period, including renewals of 
existing contracts. Signings were as follows:

Signings were as follows:

(in billions)

BPO

DO

Total Signings

_________

Year Ended December 31,

2014

2013

2012(1)

$

$

$

7.6

3.0

$

8.9

3.3

10.6

$

12.2

$

6.5

2.9

9.4

(1)  The 2012 BPO and DO signings have been revised to reflect the transfer of our Communication & Marketing Services (CMS) business 

from DO to BPO in 2013. 

Services signings were an estimated $10.6 billion in TCV for 2014 and decreased 13% compared to the prior year. 
The decrease was driven by a lower level of renewal decision opportunities and lower new business signings 
which were partially impacted by customer decision delays and a decrease in the average contract length. New 
business annual recurring revenue (ARR) and non-recurring revenue (NRR) decreased 13% compared to the prior 
year.  

Services signings were an estimated $12.2 billion in TCV for 2013 and increased 29% compared to the prior year. 
The increase was driven by new business and higher renewals. 

Note: The above DO signings amount represents Enterprise signings only and does not include signings from our 
partner print services offerings, which is driving the revenue growth in DO. TCV is the estimated total contractual 
revenue related to future contracts in the pipeline or signed contracts, as applicable.

Renewal rate (BPO only)
Renewal rate is defined as the annual recurring revenue (ARR) on contracts that are renewed during the period as 
a percentage of ARR on all contracts on which a renewal decision was made during the period. Our 2014 renewal 
rate of 82% was moderately below our target range of 85%-90% and 11-percentage points lower than 2013. 
Excluding the Texas Medicaid contract loss our renewal rate was 91% for the year. Our 2013 renewal rate of 93% 
was above our target range of 85%-90% and 8-percentage points higher than 2012. 

Revenue 2013 

Services revenue of $10,479 million increased 2% with no impact from currency. 
•  BPO revenue increased 1% and represented 68% of total Services revenue. Growth in healthcare, human 
resources and state government businesses were partially offset by lower volumes in portions of our 
commercial BPO business and the run-off of our government student loan business.

•  DO revenue increased 4% and represented 32% of total Services revenue. The increase in DO revenue was 

primarily driven by growth in our partner print services offerings as well as higher equipment sales.

Segment Margin 2013

Services segment margin of 10.1% decreased 0.5-percentage points from the prior year primarily due to a 
decrease in gross margin as increased productivity improvements and restructuring benefits were more than offset 
by the run-off of the student loan business, higher healthcare platform expenses, the impact of price declines, 
which were consistent with prior years, and lower volumes. The gross margin decline was partially offset by SAG 
improvements reflecting restructuring benefits as well as lower compensation-related expenses.

43

Document Technology Segment

Our Document Technology segment includes the sale of products and supplies, as well as the associated 
maintenance and financing of those products. 

Revenue

(in millions)

Equipment sales

Annuity revenue

Total Revenue

Revenue 2014

Year Ended December 31,

Change

2014

2013

2012

2014

2013

$

$

2,482

$

5,876

8,358

$

2,727

$

6,181

8,908

$

2,879

6,583

9,462

(9)%

(5)%

(6)%

(5)%

(6)%

(6)%

Document Technology revenue of $8,358 million decreased 6%, with no impact from currency. Document 
Technology revenues exclude Document Outsourcing. Inclusive of Document Outsourcing, 2014 aggregate 
document-related revenue decreased 4% from 2013, with no impact from currency. Total revenues include the 
following:
•  Equipment sales revenue decreased 9% with no impact from currency. The decrease in equipment sales 

reflects weakness in entry products due to product launch timing, the continued migration of customers to our 
growing partner print services offering (included in our Services segment), weakness in developing markets 
due to economic instability and, price declines of approximately 5%. 2013 benefited from the ConnectKey mid-
range product launch, and the refresh cycle for several large accounts. Equipment sales in 2014 were 
negatively impacted by lower sales in Russia due to economic instability.

•  Annuity revenue decreased by 5%, with no impact from currency. The decrease reflects a modest decline in 

total pages, weakness in developing markets and entry products due to product launch timing, a continued 
decline in financing revenue as a result of prior period sales of finance receivables and lower receivables 
balance due to lower originations. The overall decrease in Financing revenue from prior year contributed 1-
percentage point to the Annuity revenue decline and 1-percentage point impact to the overall Document 
Technology revenue decline. Annuity revenue was also impacted by the continued migration of customers to 
our partner print services offerings (included in our Services segment). Total digital page volumes declined 4% 
despite a 2% increase in digital MIF.

Document Technology revenue mix was 20% entry, 57% mid-range and 23% high-end.

Segment Margin 2014

Document Technology segment margin of 13.7% increased 2.9-percentage points from prior year. The increase 
was primarily driven by a 1.5-percentage point increase in gross margin as the benefits from restructuring and 
productivity, lower pension expense, and favorable currency on Yen-based purchases and revenue mix more than 
offset moderate price declines and the impact of lower financing revenues. SAG decreased as a percent of 
revenue as lower pension and bad debt expense as well as benefits from restructuring and productivity 
improvements more than offset the impact of overall lower revenues. 

Total revenue for Document Technology is expected to decline 4 to 5% in 2015, excluding the impact of currency, 
as projected declines in black-and-white printing are only partially offset by growth in color printing and in the 
graphic communications and SMB markets. The expected 2015 revenue decline for the Document Technology 
segment is consistent with the trend we have experienced for this segment over the past three years as we 
continue to transform the Company from a technology-based equipment company to a document outsourcing 
services-based entity and customers continue to migrate their business to more services-based offerings. These 
services-based offerings are reported within our Services segment. This business is also heavily impacted by price 
and page declines, which are secular declines being experienced across the industry. Although annual revenue 
declines are expected to continue in 2015, we believe the declines in revenues will moderate in future years. We 
expect to manage the profitability impact of any revenue declines through measures to improve productivity and 
reduce costs and expenses.

Xerox 2014 Annual Report

44

 
Installs 2014

Entry
We launched a total of twelve new Entry products in 2014, with a majority of them not available until late in the 
third quarter and early in the fourth quarter. The benefits of these launches and other Entry go-to-market 
investments are still ramping, and trends in color printers and multifunction devices are improving. Higher declines 
in Eurasia due to economic instability are partially offsetting these improvements.

7% decrease in color multifunction devices 

• 
•  Entry color printers flat 
• 

23% decrease in entry black-and-white multifunction devices driven by declines in all geographies.

Mid-Range
• 

High-End
• 

• 

• 

1% increase in installs of mid-range color devices reflects benefits from the newly launched WorkCentre 7970 
and entry production devices partially offset by timing of large account sales
13% decrease in installs of mid-range black-and-white devices is consistent with overall market declines

7% decrease in installs of high-end color systems.  Excluding Fuji Xerox growth in digital front-end (DFE) 
sales, high-end color installs increased 6% with growth in iGen and the new Versant product.
13% decrease in installs of high-end black-and-white systems, reflecting continued declines in the overall 
market.

Install activity percentages include installations for Document Outsourcing and the Xerox-branded product 
shipments to GIS. Descriptions of “Entry”, “Mid-Range” and “High-End” are defined in Note 2 - Segment Reporting, 
in the Consolidated Financial Statements.

Revenue 2013 

Document Technology revenue of $8,908 million decreased 6%, with no impact from currency. Total revenues 
include the following:
• 

5% decrease in equipment sales revenue, with a 1-percentage point positive impact from currency. Equipment 
sales benefited from our 2013 mid-range product refresh, growth and acquisitions in the small and mid-size 
business market and increased demand for color digital production presses. These benefits were more than 
offset by the continued migration of customers to managed print services and our growing partner print 
services offerings (included in our Services segment), weakness in developing markets and price declines, 
which were in the historical 5% to 10% range.
6% decrease in annuity revenue, with no impact from currency driven by a modest decline in total pages, the 
reduction in channel supplies inventory levels, lower sales in developing markets and a decline in financing 
revenue as a result of prior period sales of finance receivables and lower originations. Annuity revenue was 
also impacted by the continued migration of customers to our partner print services offerings (included in our 
Services segment). Total digital page volumes declined 2% despite a 3% increase in digital MIF. 

• 

•  Document Technology revenue mix was 21% entry, 58% mid-range and 21% high-end.

Segment Margin 2013

Document Technology segment margin of 10.8% decreased 0.5-percentage points from prior year. The decline 
was primarily driven by an increase in SAG as a percent of revenue due to the overall impact of lower revenue and 
higher pension settlement losses which were only partially offset by restructuring savings, productivity 
improvements and lower compensation-related expenses. 

Installs 2013

24% increase in color multifunction devices driven by demand for the recently introduced WorkCentre® 6605,  
WorkCentre® 6015 and ColorQube® 8700/8900
5% increase in color printers driven by demand for the Phaser® 6600 family of products as well as an increase 
in sales to OEM partners.
20% decrease in entry black-and-white multifunction devices driven by declines in all geographies.

Entry
• 

• 

• 

45

Mid-Range
• 
• 

8% increase in installs of mid-range color devices driven by demand for the ConnectKey® enabled products.
3% decrease in installs of mid-range black-and-white devices.

High-End
• 

43% increase in installs of high-end color systems driven by growth in the sale of digital front-ends (DFE's) to 
Fuji Xerox, as well as strong customer demand for the Color J75 Press and iGen® as we continue to 
strengthen our market leadership in the Production Color segment. High-end color installs increased 7%, 
excluding the DFE sales to Fuji Xerox. 
8% decrease in installs of high-end black-and-white systems, reflecting continued declines in the overall 
market.

• 

Other Segment

Revenue 2014

Other segment revenue of $598 million decreased 3%, with no impact from currency, due to lower licensing and 
patent sale revenues as well as lower wide format systems revenue. Total paper revenue (all within developing 
markets) comprised approximately one-third of the Other segment revenue.

Segment Loss 2014

Other segment loss of $272 million, increased $55 million from the prior year, primarily driven by lower gains from 
the sale of surplus properties, increased currency losses, higher legal reserves and lower licensing and patent 
revenues. Non-financing interest expense as well as all Other expenses, net (excluding deferred compensation 
investment gains and losses) are reported within the Other segment.

Revenue 2013 

Other segment revenue of $619 million decreased 10%, with no impact from currency, due to lower wide format 
systems revenue, lower sales of electronic presentation systems, lower developing market paper sales and lower 
licensing revenue. Total paper revenue (all within developing markets) comprised approximately one-third of the 
Other segment revenue.

Segment Loss 2013

Other segment loss of $217 million, was $37 million lower than the prior year, primarily driven by gains on the sale 
of businesses and assets, partially offset by lower revenues. Non-financing interest expense as well as all Other 
expenses, net (excluding deferred compensation investment gains) are reported within the Other segment.

Xerox 2014 Annual Report

46

Discontinued Operations

Detailed below are the revised results for the Services, Document Technology, Other and Total Segment by quarter 
for 2014 and 2013 as well as for the full-year 2012 as a result of Discontinued Operations in 2014.  These 
revisions reflect the pending sale of our ITO business as well as other smaller divestitures. Refer to Note 4 - 
Divestitures in the Consolidated Financial Statements for additional information regarding Discontinued 
Operations. 

$

$

$

$

Q1

Q2

2014

Q3

Q4

Full Year

$

2,585

2,044

142

$

2,651

2,126

164

$

2,623

2,029

143

2,725

2,159

149

10,584

8,358

598

4,771

$

4,941

$

4,795

$

5,033

$

19,540

222

249

(50)

421

$

$

226

306

(75)

457

$

$

240

284

(82)

442

$

$

268

310

(65)

513

$

956

1,149

(272)

1,833

8.6 %

12.2 %

(35.2)%

8.8 %

8.5 %

14.4 %

(45.7)%

9.2 %

9.1 %

14.0 %

(57.3)%

9.2 %

9.8 %

14.4 %

(43.6)%

10.2 %

9.0 %

13.7 %

(45.5)%

9.4 %

2012

Full Year

Q1

Q2

2013

Q3

Q4

Full Year

$ 10,271

$

9,462

688

2,584

2,135

138

$

2,613

2,263

166

$

2,596

2,159

145

$

2,686

2,351

170

$ 10,479

8,908

619

$ 20,421

$

4,857

$

5,042

$

4,900

$

5,207

$ 20,006

$

$

1,091

1,065

(254)

$

1,902

$

250

186

(68)

368

$

$

276

245

(61)

460

$

$

268

260

(54)

474

$

$

261

273

(34)

500

$

1,055

964

(217)

$

1,802

10.6 %

11.3 %

(36.9)%

9.3 %

9.7 %

8.7 %

(49.3)%

7.6 %

10.6 %

10.8 %

(36.7)%

9.1 %

10.3 %

12.0 %

(37.2)%

9.7 %

9.7 %

11.6 %

(20.0)%

9.6 %

10.1 %

10.8 %

(35.1)%

9.0 %

(in millions)

Revenues

Services

Document Technology

Other

Total Revenues

Segment Profit (Loss)

Services

Document Technology

Other

Total Segment Profit

Segment Margin

Services

Document Technology

Other

Total Segment Margin

(in millions)

Revenues

Services

Document Technology

Other

Total Revenues

Segment Profit (Loss)

Services

Document Technology

Other

Total Segment Profit

Segment Margin

Services

Document Technology

Other

Total Segment Margin

47

   
Capital Resources and Liquidity 

Our liquidity is primarily dependent on our ability to continue to generate strong cash flows from operations.  
Additional liquidity is also provided through access to the financial capital markets, including the Commercial Paper 
market, as well as a committed global credit facility. The following is a summary of our liquidity position:

•  As of December 31, 2014 and 2013, total cash and cash equivalents were $1,411 million and $1,764 million, 
respectively, and there was $150 million and $0 million of borrowings under our Commercial Paper Program, 
respectively. There were no borrowings or letters of credit under our $2 billion Credit Facility at either year end. 
The decrease in our cash balance in 2014 is primarily due to increased acquisitions and share repurchases. 
Refer to the Cash Flow Analysis section below.  

•  Over the past three years we have consistently delivered strong cash flows from operations driven by the 

strength of our annuity-based revenue model. Cash flows from operations was $2,063 million, $2,375 million and 
$2,580 million in each of the years in the three year period ended December 31, 2014, respectively. Cash flows 
from operations reflect the cash impacts from the sales of finance receivables - refer to Sales of Finance 
Receivables within this section. 

•  We expect cash flows from operations to be between $1.7 and $1.9 billion in 2015, which takes into 

consideration approximately $300 million from the adverse impact of prior period sales of finance receivables as 
well as the pending sale of our ITO business, which we expect to close in the first half of 2015. 

Cash Flow Analysis 

The following summarizes our cash flows for the three years ended December 31, 2014, as reported in our 
Consolidated Statements of Cash Flows in the accompanying Consolidated Financial Statements:

(in millions)

Year Ended December 31,

Change

2014

2013

2012

2014

2013

Net cash provided by operating activities

$

2,063

$

2,375

$

2,580

$

(312) $

Net cash used in investing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

(703)

(1,624)

(89)

(353)

1,764

(452)

(1,402)

(3)

518

1,246

(761)

(1,472)

(3)

344

902

(251)

(222)

(86)

(871)

518

Cash and Cash Equivalents at End of Year

$

1,411

$

1,764

$

1,246

$

(353) $

(205)

309

70

—

174

344

518

Cash Flows from Operating Activities
Net cash provided by operating activities was $2,063 million for the year ended December 31, 2014. The $312 
million decrease in operating cash from 2013 was primarily due to the following: 
• 

$598 million decrease from finance receivables primarily related to the impact from prior period sales of 
receivables partially offset by higher net run-off due to lower lease originations. Refer to Note 6 - Finance 
Receivables, Net in the Consolidated Financial Statements for additional information regarding the sale of 
finance receivables.
$54 million decrease due to higher contributions to our defined benefit pension plans.
$157 million increase due to higher accounts payable and accrued compensation primarily related to the timing 
of accounts payable payments and improved payment terms with key suppliers.
$92 million increase from accounts receivable primarily due to the timing of collections and improved collections 
partially offset by the impact from quarterly revenue changes.
$42 million increase from lower spending for product software and up-front costs for outsourcing service 
contracts.
$34 million increase due to lower net income tax payments primarily due to refunds in 2014 from prior years.
$20 million increase from lower installs of equipment on operating leases.

• 
• 

• 

• 

• 
• 

Net cash provided by operating activities was $2,375 million for the year ended December 31, 2013. The $205 
million decrease in operating cash from 2012 was primarily due to the following: 
• 
• 

$105 million decrease in pre-tax income before net gain on sales of businesses and assets and restructuring.
$307 million decrease due to lower net run-off of finance receivables of $280 million and higher equipment on 
operating leases of $27 million. The lower net run-off of finance receivables was primarily related to the impact 

Xerox 2014 Annual Report

48

 
 
from the receivables sales. Refer to Note 6 - Finance Receivables, Net in the Consolidated Financial Statements 
for additional information regarding the sale of finance receivables.
$149 million decrease due to lower accounts payable and accrued compensation primarily related to the timing 
of accounts payable payments.
$38 million decrease due higher growth in inventory reflecting the launch of new products.
$22 million decrease due to the timing of settlements of our foreign currency derivative contracts. These 
derivatives primarily relate to hedges of Yen inventory purchases.
$18 million decrease due to higher net income tax payments.
$212 million increase from accounts receivable primarily due to lower revenues partially offset by a reduction in 
the use of accelerated collection programs such as early pay discounts.
$134 million increase due to lower contributions to our defined benefit pension plans. This was in line with 
expectations.
$106 million increase from lower spending for product software and up-front costs for outsourcing service 
contracts.

• 

• 
• 

• 
• 

• 

• 

Cash flow from operations in 2014 and 2013, include approximately $145 million and $130 million, respectively, of 
cash flows from our ITO business which is held for sale and reported as a discontinued operation at December 31, 
2014.  Refer to Note 4 - Divestitures in the Consolidated Financial Statements for additional information regarding 
this pending sale.

Cash Flows from Investing Activities
Net cash used in investing activities was $703 million for the year ended December 31, 2014. The $251 million 
increase in the use of cash from 2013 was primarily due to the following:
• 

$185 million increase in acquisitions. 2014 acquisitions include ISG Holdings, Inc. for $225 million, Invoco 
Holding GmbH for $54 million, Consilience Software, Inc. for $25 million and three smaller acquisitions for $36 
million. 2013 acquisitions include Zeno Office Solutions, Inc. for $59 million, Impika for $53 million and four 
smaller acquisitions totaling $43 million.
$32 million increase primarily due to lower proceeds from the sale of assets. 2014 includes proceeds from the 
sale of surplus facilities in Latin America of $42 million. 2013 includes proceeds from the sale of a U.S. facility of 
$38 million and the sale of portions of our Wilsonville, Oregon operation and related assets of $33 million.
$25 million increase due to higher capital expenditures (including internal use software).

• 

• 

Net cash used in investing activities was $452 million for the year ended December 31, 2013. The $309 million 
decrease in the use of cash from 2012 was primarily due to the following:
• 

$121 million decrease in acquisitions. 2013 acquisitions include Zeno Office Solutions, Inc. for $59 million, 
Impika for $53 million and four smaller acquisitions totaling $43 million. 2012 acquisitions include Wireless Data 
for $95 million, RK Dixon for $58 million as well as seven smaller acquisitions totaling $123 million.
$86 million decrease due to lower capital expenditures (including internal use software).
$77 million decrease primarily due to $38 million of proceeds from the sale of a U.S. facility and $33 million of 
proceeds from the sale of portions of our Wilsonville, Oregon operation and related assets.
$26 million decrease due to proceeds from the sale of the North American and European Paper businesses.

• 
• 

• 

Capital expenditures (including internal use software) in 2014 and 2013, include approximately $100 million in each 
year associated with our ITO business which is held for sale and reported as a discontinued operation at December 
31, 2014.  Refer to Note 4 - Divestitures in the Consolidated Financial Statements for additional information 
regarding this pending sale.

Cash Flows from Financing Activities
Net cash used in financing activities was $1,624 million for the year ended December 31, 2014. The $222 million 
increase in the use of cash from 2013 was primarily due to the following: 
• 
• 
• 

$375 million increase from share repurchases.
$69 million increase due to lower proceeds from the issuance of common stock under our incentive stock plans.
$48 million increase due to higher common stock dividends of $17 million as well as distributions to 
noncontrolling interests of $31 million.
$259 million decrease from net debt activity. 2014 reflects payments of $1,050 million on Senior Notes offset by 
net proceeds of $700 million from the issuance of Senior Notes and an increase of $150 million in Commercial 
Paper. 2013 reflects payments of $1 billion of Senior Notes offset by net proceeds of $500 million from the 
issuance of Senior Notes and $39 million from the sale and capital leaseback of a building in the U.S.

• 

49

Net cash used in financing activities was $1,402 million for the year ended December 31, 2013. The $70 million 
decrease in the use of cash from 2012 was primarily due to the following: 
• 
• 

$356 million decrease from lower share repurchases.
$80 million decrease due to higher proceeds from the issuance of common stock under our incentive stock 
plans.
$326 million increase from net debt activity. 2013 reflects payments of $1 billion of Senior Notes offset by net 
proceeds of $500 million from the issuance of Senior Notes and $39 million from the sale and capital leaseback 
of a building in the U.S. 2012 reflects net proceeds of $1.1 billion from the issuance of Senior Notes offset by net 
payments on Senior Notes of $1.1 billion and a decrease of $100 million in Commercial Paper.
$41 million increase due to higher common stock dividends.

• 

• 

Customer Financing Activities 

We provide lease equipment financing to our customers, primarily in our Document Technology segment. Our lease 
contracts permit customers to pay for equipment over time rather than at the date of installation. Our investment in 
these contracts is reflected in Total finance assets, net. We primarily fund our customer financing activity through 
cash generated from operations, cash on hand, commercial paper borrowings, sales and securitizations of finance 
receivables and proceeds from capital markets offerings.

We have arrangements in certain international countries and domestically with our small and mid-sized customers, 
where third-party financial institutions independently provide lease financing directly to our customers, on a non-
recourse basis to Xerox. In these arrangements, we sell and transfer title of the equipment to these financial 
institutions. Generally, we have no continuing ownership rights in the equipment subsequent to its sale; therefore, the 
unrelated third-party finance receivable and debt are not included in our Consolidated Financial Statements.

The following represents our Total finance assets, net associated with our lease and finance operations:

(in millions)
Total Finance receivables, net(1)
Equipment on operating leases, net
Total Finance Assets, Net (2)

_________

December 31,

2014

2013

$

$

4,254

$

525

4,779

$

4,530

559

5,089

(1) 

Includes (i) billed portion of finance receivables, net, (ii) finance receivables, net and (iii) finance receivables due after one year, net as included 
in our Consolidated Balance Sheets.

(2)  The change from December 31, 2013 includes a decrease of $282 million due to currency across all Finance Assets.

We maintain a certain level of debt, referred to as financing debt, to support our investment in these lease contracts 
or Total finance assets, net. We maintain this financing debt at an assumed 7:1 leverage ratio of debt to equity as 
compared to our Total finance assets, net for this financing aspect of our business. Based on this leverage, the 
following represents the allocation of our total debt at December 31, 2014 and 2013 between financing debt and core 
debt:

(in millions)
Financing debt(1)
Core debt

Total Debt

_________

December 31,

2014

2013

$

$

4,182

$

3,559

7,741

$

4,453

3,568

8,021

(1)  Financing debt includes $3,722 million and $3,964 million as of December 31, 2014 and December 31, 2013, respectively, of debt associated 

with Total finance receivables, net and is the basis for our calculation of “Equipment financing interest” expense. The remainder of the 
financing debt is associated with Equipment on operating leases.

Xerox 2014 Annual Report

50

In 2015, we expect to continue the leveraging of our finance assets at an assumed 7:1 ratio of debt to equity. The 
following summarizes our total debt at December 31, 2014 and 2013:

(in millions)
Principal debt balance(1)
Net unamortized discount
Fair value adjustments(2)

   - terminated swaps

   - current swaps

Total Debt

_________

December 31,

2014

2013

7,722

$

(54)

68

5

7,741

$

7,979

(58)

100

—

8,021

$

$

(1)  Balance at December 31, 2014 and 2013 includes $1 million and $5 million of Notes Payable and $150 million and $0 of Commercial Paper, 

respectively.

(2)  Fair value adjustments include the following: (i) fair value adjustments to debt associated with terminated interest rate swaps, which are 

being amortized to interest expense over the remaining term of the related notes; and (ii) changes in fair value of hedged debt obligations 
attributable to movements in benchmark interest rates. Hedge accounting requires hedged debt instruments to be reported inclusive of any 
fair value adjustment.

Total debt of $7,741 million excludes $75 million of capital lease obligations related to our ITO business, which is 
held for sale and being reported as a discontinued operation at December 31, 2014. These obligations are expected 
to be assumed by the purchaser of the ITO business. Refer to Note 4 - Divestitures in the Consolidated Financial 
Statements for additional information regarding this pending sale

Sales of Accounts Receivable
Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and 
liquidity management. We have financial facilities in the U.S., Canada and several countries in Europe that enable us 
to sell certain accounts receivables without recourse to third-parties. The accounts receivables sold are generally 
short-term trade receivables with payment due dates of less than 60 days. 

Accounts receivable sales were as follows:

(in millions)

Accounts receivable sales

Deferred proceeds

Loss on sale of accounts receivable
Estimated decrease to operating cash flows(1)

__________

Year Ended December 31,

2014

2013

2012

$

2,906

$

3,401

$

3,699

387

15

(68)

486

17

(55)

639

21

(78)

(1)  Represents the difference between current and prior year fourth quarter receivable sales adjusted for the effects of: (i) the deferred proceeds, 

(ii) collections prior to the end of the year, and (iii) currency.

Refer to Note 5 - Accounts Receivable, Net in the Consolidated Financial Statements for additional information.

Sales of Finance Receivables

In 2013 and 2012, we transferred our entire interest in certain groups of lease finance receivables to third-party 
entities. The transfers were accounted for as sales and resulted in the de-recognition of lease receivables with a net 
carrying value of $676 million in 2013 and $682 million in 2012, and associated pre-tax gains of $40 million and $44 
million, respectively. We continue to service the sold receivables and record servicing fee income over the expected 
life of the associated receivables.  

Refer to Note 6 - Finance Receivables, Net in the Consolidated Financial Statements for additional information.

51

 
The net impact on operating cash flows from the sales of finance receivables is summarized below

(in millions)
Net cash received for sales of finance receivables(1)
Impact from prior sales of finance receivables(2)

Collections on beneficial interest

Estimated (Decrease) Increase to Operating Cash Flows

__________

Year Ended December 31,

2014

2013

2012

$

$

— $

(527)

94

(433) $

631

$

(392)

58

297

$

625

(45)

—

580

(1)  Net of beneficial interest, fees and expenses.
(2)  Represents cash that would have been collected if we had not sold finance receivables.

Capital Market Activity

Credit Facility
On March 18, 2014, we entered into an Amended and Restated Credit Agreement that extended the maturity date of 
our $2.0 billion unsecured revolving Credit Facility to March 18, 2019 from December 2016. The amendment also 
included modest improvements in pricing and minor changes in the composition of the group of lenders. The 
amended and restated Credit Facility contains a $300 million letter of credit sub-facility and the accordion feature that 
would allow us to increase (from time to time, with willing lenders) the overall size of the facility up to an aggregate 
amount not to exceed $2.75 billion. We also have the right to request a one year extension on each of the first and 
second anniversary of the amendment date.

At December 31, 2014 we had no outstanding borrowings or letters of credit under our Credit Facility.

Refer to Note 13 - Debt in the Condensed Consolidated Financial Statements for additional information.  

Senior Notes
In May 2014, we issued $400 million of 2.8% Senior Notes due 2020 (the "2020 Senior Notes") at 99.956% of par 
and $300 million of 3.8% Senior Notes due 2024 (the "2024 Senior Notes") at 99.669% of par, resulting in aggregate 
net proceeds of approximately $700 million. Interest on the Senior Notes are payable semi-annually. The proceeds 
were used for general corporate purposes which included repayment of a portion of our outstanding borrowings. 

Refer to Note 13 - Debt in the Consolidated Financial Statements for additional information regarding our debt.

Financial Instruments
Refer to Note 14 - Financial Instruments in the Consolidated Financial Statements for additional information 
regarding our derivative financial instruments.

Share Repurchase Programs - Treasury Stock
During 2014, we repurchased 86.5 million shares of our common stock for an aggregate cost of $1.1 billion, including 
fees. In November 2014, the Board of Directors authorized an additional $1.5 billion in share repurchases bringing 
the total cumulative authorization to $8.0 billion.

Through February 19, 2015, we repurchased an additional 9.2 million shares at an aggregate cost of $125.8 million, 
including fees, for total program repurchases of 589.3 million shares at a cost of $6.6 billion, including fees. 

We expect total share repurchases of approximately $1 billion in 2015.

Refer to Note 20 - Shareholders’ Equity – Treasury Stock in the Consolidated Financial Statements for additional 
information regarding our share repurchase programs.

Dividends
The Board of Directors declared aggregate dividends of $293 million, $287 million and $226 million on common 
stock in 2014, 2013 and 2012, respectively. The increase in 2014 as compared to prior years is primarily due to the 
increase in the quarterly dividend to 6.25 cents per share in 2014 partially offset by a lower level of outstanding 
shares as a result of the repurchase of shares under our share repurchase programs.

Xerox 2014 Annual Report

52

 
The Board of Directors declared aggregate dividends of $24 million on the Series A Convertible Preferred Stock in 
each of the years in the three year period ended December 31, 2014. The preferred shares were issued in 2010 in 
connection with the acquisition of ACS. 

In January 2015, the Board of Directors approved an increase in the Company's quarterly cash dividend from 6.25 
cents per share to 7.00 cents per share, beginning with the dividend payable on April 30, 2015.

Liquidity and Financial Flexibility
We manage our worldwide liquidity using internal cash management practices, which are subject to (1) the statutes, 
regulations and practices of each of the local jurisdictions in which we operate, (2) the legal requirements of the 
agreements to which we are a party and (3) the policies and cooperation of the financial institutions we utilize to 
maintain and provide cash management services.

Our principal debt maturities are in line with historical and projected cash flows and are spread over the next ten 
years as follows (in millions): 

Year
2015 (1)

2016

2017

2018

2019

2020

2021

2022

2023

2024 and thereafter
Total (2)

______________

Amount

1,458

998

1,037

1,023

1,158

406

1,067

—

—

650

7,797

$

$

(1) 

Includes $1 million of Notes Payable and $150 million of Commercial Paper.

(2) 

Includes payments of $75 million on capital lease obligations related to our ITO business, which is held for sale and being reported as a 
discontinued operation at December 31, 2014. These obligations are expected to be assumed by the purchaser of the ITO business. Refer to 
Note 4 - Divestitures in the Consolidated Financial Statements for additional information regarding this pending sale.

Foreign Cash
At December 31, 2014, we had $1.4 billion of cash and cash equivalents on a consolidated basis. Of that amount, 
approximately $600 million was held outside the U.S. by our foreign subsidiaries to fund future working capital, 
investment and financing needs of our foreign subsidiaries. Accordingly, we have asserted that such funds are 
indefinitely reinvested outside the U.S. 

We believe we have sufficient levels of cash and cash flows to support our domestic requirements. However, if the 
cash held by our foreign subsidiaries was needed to fund our U.S. requirements, there would not be a significant tax 
liability associated with the repatriation, as any U.S. liability would be reduced by the foreign tax credits associated 
with the repatriated earnings. 

53

However, our determination above is based on the assumption that only the cash held outside the U.S. would be 
repatriated as a result of an unanticipated or unique domestic need. It does not assume repatriation of the entire 
amount of indefinitely reinvested earnings of our foreign subsidiaries. As disclosed in Note 17- Income and Other 
Taxes in our Consolidated Financial Statements, we have not estimated the potential tax consequences associated 
with the repatriation of the entire amount of our foreign earnings indefinitely reinvested outside the U.S. We do not 
believe it is practical to calculate the potential tax impact, as there is a significant amount of uncertainty with respect 
to determining the amount of foreign tax credits as well as any additional local withholding tax and other indirect tax 
consequences that may arise from the distribution of these earnings. In addition, because such earnings have been 
indefinitely reinvested in our foreign operations, repatriation would require liquidation of those investments or a 
recapitalization of our foreign subsidiaries, the impacts and effects of which are not readily determinable. 

Loan Covenants and Compliance
At December 31, 2014, we were in full compliance with the covenants and other provisions of our Credit Facility and 
Senior Notes. We have the right to terminate the Credit Facility without penalty. Failure to comply with material 
provisions or covenants of the Credit Facility and Senior Notes could have a material adverse effect on our liquidity 
and operations and our ability to continue to fund our customers' purchase of Xerox equipment. 

Refer to Note 13 - Debt in the Consolidated Financial Statements for additional information regarding debt 
arrangements.

Contractual Cash Obligations and Other Commercial Commitments and Contingencies 
At December 31, 2014, we had the following contractual cash obligations and other commercial commitments and 
contingencies: 

(in millions) 
Total debt, including capital lease obligations(1)
Interest on debt(1)
Minimum operating lease commitments(2) 

Defined benefit pension plans

Retiree health payments

Estimated Purchase Commitments:

Fuji Xerox(3)
Flextronics(4)
Other(5)

Total

_______________

2015

2016

2017

2018

2019

Thereafter 

$

1,458

$

330

586

340

71

1,831

452

182

998

270

390

—

70

—

—

236

$

1,037

$

1,023

$

1,158

$

2,123

214

188

—

70

—

—

106

168

112

—

69

—

—

69

132

85

—

68

—

—

65

592

57

—

323

—

—

25

$

5,250

$

1,964

$

1,615

$

1,441

$

1,508

$

3,120

(1)  Total debt for 2015 includes $1 million of Notes Payable and $150 million of commercial paper as well as payments on capital lease 

obligations related to our ITO business. Refer to Note 13 - Debt in the Consolidated Financial Statements for additional information regarding 
debt and interest on debt. 

(2)  Refer to Note 8 - Land, Buildings, Equipment and Software, Net in the Consolidated Financial Statements for additional information related to 

minimum operating lease commitments, including payments on operating lease related to our ITO business.

(3)  Fuji Xerox: The amount included in the table reflects our estimate of purchases over the next year and is not a contractual commitment.
(4)  Flextronics: We outsource certain manufacturing activities to Flextronics. The amount included in the table reflects our estimate of purchases 
over the next year and is not a contractual commitment. In the past two years, actual purchases from Flextronics averaged approximately 
$525 million per year.

(5)  Other purchase commitments: We enter into other purchase commitments with vendors in the ordinary course of business. Our policy with 

respect to all purchase commitments is to record losses, if any, when they are probable and reasonably estimable. We currently do not have, 
nor do we anticipate, material loss contracts. Other purchase commitments include $2 million and $6 million for 2015 and 2016, respectively, 
related to our ITO business, which is held for sale and being reported as a discontinued operation at December 31, 2014. Refer to Note 4 - 
Divestitures in the Consolidated Financial Statements for additional information regarding this pending sale.

Pension and Other Post-retirement Benefit Plans
We sponsor defined benefit pension plans and retiree health plans that require periodic cash contributions. Our 2014 
cash contributions for these plans were $284 million for our defined benefit pension plans and $70 million for our 
retiree health plans. In 2015, based on current actuarial calculations, we expect to make contributions of 
approximately $340 million to our worldwide defined benefit pension plans and approximately $71 million to our 
retiree health benefit plans. 

Xerox 2014 Annual Report

54

Contributions to our defined benefit pension plans in subsequent years will depend on a number of factors, including 
the investment performance of plan assets and discount rates as well as potential legislative and plan changes. At 
December 31, 2014, the underfunded balance of our U.S. and Non-U.S. defined benefit pension plans was $1,590 
million and $1,078 million, respectively.

Our retiree health benefit plans are non-funded and are almost entirely related to domestic operations. Cash 
contributions are made each year to cover medical claims costs incurred during the year. The amounts reported in 
the above table as retiree health payments represent our estimate of future benefit payments. 

Refer to Note 16 - Employee Benefit Plans in the Consolidated Financial Statements for additional information 
regarding contributions to our defined benefit pension and post-retirement plans.

Fuji Xerox
We purchased products, including parts and supplies, from Fuji Xerox totaling $1.8 billion, $1.9 billion and $2.1 billion 
in 2014, 2013 and 2012, respectively. Our purchase commitments with Fuji Xerox are entered into in the normal 
course of business and typically have a lead time of three months. Related party transactions with Fuji Xerox are 
discussed in Note 9 - Investments in Affiliates, at Equity in the Consolidated Financial Statements. 

Brazil Tax and Labor Contingencies 
Our Brazilian operations are involved in various litigation matters and have received or been the subject of numerous 
governmental assessments related to indirect and other taxes, as well as disputes associated with former employees 
and contract labor. The tax matters, which comprise a significant portion of the total contingencies, principally relate 
to claims for taxes on the internal transfer of inventory, municipal service taxes on rentals and gross revenue taxes. 
We are disputing these tax matters and intend to vigorously defend our positions. Based on the opinion of legal 
counsel and current reserves for those matters deemed probable of loss, we do not believe that the ultimate 
resolution of these matters will materially impact our results of operations, financial position or cash flows. The labor 
matters principally relate to claims made by former employees and contract labor for the equivalent payment of all 
social security and other related labor benefits, as well as consequential tax claims, as if they were regular 
employees. As of December 31, 2014, the total amounts related to the unreserved portion of the tax and labor 
contingencies, inclusive of related interest, amounted to approximately $817 million, with the decrease from 
December 31, 2013 balance of approximately $933 million, primarily related to currency and closed cases partially 
offset by interest. With respect to the unreserved balance of $817 million, the majority has been assessed by 
management as being remote as to the likelihood of ultimately resulting in a loss to the Company. In connection with 
the above proceedings, customary local regulations may require us to make escrow cash deposits or post other 
security of up to half of the total amount in dispute. As of December 31, 2014, we had $135 million of escrow cash 
deposits for matters we are disputing, and there are liens on certain Brazilian assets with a net book value of $18 
million and additional letters of credit of approximately $244 million, which include associated indexation. Generally, 
any escrowed amounts would be refundable and any liens would be removed to the extent the matters are resolved 
in our favor. We routinely assess all these matters as to probability of ultimately incurring a liability against our 
Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of 
an ultimate loss as probable.

Other Contingencies and Commitments 
As more fully discussed in Note 18 - Contingencies and Litigation in the Consolidated Financial Statements, we are 
involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; governmental 
entity contracting, servicing and procurement law; intellectual property law; environmental law; employment law; the 
Employee Retirement Income Security Act (ERISA); and other laws and regulations. In addition, guarantees, 
indemnifications and claims may arise during the ordinary course of business from relationships with suppliers, 
customers and non-consolidated affiliates. Nonperformance under a contract including a guarantee, indemnification 
or claim could trigger an obligation of the Company. 

We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is 
deemed probable and can be reasonably estimated. Should developments in any of these areas cause a change in 
our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any 
of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material 
adverse effect on our results of operations, cash flows and financial position in the period or periods in which such 
change in determination, judgment or settlement occurs.

55

Unrecognized Tax Benefits
As of December 31, 2014, we had $240 million of unrecognized tax benefits. This represents the tax benefits 
associated with various tax positions taken, or expected to be taken, on domestic and foreign tax returns that have 
not been recognized in our financial statements due to uncertainty regarding their resolution. The resolution or 
settlement of these tax positions with the taxing authorities is at various stages and therefore we are unable to make 
a reliable estimate of the eventual cash flows by period that may be required to settle these matters. In addition, 
certain of these matters may not require cash settlement due to the existence of credit and net operating loss 
carryforwards, as well as other offsets, including the indirect benefit from other taxing jurisdictions that may be 
available.

Refer to Note 17 - Income and Other Taxes in the Consolidated Financial Statements for additional information 
regarding unrecognized tax benefits.

Off-Balance Sheet Arrangements 

We may occasionally utilize off-balance sheet arrangements in our operations (as defined by the SEC Financial 
Reporting Release 67 (FRR-67), “Disclosure in Management’s Discussion and Analysis about Off-Balance Sheet 
Arrangements and Aggregate Contractual Obligations”). We enter into the following arrangements that have off-
balance sheet elements:

•  Operating leases in the normal course of business. The nature of these lease arrangements is discussed in Note 

8 - Land, Buildings, Equipment and Software, Net in the Consolidated Financial Statements.

•  We have facilities, primarily in the U.S., Canada and several countries in Europe that enable us to sell to third-

parties certain accounts receivable without recourse. In most instances, a portion of the sales proceeds are held 
back by the purchaser and payment is deferred until collection of the related sold receivables. Refer to Note 5 - 
Accounts Receivables, Net in the Consolidated Financial Statements for further information regarding these 
facilities.

•  During 2013 and 2012, we entered into arrangements to transfer and sell our entire interest in certain groups of 
finance receivables where we received cash and beneficial interests from the third-party purchaser. Refer to 
Note 6 - Finance Receivables, Net in the Consolidated Financial Statements for further information regarding 
these sales. There were no sales of Finance Receivables in 2014.

At December 31, 2014, we do not believe we have any off-balance sheet arrangements that have, or are reasonably 
likely to have, a material current or future effect on financial condition, changes in financial condition, revenues or 
expenses, results of operations, liquidity, capital expenditures or capital resources.

In addition, see the table above for the Company's contractual cash obligations and other commercial commitments 
and Note 18 - Contingencies and Litigation in the Consolidated Financial Statements for additional information 
regarding contingencies, guarantees, indemnifications and warranty liabilities.

Non-GAAP Financial Measures 

We have reported our financial results in accordance with generally accepted accounting principles (GAAP). In 
addition, we have discussed our results using non-GAAP measures. 

Management believes that these non-GAAP financial measures provide an additional means of analyzing the current 
periods’ results against the corresponding prior periods’ results. However, these non-GAAP financial measures 
should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance 
with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for 
comparable GAAP measures and should be read only in conjunction with our consolidated financial statements 
prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial 
measures internally to understand, manage and evaluate our business and make operating decisions. These non-
GAAP measures are among the primary factors management uses in planning for and forecasting future periods. 
Compensation of our executives is based in part on the performance of our business based on these non-GAAP 
measures.

Xerox 2014 Annual Report

56

 
 
 
A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and 
presented in accordance with GAAP are set forth on the following tables. 

Adjusted Earnings Measures
To better understand the trends in our business, we believe it is necessary to adjust the following amounts 
determined in accordance with GAAP to exclude the effects of the certain items as well as their related income tax 
effects. 

•  Net income and Earnings per share (EPS), and
•  Effective tax rate.

The above have been adjusted for the following items:

•  Amortization of intangible assets (all periods): The amortization of intangible assets is driven by our 

acquisition activity which can vary in size, nature and timing as compared to other companies within our industry 
and from period to period. Accordingly, due to the incomparability of acquisition activity among companies and 
from period to period, we believe exclusion of the amortization associated with intangible assets acquired 
through our acquisitions allows investors to better compare and understand our results. The use of intangible 
assets contributed to our revenues earned during the periods presented and will contribute to our future period 
revenues as well. Amortization of intangible assets will recur in future periods.

•  Other discrete, unusual or infrequent costs and expenses: In addition, we occasionally may also exclude 
additional items given the discrete, unusual or infrequent nature of the item on our results of operations for the 
period. We believe the exclusion of these items allow investors to better understand and analyze the results for 
the period as compared to prior periods as well as expected trends in our business.

Adjustments for 2014, 2013 and 2012 earnings were limited to the amortization of intangible assets. 

We also calculate and utilize an Operating income and margin earnings measure by adjusting our pre-tax income 
and margin amounts to exclude certain items. In addition to the amortization of intangible assets, operating income 
and margin also exclude Other expenses, net as well as Restructuring and asset impairment charges. Other 
expenses, net is primarily comprised of non-financing interest expense and also includes certain other non-operating 
items. Restructuring and asset impairment charges consist of costs primarily related to severance and benefits for 
employees pursuant to formal restructuring and workforce reduction plans. Such charges are expected to yield future 
benefits and savings with respect to our operational performance. We exclude all of these amounts in order to 
evaluate our current and past operating performance and to better understand the expected future trends in our 
business.

Net Income and EPS reconciliation:

(in millions; except per share amounts)
As Reported(1)

Adjustments:

Amortization of intangible assets

Adjusted
Weighted average shares for adjusted EPS(2)
Fully diluted shares at December 31, 2014(3)

 ___________

$

$

Year Ended December 31,

2014

2013

2012

Net Income

EPS

Net Income

EPS

Net Income

EPS

1,084

$

0.90

$

1,139

$

0.89

$

1,152

$

0.85

196

0.17

189

0.15

186

1,280

$

1.07

$

1,328

$

1.04

$

1,338

$

0.14

0.99

1,199

1,159

1,274

1,356

(1)  Net income and EPS from continuing operations attributable to Xerox.
(2)  Average shares for the calculation of adjusted EPS include 27 million shares associated with the Series A convertible preferred stock and therefore the related 

annual dividend was excluded.

(3)  Represents common shares outstanding at December 31, 2014 as well as shares associated with our Series A convertible preferred stock plus dilutive potential 

common shares as used for the calculation of diluted earnings per share in the fourth quarter 2014.

57

 
 
Effective Tax reconciliation:

(in millions)
As Reported(1)

Adjustments:

Amortization of intangible assets

Adjusted

 __________

$

$

Year Ended December 31, 2014

Year Ended December 31, 2013

Year Ended December 31, 2012

Pre-Tax
Income

Income Tax
Expense

Effective
Tax Rate

Pre-Tax
Income

Income Tax
Expense

Effective
Tax Rate

Pre-Tax
Income

Income Tax
Expense

Effective
Tax Rate

1,206

$

259

21.5% $

1,243

$

253

20.4% $

1,284

$

256

19.9%

315

1,521

$

119

378

305

24.9% $

1,548

$

116

369

301

23.8% $

1,585

$

115

371

23.4%

(1)  Pre-tax income and income tax expense from continuing operations attributable to Xerox.

Operating Income / Margin reconciliation:

(in millions)
Reported Pre-tax Income(1)

Adjustments:

Amortization of intangible assets

Xerox restructuring charge

Other expenses, net

Adjusted Operating Income /
Margin

Year Ended December 31, 2014

Year Ended December 31, 2013

Year Ended December 31, 2012

Profit

Revenue

Margin

Profit

Revenue

Margin

Profit

Revenue

Margin

$

1,206

$

19,540

6.2% $

1,243

$

20,006

6.2% $

1,284

$

20,421

6.3%

315

128

232

305

115

146

301

149

257

1,881

19,540

9.6%

1,809

20,006

9.0%

1,991

20,421

9.7%

Equity in net income of unconsolidated
affiliates
Business transformation costs(2)

Fuji Xerox restructuring charge

Litigation matters

Other expense, net*

160

21

3

—

(232)

169

—

9

(37)

(148)

152

—

16

—

(257)

Segment Profit / Margin

$

1,833

$

19,540

9.4% $

1,802

$

20,006

9.0% $

1,902

$

20,421

9.3%

 ____________

*        Includes rounding adjustments.
(1)  Profit and revenue from continuing operations attributable to Xerox.
(2)  Business transformation costs represent incremental costs incurred directly in support of our business transformation and restructuring initiatives such as 

compensation costs for overlapping staff, consulting costs and training costs.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

Financial Risk Management 

We are exposed to market risk from foreign currency exchange rates and interest rates, which could affect 
operating results, financial position and cash flows. We manage our exposure to these market risks through our 
regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. 
We utilized derivative financial instruments to hedge economic exposures, as well as reduce earnings and cash flow 
volatility resulting from shifts in market rates. 

Recent market events have not caused us to materially modify or change our financial risk management strategies 
with respect to our exposures to interest rate and foreign currency risk. Refer to Note 14 - Financial Instruments in 
the Consolidated Financial Statements for additional discussion on our financial risk management. 

Xerox 2014 Annual Report

58

 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
 
Foreign Exchange Risk Management

Assuming a 10% appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency 
exchange rates at December 31, 2014, the potential change in the fair value of foreign currency-denominated 
assets and liabilities in each entity would not be significant because all material currency asset and liability 
exposures were economically hedged as of December 31, 2014. A 10% appreciation or depreciation of the U.S. 
Dollar against all currencies from the quoted foreign currency exchange rates at December 31, 2014 would have an 
impact on our cumulative translation adjustment portion of equity of approximately $637 million. The net amount 
invested in foreign subsidiaries and affiliates, primarily Xerox Limited, Fuji Xerox and Xerox Canada Inc. and 
translated into U.S. Dollars using the year-end exchange rates, was approximately $6.4 billion at December 31, 
2014.

Interest Rate Risk Management
The consolidated weighted-average interest rates related to our total debt for 2014, 2013 and 2012 approximated 
4.8%, 5.0%, and 4.7%, respectively. Interest expense includes the impact of our interest rate derivatives. 

Virtually all customer-financing assets earn fixed rates of interest. The interest rates on a significant portion of the 
Company's term debt are fixed. 

As of December 31, 2014, $343 million of our total debt of $7.7 billion carried variable interest rates, including the 
effect of pay variable interest rate swaps, if any, we may use to reduce the effective interest rate on our fixed 
coupon debt.

The fair market values of our fixed-rate financial instruments are sensitive to changes in interest rates. At 
December 31, 2014, a 10% change in market interest rates would change the fair values of such financial 
instruments by approximately $92 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

59

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Xerox Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, 
comprehensive income, cash flows and shareholders’ equity present fairly, in all material respects, the financial 
position of Xerox Corporation and its subsidiaries at December 31, 2014 and 2013, and the results of their 
operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity 
with accounting principles generally accepted in the United States of America. In addition, in our opinion, the 
financial statement schedule listed in Item 15(a)(1) of this Form 10-K presents fairly, in all material respects, the 
information set forth therein when read in conjunction with the related consolidated financial statements.  Also in our 
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of 
December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by the 
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is 
responsible for these financial statements and financial statement schedule, for maintaining effective internal control 
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, 
included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our 
responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the 
Company's internal control over financial reporting based on our integrated audits. We conducted our audits in 
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those 
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial 
statements are free of material misstatement and whether effective internal control over financial reporting was 
maintained in all material respects. Our audits of the financial statements included examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles 
used and significant estimates made by management, and evaluating the overall financial statement presentation. 
Our audit of internal control over financial reporting included obtaining an understanding of internal control over 
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and 
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such 
other procedures as we considered necessary in the circumstances. We believe that our audits provide a 
reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance 
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in 
accordance with generally accepted accounting principles. A company’s internal control over financial reporting 
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable 
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance 
with generally accepted accounting principles, and that receipts and expenditures of the company are being made 
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable 
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may 
become inadequate because of changes in conditions, or that the degree of compliance with the policies or 
procedures may deteriorate.

/s/    PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Stamford, Connecticut
February 24, 2015

Xerox 2014 Annual Report

60

REPORTS OF MANAGEMENT 

Management's Responsibility for Financial Statements 

Our management is responsible for the integrity and objectivity of all information presented in this annual report. 
The consolidated financial statements were prepared in conformity with accounting principles generally accepted in 
the United States of America and include amounts based on management's best estimates and judgments. 
Management believes the consolidated financial statements fairly reflect the form and substance of transactions 
and that the financial statements fairly represent the Company's financial position and results of operations. 

The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly 
with the independent auditors, PricewaterhouseCoopers LLP, the internal auditors and representatives of 
management to review accounting, financial reporting, internal control and audit matters, as well as the nature and 
extent of the audit effort. The Audit Committee is responsible for the engagement of the independent auditors. The 
independent auditors and internal auditors have free access to the Audit Committee. 

Management's Report on Internal Control Over Financial Reporting 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, 
as such term is defined in the rules promulgated under the Securities Exchange Act of 1934. Under the supervision 
and with the participation of our management, including our principal executive, financial and accounting officers, 
we have conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 
framework in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations 
of the Treadway Commission. 

Based on the above evaluation, management has concluded that our internal control over financial reporting was 
effective as of December 31, 2014. 

/s/    URSULA M. BURNS      

/s/    KATHRYN A. MIKELLS        

/s/    JOSEPH H. MANCINI, JR.      

Chief Executive Officer

Chief Financial Officer

Chief Accounting Officer

61

 
 
 
XEROX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME 

(in millions, except per-share data)

Revenues

Sales

Outsourcing, maintenance and rentals

Financing

Total Revenues

Costs and Expenses

Cost of sales

Cost of outsourcing, maintenance and rentals

Cost of financing

Research, development and engineering expenses

Selling, administrative and general expenses

Restructuring and asset impairment charges

Amortization of intangible assets

Other expenses, net

Total Costs and Expenses

Income Before Income Taxes and Equity Income

Income tax expense

Equity in net income of unconsolidated affiliates

Income from Continuing Operations

(Loss) income from discontinued operations, net of tax

Net Income

Less: Net income attributable to noncontrolling interests

Net Income Attributable to Xerox

Amounts attributable to Xerox:

Net income from continuing operations

(Loss) income from discontinued operations, net of tax

Net Income Attributable to Xerox

Basic Earnings per Share:

Continuing operations

Discontinued operations

Total Basic Earnings per Share

Diluted Earnings per Share:

Continuing operations

Discontinued operations

Total Diluted Earnings per Share

Year Ended December 31,

2014

2013

2012

$

5,288

$

5,582

$

13,865

387

19,540

3,269

9,885

140

577

3,788

128

315

232

18,334

1,206

259

160

1,107

(115)

992

23

13,941

483

20,006

3,550

9,808

163

603

4,073

115

305

146

18,763

1,243

253

169

1,159

20

1,179

20

$

$

$

$

$

$

$

969

$

1,159

$

1,084

$

(115)

969

$

0.92

$

(0.10)

0.82

$

0.90

$

(0.09)

0.81

$

1,139

$

20

1,159

$

0.91

0.02

0.93

0.89

0.02

0.91

$

$

$

$

5,827

13,997

597

20,421

3,701

9,735

198

655

4,141

149

301

257

19,137

1,284

256

152

1,180

43

1,223

28

1,195

1,152

43

1,195

0.87

0.03

0.90

0.85

0.03

0.88

The accompanying notes are an integral part of these Consolidated Financial Statements.

Xerox 2014 Annual Report

62

 
XEROX CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME 

(in millions)

Net Income

Less: Net income attributable to noncontrolling interests

Net Income Attributable to Xerox

Other Comprehensive (Loss) Income, Net(1):

Translation adjustments, net

Unrealized gains (losses), net

Changes in defined benefit plans, net

Other Comprehensive (Loss) Income, Net

Less: Other comprehensive loss, net attributable to noncontrolling
interests

Other Comprehensive (Loss) Income, Net Attributable to Xerox

Comprehensive (Loss) Income, Net

Less: Comprehensive income, net attributable to noncontrolling
interests

Comprehensive (Loss) Income, Net Attributable to Xerox

__________

$

$

$

$

$

$

Year Ended December 31,

2014

2013

2012

992

$

23

969

$

1,179

$

20

1,159

$

(734) $

(185) $

15

(662)

(1,381)

(1)

(1,380) $

—

632

447

(1)

448

$

(389) $

1,626

$

22

(411) $

19

1,607

$

1,223

28

1,195

113

(63)

(561)

(511)

—

(511)

712

28

684

(1)  Refer to Note 21 - Other Comprehensive (Loss) Income for gross components of Other Comprehensive (Loss) Income, reclassification 

adjustments out of Accumulated Other Comprehensive Loss and related tax effects. 

The accompanying notes are an integral part of these Consolidated Financial Statements.

63

 
XEROX CORPORATION
CONSOLIDATED BALANCE SHEETS

(in millions, except share data in thousands)

Assets

Cash and cash equivalents

Accounts receivable, net

Billed portion of finance receivables, net

Finance receivables, net

Inventories

Assets of discontinued operations

Other current assets

Total current assets

Finance receivables due after one year, net

Equipment on operating leases, net

Land, buildings and equipment, net

Investments in affiliates, at equity

Intangible assets, net

Goodwill

Other long-term assets

Total Assets

Liabilities and Equity

Short-term debt and current portion of long-term debt

Accounts payable

Accrued compensation and benefits costs

Unearned income

Liabilities of discontinued operations

Other current liabilities

Total current liabilities

Long-term debt

Pension and other benefit liabilities

Post-retirement medical benefits

Other long-term liabilities

Total Liabilities

Series A Convertible Preferred Stock

Common stock

Additional paid-in capital

Treasury stock, at cost

Retained earnings

Accumulated other comprehensive loss

Xerox shareholders’ equity

Noncontrolling interests

Total Equity

Total Liabilities and Equity

Shares of common stock issued

Treasury stock

Shares of common stock outstanding

December 31,

2014

2013

$

1,411

$

2,652

110

1,425

934

1,260

1,082

8,874

2,719

525

1,123

1,338

2,031

8,805

2,243

1,764

2,929

113

1,500

998

—

1,207

8,511

2,917

559

1,466

1,285

2,503

9,205

2,590

$

$

27,658

$

29,036

1,427

$

1,584

754

431

371

1,509

6,076

6,314

2,847

865

498

1,117

1,626

734

496

—

1,713

5,686

6,904

2,136

785

757

16,600

16,268

349

349

1,124

4,283

(105)

9,491

(4,159)

10,634

75

10,709

$

27,658

$

1,210

5,282

(252)

8,839

(2,779)

12,300

119

12,419

29,036

1,124,354

1,210,321

(7,609)

(22,001)

1,116,745

1,188,320

The accompanying notes are an integral part of these Consolidated Financial Statements.

Xerox 2014 Annual Report

64

XEROX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

Cash Flows from Operating Activities:

Net income

Adjustments required to reconcile net income to cash flows from operating activities:

Depreciation and amortization

Provision for receivables

Provision for inventory

Deferred tax expense

Net loss (gain) on sales of businesses and assets

Undistributed equity in net income of unconsolidated affiliates

Stock-based compensation

Restructuring and asset impairment charges

Payments for restructurings

Contributions to defined benefit pension plans

Increase in accounts receivable and billed portion of finance receivables

Collections of deferred proceeds from sales of receivables

Increase in inventories

Increase in equipment on operating leases

(Increase) decrease in finance receivables

Collections on beneficial interest from sales of finance receivables

Increase in other current and long-term assets

Increase (decrease) in accounts payable and accrued compensation

Decrease in other current and long-term liabilities

Net change in income tax assets and liabilities

Net change in derivative assets and liabilities

Other operating, net

Net cash provided by operating activities

Cash Flows from Investing Activities:

Cost of additions to land, buildings and equipment

Proceeds from sales of land, buildings and equipment

Cost of additions to internal use software

Proceeds from sale of businesses

Acquisitions, net of cash acquired

Other investing, net

Net cash used in investing activities

Cash Flows from Financing Activities:

Net payments on debt

Common stock dividends

Preferred stock dividends

Proceeds from issuances of common stock

Excess tax benefits from stock-based compensation

Payments to acquire treasury stock, including fees

Repurchases related to stock-based compensation

Distributions to noncontrolling interests

Other financing

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and Cash Equivalents at End of Year

Year Ended December 31,

2014

2013

2012

$

992

$

1,179

$

1,426

1,358

53

26

113

134

(91)

91

130

(133)

(284)

(436)

434

(22)

(283)

(10)

79

(159)

128

(64)

29

(14)

(76)

2,063

(368)

54

(84)

26

(340)

9

(703)

(175)

(289)

(24)

55

18

(1,071)

(41)

(87)

(10)

(1,624)

(89)

(353)

1,764

123

35

117

(45)

(92)

90

116

(136)

(230)

(576)

482

(38)

(303)

609

58

(145)

(29)

(50)

8

(11)

(145)

2,375

(346)

86

(81)

26

(155)

18

(452)

(434)

(272)

(24)

124

16

(696)

(57)

(56)

(3)

(1,402)

(3)

518

1,246

$

1,411

$

1,764

$

1,223

1,301

127

30

105

2

(90)

125

154

(144)

(364)

(776)

470

—

(276)

947

—

(265)

120

(71)

33

11

(82)

2,580

(388)

9

(125)

—

(276)

19

(761)

(108)

(231)

(24)

44

10

(1,052)

(42)

(69)

—

(1,472)

(3)

344

902

1,246

The accompanying notes are an integral part of these Consolidated Financial Statements.

65

 
XEROX CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 

(in millions)

Common
Stock

Additional
Paid-in
Capital

Treasury
Stock

Retained
Earnings

AOCL(3)

Xerox
Shareholders’
Equity

Non-
controlling
Interests

Total
Equity

Balance at December 31, 2011

$

1,353

$

6,317

$

(124) $

7,046

$ (2,716) $

11,876

$

149

$ 12,025

Comprehensive income (loss), net
Cash dividends declared-common(1)
Cash dividends declared-preferred(2)
Contribution of common stock to U.S.
pension plan
Stock option and incentive plans, net

Payments to acquire treasury stock,
including fees
Cancellation of treasury stock

Distributions to noncontrolling interests

—

—

—

15

18

—

(147)
—

—

—

—

115

115

—

(925)
—

—

—

—

—

—

(1,052)

1,072

—

1,195

(511)

(226)

(24)

—

—

—

—

—

—

—

—

—

—

—

—

684

(226)

(24)

130

133

(1,052)

—

—

28

—

—

—

—

—

—
(34)

712

(226)

(24)

130

133

(1,052)

—

(34)

Balance at December 31, 2012

$

1,239

$

5,622

$

(104) $

7,991

$ (3,227) $

11,521

$

143

$ 11,664

Comprehensive income, net
Cash dividends declared-common(1)
Cash dividends declared-preferred(2)
Conversion of notes to common stock

Stock option and incentive plans, net

Payments to acquire treasury stock,
including fees
Cancellation of treasury stock

Distributions to noncontrolling interests

—

—
—

1

28

—

(58)

—

—

—
—

8

142

—

(490)
—

—

—
—

—

—

(696)

548

—

1,159

(287)
(24)

—

—

—

—

—

448

1,607

—
—

—

—

—

—

—

(287)
(24)

9

170

(696)

—

—

19

—
—

—

—

—

—
(43)

1,626

(287)
(24)

9

170

(696)

—

(43)

Balance at December 31, 2013

$

1,210

$

5,282

$

(252) $

8,839

$ (2,779) $

12,300

$

119

$ 12,419

Comprehensive income (loss), net
Cash dividends declared-common(1)
Cash dividends declared-preferred(2)
Conversion of notes to common stock

Stock option and incentive plans, net

Payments to acquire treasury stock,
including fees
Cancellation of treasury stock

Distributions to noncontrolling interests

Balance at December 31, 2014

$

__________

—

—

—

1

14

—

—

—

—

8

110

—

(101)
—
1,124

$

(1,117)

—
4,283

—

—

—

—

—

(1,071)

1,218

969

(293)
(24)

—

—

—

—

—
(105) $

—
9,491

$

(1,380)

—

—

—

—

—

—

—

$ (4,159) $

(411)

(293)
(24)

9

124

(1,071)

—

—
10,634

$

22

—

—

—

—

—

—
(66)
75

(389)

(293)

(24)

9

124

(1,071)

—

(66)

$ 10,709

(1)  Cash dividends declared on common stock of $0.0625 in each quarter of 2014, $0.0575 in each quarter of 2013 and $0.0425 in each quarter 

of 2012.

(2)  Cash dividends declared on preferred stock of $20 per share in each quarter of 2014, 2013 and 2012.
(3)  AOCL - Accumulated other comprehensive loss.

The accompanying notes are an integral part of these Consolidated Financial Statements.

Xerox 2014 Annual Report

66

 
XEROX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per-share data and where otherwise noted)

Note 1 – Summary of Significant Accounting Policies

References herein to “we,” “us,” “our,” the “Company” and “Xerox” refer to Xerox Corporation and its consolidated 
subsidiaries unless the context suggests otherwise.

Description of Business and Basis of Presentation

Xerox is a $19.5 billion global enterprise for business process and document management solutions. We are one of 
the largest diversified business process outsourcing company worldwide, with an expertise in managing transaction-
intensive processes. This includes services that support enterprises through multi-industry offerings such as 
customer care, transaction processing, finance and accounting, and human resources, as well as industry focused 
offerings in areas such as healthcare, transportation, financial services, retail and telecommunications. We also 
provide extensive leading-edge document technology, services, software and genuine Xerox supplies for graphic 
communication and office printing environments of any size. 

Basis of Consolidation

The Consolidated Financial Statements include the accounts of Xerox Corporation and all of our controlled 
subsidiary companies. All significant intercompany accounts and transactions have been eliminated. Investments in 
business entities in which we do not have control, but we have the ability to exercise significant influence over 
operating and financial policies (generally 20% to 50% ownership) are accounted for using the equity method of 
accounting. Operating results of acquired businesses are included in the Consolidated Statements of Income from 
the date of acquisition. 

We consolidate variable interest entities if we are deemed to be the primary beneficiary of the entity. Operating 
results for variable interest entities in which we are determined to be the primary beneficiary are included in the 
Consolidated Statements of Income from the date such determination is made. 

For convenience and ease of reference, we refer to the financial statement caption “Income before Income Taxes 
and Equity Income” as “pre-tax income” throughout the Notes to the Consolidated Financial Statements.

In December 2014, we announced an agreement to sell our Information Technology Outsourcing (ITO) business to 
Atos SE (Atos); the sale is expected to close in the first half of 2015. As a result of the pending sale and having met 
applicable accounting requirements, we reported the ITO business as held for sale and a discontinued operation at 
December 31, 2014. In 2014 we also completed the disposal of two smaller businesses - Xerox Audio Visual 
Solutions, Inc. (XAV) and Truckload Management Services (TMS) - that were also reported as discontinued 
operations. All prior periods have been reclassified to conform to this presentation. In 2013 we completed the sale of 
our U.S. and Canadian (North American or N.A.) and Western European (European) Paper businesses. Results from 
these paper-related businesses are reported as Discontinued Operations and all prior period results have been 
reclassified to conform to this presentation. Refer to Note 4 - Divestitures for additional information regarding 
discontinued operations. 

Use of Estimates 

The preparation of our Consolidated Financial Statements requires that we make estimates and assumptions that 
affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at 
the date of the financial statements, and the reported amounts of revenues and expenses during the reporting 
period. Future events and their effects cannot be predicted with certainty; accordingly, our accounting estimates 
require the exercise of judgment. The accounting estimates used in the preparation of our Consolidated Financial 
Statements will change as new events occur, as more experience is acquired, as additional information is obtained 
and as our operating environment changes. Our estimates are based on management's best knowledge of current 
events, historical experience, actions that the company may undertake in the future and on various other 
assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different 
from these estimates. 

67

 
The following table summarizes certain significant costs and expenses that require management estimates for the 
three years ended December 31, 2014: 

Expense/(Income)

Year Ended December 31,

2014

2013

2012

Provisions for restructuring and asset impairments - continuing operations

$

128

$

115

$

Provisions for restructuring and asset impairments - discontinued operations

Provision for receivables

Provisions for litigation and regulatory matters

Provisions for obsolete and excess inventory

Provision for product warranty liability

Depreciation and obsolescence of equipment on operating leases
Depreciation of buildings and equipment (1)
Amortization of internal use software (1)

Amortization of product software
Amortization of acquired intangible assets (1)
Amortization of customer contract costs (1)

Defined pension benefits - net periodic benefit cost

Retiree health benefits - net periodic benefit cost

Income tax expense - continuing operations

Income tax expense - discontinued operations

__________________

2

53

11

26

25

297

324

139

62

315

128

82

3

259

6

7

123

(34)

35

28

283

332

137

43

305

100

267

1

253

27

149

4

127

(1)

30

29

279

354

114

19

301

92

300

11

256

21

(1)  Excludes amounts related to our ITO business which is held for sale and reported as a discontinued operation at December 31, 2014. Refer 

to Note 4 - Divestitures for additional information regarding this pending sale.

Changes in Estimates

In the ordinary course of accounting for the items discussed above, we make changes in estimates as appropriate 
and as we become aware of new or revised circumstances surrounding those estimates. Such changes and 
refinements in estimation methodologies are reflected in reported results of operations in the period in which the 
changes are made and, if material, their effects are disclosed in the Notes to the Consolidated Financial Statements 
and in Management's Discussion and Analysis of Financial Condition and Results of Operations. 

New Accounting Standards and Accounting Changes

Except for the Accounting Standard Updates (ASU's) discussed below, the new ASU's issued by the FASB during the 
last two years did not have any significant impact on the Company.

Income Statement  

In January 2015, the FASB issued ASU 2015-01 Income Statement-Extraordinary and Unusual Items (Subtopic 
225-20) - Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 
2015-01 eliminates from GAAP the concept of extraordinary items. ASU 2015-01 is effective for our fiscal year 
ending December 31, 2016, with early adoption permitted. The standard primarily involves presentation and 
disclosure and, therefore, is not expected to have a material impact on our financial condition, results of operations 
or cash flows.

Business Combinations  

In November 2014, the FASB issued ASU 2014-17, Business Combinations (Topic 805) - Pushdown Accounting.  
The amendments in this Update provide an acquired entity with an option to apply pushdown accounting in its 
separate financial statements. ASU 2014-17 was effective on November 18, 2014. The adoption of this standard did 
not have a material impact on our financial condition or results of operations.

Derivatives and Hedging

In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815) - Determining Whether the 
Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. ASU 
2014-16 does not change the current criteria in GAAP for determining when separation of certain embedded 
derivative features in a hybrid financial instrument. The amendments clarify how current GAAP should be interpreted 
in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in 
the form of a share. ASU 2014-16 is effective for our fiscal year ending December 31, 2016, with early adoption 

Xerox 2014 Annual Report

68

permitted. The adoption of this standard is not expected to have a material impact on our financial condition or 
results of operations.

Disclosures of Going Concern Uncertainties   

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 
205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15  
provides guidance regarding management's responsibility to evaluate whether there is substantial doubt about an 
entity's ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective 
for our fiscal year ending December 31, 2016, with early adoption permitted. We do not expect the adoption of this 
standard to have an impact on our consolidated financial statements.

Stock Compensation

In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for 
Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after 
the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting, and that could be 
achieved after the requisite service period, be treated as a performance condition. As such, the performance target 
should not be reflected in estimating the grant date fair value of the award. This update is effective for our fiscal year 
beginning January 1, 2016 and early adoption is permitted. We do not expect the adoption of this standard to have a 
material impact on our financial condition, results of operations or cash flows.

Revenue Recognition

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to supersede 
nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize 
revenues when promised goods or services are transferred to customers in an amount that reflects the consideration 
that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this 
core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue 
recognition process than required under existing U.S. GAAP, including identifying performance obligations in the 
contract, estimating the amount of variable consideration to include in the transaction price and allocating the 
transaction price to each separate performance obligation. ASU 2014-09 is effective for our fiscal year beginning 
January 1, 2017 using either of two methods: (i) retrospective to each prior reporting period presented with the option 
to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of 
initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures 
as defined per ASU 2014-09. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our 
consolidated financial statements.

Discontinued Operations

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, 
and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an 
Entity. The update changes the requirements for reporting discontinued operations in Subtopic 205-20. A 
discontinued operation may include a component of an entity or a group of components of an entity, or a business. A 
disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued 
operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations 
and financial results. Examples include a disposal of a major geographic area, a major line of business or a major 
equity method investment.

Additionally, the update requires expanded disclosures about discontinued operations that will provide financial 
statement users with more information about the assets, liabilities, income and expenses of discontinued operations. 
This update is effective prospectively for our fiscal year beginning January 1, 2015. The standard primarily involves 
presentation and disclosure and, therefore, is not expected to have a material impact on our financial condition, 
results of operations or cash flows.

Service Concession Arrangements

In January 2014, the FASB issued ASU 2014-05, Service Concession Arrangements (Topic 853). This update 
specifies that an entity should not account for a service concession arrangement within the scope of this update as a 
lease in accordance with Topic 840, Leases. The update does not provide specific accounting guidance for various 
aspects of service concession arrangements but rather indicates that an entity should refer to other Topics as 
applicable to account for various aspects of a service concession arrangement. The update is effective for our fiscal 
year beginning January 1, 2015. The adoption of this standard is not expected to have a material effect on our 
financial condition, results of operation or cash flows.

69

Income Taxes

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit 
When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update 
provides guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss 
carryforward, a similar tax loss, or a tax credit carryforward, exists. This update was effective prospectively for our 
fiscal year beginning January 1, 2014. Upon adoption of this standard, we reclassified approximately $180 of 
liabilities for unrecognized tax benefits against deferred tax assets. 

Hedge Accounting

In July 2013, the FASB issued ASU 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index
Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. The update permits the Fed Funds
Effective Swap Rate to be used as a U.S. benchmark interest rate for hedge accounting purposes under FASB ASC
Topic 815, in addition to the interest rates on direct Treasury obligations of the U.S. government (UST) and the
London Interbank Offered Rate (LIBOR). The update also removes the restriction on using different benchmark
rates for similar hedges. ASU 2013-10 is effective prospectively for qualifying new or re-designated hedging
relationships entered into on or after July 17, 2013. The adoption of this standard did not have a material impact on
our financial condition or results of operations.

Cumulative Translation Adjustments

In March 2013, the FASB issued ASU 2013-05, Parent's Accounting for the Cumulative Translation Adjustment upon 
Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign 
Entity (Topic 830). The objective of ASU 2013-05 is to resolve the diversity in practice regarding the release into net 
income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a 
foreign entity. This update was effective prospectively for our fiscal year beginning January 1, 2014, and did not have 
nor is it expected to have a material impact on our financial condition, results of operations or cash flows.

Summary of Accounting Policies 

Revenue Recognition

We generate revenue through services, the sale and rental of equipment, supplies and income associated with the 
financing of our equipment sales. Revenue is recognized when it is realized or realizable and earned. We consider 
revenue realized or realizable and earned when we have persuasive evidence of an arrangement, delivery has 
occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Delivery does not occur 
until equipment has been shipped or services have been provided to the customer, risk of loss has transferred to the 
customer, and either customer acceptance has been obtained, customer acceptance provisions have lapsed, or the 
company has objective evidence that the criteria specified in the customer acceptance provisions have been 
satisfied. The sales price is not considered to be fixed or determinable until all contingencies related to the sale have 
been resolved. More specifically, revenue related to services and sales of our products is recognized as follows: 

Equipment-Related Revenues

Equipment: Revenues from the sale of equipment, including those from sales-type leases, are recognized at the 
time of sale or at the inception of the lease, as appropriate. For equipment sales that require us to install the product 
at the customer location, revenue is recognized when the equipment has been delivered and installed at the 
customer location. Sales of customer installable products are recognized upon shipment or receipt by the customer 
according to the customer's shipping terms. Revenues from equipment under other leases and similar arrangements 
are accounted for by the operating lease method and are recognized as earned over the lease term, which is 
generally on a straight-line basis. 

Technical Services: Technical service revenues are derived primarily from maintenance contracts on the equipment 
sold to our customers and are recognized over the term of the contracts. A substantial portion of our products are 
sold with full service maintenance agreements for which the customer typically pays a base service fee plus a 
variable amount based on usage. As a consequence, other than the product warranty obligations associated with 
certain of our low end products, we do not have any significant product warranty obligations, including any 
obligations under customer satisfaction programs. 

Xerox 2014 Annual Report

70

Bundled Lease Arrangements: We sell our products and services under bundled lease arrangements, which 
typically include equipment, service, supplies and financing components for which the customer pays a single 
negotiated fixed minimum monthly payment for all elements over the contractual lease term. These arrangements 
also typically include an incremental, variable component for page volumes in excess of contractual page volume 
minimums, which are often expressed in terms of price-per-page. The fixed minimum monthly payments are 
multiplied by the number of months in the contract term to arrive at the total fixed minimum payments that the 
customer is obligated to make (fixed payments) over the lease term. The payments associated with page volumes in 
excess of the minimums are contingent on whether or not such minimums are exceeded (contingent payments). In 
applying our lease accounting methodology, we only consider the fixed payments for purposes of allocating to the 
relative fair value elements of the contract. Contingent payments, if any, are recognized as revenue in the period 
when the customer exceeds the minimum copy volumes specified in the contract. 

Revenues under bundled arrangements are allocated considering the relative selling prices of the lease and non-
lease deliverables included in the bundled arrangement. Lease deliverables include the equipment, financing, 
maintenance and other executory costs, while non-lease deliverables generally consist of the supplies and non-
maintenance services. The allocation for the lease deliverables begins by allocating revenues to the maintenance 
and other executory costs plus a profit thereon. These elements are generally recognized over the term of the lease 
as service revenue. The remaining amounts are allocated to the equipment and financing elements which are 
subjected to the accounting estimates noted below under “Leases.” 

Our pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are 
developed based upon a variety of factors including local prevailing rates in the marketplace and the customer’s 
credit history, industry and credit class. We reassess our pricing interest rates quarterly based on changes in the 
local prevailing rates in the marketplace. These interest rates have generally been adjusted if the rates vary by 25 
basis points or more, cumulatively, from the rate last in effect. The pricing interest rates generally equal the implicit 
rates within the leases, as corroborated by our comparisons of cash to lease selling prices.

Sales to distributors and resellers: We utilize distributors and resellers to sell many of our technology products, 
supplies and services to end-user customers. We refer to our distributor and reseller network as our two-tier 
distribution model. Sales to distributors and resellers are generally recognized as revenue when products are sold to 
such distributors and resellers. However, revenue is only recognized when the distributor or reseller has economic 
substance apart from the company, the sales price is not contingent upon resale or payment by the end user 
customer and we have no further obligations related to bringing about the resale, delivery or installation of the 
product.

Distributors and resellers participate in various rebate, price-protection, cooperative marketing and other programs, 
and we record provisions for these programs as a reduction to revenue when the sales occur. Similarly, we account 
for our estimates of sales returns and other allowances when the sales occur based on our historical experience. 

In certain instances, we may provide lease financing to end-user customers who purchased equipment we sold to 
distributors or resellers. We compete with other third-party leasing companies with respect to the lease financing 
provided to these end-user customers. 

Supplies: Supplies revenue generally is recognized upon shipment or utilization by customers in accordance with 
the sales contract terms. 

Software: Most of our equipment has both software and non-software components that function together to deliver 
the equipment's essential functionality and therefore they are accounted for together as part of equipment sales 
revenues. Software accessories sold in connection with our equipment sales, as well as free-standing software sales 
are accounted for as separate deliverables or elements. In most cases, these software products are sold as part of 
multiple element arrangements and include software maintenance agreements for the delivery of technical service, 
as well as unspecified upgrades or enhancements on a when-and-if-available basis. In those software accessory and 
free-standing software arrangements that include more than one element, we allocate the revenue among the 
elements based on vendor-specific objective evidence (VSOE) of fair value. Revenue allocated to software is 
normally recognized upon delivery while revenue allocated to the software maintenance element is recognized 
ratably over the term of the arrangement. 

Leases: As noted above, equipment may be placed with customers under bundled lease arrangements. The two 
primary accounting provisions which we use to classify transactions as sales-type or operating leases are: (1) a 
review of the lease term to determine if it is equal to or greater than 75% of the economic life of the equipment and 
(2) a review of the present value of the minimum lease payments to determine if they are equal to or greater than 
90% of the fair market value of the equipment at the inception of the lease. 

71

We consider the economic life of most of our products to be five years, since this represents the most frequent 
contractual lease term for our principal products and only a small percentage of our leases are for original terms 
longer than five years. There is no significant after-market for our used equipment. We believe five years is 
representative of the period during which the equipment is expected to be economically usable, with normal service, 
for the purpose for which it is intended. Residual values are not significant. 

With respect to fair value, we perform an analysis of equipment fair value based on cash selling prices during the 
applicable period. The cash selling prices are compared to the range of values determined for our leases. The range 
of cash selling prices must be reasonably consistent with the lease selling prices in order for us to determine that 
such lease prices are indicative of fair value. 

Financing: Finance income attributable to sales-type leases, direct financing leases and installment loans is 
recognized on the accrual basis using the effective interest method. 

Services-Related Revenue

Outsourcing: Revenues associated with outsourcing services are generally recognized as services are rendered, 
which is generally on the basis of the number of accounts or transactions processed. Information technology 
processing revenues are recognized as services are provided to the customer, generally at the contractual selling 
prices of resources consumed or capacity utilized by our customers. In those service arrangements where final 
acceptance of a system or solution by the customer is required, revenue is deferred until all acceptance criteria have 
been met. Revenues on cost reimbursable contracts are recognized by applying an estimated factor to costs as 
incurred, determined by the contract provisions and prior experience. Revenues on unit-price contracts are 
recognized at the contractual selling prices as work is completed and accepted by the customer. Revenues on time 
and material contracts are recognized at the contractual rates as the labor hours and direct expenses are incurred.

Revenues on certain fixed price contracts where we provide system development and implementation services are 
recognized over the contract term based on the percentage of development and implementation services that are 
provided during the period compared with the total estimated development and implementation services to be 
provided over the entire contract using the percentage-of-completion accounting methodology. These services 
require that we perform significant, extensive and complex design, development, modification or implementation of 
our customers' systems. Performance will often extend over long periods, and our right to receive future payment 
depends on our future performance in accordance with the agreement. 

The percentage-of-completion methodology involves recognizing probable and reasonably estimable revenue using 
the percentage of services completed, on a current cumulative cost to estimated total cost basis, using a reasonably 
consistent profit margin over the period. 

Revenues earned in excess of related billings are accrued, whereas billings in excess of revenues earned are 
deferred until the related services are provided. We recognize revenues for non-refundable, upfront implementation 
fees on a straight-line basis over the period between the initiation of the ongoing services through the end of the 
contract term.

In connection with our services arrangements, we incur and capitalize costs to originate these long-term contracts 
and to perform the migration, transition and setup activities necessary to enable us to perform under the terms of the 
arrangement. Certain initial direct costs of an arrangement are capitalized and amortized over the contractual service 
period of the arrangement to cost of services. From time to time, we also provide inducements to customers in 
various forms, including contractual credits, which are capitalized and amortized as a reduction of revenue over the 
term of the contract. 

Spending associated with customer-related deferred set-up/transition and inducement costs was $80, $107 and 
$109 in 2014, 2013 and 2012, respectively, excluding the ITO business(1). At December 31, 2014 and 2013 the 
balance of deferred costs was $323 (of which $96 relates to our ITO business(1)) and $399, respectively. The balance 
at December 31, 2014 excluding ITO of $227, is expected to be amortized over a weighted average period of 
approximately 7 years and amortization expense in 2015 is expected to be approximately $94. 

Long-lived assets used in the fulfillment of the arrangements are capitalized and depreciated over the shorter of their 
useful life or the term of the contract if an asset is contract specific.  

Our outsourcing services contracts may also include the sale of equipment and software. In these instances we 
follow the policies noted above under Equipment-Related Revenue. 

(1)  Our ITO business is held for sale and reported as a discontinued operation at December 31, 2014. Refer to Note 4 - Divestitures for 

additional information regarding this pending sale.

Xerox 2014 Annual Report

72

Other Revenue Recognition Policies 

Multiple Element Arrangements: As described above, we enter into the following revenue arrangements that may 
consist of multiple deliverables:

•  Bundled lease arrangements, which typically include both lease deliverables and non-lease deliverables as 

described above.

•  Contracts for multiple types of outsourcing services, as well as professional and value-added services. For 

instance, we may contract for an implementation or development project and also provide services to operate 
the system over a period of time; or we may contract to scan, manage and store customer documents.

In substantially all of our multiple element arrangements, we are able to separate the deliverables since we normally 
will meet both of the following criteria:

• 

• 

The delivered item(s) has value to the customer on a stand-alone basis; and

If the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of 
the undelivered item(s) is considered probable and substantially in our control. 

Consideration in a multiple-element arrangement is allocated at the inception of the arrangement to all deliverables 
on the basis of the relative selling price. When applying the relative selling price method, the selling price for each 
deliverable is primarily determined based on VSOE or third-party evidence (TPE) of the selling price. The above 
noted revenue policies are then applied to each separated deliverable, as applicable. 

Revenue-based taxes: We report revenue net of any revenue-based taxes assessed by governmental authorities 
that are imposed on and concurrent with specific revenue-producing transactions. The primary revenue-based taxes 
are sales tax and value-added tax (VAT).

Other Significant Accounting Policies

Shipping and Handling 

Costs related to shipping and handling are recognized as incurred and included in Cost of sales in the Consolidated 
Statements of Income.

Research, Development and Engineering (RD&E)

Research, development and engineering costs are expensed as incurred. Sustaining engineering costs are incurred 
with respect to on-going product improvements or environmental compliance after initial product launch. Sustaining 
engineering costs were $132, $122 and $110 in 2014, 2013 and 2012, respectively. 

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, including money market funds, and investments with original 
maturities of three months or less. 

Receivable Sales

We regularly transfer certain portions of our receivable portfolios and normally account for those transfers as sales 
based on meeting the criteria for derecognition in accordance with ASC Topic 860 "Transfer and Servicing" of 
Financial Assets. Gains or losses on the sale of receivables depend, in part, on both (a) the cash proceeds and (b) 
the net non-cash proceeds received or paid. When we sell receivables we normally receive beneficial interests in the 
transferred receivables from the purchasers as part of the proceeds.  We may refer to these beneficial interests as a 
deferred purchase price. The beneficial interests obtained are initially measured at their fair value. We generally 
estimate fair value based on the present value of expected future cash flows, which are calculated using 
management's best estimates of the key assumptions including credit losses, prepayment rate and discount rates 
commensurate with the risks involved. Refer to Note 5 - Accounts Receivable, Net and Note 6 - Finance 
Receivables, Net for more details on our receivable sales.

Inventories

Inventories are carried at the lower of average cost or market. Inventories also include equipment that is returned at 
the end of the lease term. Returned equipment is recorded at the lower of remaining net book value or salvage 
value, which normally are not significant. We regularly review inventory quantities and record a provision for excess 
and/or obsolete inventory based primarily on our estimated forecast of product demand, production requirements 
and servicing commitments. Several factors may influence the realizability of our inventories, including our decision 
to exit a product line, technological changes and new product development. The provision for excess and/or obsolete 

73

raw materials and equipment inventories is based primarily on near term forecasts of product demand and include 
consideration of new product introductions, as well as changes in remanufacturing strategies. The provision for 
excess and/or obsolete service parts inventory is based primarily on projected servicing requirements over the life of 
the related equipment populations. 

Land, Buildings and Equipment and Equipment on Operating Leases

Land, buildings and equipment are recorded at cost. Buildings and equipment are depreciated over their estimated 
useful lives. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life. 
Equipment on operating leases is depreciated to estimated salvage value over the lease term. Depreciation is 
computed using the straight-line method. Significant improvements are capitalized and maintenance and repairs are 
expensed. Refer to Note 7 - Inventories and Equipment on Operating Leases, Net and Note 8 - Land, Buildings, 
Equipment and Software, Net for further discussion. 

Software - Internal Use and Product

We capitalize direct costs associated with developing, purchasing or otherwise acquiring software for internal use 
and amortize these costs on a straight-line basis over the expected useful life of the software, beginning when the 
software is implemented (Internal Use Software). Costs incurred for upgrades and enhancements that will not result 
in additional functionality are expensed as incurred. Amounts expended for Internal Use Software are included in 
Cash Flows from Investing. 

We also capitalize certain costs related to the development of software solutions to be sold to our customers upon 
reaching technological feasibility (Product Software). These costs are amortized on a straight-line basis over the 
estimated economic life of the software. Amounts expended for Product Software are included in Cash Flows from 
Operations. We perform periodic reviews to ensure that unamortized Product Software costs remain recoverable 
from estimated future operating profits (net realizable value or NRV). Costs to support or service licensed software 
are charged to Costs of services as incurred. 

Refer to Note 8 - Land, Buildings, Equipment and Software, Net for further information.

Goodwill and Other Intangible Assets 

Goodwill represents the excess of the purchase price over the fair value of acquired net assets in a business 
combination, including the amount assigned to identifiable intangible assets. The primary drivers that generate 
goodwill are the value of synergies between the acquired entities and the company and the acquired assembled 
workforce, neither of which qualifies as an identifiable intangible asset. Goodwill is not amortized but rather is tested 
for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have 
been incurred. 

Impairment testing for goodwill is done at the reporting unit level. A reporting unit is an operating segment or one 
level below an operating segment (a "component") if the component constitutes a business for which discrete 
financial information is available, and segment management regularly reviews the operating results of that 
component.

When testing goodwill for impairment, we may assess qualitative factors for some or all of our reporting units to 
determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a 
reporting unit is less than its carrying amount, including goodwill. Alternatively, we may bypass this qualitative 
assessment for some or all of our reporting units and perform a detailed quantitative test of impairment (Step 1). If 
we perform the detailed quantitative impairment test and the carrying amount of the reporting unit exceeds its fair 
value, we would perform an analysis (Step 2) to measure such impairment. In 2014, we elected to proceed to the 
quantitative assessment of the recoverability of our goodwill balances for each of our reporting units in performing 
our annual impairment test. Based on our quantitative assessments, we concluded that the fair values of each of our 
reporting units in 2014 exceeded their carrying values and no impairments were identified. 

Other intangible assets primarily consist of assets obtained in connection with business acquisitions, including 
installed customer base and distribution network relationships, patents on existing technology and trademarks. We 
apply an impairment evaluation whenever events or changes in business circumstances indicate that the carrying 
value of our intangible assets may not be recoverable. Other intangible assets are amortized on a straight-line basis 
over their estimated economic lives. We believe that the straight-line method of amortization reflects an appropriate 
allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained 
annually by the Company. 

Refer to Note 10 - Goodwill and Intangible Assets, Net for further information.

Xerox 2014 Annual Report

74

 
Impairment of Long-Lived Assets

We review the recoverability of our long-lived assets, including buildings, equipment, internal use software and other 
intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset 
may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value 
of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related 
operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for 
the difference between estimated fair value and carrying value. Our primary measure of fair value is based on 
discounted cash flows. 

Pension and Post-Retirement Benefit Obligations

We sponsor defined benefit pension plans in various forms in several countries covering employees who meet 
eligibility requirements. Retiree health benefit plans cover U.S. and Canadian employees for retiree medical costs. 
We employ a delayed recognition feature in measuring the costs of pension and post-retirement benefit plans. This 
requires changes in the benefit obligations and changes in the value of assets set aside to meet those obligations to 
be recognized not as they occur, but systematically and gradually over subsequent periods. All changes are 
ultimately recognized as components of net periodic benefit cost, except to the extent they may be offset by 
subsequent changes. At any point, changes that have been identified and quantified but not recognized as 
components of net periodic benefit cost, are recognized in Accumulated Other Comprehensive Loss, net of tax. 

Several statistical and other factors that attempt to anticipate future events are used in calculating the expense, 
liability and asset values related to our pension and retiree health benefit plans. These factors include assumptions 
we make about the discount rate, expected return on plan assets, rate of increase in healthcare costs, the rate of 
future compensation increases and mortality. Actual returns on plan assets are not immediately recognized in our 
income statement due to the delayed recognition requirement. In calculating the expected return on the plan asset 
component of our net periodic pension cost, we apply our estimate of the long-term rate of return on the plan assets 
that support our pension obligations, after deducting assets that are specifically allocated to Transitional Retirement 
Accounts (which are accounted for based on specific plan terms). 

For purposes of determining the expected return on plan assets, we utilize a market-related value approach in 
determining the value of the pension plan assets, rather than a fair market value approach. The primary difference 
between the two methods relates to systematic recognition of changes in fair value over time (generally two years) 
versus immediate recognition of changes in fair value. Our expected rate of return on plan assets is applied to the 
market-related asset value to determine the amount of the expected return on plan assets to be used in the 
determination of the net periodic pension cost. The market-related value approach reduces the volatility in net 
periodic pension cost that would result from using the fair market value approach. 

The discount rate is used to present value our future anticipated benefit obligations. The discount rate reflects the 
current rate at which benefit liabilities could be effectively settled considering the timing of expected payments for 
plan participants. In estimating our discount rate, we consider rates of return on high-quality fixed-income 
investments adjusted to eliminate the effects of call provisions, as well as the expected timing of pension and other 
benefit payments.

Each year, the difference between the actual return on plan assets and the expected return on plan assets, as well 
as increases or decreases in the benefit obligation as a result of changes in the discount rate and other actuarial 
assumptions, are added to or subtracted from any cumulative actuarial gain or loss from prior years. This amount is 
the net actuarial gain or loss recognized in Accumulated other comprehensive loss. We amortize net actuarial gains 
and losses as a component of net pension cost for a year if, as of the beginning of the year, that net gain or loss 
(excluding asset gains or losses that have not been recognized in market-related value) exceeds 10% of the greater 
of the projected benefit obligation or the market-related value of plan assets (the "corridor" method). This 
determination is made on a plan-by-plan basis. If amortization is required for a particular plan, we amortize the 
applicable net gain or loss in excess of the 10% threshold on a straight-line basis in net periodic pension cost over 
the remaining service period of the employees participating in that pension plan. In plans where substantially all 
participants are inactive, the amortization period for the excess is the average remaining life expectancy of the plan 
participants.

Our primary domestic plans allow participants the option of settling their vested benefits through the receipt of a 
lump-sum payment. The participant's vested benefit is considered fully settled upon payment of the lump-sum. We 
have elected to apply settlement accounting and therefore we recognize the losses associated with settlements in 
this plan immediately upon the settlement of the vested benefits. Settlement accounting requires us to recognize a 
pro rata portion of the aggregate unamortized net actuarial losses upon settlement. The pro rata factor is computed 

75

as the percentage reduction in the projected benefit obligation due to the settlement of the participant's vested 
benefit.

Refer to Note 16 - Employee Benefit Plans for further information regarding our Pension and Post-Retirement Benefit 
Obligations.

Foreign Currency Translation and Re-measurement

The functional currency for most foreign operations is the local currency. Net assets are translated at current rates of 
exchange and income, expense and cash flow items are translated at average exchange rates for the applicable 
period. The translation adjustments are recorded in Accumulated other comprehensive loss. 

The U.S. Dollar is used as the functional currency for certain foreign subsidiaries that conduct their business in U.S. 
Dollars. A combination of current and historical exchange rates is used in re-measuring the local currency 
transactions of these subsidiaries and the resulting exchange adjustments are recorded in Currency (gains) and 
losses within Other expenses, net together with other foreign currency remeasurments.

Note 2 – Segment Reporting

Our reportable segments are aligned with how we manage the business and view the markets we serve. We report 
our financial performance based on the following two primary reportable segments – Services and Document 
Technology. Our Services segment operations involve the delivery of business process and document outsourcing 
services for a broad range of customers from small businesses to large global enterprises.
Our Document Technology segment includes the sale and support of a broad range of document systems from 
entry level to high-end. 

The Services segment is comprised of two outsourcing service offerings:

•  Business Process Outsourcing (BPO)

•  Document Outsourcing (which includes Managed Print Services) (DO)

Business process outsourcing services include service arrangements where we manage a customer's business 
activity or process.  We provide multi-industry offerings such as customer care, transaction processing, finance and 
accounting, and human resources, as well as industry focused offerings in areas such as healthcare, transportation, 
financial services, retail and telecommunications. Document outsourcing services include service arrangements that 
allow customers to streamline, simplify and digitize their document-intensive business processes through 
automation and deployment of software applications and tools and the management of their printing needs. 
Document outsourcing also includes revenues from our partner print services offerings. 

As discussed in Note 4 - Divestitures, in December 2014 we announced an agreement to sell our Information 
Technology Outsourcing (ITO) business to Atos; the sale is expected to close in the first half of 2015.  As a result of 
the pending sale and having met applicable accounting requirements, we reported the ITO business as a 
discontinued operation and reclassified their results from the Services segment to Discontinued Operations. All prior 
periods have been reclassified to conform to this presentation. 

• 

• 

Our Document Technology segment includes the sale of document systems and supplies, provision of technical 
service and financing of products. Our product groupings range from:
“Entry,” which includes A4 devices and desktop printers; to
“Mid-range,” which includes A3 devices that generally serve workgroup environments in mid to large 
enterprises and includes products that fall into the following market categories: Color 41+ ppm priced at less 
than $100K and Light Production 91+ ppm priced at less than $100K; to
“High-end,” which includes production printing and publishing systems that generally serve the graphic 
communications marketplace and large enterprises.

• 

Customers range from small and mid-sized businesses to large enterprises. Customers also include graphic 
communication enterprises as well as channel partners including distributors and resellers. Segment revenues 
reflect the sale of document systems and supplies, technical services and product financing. 

The segment classified as Other includes several units, none of which meet the thresholds for separate segment 
reporting. This group includes paper sales in our developing market countries, Wide Format Systems, licensing 
revenues, GIS network integration solutions and electronic presentation systems and non-allocated corporate items 
including non-financing interest, as well as other items included in Other expenses, net.

Xerox 2014 Annual Report

76

As discussed in Note 4 - Divestitures, during 2013 we completed the sales of our North American and European 
Paper business. As a result, in 2013 we began to report our North American and European paper-related operations 
as Discontinued Operations and reclassified their results from the Other segment to Discontinued Operations. All 
prior periods were reclassified to conform to this presentation.

Selected financial information for our Reportable segments was as follows:

2014 (1)

Revenue

Finance income

Total Segment Revenue

Interest expense
Segment profit (loss)(2)

Equity in net income of unconsolidated affiliates

2013 (1)
Revenue

Finance income

Total Segment Revenue

Interest expense
Segment profit (loss)(2)

Equity in net income of unconsolidated affiliates

2012 (1)
Revenue

Finance income

Total Segment Revenue

Interest expense
Segment profit (loss)(2)

Equity in net income of unconsolidated affiliates

____________________________

Years Ended December 31,

Services

Document
Technology

Other

Total

$

$

$

$

$

$

$

$

$

10,519

$

8,044

$

590

$

$

$

65

10,584

18

956

32

$

$

314

8,358

121

1,149

128

$

$

8

598

238

(272)

—

10,412

$

8,500

$

611

$

$

$

67

10,479

19

1,055

34

$

$

408

8,908

140

964

135

$

$

8

619

244

(217)

—

10,196

$

8,951

$

677

$

$

$

75

10,271

19

1,091

30

$

$

511

9,462

172

1,065

122

$

$

11

688

236

(254)

—

19,153

387

19,540

377

1,833

160

19,523

483

20,006

403

1,802

169

19,824

597

20,421

427

1,902

152

(1)  Asset information on a segment basis is not disclosed as this information is not separately identified and internally reported to our Chief 

Operating Decision Maker (CODM). 

(2)  Depreciation and amortization expense, which is recorded in Cost of Sales, Cost of Services, RD&E and SAG are included in segment profit 

above. This information is neither identified nor internally reported to our CODM. 

The following is a reconciliation of segment profit to pre-tax income: 

Segment Profit Reconciliation to Pre-tax Income

2014

2013

2012

Years Ended December 31,

Total Segment Profit

Reconciling items:

Amortization of intangible assets

Equity in net income of unconsolidated affiliates
Restructuring and related costs(1)

Restructuring charges of Fuji Xerox

Litigation matters

Other

Pre-tax Income

____________________________

$

1,833

$

1,802

$

1,902

(315)

(160)

(149)

(3)

—

—

(305)

(169)

(115)

(9)

37

2

(301)

(152)

(149)

(16)

—

—

$

1,206

$

1,243

$

1,284

(1)  2014 includes Restructuring and asset impairment charges of $128 and Business transformation costs of $21. Business transformation 
costs represent incremental costs incurred directly in support of our business transformation and restructuring initiatives such as 
compensation costs for overlapping staff, consulting costs and training costs.

77

 
 
Geographic area data is based upon the location of the subsidiary reporting the revenue or long-lived assets and is 
as follows for the three years ended December 31: 

United States

Europe

Other areas

Total Revenues and Long-Lived Assets

________________

Revenues

Long-Lived Assets (1) (2)

2014

2013

2012

2014

2013

2012

$

$

13,041

$

13,272

$

13,323

$

1,758

$

1,870

$

1,966

4,428

2,071

4,414

2,320

4,599

2,499

632

240

761

243

784

262

19,540

$

20,006

$

20,421

$

2,630

$

2,874

$

3,012

(1)  Long-lived assets are comprised of (i) land, buildings and equipment, net, (ii) equipment on operating leases, net, (iii) internal use software, 

net and (iv) product software, net. 

(2)  Long-lived assets at December 31, 2014 includes $241 related to our ITO business which is held for sale and being reported as a 
discontinued operation at December 31, 2014. Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Note 3 – Acquisitions 

2014 Acquisitions
In September 2014, we acquired Consilience Software, Inc. (Consilience) for approximately $25 in cash. 
Consilience provides case management and workflow automation software solutions to the public sector. 
Consilience's proprietary Maven Case Management software system uses data and process analytics to help 
government agencies extract more value from their information. The intelligent case management system 
automates workflows for document- and labor-intensive processes and integrates previously siloed legacy systems 
for accelerated decision-making.

In May 2014, we acquired ISG Holdings, Inc. (ISG) for approximately $225 in cash. The acquisition of ISG 
enhances our Services segment by providing a comprehensive workers' compensation suite of offerings to the 
property and casualty sector. In addition, the acquisition expands our services to property and casualty insurance 
carriers, third-party administrators, managed care services providers, governments and self-administered employers 
who require comprehensive reviews of medical bills and implementation of care management plans stemming from 
workers' compensation claims.

In January 2014, we acquired Invoco Holding GmbH (Invoco), a German company, for approximately $54 (€40  
million) in cash. The acquisition of Invoco expands our European customer care services and provides our global 
customers immediate access to German-language customer care services and provides Invoco's existing 
customers access to our broad business process outsourcing capabilities.

The 2014 acquisitions noted above are included in our Services segment. Additionally, during 2014, our Services 
segment acquired one additional business for $2 in cash and our Document Technology segment acquired two 
businesses for approximately $34 in cash, which expanded our distribution capability of products and services in 
North America.

2014 Summary
All of our 2014 acquisitions reflected 100% ownership of the acquired companies. The operating results of the 
acquisitions described above are not material to our financial statements and are included within our results from 
their respective acquisition dates. Our 2014 acquisitions contributed aggregate revenues of approximately $132 to 
our 2014 total revenues from their respective acquisition dates. The purchase prices for all acquisitions were 
primarily allocated to intangible assets and goodwill based on third-party valuations and management's estimates. 
The primary elements that generated the goodwill are the value of synergies and the acquired assembled 
workforce. Approximately 50% of the goodwill recorded in 2014 is expected to be deductible for tax purposes. Refer 
to Note 10 - Goodwill and Intangible Assets, Net for additional information.   

Xerox 2014 Annual Report

78

 
 
The following table summarizes the purchase price allocations for our 2014 acquisitions as of the acquisition dates:

Accounts/finance receivables

Intangible assets:

Customer relationships

Trademarks

Non-compete agreements

Software

Goodwill

Other assets

Total Assets Acquired

Liabilities assumed

Total Purchase Price

Weighted-
Average Life
(Years)

Total 2014
Acquisitions

13

11

4

7

$

$

33

71

6

3

25

249

26

413

(73)

340

2013 and 2012 Acquisitions
In April 2013, we acquired Florida based Zeno Office Solutions, Inc. (Zeno), a provider of print and IT solutions to 
small and mid-sized businesses in the Southeast, for approximately $59 in cash. This acquisition furthers our 
coverage in Florida, building on our strategy of expanding our network of locally-based companies focused on 
customers' requirements to improve their performance through efficiencies. 

In February 2013, we acquired Impika, a leader in the design, manufacture and sale of production inkjet printing 
solutions used for industrial, commercial, security, label and package printing for approximately $53 in cash. Impika, 
which is based in Aubagne, France, offers a portfolio of aqueous (water-based) inkjet presses based on proprietary 
technology. Through the addition of Impika's aqueous technology to our offerings, we go to market with the 
industry's broadest range of digital presses, strengthening our leadership in digital color production printing. 

In July 2012, we acquired Wireless Data Services, Ltd. (WDS), a provider of technical support, knowledge 
management and related consulting to the world's largest wireless telecommunication brands for approximately $95 
(£60 million) in cash. Based in the U.K., WDS's expertise in the telecommunications industry strengthens our broad 
portfolio of customer care solutions.

In February 2012, we acquired R.K. Dixon, a leading provider of IT services, copiers, printers and managed print 
services for approximately $58 in cash. The acquisition furthers our coverage of central Illinois and eastern Iowa, 
building on our strategy to create a nationwide network of locally-based companies.

Our Document Technology segment also acquired one additional business in 2013 and three additional business in 
2012 for $12 and $62, respectively, in cash. These acquisitions were largely a part of our strategy of increasing our 
distribution network for small and mid-size businesses. Our Services segment acquired three additional businesses 
in 2013 and four additional business in 2012 for $31 and $61, respectively, in cash primarily related to customer 
care and software to support our BPO service offerings.

Summary - 2013 and 2012 Acquisitions
All of our 2013 and 2012 acquisitions reflected 100% ownership of the acquired companies. The operating results of 
the 2013 and 2012 acquisitions described above were not material to our financial statements and were included 
within our results from the respective acquisition dates. WDS was included within our Services segment while the 
acquisitions of Zeno, Impika and R.K. Dixon were included within our Document Technology segment. The 
purchase prices for all acquisitions were primarily allocated to intangible assets and goodwill based on third-party 
valuations and management's estimates. Refer to Note 10 - Goodwill and Intangible Assets, Net for additional 
information. Our 2013 acquisitions contributed aggregate revenues from their respective acquisition dates of 
approximately $84 and $56 to our 2014 and 2013 total revenues, respectively. Our 2012 acquisitions contributed 
aggregate revenues from their respective acquisition dates of approximately $275, $277 and $162 to our 2014, 
2013 and 2012 total revenues, respectively.

79

Contingent Consideration 
In connection with certain acquisitions, we are obligated to make contingent payments if specified contractual 
performance targets are achieved. Contingent consideration obligations are recorded at their respective fair value.  
As of December 31, 2014, the maximum aggregate amount of outstanding contingent obligations to former owners 
of acquired entities was approximately $33, of which $25 was accrued representing the estimated fair value of this 
obligation. 

Note 4 – Divestitures

Information Technology Outsourcing (ITO)

In December 2014, we announced an agreement to sell our ITO business to Atos for $1,050, which includes the 
assumption of approximately $100 of capital lease obligations and pension liabilities. The final sales price is subject 
to final closing adjustments with additional consideration of $50 contingent on the condition of certain assets at 
closing. The transaction is subject to customary closing conditions and regulatory approval and is expected to close 
in the first half of 2015. We expect net after-tax proceeds from the transaction of approximately $850.

ITO services include service arrangements where we manage a customer’s IT-related activities, such as application 
management and development, data center operations or testing and quality assurance. Our ITO business includes 
approximately 9,800 employees in 45 countries. As part of the transaction, Atos will provide IT services for certain of 
our existing BPO customers as well as a portion of our internal IT requirements. These continuing cash flows were 
determined to not be significant, and we will have no significant continuing involvement in the ITO business post-
closing.  

As a result of this pending transaction and having met applicable accounting requirements, in the fourth quarter 
2014, we reported the ITO business as held for sale and a Discontinued Operation and reclassified its results from 
the Services segment to Discontinued Operations. All prior periods have accordingly been reclassified to conform to 
this presentation. 

In the fourth quarter 2014, we also recorded a net pre-tax loss of $181 related to the pending sale reflecting the 
write-down of the carrying value of the ITO disposal group, inclusive of goodwill, to its estimated fair value less costs 
to sell. Goodwill was allocated to the ITO disposal group based on the relative fair value of the business. The 
estimated fair value may be adjusted, and we are likely to incur additional charges prior to the closing of the 
transaction, which will be recorded in Discontinued Operations. In addition, upon final disposal of the business, we 
expect to record additional tax expense of approximately $75 within Discontinued Operations primarily related to the 
difference between the book basis and the tax basis of allocated goodwill. All the assets and liabilities of the ITO 
business are reported as held for sale at December 31, 2014 and are included in Assets and Liabilities of 
discontinued operations, respectively, in the Consolidated Balance Sheet at December 31, 2014.   

Since the ITO business comprised a portion of several reporting units, we tested the retained goodwill of those 
reporting units for impairment and concluded that the goodwill remaining in those reporting units was not impaired 
since the fair values of those reporting units exceeded their carrying values.

Other Discontinued Operations

During the third quarter 2014, we completed the closure of Xerox Audio Visual Solutions, Inc. (XAV), a small 
audio visual business within our Global Imaging Systems subsidiary, and recorded a net pre-tax loss on disposal of 
$1. XAV provided audio visual equipment and services to enterprise and government customers. As a result of this 
closure, we reported XAV as a Discontinued Operation and reclassified its results from the Other segment to 
Discontinued Operations in the third quarter 2014. 

In May 2014 we sold our Truckload Management Services, Inc. (TMS) business for $15 and recorded a net pre-
tax loss on disposal of $1. TMS provided document capture and submission solutions as well as campaign 
management, media buying and digital marketing services to the long haul trucking and transportation industry. As a 
result of this transaction, we reported this business as a Discontinued Operation and reclassified its results from the 
Services segment to Discontinued Operations in the second quarter 2014. 

Xerox 2014 Annual Report

80

In 2013, in connection with our decision to exit from the Paper distribution business, we completed the sale of our 
North American and European Paper businesses. As a result of these transactions, we reported these paper-related 
operations as Discontinued Operations and reclassified the results from the Other segment to Discontinued 
operations in 2013. We recorded a net pre-tax loss on disposal of $25 in 2013 for the disposition of these 
businesses. In 2014, we recorded income of $1 in discontinued operations primarily representing adjustments to the 
loss on disposal recorded in 2013 due to changes in estimates. 

Summarized financial information for our Discontinued Operations is as follows: 

Revenues

$ 1,320

$

45

$ 1,365

$ 1,335

$

497

$ 1,832

$ 1,213

$

756

$ 1,969

2014

Other

ITO

Total

ITO

2013

Other

Total

ITO

2012

Other

Total

Year Ended December 31,

Income (loss) from operations

$

74

$

(1) $

73

$

Loss on disposal

(181)

(1)

(182)

70

—

$

2

$

72

$

(25)

(25)

$

47

—

$

17

—

Net (loss) income before income
taxes

$

(107) $

(2) $

(109) $

70

$

(23) $

47

$

47

$

17

$

64

—

64

Income tax expense

(5)

(1)

(6)

(24)

(3)

(27)

(16)

(5)

(21)

(Loss) income from discontinued
operations, net of tax

$

(112) $

(3) $

(115) $

46

$

(26) $

20

$

31

$

12

$

43

The following is a summary of the the major categories of assets and liabilities of the ITO business held for sale at 
December 31, 2014: 

2014

213

146

220

197

337

147

1,260

31

32

9

64

112

44

25

54

371

$

$

$

$

Accounts receivable, net

Other current assets

Land, buildings and equipment, net

Intangible assets, net

Goodwill

Other long-term assets

   Total Assets of Discontinued Operations

Current portion of long-term debt

Accounts payable

Accrued pension and benefit costs

Unearned income

Other current liabilities

Long-term debt

Pension and other benefit liabilities

Other long-term liabilities

   Total Liabilities of Discontinued Operations

81

The following is a summary of selected financial information of the ITO business for the three years ended 
December 31, 2014:

Year Ended December 31,

2014

2013

2012

Expense (Income):

Depreciation of buildings and equipment

$

98

$

Amortization of internal use software

Amortization of acquired intangible assets

Amortization of customer contract costs

Operating lease rent expense

Defined contribution plans
Interest expense (1)

Expenditures:

9

27

26

258

8

4

Cost of additions to land, buildings and equipment

$

105

$

Cost of additions to internal use software

Customer-related deferred set-up/transition and inducement
costs

_______________

2

26

$

99

10

27

22

241

7

3

99

$

4

35

98

2

27

15

185

2

3

140

15

60

(1) 

Interest expense is related to capital lease obligations, which are expected to be assumed by purchaser of the ITO business.

Note 5 – Accounts Receivable, Net

Accounts receivable, net were as follows: 

Amounts billed or billable

Unbilled amounts

Allowance for doubtful accounts

     Subtotal
Discontinued operations (1)

Accounts Receivable, Net

December 31,

2014

2013

2,634

$

319

(88)

2,865

(213)

2,652

$

2,651

390

(112)

2,929
—
2,929

$

$

(1)  Represents net accounts receivable related to our ITO business which is held for sale and being reported as a discontinued operation at 

December 31, 2014. Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Unbilled amounts include amounts associated with percentage-of-completion accounting and other earned 
revenues not currently billable due to contractual provisions. Amounts to be invoiced in the subsequent month for 
current services provided are included in amounts billable, and at December 31, 2014 and 2013 were approximately 
$997 and $1,054, respectively. The balance at December 31, 2014 includes $52 related to our ITO business.

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment 
history and current creditworthiness. The allowance for uncollectible accounts receivables is determined principally 
on the basis of past collection experience as well as consideration of current economic conditions and changes in 
our customer collection trends. 

Accounts Receivable Sales Arrangements

Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and 
liquidity management. We have facilities in the U.S., Canada and several countries in Europe that enable us to sell 
certain accounts receivable without recourse to third-parties. The accounts receivables sold are generally short-term 
trade receivables with payment due dates of less than 60 days. 

All of our arrangements involve the sale of our entire interest in groups of accounts receivable for cash. In most 
instances a portion of the sales proceeds are held back by the purchaser and payment is deferred until collection of 
the related receivables sold. Such holdbacks are not considered legal securities nor are they certificated. We report 
collections on such receivables as operating cash flows in the Consolidated Statements of Cash Flows because 
such receivables are the result of an operating activity and the associated interest rate risk is de minimis due to their 

Xerox 2014 Annual Report

82

short-term nature. Our risk of loss following the sales of accounts receivable is limited to the outstanding deferred 
purchase price receivable. These receivables are included in the caption “Other current assets” in the 
accompanying Consolidated Balance Sheets and were $73 and $121 at December 31, 2014 and 2013, respectively.  

Under most of the agreements, we continue to service the sold accounts receivable. When applicable, a servicing 
liability is recorded for the estimated fair value of the servicing. The amounts associated with the servicing liability 
were not material. 

Of the accounts receivables sold and derecognized from our balance sheet, $580 and $723 remained uncollected 
as of December 31, 2014 and 2013, respectively. Accounts receivable sales were as follows:

Accounts receivable sales

Deferred proceeds

Loss on sale of accounts receivable
Estimated decrease to operating cash flows(1)

__________

Year Ended December 31,

2014

2013

2012

$

2,906

$

3,401

$

387

15

(68)

486

17

(55)

3,699

639

21

(78)

(1)  Represents the difference between current and prior year fourth quarter receivable sales adjusted for the effects of: (i) the deferred 

proceeds, (ii) collections prior to the end of the year and (iii) currency.

Note 6 – Finance Receivables, Net

Finance receivables include sales-type leases, direct financing leases and installment loans arising from the 
marketing of our equipment. These receivables are typically collateralized by a security interest in the underlying 
assets. Finance receivables, net were as follows: 

Gross receivables

Unearned income

Subtotal

Residual values

Allowance for doubtful accounts

Finance Receivables, Net

Less: Billed portion of finance receivables, net

Less: Current portion of finance receivables not billed, net

Finance Receivables Due After One Year, Net

December 31,

2014

2013

$

5,009

$

(624)

4,385

—

(131)

4,254

110

1,425

$

2,719

$

5,349

(666)

4,683

1

(154)

4,530

113

1,500

2,917

Contractual maturities of our gross finance receivables as of December 31, 2014 were as follows (including those 
already billed of $117): 

2015

2016

2017

2018

2019

Thereafter 

Total 

$

1,883

$

1,382

$

958

$

558

$

205

$

23

$

5,009

Transfer and Sale of Finance Receivables

Sale of Finance Receivables
In 2013 and 2012, we transferred our entire interest in certain groups of lease finance receivables to third-party 
entities for cash proceeds and beneficial interests. The transfers were accounted for as sales with derecognition of 
the associated lease receivables. There were no transfers or sales of finance receivables in 2014. We continue to 
service the sold receivables and record servicing fee income over the expected life of the associated receivables. 
The following is a summary of our prior sales activity:

83

 
 
 
Net carrying value (NCV) sold

Allowance included in NCV

Cash proceeds received

Beneficial interests received

Pre-tax gain on sales

Net fees and expenses

Year Ended December 31,

2014

2013

2012

$

— $

676

$

—

—

—

—

—

17

635

86

40

5

682

18

630

101

44

5

The principal value of the finance receivables derecognized from our balance sheet was $549 and $1,006 at 
December 31, 2014 and 2013, respectively (sales value of approximately $596 and $1,098, respectively). 

Summary Finance Receivable Sales 

The lease portfolios transferred and sold were all from our Document Technology segment and the gains on these 
sales were reported in Financing revenues within the Document Technology segment. The ultimate purchaser has 
no recourse to our other assets for the failure of customers to pay principal and interest when due beyond our 
beneficial interests which were $77 and $150 at December 31, 2014 and 2013, respectively, and are included in 
Other current assets and Other long-term assets in the accompanying Consolidated Balance Sheets. Beneficial 
interests of $64 and $124 at December 31, 2014 and 2013, respectively, are held by the bankruptcy-remote 
subsidiaries and therefore are not available to satisfy any of our creditor obligations. We report collections on the 
beneficial interests as operating cash flows in the Consolidated Statements of Cash Flows because such beneficial 
interests are the result of an operating activity and the associated interest rate risk is de minimis considering their 
weighted average lives of less than 2 years.  

The net impact from the sales of finance receivables on operating cash flows is summarized below:

Net cash received for sales of finance receivables(1)
Impact from prior sales of finance receivables(2)

Collections on beneficial interests

Estimated (Decrease) Increase to Operating Cash Flows

____________

Year Ended December 31,

2014

2013

2012

$

$

— $

631

$

(527)

94

(392)

58

(433) $

297

$

625

(45)

—

580

(1)  Net of beneficial interest, fees and expenses.
(2)  Represents cash that would have been collected if we had not sold finance receivables.

Finance Receivables - Allowance for Credit Losses and Credit Quality
Our finance receivable portfolios are primarily in the U.S., Canada and Europe. We generally establish customer 
credit limits and estimate the allowance for credit losses on a country or geographic basis. Customer credit limits 
are based upon an initial evaluation of the customer's credit quality and we adjust that limit accordingly based upon 
ongoing credit assessments of the customer, including payment history and changes in credit quality. 

The allowance for doubtful accounts and provision for credit losses represents an estimate of the losses expected 
to be incurred from the Company's finance receivable portfolio. The level of the allowance is determined on a 
collective basis by applying projected loss rates to our different portfolios by country, which represent our portfolio 
segments. This is the level at which we develop and document our methodology to determine the allowance for 
credit losses. This loss rate is primarily based upon historical loss experience adjusted for judgments about the 
probable effects of relevant observable data including current economic conditions as well as delinquency trends, 
resolution rates, the aging of receivables, credit quality indicators and the financial health of specific customer 
classes or groups. The allowance for doubtful finance receivables is inherently more difficult to estimate than the 
allowance for trade accounts receivable because the underlying lease portfolio has an average maturity, at any 
time, of approximately two to three years and contains past due billed amounts, as well as unbilled amounts. We 
consider all available information in our quarterly assessments of the adequacy of the allowance for doubtful 
accounts. The identification of account-specific exposure is not a significant factor in establishing the allowance for 
doubtful finance receivables. Our policy and methodology used to establish our allowance for doubtful accounts 
has been consistently applied over all periods presented. 

Xerox 2014 Annual Report

84

 
 
Since our allowance for doubtful finance receivables is determined by country, the risk characteristics in our 
finance receivable portfolio segments will generally be consistent with the risk factors associated with the 
economies of those countries/regions. Loss rates declined in the U.S. reflecting the effects of improved collections 
during 2014 and 2013 as well as the lower balance of finance receivables primarily due to sales in 2013 and 2012. 
Since Europe is comprised of various countries and regional economies, the risk profile within our European 
portfolio segment is somewhat more diversified due to the varying economic conditions among and within the 
countries. Charge-offs in Europe were $29 in 2014 as compared to $60 in the prior year, reflecting a significant 
improvement from the credit issues that began back in 2011. Loss rates peaked in 2011 as a result of the 
European economic challenges particularly for countries in the southern region.  

The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment 
in finance receivables:

Allowance for Credit Losses:

Balance at December 31, 2012

Provision

Charge-offs
Recoveries and other(1)

Sale of finance receivables

Balance at December 31, 2013

Provision

Charge-offs
Recoveries and other(1)
Balance at December 31, 2014

Finance Receivables Collectively Evaluated for
Impairment:
December 31, 2013(2)
December 31, 2014(2)

 __________

United States

Canada

Europe

Other(3)

Total

$

$

$

$

$

50

13

(8)

2

(12)

45

—

(5)

1

$

31

11

(16)

1

(5)

22

9

(14)

3

$

85

53

(60)

3

—

81

15

(29)

(9)

41

$

20

$

58

$

4

4

(2)

—

—

6

9

(3)

—

12

1,666

1,728

$

$

421

424

$

$

2,292

1,835

$

$

304

398

$

$

$

$

170

81

(86)

6

(17)

154

33

(51)

(5)

131

4,683

4,385

(1) 

Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as 
customer accommodations and contract terminations.

(2)  Total Finance receivables exclude residual values of $0 and $1 and the allowance for credit losses of $131 and $154 at December 31, 

2014 and 2013, respectively.
Includes developing market countries and smaller units.

(3) 

In the U.S. and Canada, customers are further evaluated or segregated by class based on industry sector. The 
primary customer classes are Finance & Other Services, Government & Education; Graphic Arts; Industrial; 
Healthcare and Other. In Europe, customers are further grouped by class based on the country or region of the 
customer. The primary customer classes include the U.K./Ireland, France and the following European regions - 
Central, Nordic and Southern. These groupings or classes are used to understand the nature and extent of our 
exposure to credit risk arising from finance receivables. 

We evaluate our customers based on the following credit quality indicators:

• 

Investment grade: This rating includes accounts with excellent to good business credit, asset quality and the 
capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in 
economic conditions or changes in circumstance. The rating generally equates to a Standard & Poors (S&P) 
rating of BBB- or better. Loss rates in this category are normally minimal at less than 1%.

•  Non-investment grade: This rating includes accounts with average credit risk that are more susceptible to 
loss in the event of adverse business or economic conditions. This rating generally equates to a BB S&P 
rating. Although we experience higher loss rates associated with this customer class, we believe the risk is 
somewhat mitigated by
the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the 
higher loss rates are largely offset by the higher rates of return we obtain with such leases. Loss rates in this 
category are generally in the range of 2% to 4%.

•  Substandard: This rating includes accounts that have marginal credit risk such that the customer’s ability to 
make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk 
including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include 
customers who were downgraded during the term of the lease from investment and non-investment grade 

85

3

108

15

16

29

205

11

1

48

6

5

71

122

42

43

58

3

268

9

325

671

309

135

115

111

1,666

75

106

156

41

43

421

718

412

724

347

91

2,292

304

4,683

evaluation when the lease was originated. Accordingly there is a distinct possibility for a loss of principal and 
interest or customer default. The loss rates in this category are around 10%.

Credit quality indicators are updated at least annually, and the credit quality of any given customer can change 
during the life of the portfolio. Details about our finance receivables portfolio based on industry and credit quality 
indicators are as follows:

December 31, 2014

December 31, 2013

Investment
Grade

Non-
investment
Grade

Sub-
standard

Total
Finance 
Receivables

Investment
Grade

Non-
investment
Grade

Sub-
standard

Total
Finance 
Receivables

Finance and other services $

Government and education

Graphic arts

Industrial

Healthcare

Other

195

589

148

92

84

55

$

159

$

55

$

13

79

41

26

38

3

90

18

14

29

$

409

605

317

151

124

122

189

656

142

92

74

55

12

59

28

25

27

Total United States

1,163

356

209

1,728

1,208

253

$

102

$

34

$

Finance and other services

Government and education

Graphic arts

Industrial

Other
Total Canada(1)

France

U.K/Ireland
Central(2)
Southern(3)
Nordic(4)

Total Europe

Other

Total

__________

54

76

58

24

34

246

253

255

230

60

25

823

195

31

8

49

13

19

120

234

101

278

148

49

810

163

12

2

36

4

4

58

129

6

30

36

1

202

40

97

86

143

41

57

424

616

362

538

244

75

1,835

398

46

96

56

23

29

250

282

199

287

102

46

916

226

18

9

52

12

9

100

314

171

394

187

42

1,108

69

$

2,427

$

1,449

$

509

$

4,385

$

2,600

$

1,530

$

553

$

(1)  Historically, the Company had included certain Canadian customers with graphic arts activity in their industry sector. In 2014, these 

customers were reclassified to Graphic Arts to better reflect their primary business activity. The December 31, 2013 amounts have been 
revised to reclassify $33 from Finance and Other Services and $38 from Industrial to Graphic Arts to be consistent with the 2014 
presentation.

(2)  Switzerland, Germany, Austria, Belgium and Holland.
(3) 
Italy, Greece, Spain and Portugal.
(4)  Sweden, Norway, Denmark and Finland.

The aging of our receivables portfolio is based upon the number of days an invoice is past due. Receivables that 
are more than 90 days past due are considered delinquent. Receivable losses are charged against the allowance 
when management believes the uncollectibility of the receivable is confirmed and is generally based on individual 
credit evaluations, results of collection efforts and specific circumstances of the customer. Subsequent recoveries, 
if any, are credited to the allowance.

Xerox 2014 Annual Report

86

 
 
 
We generally continue to maintain equipment on lease and provide services to customers that have invoices for 
finance receivables that are 90 days or more past due and, as a result of the bundled nature of billings, we also 
continue to accrue interest on those receivables. However, interest revenue for such billings is only recognized if 
collectability is deemed reasonably assured. The aging of our billed finance receivables is as follows:

Current

31-90
Days
Past Due

>90 Days
Past Due

Total Billed

Unbilled

Total
Finance
Receivables

>90 Days
and
Accruing

December 31, 2014

Finance and other services

$

7

$

Government and education

Graphic arts

Industrial

Healthcare

Other

Total United States

Canada

France

U.K./Ireland
Central(1)
Southern(2)
Nordic(3)
Total Europe

Other

Total

14

12

4

3

3

43

9

—

1

2

14

1

18

13

83

$

$

20

$

1

3

1

1

—

—

6

1

2

—

1

4

—

7

—

14

$

10

21

14

6

4

4

59

12

3

1

5

22

1

32

14

$

$

399

584

303

145

120

118

$

409

605

317

151

124

122

1,669

1,728

412

613

361

533

222

74

1,803

384

424

616

362

538

244

75

1,835

398

13

25

6

9

5

6

64

17

35

1

15

17

2

70

—

$

117

$

4,268

$

4,385

$

151

Current

31-90
Days
Past Due

>90 Days
Past Due

Total Billed

Unbilled

Total
Finance
Receivables

>90 Days
and
Accruing

December 31, 2013

Finance and other services

$

7

$

1

3

—

1

—

—

5

3

—

—

3

7

—

10

—

18

$

10

24

13

5

4

4

60

10

—

2

8

33

2

45

9

$

$

315

647

296

130

111

107

$

325

671

309

135

115

111

1,606

1,666

411

718

410

716

314

89

2,247

295

421

718

412

724

347

91

2,292

304

$

124

$

4,559

$

4,683

$

12

34

5

6

5

3

65

19

40

2

23

45

—

110

—

194

Government and education

Graphic arts

Industrial

Healthcare

Other

Total United States

Canada

France

U.K./Ireland
Central(1)
Southern(2)
Nordic(3)

Total Europe

Other

Total

 ___________

17

12

3

3

3

45

4

—

1

3

21

2

27

8

$

84

$

22

$

(1)  Switzerland, Germany, Austria, Belgium and Holland.
(2) 
Italy, Greece, Spain and Portugal.
(3)  Sweden, Norway, Denmark and Finland.

87

$

2

4

1

1

1

1

10

2

1

—

2

4

—

7

1

$

2

4

1

1

1

1

10

3

—

1

2

5

—

8

1

 
 
 
 
Note 7 – Inventories and Equipment on Operating Leases, Net

The following is a summary of Inventories by major category:

Finished goods

Work-in-process

Raw materials

Total Inventories

December 31,

2014

2013

$

$

778

$

58

98

934

$

837

60

101

998

The transfer of equipment from our inventories to equipment subject to an operating lease is presented in our 
Consolidated Statements of Cash Flows in the operating activities section. Equipment on operating leases and 
similar arrangements consists of our equipment rented to customers and depreciated to estimated salvage value at 
the end of the lease term.

Equipment on operating leases and the related accumulated depreciation were as follows: 

Equipment on operating leases

Accumulated depreciation

Equipment on Operating Leases, Net

December 31,

2014

2013

$

$

1,531

$

(1,006)

525

$

1,575

(1,016)

559

Depreciable lives generally vary from three to four years consistent with our planned and historical usage of the 
equipment subject to operating leases. Our equipment operating lease terms vary, generally from one to three 
years. Scheduled minimum future rental revenues on operating leases with original terms of one year or longer are: 

2015

2016

2017

2018

2019

Thereafter 

$

339

$

246

$

155

$

82

$

34

$

5

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum 
contracted amounts, for the years ended December 31, 2014, 2013 and 2012 amounted to $149, $151 and $158, 
respectively. 

Note 8 - Land, Buildings, Equipment and Software, Net

Land, buildings and equipment, net were as follows: 

Land

Building and building equipment

Leasehold improvements

Plant machinery

Office furniture and equipment

Other

Construction in progress

Subtotal

Accumulated depreciation

Subtotal

Discontinued operations (1)

Land, Buildings and Equipment, Net

___________

Estimated
Useful Lives
(Years)

25 to 50

Varies

5 to 12

3 to 15

4 to 20

December 31,

2014

2013

$

46

$

1,038

486

1,375

1,938

78

80

5,041

(3,698)

1,343

(220)

  $

1,123

$

50

1,086

483

1,493

1,826

83

66

5,087

(3,621)

1,466

—

1,466

(1)  Represents net fixed assets related to our ITO business which is held for sale and being reported as a discontinued operation at December 

31, 2014. Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Xerox 2014 Annual Report

88

 
 
 
 
 
Depreciation expense and operating lease rent expense were as follows:

Depreciation expense (1)
Operating lease rent expense(1)

___________

Year Ended December 31,

2014

2013

2012

$

$

324

560

$

332

513

354

461

(1)  Excludes amounts related to our ITO business which is held for sale and reported as a discontinued operation at December 31, 2014.  Refer 

to Note 4 - Divestitures for additional information regarding this pending sale.

We lease buildings and equipment, substantially all of which are accounted for as operating leases. Capital leased 
assets were approximately $180 and $150 at December 31, 2014 and 2013, respectively. Capital lease assets at 
December 31, 2014 includes approximately $75 related to our ITO business which is held for sale and being 
reported as a discontinued operation at December 31, 2014. Refer to Note 4 - Divestitures for additional information 
regarding this pending sale.

Future minimum operating lease commitments that have initial or remaining non-cancelable lease terms in excess of 
one year at December 31, 2014 were as follows: 

Continuing operations
Discontinued operations (1)

Minimum operating lease commitments

___________

2015

2016

2017

2018

2019

Thereafter  

$

$

469

$

117

586

$

347

$

170

$

104

$

43

18

8

390

$

188

$

112

$

79

$

6

85

$

57

—

57

(1)  Reflects lease commitments related to our ITO business which is held for sale and reported as a discontinued operation at December 31, 

2014.  Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Internal Use and Product Software 

Additions to:
Internal use software (1)

Product software

___________

Year Ended December 31,

2014

2013

2012

$

$

82

23

$

77

28

110

107

(1)  Excludes amounts related to our ITO business which is held for sale and reported as a discontinued operation at December 31, 2014.  Refer 

to Note 4 - Divestitures for additional information regarding this pending sale.

Capitalized costs, net:
Internal use software (1)

Product software

___________

December 31,

2014

2013

$

$

454

307

506

343

(1) 

Internal use software at December 31, 2014 includes $20 related to our ITO business which is held for sale and being reported as a 
discontinued operation at December 31, 2014.  Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Useful lives of our internal use and product software generally vary from three to ten years. 

Included within product software at December 31, 2014 is approximately $250 of capitalized costs associated with 
significant software system platforms developed for use in certain of our government services businesses. We 
regularly review these software system platforms for impairment. Our impairment reviews for 2014 and 2013 
indicated that the costs would be recoverable from estimated future operating profits; however, those future 
operating profits are heavily dependent on our ability to successfully complete existing contracts as well as obtain 
future contracts.

89

 
Note 9 – Investment in Affiliates, at Equity

Investments in corporate joint ventures and other companies in which we generally have a 20% to 50% ownership 
interest were as follows: 

Fuji Xerox

Other

Investments in Affiliates, at Equity

December 31,

2014

2013

$

$

1,275

$

63

1,338

$

 Our equity in net income of our unconsolidated affiliates was as follows:

Fuji Xerox

Other

Total Equity in Net Income of Unconsolidated Affiliates

Year Ended December 31,

2014

2013

2012

$

$

147

$

13

160

$

156

$

13

169

$

1,224

61

1,285

139

13

152

Fuji Xerox
Fuji Xerox is headquartered in Tokyo and operates in Japan, China, Australia, New Zealand, Vietnam and other 
areas of the Pacific Rim. Our investment in Fuji Xerox of $1,275 at December 31, 2014, differs from our implied 
25% interest in the underlying net assets, or $1,367, due primarily to our deferral of gains resulting from sales of 
assets by us to Fuji Xerox.

Equity in net income of Fuji Xerox is affected by certain adjustments to reflect the deferral of profit associated with 
intercompany sales. These adjustments may result in recorded equity income that is different from that implied by our 
25% ownership interest. 

Summarized financial information for Fuji Xerox is as follows: 

Year Ended December 31,

2014

2013

2012

Summary of Operations

Revenues

Costs and expenses

Income before income taxes

Income tax expense

Net Income

Less: Net income - noncontrolling interests

Net Income - Fuji Xerox

Balance Sheet

Assets:

Current assets

Long-term assets

Total Assets

Liabilities and Equity:

Current liabilities

Long-term debt

Other long-term liabilities

Noncontrolling interests

Fuji Xerox shareholders' equity

Total Liabilities and Equity

$

11,112

$

11,415

$

10,242

10,479

870

262

608

4

936

276

660

5

604

$

655

$

$

$

$

$

4,801

$

4,955

$

4,742

5,160

5,154

6,158

9,543

$

10,115

$

11,312

2,982

$

3,114

$

580

482

30

5,469

978

680

28

5,315

$

9,543

$

10,115

$

12,633

11,783

850

279

571

6

565

3,465

1,185

917

27

5,718

11,312

Xerox 2014 Annual Report

90

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Yen/U.S. Dollar exchange rates used to translate are as follows:

Financial Statement

Exchange Basis 

Summary of Operations

Weighted average rate

Balance Sheet

Year-end rate

2014

105.58

119.46

2013

97.52

105.15

2012

79.89

86.01

Transactions with Fuji Xerox
We receive dividends from Fuji Xerox, which are reflected as a reduction in our investment. Additionally, we have a 
Technology Agreement with Fuji Xerox whereby we receive royalty payments for their use of our Xerox brand 
trademark, as well as rights to access our patent portfolio in exchange for access to their patent portfolio. These 
payments are included in Outsourcing, maintenance and rental revenues in the Consolidated Statements of 
Income. We also have arrangements with Fuji Xerox whereby we purchase inventory from and sell inventory to Fuji 
Xerox. Pricing of the transactions under these arrangements is based upon terms the Company believes to be 
negotiated at arm's length. Our purchase commitments with Fuji Xerox are in the normal course of business and 
typically have a lead time of three months. In addition, we pay Fuji Xerox and they pay us for unique research and 
development costs.

Transactions with Fuji Xerox were as follows:

Dividends received from Fuji Xerox

Royalty revenue earned

Inventory purchases from Fuji Xerox

Inventory sales to Fuji Xerox

R&D payments received from Fuji Xerox

R&D payments paid to Fuji Xerox

Year Ended December 31,

2014

2013

2012

$

58

$

60

$

115

1,831

120

1

17

118

1,903

145

2

21

52

132

2,069

147

2

15

As of December 31, 2014 and 2013, net amounts due to Fuji Xerox were $339 and $402 (corrected from $85 
originally disclosed in the December 31, 2013 Form 10-K), respectively. 

91

 
Note 10 - Goodwill and Intangible Assets, Net 

Goodwill 
The following table presents the changes in the carrying amount of goodwill, by reportable segment:

Balance at December 31, 2011

Foreign currency translation

Acquisitions:

WDS

R.K. Dixon

Other

Balance at December 31, 2012

Foreign currency translation

Acquisitions:

Zeno

Impika

Other

Balance at December 31, 2013

Foreign currency translation

Acquisitions:

Invoco

ISG

Consilience

Other
Divestitures (1)

Balance at December 31, 2014

___________

Services

Document
Technology

Total 

6,619

$

2,184

$

8,803

41

69

—

51

34

—

30

34

75

69

30

85

6,780

$

2,282

$

9,062

6

—

—

29

16

44

43

5

6,815

$

(98)

2,390

$

(56)

39

166

23

2

(495)

6,452

$

—

—

—

19

—

2,353

$

22

44

43

34

9,205

(154)

39

166

23

21

(495)

8,805

$

$

$

$

(1)  Primarily represents goodwill related to our ITO business ($487) which is held for sale and being reported as a discontinued operation at 

December 31, 2014. Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Intangible Assets, Net 
Net intangible assets were $2,031 at December 31, 2014 of which $1,677 relate to our Services segment and $354 
relate to our Document Technology segment. Intangible assets were comprised of the following:

December 31, 2014

December 31, 2013

Weighted 
Average
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

Net
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Amount

Customer relationships

12 years

$

3,636

$

1,670

$

1,966

$

3,580

$

1,359

$

2,221

Distribution network

Trademarks

Technology, patents and
non-compete

   Subtotal

Discontinued Operations(1)

Total Intangible Assets

 _______________

25 years

20 years

9 years

123

274

40

4,073

(335)

74

87

14

1,845

(138)

49

187

26

2,228

(197)

$

3,738

$

1,707

$

2,031

$

123

269

41

4,013

—
4,013

69

72

10

1,510

—
1,510

$

$

54

197

31

2,503

—
2,503

(1)  Represents net intangible assets related to our ITO business which is held for sale and being reported as a discontinued operation at 

December 31, 2014. Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Amortization expense related to intangible assets was $315, $305, and $301 for the years ended December 31, 
2014, 2013 and 2012, respectively1. Excluding the impact of additional acquisitions, amortization expense is 
expected to approximate $305 in 2015 and  2016, and $300 in years 2017, 2018 and 20191.

(1)  Excludes amounts related to our ITO business, which is held for sale and reported as a discontinued operation at December 31, 2014.  

Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Xerox 2014 Annual Report

92

 
 
 
Note 11 – Restructuring and Asset Impairment Charges

We continue to engage in a series of restructuring programs related to downsizing our employee base, exiting 
certain activities, outsourcing certain internal functions and engaging in other actions designed to reduce our cost 
structure and improve productivity. These initiatives primarily consist of severance actions and impact all major 
geographies and segments. Management continues to evaluate our business, therefore, in future years, there may 
be additional provisions for new plan initiatives as well as changes in previously recorded estimates, as payments 
are made or actions are completed. Asset impairment charges were also incurred in connection with these 
restructuring actions for those assets sold, abandoned or made obsolete as a result of these programs.

Costs associated with restructuring, including employee severance and lease termination costs are generally 
recognized when it has been determined that a liability has been incurred, which is generally upon communication 
to the affected employees or exit from the leased facility, respectively. In those geographies where we have either a 
formal severance plan or a history of consistently providing severance benefits representing a substantive plan, we 
recognize employee severance costs when they are both probable and reasonably estimable. 

A summary of our restructuring program activity during the three years ended December 31, 2014 is as follows:

Severance and
Related Costs

Lease Cancellation
and Other Costs

Asset 
Impairments(1)

Total

$

— $

Balance at December 31, 2011

$

Restructuring provision

Reversals of prior accruals

Net current period charges - continuing operations(2)

Discontinued operations(3)

Total Net Current Period Charges

Charges against reserve and currency

Balance at December 31, 2012

Restructuring provision

Reversals of prior accruals

Net current period charges - continuing operations(2)

Discontinued operations(3)

Total Net Current Period Charges

Charges against reserve and currency

Balance at December 31, 2013

Restructuring provision

Reversals of prior accruals

Net current period charges - continuing operations(2)

Discontinued operations(3)

Total Net Current Period Charges

Charges against reserve and currency

Balance at December 31, 2014

 ________________

$

116

156

(13)

143

4

147

(140)

123

141

(29)

112

7

119

(133)

109

143

(25)

118

2

120

(136)

7

5

—

5

—

5

(5)

7

2

—

2

—

2

(2)

7

5

(2)

3

—

3

(6)

2

(1)

1

—

1

(1)

—

1

—

1

—

1

(1)

—

7

—

7

—

7

(7)

— $

$

93

$

4

$

(1)  Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded 

concurrently with the recognition of the provision.

(2)  Represents amount recognized within the Consolidated Statements of Income for the years shown.
(3)  Refer to Note 4 - Divestitures for additional information regarding discontinued operations. 

The following table summarizes the reconciliation to the Consolidated Statements of Cash Flows:

Charges against reserve

Asset impairment

Effects of foreign currency and other non-cash items

Restructuring Cash Payments

93

Year Ended December 31,

2014

2013

2012

(149) $

(136) $

7

9

1

(1)

(133) $

(136) $

$

$

123

163

(14)

149

4

153

(146)

130

144

(29)

115

7

122

(136)

116

155

(27)

128

2

130

(149)

97

(146)

1

1

(144)

 
 
The following table summarizes the total amount of costs incurred in connection with these restructuring programs 
by segment:

Services

Document Technology

Other

Total Net Restructuring Charges

Year Ended December 31,

2014

2013

2012

$

$

$

38

76

14

$

38

77

—

128

$

115

$

66

83

—

149

Xerox 2014 Annual Report

94

 
 
Note 12 - Supplementary Financial Information
The components of other current and long-term assets and liabilities were as follows:

Other Current Assets

Deferred taxes and income taxes receivable

Royalties, license fees and software maintenance

Restricted cash

Prepaid expenses

Derivative instruments

Deferred purchase price from sales of accounts receivables

Beneficial interests - sales of finance receivables

Advances and deposits

Other
Discontinued operations (1)

Total Other Current Assets

Other Current Liabilities

Deferred taxes and income taxes payable

Other taxes payable

Interest payable

Restructuring reserves

Derivative instruments

Product warranties

Dividends payable

Distributor and reseller rebates/commissions

Servicer liabilities

Other
Discontinued operations (1)

Total Other Current Liabilities

Other Long-term Assets

Deferred taxes and income taxes receivable

Prepaid pension costs

Net investment in TRG

Internal use software, net

Product software, net

Restricted cash

Debt issuance costs, net

Customer contract costs, net

Beneficial interest - sales of finance receivables

Deferred compensation plan investments

Other
Discontinued operations (1)

Total Other Long-term Assets

Other Long-term Liabilities

Deferred taxes and income taxes payable

Environmental reserves

Unearned income

Restructuring reserves

Other
Discontinued operations (1)

$

$

$

$

$

$

$

December 31,

2014

2013

$

426

190

113

134

22

73

35

29

206

(146)

253

185

147

143

6

121

64

32

256

—

1,082

$

1,207

$

120

134

78

94

58

11

88

120

107

811

(112)

87

180

80

108

70

13

84

125

140

826

—

1,509

$

1,713

367

$

17

158

454

307

139

31

323

42

125

427

(147)

377

55

173

506

343

170

31

399

86

116

334

—

2,243

$

2,590

142

$

9

166

3

232

(54)

286

12

168

8

283

—

757

Total Other Long-term Liabilities

$

498

$

95

 
 
 
 
 
 
 
 
(1)  Represents assets and liabilities related to our ITO business which is held for sale and being reported as a discontinued operation at 

December 31, 2014. Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Restricted Cash and Investments
As more fully discussed in Note 18 - Contingencies and Litigation, various litigation matters in Brazil require us to 
make cash deposits to escrow as a condition of continuing the litigation. In addition, as more fully discussed in Note 
5 - Accounts Receivable, Net and Note 6 - Finance Receivables, Net, we continue to service the receivables sold 
under most of our receivable sale agreements. As servicer, we may collect cash related to sold receivables prior to 
year-end that will be remitted to the purchaser the following year. Since we are acting on behalf of the purchaser in 
our capacity as servicer, such cash collected is reported as restricted cash. Restricted cash amounts are classified 
in our Consolidated Balance Sheets based on when the cash will be contractually or judicially released.

Restricted cash amounts were as follows: 

Tax and labor litigation deposits in Brazil

Escrow and cash collections related to receivable sales

Other restricted cash

Total Restricted Cash and Investments

December 31,

2014

2013

$

$

$

135

107

10

252

$

167

140

10

317

Net Investment in TRG
At December 31, 2014, our net investment in discontinued operations primarily consisted of a $174 performance-
based instrument relating to the 1997 sale of The Resolution Group (TRG) net of remaining net liabilities associated 
with our discontinued operations of $16. The recovery of the performance-based instrument is dependent on the 
sufficiency of TRG's available cash flows, as guaranteed by TRG's ultimate parent, which are expected to be 
recovered in annual cash distributions through 2017. The performance-based instrument is pledged as security for 
our future funding obligations to our U.K. Pension Plan for salaried employees.

Note 13 – Debt

Short-term borrowings were as follows:

Commercial paper

Notes Payable

Current maturities of long-term debt
Discontinued operations - capital leases (1)

Total Short-term Debt

 ____________

December 31,

2014

2013

150

$

1

1,307

(31)

1,427

$

—

5

1,112
—
1,117

$

$

(1)  Represents current capital lease obligations related to our ITO business which is held for sale and being reported as a discontinued 

operation at December 31, 2014. These obligations are expected to be assumed by the purchaser of the ITO business. Refer to Note 4 - 
Divestitures for additional information regarding this pending sale.

We classify our debt based on the contractual maturity dates of the underlying debt instruments or as of the earliest 
put date available to the debt holders. We defer costs associated with debt issuance over the applicable term, or to 
the first put date in the case of convertible debt or debt with a put feature. These costs are amortized as interest 
expense in our Consolidated Statements of Income. 

Xerox 2014 Annual Report

96

 
 
 
Long-term debt was as follows:

Xerox Corporation

Convertible Notes due 2014

Senior Notes due 2014

Floating Rate Notes due 2014

Senior Notes due 2015

Notes due 2016

Senior Notes due 2016

Senior Notes due 2017

Senior Notes due 2017

Notes due 2018

Senior Notes due 2018

Senior Notes due 2019

Senior Notes due 2019

Senior Notes due 2020

Senior Notes due 2021

Senior Notes due 2024

Senior Notes due 2039

   Subtotal - Xerox Corporation

Subsidiary Companies

Senior Notes due 2015

Borrowings secured by other assets

Other

   Subtotal - Subsidiary Companies

Principal debt balance

Unamortized discount
Fair value adjustments(1)

   Terminated swaps

   Current swaps

Less: current maturities
Discontinued Operations (3)

Total Long-term Debt

 ____________

Weighted Average 
Interest Rates at 
December 31, 2014(2) 

2014

2013

December 31,

—% $

— $

—%

—%

4.29%

7.20%

6.48%

6.83%

2.98%

0.57%

6.37%

2.77%

5.66%

2.81%

5.39%

3.84%

6.78%

4.25%

3.85%

1.20%

$

$

—

—

1,000

250

700

500

500

1

1,000

500

650

400

1,062

300

350

7,213

$

250

180

3

433

$

7,646

(54)

68

5

(1,307)

(44)

$

6,314

$

9

750

300

1,000

250

700

500

500

1

1,000

500

650

—

1,062

—

350

7,572

250

146

6

402

7,974

(58)

100

—

(1,112)

—

6,904

(1)  Fair value adjustments include the following: (i) fair value adjustments to debt associated with terminated interest rate swaps, which are 

being amortized to interest expense over the remaining term of the related notes; and (ii) changes in fair value of hedged debt obligations 
attributable to movements in benchmark interest rates. Hedge accounting requires hedged debt instruments to be reported inclusive of any 
fair value adjustment. 

(2)  Represents weighted average effective interest rate which includes the effect of discounts and premiums on issued debt.
(3)  Represents long-term capital lease obligations related to our ITO business which is held for sale and being reported as a discontinued 

operation at December 31, 2014. These obligations are expected to be assumed by the purchaser of the ITO business. Refer to Note 4 - 
Divestitures for additional information regarding this pending sale.

97

 
 
 
 
 
 
 
 Scheduled principal payments due on our long-term debt for the next five years and thereafter are as follows:

Continuing operations
Discontinued operations (2)

Total Long-term Principal Payments

 _____________

2015(1)

2016

2017

2018

2019

Thereafter

Total 

$

$

1,276

$

974

$

1,023

$

1,017

$

1,158

$

2,123

$

7,571

31

24

14

6

—

—

75

1,307

$

998

$

1,037

$

1,023

$

1,158

$

2,123

$

7,646

(1)  Quarterly long-term debt maturities from continuing operations for 2015 are $1,007, $256, $7 and $6 for the first, second, third and fourth 

quarters, respectively. 

(2)  Represents payments on capital lease obligations related to our ITO business which is held for sale and being reported as a discontinued 
operation at December 31, 2014. These obligations are expected to be assumed by the purchaser of the ITO business. Refer to Note 4 - 
Divestitures for additional information regarding this pending sale.

Commercial Paper 
We have a private placement commercial paper (CP) program in the U.S. under which we may issue CP up to a 
maximum amount of $2.0 billion outstanding at any time. Aggregate CP and Credit Facility borrowings may not 
exceed $2.0 billion outstanding at any time. The maturities of the CP Notes will vary, but may not exceed 390 days 
from the date of issue. The CP Notes are sold at a discount from par or, alternatively, sold at par and bear interest at 
market rates. CP outstanding at December 31, 2014 and 2013, was $150 and $0, respectively.

Credit Facility
In 2014, we entered into an Amended and Restated Credit Agreement that extended the maturity date of our $2.0 
billion unsecured revolving Credit Facility to 2019 from 2016. The amendment also included modest improvements 
in pricing and minor changes in the composition of the group of lenders. The amended and restated Credit Facility 
contains a $300 letter of credit sub-facility, and also includes an accordion feature that would allow us to increase 
(from time to time, with willing lenders) the overall size of the facility up to an aggregate amount not to exceed $2.75 
billion. We also have the right to request a one year extension on each of the first and second anniversaries of the 
amendment date.

We deferred $7 of debt issuance costs in connection with this amendment, which included approximately $4 of 
unamortized deferred debt issue costs associated with the previous Credit Facility. The write-off of debt issuance 
costs associated with lenders that reduced their participation in the amended and restated Credit Facility was not 
material.

The Credit Facility provides a backstop to our $2.0 billion CP program. Proceeds from any borrowings under the 
Credit Facility can be used to provide working capital for the Company and its subsidiaries and for general 
corporate purposes.

At December 31, 2014 we had no outstanding borrowings or letters of credit under the Credit Facility. 

The Credit Facility is available, without sublimit, to certain of our qualifying subsidiaries. Our obligations under the 
Credit Facility are unsecured and are not currently guaranteed by any of our subsidiaries. Any domestic subsidiary 
that guarantees more than $100 of Xerox Corporation debt must also guaranty our obligations under the Credit 
Facility. In the event that any of our subsidiaries borrows under the Credit Facility, its borrowings thereunder would 
be guaranteed by us.

Borrowings under the Credit Facility bear interest at our choice, at either (a) a Base Rate as defined in our Credit 
Facility agreement, plus a spread that varies between 0.00% and 0.45% depending on our credit rating at the time 
of borrowing, or (b) LIBOR plus an all-in spread that varies between 0.90% and 1.45% depending on our credit 
rating at the time of borrowing. Based on our credit rating as of December 31, 2014, the applicable all-in spreads for 
the Base Rate and LIBOR borrowing were 0.10% and 1.10%, respectively.

An annual facility fee is payable to each lender in the Credit Facility at a rate that varies between 0.10% and 0.30% 
depending on our credit rating. Based on our credit rating as of December 31, 2014, the applicable rate is 0.15%.

Xerox 2014 Annual Report

98

The Credit Facility contains various conditions to borrowing and affirmative, negative and financial maintenance 
covenants. Certain of the more significant covenants are summarized below: 

(a)  Maximum leverage ratio (a quarterly test that is calculated as principal debt divided by consolidated EBITDA, as 

defined) of 3.75x. 

(b)  Minimum interest coverage ratio (a quarterly test that is calculated as consolidated EBITDA divided by 

consolidated interest expense) may not be less than 3.00x. 

(c)  Limitations on (i) liens of Xerox and certain of our subsidiaries securing debt, (ii) certain fundamental changes to 

corporate structure, (iii) changes in nature of business and (iv) limitations on debt incurred by certain 
subsidiaries. 

The Credit Facility also contains various events of default, the occurrence of which could result in termination of the 
lenders' commitments to lend and the acceleration of all our obligations under the Credit Facility. These events of 
default include, without limitation: (i) payment defaults, (ii) breaches of covenants under the Credit Facility (certain 
of which breaches do not have any grace period), (iii) cross-defaults and acceleration to certain of our other 
obligations and (iv) a change of control of Xerox.

Interest
Interest paid on our short-term and long-term debt amounted to $400, $435 and $464 for the years ended 
December 31, 2014, 2013 and 2012, respectively. 

Interest expense and interest income was as follows: 

Interest expense(1) (3)
Interest income(2)
  ___________

Year Ended December 31,

2014

2013

2012

$

$

377

397

$

403

494

427

610

(1) 

(2) 

Includes Equipment financing interest expense, as well as non-financing interest expense included in Other expenses, net in the 
Consolidated Statements of Income. 
Includes Finance income, as well as other interest income that is included in Other expenses, net in the Consolidated Statements of 
Income. 

(3)  Excludes interest on capital lease obligations related to our ITO business which is held for sale and being reported as a discontinued 

operation at December 31, 2014. These obligations are expected to be assumed by the purchaser of the ITO business. Refer to Note 4 - 
Divestitures for additional information regarding this pending sale. 

Equipment financing interest is determined based on an estimated cost of funds, applied against the estimated level 
of debt required to support our net finance receivables. The estimated cost of funds is based on our overall 
corporate cost of borrowing adjusted to reflect a rate that would be paid by a typical BBB rated leasing company. 
The estimated level of debt is based on an assumed 7 to 1 leverage ratio of debt/equity as compared to our 
average finance receivable balance during the applicable period. 

Net (Payments) Proceeds on Debt 
Net (payments) proceeds on debt as shown on the Consolidated Statements of Cash Flows was as follows: 

Net proceeds (payments) on short-term debt

Proceeds from issuance of long-term debt

Payments on long-term debt

Net Payments on Other Debt

Year Ended December 31,

2014

2013

2012

$

$

$

145

808

(1,128)

(175) $

5

$

617

(1,056)

(434) $

(108)

1,116

(1,116)

(108)

99

 
 
 
Note 14 – Financial Instruments

We are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could 
affect operating results, financial position and cash flows. We manage our exposure to these market risks through 
our regular operating and financing activities and, when appropriate, through the use of derivative financial 
instruments. These derivative financial instruments are utilized to hedge economic exposures, as well as to reduce 
earnings and cash flow volatility resulting from shifts in market rates. We enter into limited types of derivative 
contracts, including interest rate swap agreements, foreign currency spot, forward and swap contracts and net 
purchased foreign currency options to manage interest rate and foreign currency exposures. Our primary foreign 
currency market exposures include the Japanese Yen, Euro and U.K. Pound Sterling. The fair market values of all 
our derivative contracts change with fluctuations in interest rates and/or currency exchange rates and are designed 
so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative 
financial instruments are held solely as risk management tools and not for trading or speculative purposes. The 
related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities. 

We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated 
with our derivative instruments because these transactions are executed with a diversified group of major financial 
institutions. Further, our policy is to deal only with counterparties having a minimum investment grade or better credit 
rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties.

Interest Rate Risk Management

We use interest rate swap agreements to manage our interest rate exposure and to achieve a desired proportion of 
variable and fixed rate debt. These derivatives may be designated as fair value hedges or cash flow hedges 
depending on the nature of the risk being hedged.

Terminated Swaps 

During the period from 2004 to 2011, we early terminated several interest rate swaps that were designated as fair 
value hedges of certain debt instruments. The associated net fair value adjustments to the debt instruments are 
being amortized to interest expense over the remaining term of the related notes. In 2014, 2013 and 2012, the 
amortization of these fair value adjustments reduced interest expense by $31, $42 and $49, respectively, and we 
expect to record a net decrease in interest expense of $68 in future years through 2018.

Fair Value Hedges

As of December 31, 2014, pay variable/received fixed interest rate swaps with notional amounts of $300 and net 
asset fair value of $5 were designated and accounted for as fair value hedges. The swaps were structured to hedge 
the fair value of related debt by converting them from fixed rate instruments to variable rate instruments. No 
ineffective portion was recorded to earnings during 2014. We did not have any interest rate swaps outstanding at 
December 31, 2013.

The following is a summary of our fair value hedges at December 31, 2014:

Debt Instrument

Senior Note 2021

Year First
Designated

Notional
Amount

Net Fair
Value

Weighted
Average
Interest
Rate Paid

Interest
Rate
Received

Basis

Maturity

2014

$

300

$

5

2.43%

4.50%

Libor

2021

Foreign Exchange Risk Management

As a global company, we are exposed to foreign currency exchange rate fluctuations in the normal course of our 
business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily 
forward contracts and purchased option contracts, to hedge the following foreign currency exposures, thereby 
reducing volatility of earnings or protecting fair values of assets and liabilities: 

•  Foreign currency-denominated assets and liabilities
•  Forecasted purchases, and sales in foreign currency

Summary of Foreign Exchange Hedging Positions 
At December 31, 2014, we had outstanding forward exchange and purchased option contracts with gross notional 
values of $2,991, which is typical of the amounts that are normally outstanding at any point during the year. 
Approximately 75% of these contracts mature within three months, 7% in three to six months and 18% in six to 
twelve months.

Xerox 2014 Annual Report

100

The following is a summary of the primary hedging positions and corresponding fair values as of December 31, 2014:

Currencies Hedged (Buy/Sell)

Euro/U.K. Pound Sterling

U.S. Dollar/Euro

Japanese Yen/U.S. Dollar

Japanese Yen/Euro

Canadian Dollar/Euro

U.K. Pound Sterling/Euro

Swiss Franc/Euro

Philippine Peso/U.S. Dollar

Indian Rupee/U.S. Dollar

Euro/U.S. Dollar

Mexican Peso/U.S. Dollar

Euro/Danish Krone

U.S. Dollar/Philippine Peso

U.S. Dollar/Canadian Dollar

Mexican Peso/Euro

All Other

Total Foreign Exchange Hedging

____________

Gross
Notional
Value

Fair  Value
Asset
(Liability)(1)

$

$

785

450

442

338

299

153

83

67

62

53

52

24

23

23

22

115

$

2,991

$

(11)

15

(33)

(4)

(1)

1

—

—

(1)

(1)

(2)

—

—

—
—
1

(36)

(1)  Represents the net receivable (payable) amount included in the Consolidated Balance Sheet at December 31, 2014.

Foreign Currency Cash Flow Hedges 

We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-
denominated inventory purchases, sales and expenses. No amount of ineffectiveness was recorded in the 
Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s 
gain or loss was included in the assessment of hedge effectiveness. The net liability fair value of these contracts was 
$30 and $50 as of December 31, 2014 and December 31, 2013, respectively.

Summary of Derivative Instruments Fair Value 
The following table provides a summary of the fair value amounts of our derivative instruments:

Designation of Derivatives

Balance Sheet Location

Derivatives Designated as Hedging Instruments

Foreign exchange contracts – forwards

Foreign currency options

Interest rate swaps

Other current assets

Other current liabilities

Other current assets

Other long-term assets

Net Designated Derivative Liability

Derivatives NOT Designated as Hedging Instruments

Foreign exchange contracts – forwards

Summary of Derivatives

Other current assets

Other current liabilities

Net Undesignated Derivative Liability

Total Derivative Assets

Total Derivative Liabilities

Net Derivative Liability

December 31,

2014

2013

7

$

(39)

2

5

(25) $

13

$

(19)

(6) $

27

$

(58)

(31) $

1

(51)

—

—

(50)

5

(19)

(14)

6

(70)

(64)

$

$

$

$

$

$

101

 
 
Summary of Derivative Instruments Gains (Losses)

Derivative gains and (losses) affect the income statement based on whether such derivatives are designated as 
hedges of underlying exposures. The following is a summary of derivative gains and (losses).

Designated Derivative Instruments Gains (Losses)

The following tables provide a summary of gains (losses) on derivative instruments:

Derivatives in Fair Value
Relationships

Location of Gain (Loss)
Recognized in Income

Year Ended December 31,

Derivative Gain (Loss)
Recognized in Income

Hedged Item Gain (Loss)
Recognized in Income

2014

2013

2012

2014

2013

2012

Interest rate contracts

Interest expense

$

5

$

— $

— $

(5) $

— $

—

Derivative Gain (Loss) Recognized in OCI
(Effective Portion)

2014

2013

2012

Year Ended December 31,

Location of Derivative
Gain (Loss) 
Reclassified
from AOCI into Income
(Effective Portion)

Gain (Loss) Reclassified from AOCI to
Income (Effective Portion)

2014

2013

2012

$

(20) $

(126) $

(50) Cost of sales

$

(36) $

(123) $

37

Derivatives in Cash 
Flow
Hedging Relationships

Foreign exchange
contracts – forwards/
options

No amount of ineffectiveness was recorded in the Consolidated Statements of Income for these designated cash 
flow hedges and all components of each derivative’s gain or (loss) were included in the assessment of hedge 
effectiveness. In addition, no amount was recorded for an underlying exposure that did not occur or was not 
expected to occur.

As of December 31, 2014, net after-tax losses of $22 were recorded in accumulated other comprehensive loss 
associated with our cash flow hedging activity. The entire balance is expected to be reclassified into net income 
within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

Non-Designated Derivative Instruments Losses

Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets 
and liabilities. They are not designated as hedges since there is a natural offset for the re-measurement of the 
underlying foreign currency-denominated asset or liability.

The following table provides a summary of losses on non-designated derivative instruments:

Derivatives NOT Designated as
Hedging Instruments

Location of Derivative Loss

2014

2013

2012

Foreign exchange contracts – forwards

Other expense – Currency losses, net

$

(10) $

(86) $

(38)

Year Ended December 31,

During the three years ended December 31, 2014, we recorded Currency (losses) gains, net of $(5), $7 and $(3), 
respectively. Currency (losses) gains, net includes the mark-to-market adjustments of the derivatives not designated 
as hedging instruments and the related cost of those derivatives, as well as the re-measurement of foreign currency-
denominated assets and liabilities.

Xerox 2014 Annual Report

102

 
 
Note 15 – Fair Value of Financial Assets and Liabilities

The following table represents assets and liabilities fair value measured on a recurring basis. The basis for the 
measurement at fair value in all cases is Level 2 – Significant Other Observable Inputs.

Assets:

Foreign exchange contracts - forwards

Foreign currency options

Interest rate swaps

Deferred compensation investments in cash surrender life insurance

Deferred compensation investments in mutual funds

Total

Liabilities:

Foreign exchange contracts - forwards

Deferred compensation plan liabilities

Total

As of December 31,

2014

2013

$

$

$

$

20

$

2

5

94

32

153

$

58

$

135

193

$

6

—

—

88

28

122

70

125

195

We utilize the income approach to measure the fair value for our derivative assets and liabilities. The income 
approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates 
and forward prices, and therefore are classified as Level 2.

Fair value for our deferred compensation plan investments in Company-owned life insurance is reflected at cash 
surrender value. Fair value for our deferred compensation plan investments in mutual funds is based on quoted 
market prices for actively traded investments similar to those held by the plan. Fair value for deferred compensation 
plan liabilities is based on the fair value of investments corresponding to employees’ investment selections, based 
on quoted prices for similar assets in actively traded markets.

Summary of Other Financial Assets and Liabilities Fair Value Measured on a Nonrecurring Basis

The estimated fair values of our other financial assets and liabilities fair value measured on a nonrecurring basis 
were as follows:

Cash and cash equivalents

Accounts receivable, net

Short-term debt

Long-term debt

December 31, 2014

December 31, 2013

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

$

1,411

$

1,411

$

1,764

$

2,652

1,427

6,314

2,652

1,417

6,719

2,929

1,117

6,904

1,764

2,929

1,126

7,307

The fair value amounts for Cash and cash equivalents and Accounts receivable, net, approximate carrying amounts 
due to the short maturities of these instruments. The fair value of Short and Long-term debt was estimated based on 
quoted market prices for publicly traded securities (Level 1) or on the current rates offered to us for debt of similar 
maturities (Level 2). The difference between the fair value and the carrying value represents the theoretical net 
premium or discount we would pay or receive to retire all debt at such date.

103

 
 
Note 16 – Employee Benefit Plans
We sponsor numerous defined benefit and defined contribution pension and other post-retirement benefit plans, 
primarily retiree health care, in our domestic and international operations. December 31 is the measurement date 
for all of our post-retirement benefit plans. 

Change in Benefit Obligation:

Benefit obligation, January 1

Service cost

Interest cost

Plan participants' contributions

Actuarial loss (gain)

Currency exchange rate changes

Curtailments

Benefits paid/settlements

Other

Benefit Obligation, December 31

Change in Plan Assets:

Fair value of plan assets, January 1

Actual return on plan assets

Employer contribution

Plan participants' contributions

Currency exchange rate changes

Benefits paid/settlements

Other

Fair Value of Plan Assets, December 31

Net Funded Status at December 31(1) 

Amounts Recognized in the Consolidated
Balance Sheets:

Other long-term assets

Accrued compensation and benefit costs

Pension and other benefit liabilities

Post-retirement medical benefits
Discontinued Operations (2)

Net Amounts Recognized

  _______________

Pension Benefits 

U.S. Plans

Non-U.S. Plans

Retiree Health

2014

2013

2014

2013

2014

2013

$

3,893

$

5,033

$

6,664

$

6,708

$

856

$

989

9

281

—

813

—

(7)

(273)

—

10

154

—

(440)

—

—

(864)

—

34

272

5

1,069

(594)

—

(279)

(5)

91

260

6

(203)

98

(10)

(264)

(22)

9

36

16

119

(13)

—

(86)

—

4,716

$

3,893

$

7,166

$

6,664

$

937

$

2,876

$

3,573

$

5,789

$

5,431

$

— $

398

124

—

—

(273)

1

139

27

—

—

(864)

1

899

160

5

(484)

(279)

(2)

326

203

6

88

(264)

(1)

—

70

16

—

(86)

—

3,126

$

2,876

$

6,088

$

5,789

$

— $

9

33

14

(88)

(10)

—

(91)

—

856

—

—

77

14

—

(91)

—

—

(1,590) $

(1,017) $

(1,078) $

(875) $

(937) $

(856)

— $

— $

17

$

55

$

— $

(24)

(1,566)
—

—

(25)

(992)

—
—

(28)

(1,040)

—

(27)

(30)

(900)

—

—

(72)

—

(865)

—

$

(1,590) $

(1,017) $

(1,078) $

(875) $

(937) $

—

(71)

—

(785)

—

(856)

$

$

$

$

$

Includes under-funded and un-funded plans.

(1) 
(2)  Represents the net un-funded pension obligations related to our ITO business which is held for sale and being reported as a discontinued 

operation at December 31, 2014. These obligations are expected to be assumed by the purchaser of the ITO business. The net pension 
cost associated with these plans is immaterial. Refer to Note 4 - Divestitures for additional information regarding this pending sale.

Benefit plans pre-tax amounts recognized in AOCL at December 31:

Net actuarial loss

Prior service credit

Total Pre-tax Loss (Gain)

Accumulated Benefit Obligation

$

$

$

Pension Benefits 

U.S. Plans

Non-U.S. Plans

Retiree Health

2014

2013

2014

2013

2014

2013

1,301

$

672

$

2,036

$

1,741

$

122

$

(13)

(15)

(20)

(20)

(42)

1,288

$

657

$

2,016

$

1,721

$

80

$

6

(85)

(79)

4,716

$

3,887

$

6,883

$

6,368

Xerox 2014 Annual Report

104

 
 
 
 
 
 
 
 
 
 
 
Aggregate information for pension plans with an Accumulated benefit obligation in excess of plan assets is 
presented below:

Underfunded Plans:

U.S.

Non U.S.

Unfunded Plans:

U.S.

Non U.S.

Total Underfunded and Unfunded Plans:

U.S.

Non U.S.

Total

December 31, 2014

December 31, 2013

Projected
benefit
obligation

Accumulated
benefit
obligation

Fair value of
plan assets

Projected
benefit
obligation

Accumulated
benefit
obligation

Fair value of
plan assets

$

4,351

$

4,351

$

3,126

$

3,571

$

3,565

$

6,376

6,125

5,848

5,350

5,104

2,876

4,964

$

$

$

$

365

567

$

365

551

— $

—

$

322

540

$

322

526

—

—

4,716

$

4,716

$

3,126

$

3,893

$

3,887

$

6,943

6,676

5,848

5,890

5,630

11,659

$

11,392

$

8,974

$

9,783

$

9,517

$

2,876

4,964

7,840

Our pension plan assets and benefit obligations at December 31, 2014 were as follows:

(in billions)

U.S. funded

U.S. unfunded

Total U.S.

U.K.

Canada

Other funded

Other unfunded

Total

Fair Value of
Pension Plan
Assets

Pension Benefit
Obligations

Net Funded Status

$

$

$

3.1

$

$

—

3.1

3.9

0.8

1.4

—

$

$

4.4

0.3

4.7

4.2

0.9

1.6

0.5

9.2

$

11.9

$

(1.3)

(0.3)

(1.6)

(0.3)

(0.1)

(0.2)

(0.5)

(2.7)

Prior to the freeze of current benefits (see below), most of our defined benefit pension plans generally provided 
employees a benefit, depending on eligibility, calculated under a highest average pay and years of service formula. 
Our primary domestic defined benefit pension plans provided a benefit at the greater of (i) the highest average pay 
and years of service formula, (ii) the benefit calculated under a formula that provides for the accumulation of salary 
and interest credits during an employee's work life or (iii) the individual account balance from the Company's prior 
defined contribution plan (Transitional Retirement Account or TRA). 

105

The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows:

Year Ended December 31,

Pension Benefits

U.S. Plans

Non-U.S. Plans

Retiree Health

2014

2013

2012

2014

2013

2012

2014

2013

2012

Components of Net Periodic Benefit
Costs:

Service cost
Interest cost(1)
Expected return on plan assets(2)

Recognized net actuarial loss

Amortization of prior service credit

Recognized settlement loss

Recognized curtailment gain

Defined Benefit Plans
Defined contribution plans (3)

Net Periodic Benefit Cost

Other changes in plan assets and
benefit obligations recognized in
Other Comprehensive Income:

Net actuarial loss (gain)

Prior service credit

Amortization of net actuarial loss

Amortization of net prior service credit

Curtailment gain

Total Recognized in Other
Comprehensive Income

Total Recognized in Net Periodic
Benefit Cost and Other
Comprehensive Income

$

34

$

91

$

83

$

9

$

9

$

$

9

$

10

$

281

(290)

17

(2)

51

—

66

58

124

697

—

(68)

2

—

154

(179)

19

(2)

162

—

164

64

228

(403)

—

(181)

2

—

112

282

(306)

53

(23)

82

—

200

28

228

427

(2)

(135)

23

—

272

(342)

54

(1)

—

(1)

16

44

60

481

(6)

(54)

1

2

260

(317)

77

—

—

(8)

103

25

128

(224)

(14)

(77)

—

—

270

(307)

53

—

1

—

100

33

133

416

(1)

(54)

—

—

631

(582)

313

424

(315)

361

36

—

1

(43)

—

—

3

n/a

3

119

—

(1)

43

n/a

161

33

—

2

(43)

—

—

1

n/a

1

(88)

—

(2)

43

n/a

(47)

9

42

—

1

(41)

—

—

11

n/a

11

18

(6)

(1)

41

n/a

52

$

755

$

(354) $

541

$

484

$

(187) $

494

$

164

$

(46) $

63

_______________
(1) 

Interest cost includes interest expense on non-TRA obligations of $371, $349 and $382 and interest expense directly allocated to TRA 
participant accounts of $182, $65 and $170 for the years ended December 31, 2014, 2013 and 2012, respectively. 

(2)  Expected return on plan assets includes expected investment income on non-TRA assets of $450, $431 and $443 and actual investment 

income on TRA assets of $182, $65 and $170 for the years ended December 31, 2014, 2013 and 2012, respectively.

(3)  Excludes contributions related to our ITO business, which is held for sale and reported as a discontinued operation at December 31, 2014.  

Refer to Note 4 - Divestitures for additional information regarding this pending sale.

The net actuarial loss and prior service credit for the defined benefit pension plans that will be amortized from 
Accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $111 and 
$(4), respectively, excluding amounts that may be recognized through settlement losses. The net actuarial loss and 
prior service credit for the retiree health benefit plans that will be amortized from Accumulated other comprehensive 
income (loss) into net periodic benefit cost over the next fiscal year are $5 and $(30), respectively. 

Pension plan assets consist of both defined benefit plan assets and assets legally restricted to the TRA accounts. 
The combined investment results for these plans, along with the results for our other defined benefit plans, are 
shown above in the “actual return on plan assets” caption. To the extent that investment results relate to TRA, such 
results are charged directly to these accounts as a component of interest cost. 

Plan Amendments 

Pension Plan Freezes
Over the past several years, we have amended several of our major defined benefit pension plans to freeze current 
benefits and eliminate benefits accruals for future service including our primary U.S. defined benefit plan for salaried 
employees, the Canadian Salary Pension Plan and the U.K. Final Salary Pension Plan. The freeze of current 
benefits is the primary driver of the reduction in pension service costs since 2012. In certain Non-U.S. plans we are 
required to continue to consider salary increases and inflation in determining the benefit obligation related to prior 
service. 

Plan Assets

Current Allocation 
As of the 2014 and 2013 measurement dates, the global pension plan assets were $9.2 billion and $8.7 billion, 
respectively. These assets were invested among several asset classes.  

Xerox 2014 Annual Report

106

 
 
 
The following tables presents the defined benefit plans assets measured at fair value and the basis for that 
measurement: 

Asset Class 

Level 1

Level 2

Level 3

Total

%

Level 1

Level 2

Level 3

Total

%

Cash and cash equivalents

$

52

$

— $

— $

52

2% $

608

$

— $

— $

608

10%

U.S. Plans

Non-U.S. Plans

December 31, 2014

Equity Securities:

U.S. large cap

U.S. mid cap

U.S. small cap

International developed

Emerging markets

Global Equity

Total Equity Securities

Fixed Income Securities:

U.S. treasury securities

Debt security issued by
government agency

Corporate bonds

Asset backed securities

Total Fixed Income Securities

Derivatives:

Interest rate contracts

Foreign exchange contracts

Equity contracts

Other contracts

Total Derivatives

Real estate

Private equity/venture capital

Guaranteed insurance contracts
Other(1)

332

73

52

195

140

2

794

—

—

—

—

—

—

—

—

—

—

46

—

—

(1)

15

—

39

92

113

7

266

145

225

988

10

1,368

(1)

1

—

—

—

39

—

—

40

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

25

497

—

—

347

73

91

287

253

9

1,060

145

225

988

10

1,368

(1)

1

—

—

—

110

497

—

39

11%

2%

3%

9%

8%

—%

33%

5%

7%

32%

—%

44%

—%

—%

—%

—%

—%

4%

16%

—%

1%

253

10

28

1,065

276

4

1,636

7

25

23

—

55

—

—

—

—

—

—

—

—

6

52

—

—

162

69

6

289

26

1,536

850

1

2,413

128

(5)

—

14

137

29

—

—

8

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

279

499

129

—

305

10

28

1,227

345

10

1,925

33

1,561

873

1

2,468

128

(5)

—

14

137

308

499

129

14

Total Fair Value of Plan Assets

$

891

$

1,713

$

522

$

3,126

100% $

2,305

$

2,876

$

907

$

6,088

5%

—%

—%

20%

6%

—%

31%

1%

26%

15%

—%

42%

2%

—%

—%

—%

2%

5%

8%

2%

—%

100%

_____________________________

(1)  Other Level 1 assets include net non-financial assets of $(1) U.S. and $6 Non-U.S., such as due to/from broker, interest receivables and 

accrued expenses.

107

 
Asset Class 

Level 1

Level 2

Level 3

Total

%

Level 1

Level 2

Level 3

Total

%

Cash and cash equivalents

$

48

$

— $

— $

48

1 % $

688

$

— $

— $

688

12%

U.S. Plans

Non-U.S. Plans

December 31, 2013

Equity Securities:

U.S. large cap

U.S. mid cap

U.S. small cap

International developed

Emerging markets

Global Equity

Total Equity Securities

Fixed Income Securities:

U.S. treasury securities

Debt security issued by
government agency

Corporate bonds

Asset backed securities

Total Fixed Income Securities

Derivatives:

Interest rate contracts

Foreign exchange
contracts

Equity contracts

Other contracts

Total Derivatives

Real estate

Private equity/venture capital

Guaranteed insurance
contracts
Other(1)

Total Fair Value of Plan
Assets

_____________________________

319

71

48

182

171

2

793

—

—

—

—

—

—

—

—

—

—

40

—

—

10

13

—

46

123

69

7

258

74

180

908

10

1,172

(17)

(12)

—

—

(29)

34

—

—

70

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

29

451

—

—

332

71

94

305

240

9

1,051

74

180

908

10

1,172

(17)

(12)

—

—

(29)

103

451

—

80

12 %

2 %

3 %

11 %

8 %

— %

36 %

3 %

6 %

32 %

— %

41 %

(1)%

— %

— %

— %

(1)%

4 %

16 %

— %

3 %

220

13

40

1,314

262

5

1,854

4

31

146

—

181

—

14

—

62

76

32

—

—

6

55

—

—

212

76

—

343

16

1,189

660

1

1,866

62

30

—

—

92

35

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

269

212

135

—

275

13

40

1,526

338

5

2,197

20

1,220

806

1

2,047

62

44

—

62

168

336

212

135

6

5%

—%

1%

26%

6%

—%

38%

—%

21%

14%

—%

35%

1%

1%

—%

1%

3%

6%

4%

2%

—%

$

891

$

1,505

$

480

$

2,876

100 % $

2,837

$

2,336

$

616

$

5,789

100%

(1)  Other Level 1 assets include net non-financial liabilities of $9 U.S. and $6 Non-U.S., such as due to/from broker, interest receivables and 

accrued expenses.

The following tables represents a roll-forward of the defined benefit plans assets measured using significant 
unobservable inputs (Level 3 assets): 

Balance at December 31, 2012

$

Purchases

Sales

Net transfers in from Level 1

Realized gains (losses)

Unrealized gains (losses)

Currency translation

Balance at December 31, 2013

Purchases

Sales

Realized gains (losses)

Unrealized gains (losses)

Currency translation

Balance at December 31, 2014

$

Fair Value Measurement Using Significant Unobservable Inputs (Level 3)

U.S. Defined Benefit Plans Assets

Non-U.S. Defined Benefit Plans Assets

Private
Equity/
Venture
Capital

Real
Estate

Total

Real
Estate

Private
Equity/
Venture
Capital

Guaranteed
Insurance
Contracts

Total

58

1

(36)
—
24

(18)

—

29

1

(6)

(7)

8

—

25

$

$

300

177

(59)
—
46

(13)

—

451

44

(59)

41

20

—

358

178

(95)
—
70

(31)

—

480

45

(65)

34

28

—

$

332

$

3

$

131

$

64

(128)

—

17

(21)

5

269

74

(64)

20

(1)

(19)

193

—

—

2

2

12

212

279

—

—

38

(30)

3

(5)

(1)

4

(2)

5

135

22

(25)

15

—

(18)

$

497

$

522

$

279

$

499

$

129

$

466

260

(133)

(1)

23

(21)

22

616

375

(89)

35

37

(67)

907

Xerox 2014 Annual Report

108

 
Valuation Method
Our primary Level 3 assets are Real Estate and Private Equity/Venture Capital investments. The fair value of our 
real estate investment funds are based on the Net Asset Value (NAV) of our ownership interest in the funds. NAV 
information is received from the investment advisers and is primarily derived from third-party real estate appraisals 
for the properties owned. The fair value for our private equity/venture capital partnership investments are based on 
our share of the estimated fair values of the underlying investments held by these partnerships as reported (or 
expected to be reported) in their audited financial statements. The valuation techniques and inputs for our Level 3 
assets have been consistently applied for all periods presented.

Investment Strategy
The target asset allocations for our worldwide defined benefit pension plans were: 

Equity investments

Fixed income investments

Real estate

Private equity

Other

2014

Non-U.S.

34%

47%

9%

6%

4%

U.S.

33%

43%

8%

9%

7%

2013

Non-U.S.

41%

47%

9%

—%

3%

U.S.

36%

44%

5%

14%

1%

Total Investment Strategy

100%

100%

100%

100%

We employ a total return investment approach whereby a mix of equities and fixed income investments are used to 
maximize the long-term return of plan assets for a prudent level of risk. The intent of this strategy is to minimize plan 
expenses by exceeding the interest growth in long-term plan liabilities. Risk tolerance is established through careful 
consideration of plan liabilities, plan funded status and corporate financial condition. This consideration involves the 
use of long-term measures that address both return and risk. The investment portfolio contains a diversified blend of 
equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. 
stocks, as well as growth, value and small and large capitalizations, and may include Company stock. Other assets 
such as real estate, private equity, and hedge funds are used to improve portfolio diversification. Derivatives may be 
used to hedge market exposure in an efficient and timely manner; however, derivatives may not be used to leverage 
the portfolio beyond the market value of the underlying investments. Investment risks and returns are measured and 
monitored on an ongoing basis through annual liability measurements and quarterly investment portfolio reviews. 

Expected Long-term Rate of Return
We employ a “building block” approach in determining the long-term rate of return for plan assets. Historical 
markets are studied and long-term relationships between equities and fixed income are assessed. Current market 
factors such as inflation and interest rates are evaluated before long-term capital market assumptions are 
determined. The long-term portfolio return is established giving consideration to investment diversification and 
rebalancing. Peer data and historical returns are reviewed periodically to assess reasonableness and 
appropriateness. 

Contributions 
In 2014, we made cash contributions of $284 ($124 U.S. and $160 Non-U.S.) and $70 to our defined benefit 
pension plans and retiree health benefit plans, respectively. 

In 2015, based on current actuarial calculations, we expect to make contributions of approximately $340  ($180 
U.S. and $160 non-U.S.) to our defined benefit pension plans and approximately $71 to our retiree health benefit 
plans.

109

 
Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid 
during the following years: 

2015

2016

2017

2018

2019

Years 2020-2023

Assumptions

Pension Benefits

U.S.

Non-U.S.

Total

Retiree Health

$

$

643

343

336

333

326

$

251

252

261

269

279

$

894

595

597

602

605

1,681

1,539

3,220

71

70

70

69

68

323

Weighted-average assumptions used to determine benefit obligations at the plan measurement dates:

Discount rate

Rate of compensation increase

Discount rate

2014

Pension Benefits 

2013

2012

U.S.

Non-U.S.

U.S.

Non-U.S.

U.S.

Non-U.S.

3.9%

0.2%

3.1%

2.6%

4.8%

0.2%

4.2%

2.7%

3.7%

0.2%

4.0%

2.6%

Retiree Health 

2014

2013

2012

3.8%

4.5%

3.6%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:

2015

2014

2013

2012

U.S.

Non-U.S.

U.S.

Non-U.S.

U.S.

Non-U.S.

U.S.

Non-U.S.

Pension Benefits 

Discount rate

Expected return on plan assets

Rate of compensation increase

3.9%

7.5%

0.2%

3.1%

5.2%

2.6%

4.8%

7.8%

0.2%

4.2%

6.1%

2.7%

3.7%

7.8%

0.2%

4.0%

6.1%

2.6%

4.8%

7.8%

3.5%

4.6%

6.2%

2.7%

Discount rate

_____________________________

Retiree Health 

2015

2014

2013

2012

3.8%

4.5%

3.6%

4.5%

Note: Expected return on plan assets is not applicable to retiree health benefits as these plans are not funded. Rate of compensation increase is 
not applicable to retiree health benefits as compensation levels do not impact earned benefits. 

Assumed health care cost trend rates were as follows:

Health care cost trend rate assumed for next year

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

Year that the rate reaches the ultimate trend rate

December 31,

2014

2013

7.0%

4.9%

2023

7.2%

4.9%

2023

Xerox 2014 Annual Report

110

 
 
 
 
 
 
 
 
 
 
 
 
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 
one-percentage-point change in assumed health care cost trend rates would have the following effects: 

Effect on total service and interest cost components

Effect on post-retirement benefit obligation

Defined Contribution Plans

1% increase

1% decrease

$

1

$

46

(1)

(39)

We have savings and investment plans in several countries, including the U.S., U.K. and Canada.  In many instances, 
employees from those defined benefit pension plans that have been amended to freeze future service accruals (see 
"Plan Amendments" for additional information) were transitioned to an enhanced defined contribution plan. In these 
plans employees are allowed to contribute a portion of their salaries and bonuses to the plans, and we match a portion 
of the employee contributions. We recorded charges related to our defined contribution plans of $102 in 2014, $89 in 
2013 and $61 in 2012. These charges exclude $8, $7 and $2 for the three years ended December 31, 2014, respectively, 
related to our ITO business, which is held for sale and reported as a discontinued operation at December 31, 2014.  
Refer to Note 4 - Divestitures for additional information regarding this pending sale.

$

$

$

Year Ended December 31,
2013

2012

2014

675

$

531

905

$

338

1,206

$

1,243

$

850

434

1,284

Year Ended December 31,

2014

2013

2012

(3) $

79

115

28

34

6

$

17

66

82

36

37

15

$

259

$

253

$

5

93

114

(1)

32

13

256

Note 17 - Income and Other Taxes 

Income before income taxes (pre-tax income) was as follows: 

Domestic income

Foreign income

Income Before Income Taxes

Provisions (benefits) for income taxes were as follows:

Federal Income Taxes

Current

Deferred

Foreign Income Taxes

Current

Deferred

State Income Taxes

Current

Deferred

Total Provision

111

 
 
 
 
A reconciliation of the U.S. federal statutory income tax rate to the consolidated effective income tax rate was as 
follows: 

U.S. federal statutory income tax rate

Nondeductible expenses

Effect of tax law changes

Change in valuation allowance for deferred tax assets

State taxes, net of federal benefit

Audit and other tax return adjustments

Tax-exempt income, credits and incentives
Foreign rate differential adjusted for U.S. taxation of foreign profits(1)

Other

Effective Income Tax Rate

 ____________

Year Ended December 31,

2014

2013

2012

35.0 %

2.0 %

(1.0)%

(1.6)%

2.2 %

(2.9)%

(2.4)%

(9.6)%

(0.2)%

21.5 %

35.0 %

1.5 %

(0.6)%

0.2 %

2.7 %

(2.5)%

(4.0)%

(12.4)%

0.5 %

20.4 %

35.0 %

2.6 %

0.7 %

(0.7)%

2.0 %

(4.7)%

(2.6)%

(12.4)%

— %

19.9 %

(1)  The “U.S. taxation of foreign profits” represents the U.S. tax, net of foreign tax credits, associated with actual and deemed repatriations of 

earnings from our non-U.S. subsidiaries.

On a consolidated basis, we paid a total of $121, $155 and $137 in income taxes to federal, foreign and state 
jurisdictions during the three years ended December 31, 2014, respectively. 

Total income tax (benefit) expense was allocated as follows: 

Pre-tax income
Discontinued operations(1)

Common shareholders' equity:

Changes in defined benefit plans

Stock option and incentive plans, net

Cash flow hedges

Translation adjustments

Total Income Tax (Benefit) Expense

_____________

Year Ended December 31,

2014

2013

2012

$

259

$

6

253

$

27

(408)

(18)

—

(2)

318

(13)

—

(9)

$

(163) $

576

$

256

21

(233)

(5)

(24)

(9)

6

(1)  Refer to Note 4 - Divestitures for additional information regarding discontinued operations. 

Unrecognized Tax Benefits and Audit Resolutions 
We recognize tax liabilities when, despite our belief that our tax return positions are supportable, we believe that 
certain positions may not be fully sustained upon review by tax authorities. Each period we assess uncertain tax 
positions for recognition, measurement and effective settlement. Benefits from uncertain tax positions are measured 
at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement - the more 
likely than not recognition threshold. Where we have determined that our tax return filing position does not satisfy 
the more likely than not recognition threshold, we have recorded no tax benefits.

We are also subject to ongoing tax examinations in numerous jurisdictions due to the extensive geographical scope 
of our operations. Our ongoing assessments of the more-likely-than-not outcomes of the examinations and related 
tax positions require judgment and can increase or decrease our effective tax rate, as well as impact our operating 
results. The specific timing of when the resolution of each tax position will be reached is uncertain. As of 
December 31, 2014, we do not believe that there are any positions for which it is reasonably possible that the total 
amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. 

Xerox 2014 Annual Report

112

 
 
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 

Balance at January 1

Additions related to current year

Additions related to prior years positions

Reductions related to prior years positions
Settlements with taxing authorities(1)

Reductions related to lapse of statute of limitations

Currency

Balance at December 31

 _______________

2014

2013

2012

267

$

201

$

16

10

(35)

(10)

(6)

(2)

60

39

(19)

—

(14)

—

240

$

267

$

225

28

5

(36)

(13)

(8)

—

201

$

$

(1)  Majority of settlements did not result in the utilization of cash. 

Included in the balances at December 31, 2014, 2013 and 2012 are $39, $36 and $16, respectively, of tax positions 
that are highly certain of realizability but for which there is uncertainty about the timing or that they may be reduced 
through an indirect benefit from other taxing jurisdictions. Because of the impact of deferred tax accounting, other 
than for the possible incurrence of interest and penalties, the disallowance of these positions would not affect the 
annual effective tax rate. 

We recognized interest and penalties accrued on unrecognized tax benefits, as well as interest received from 
favorable settlements within income tax expense. We had $17, $20 and $20 accrued for the payment of interest and 
penalties associated with unrecognized tax benefits at December 31, 2014, 2013 and 2012, respectively. 

In the U.S., with the exception of ACS, we are no longer subject to U.S. federal income tax examinations for years 
before 2009. ACS is no longer subject to such examinations for years before 2005. With respect to our major 
foreign jurisdictions, we are no longer subject to tax examinations by tax authorities for years before 2003. 

Deferred Income Taxes

We have not provided deferred taxes on approximately $8.5 billion of undistributed earnings of foreign subsidiaries 
and other foreign investments carried at equity at December 31, 2014, as such undistributed earnings have been 
determined to be indefinitely reinvested and we currently do not plan to initiate any action that would precipitate a 
deferred tax impact. We do not believe it is practical to calculate the potential deferred tax impact, as there is a 
significant amount of uncertainty with respect to determining the amount of foreign tax credits as well as any 
additional local withholding tax and other indirect tax consequences that may arise from the distribution of these 
earnings. In addition, because such earnings have been indefinitely reinvested in our foreign operations, 
repatriation would require liquidation of those investments or a recapitalization of our foreign subsidiaries, the 
impacts and effects of which are not readily determinable. 

113

 
 
The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows: 

Deferred Tax Assets

Research and development

Post-retirement medical benefits

Net operating losses

Operating reserves, accruals and deferrals

Tax credit carryforwards

Deferred compensation

Pension

Other

Subtotal

Valuation allowance

Total

Deferred Tax Liabilities

Unearned income and installment sales

Intangibles and goodwill

Anticipated foreign repatriations

Other

Total

Total Deferred Taxes, Net

December 31,

2014

2013

$

475

341

531

318

579

286

672

177

3,379

(538)

2,841

$

883

$

1,161

50

154

2,248

$

647

310

597

374

694

268

431

87

3,408

(614)

2,794

959

1,253

55

53

2,320

593

$

474

$

$

$

$

$

The above amounts are classified as current or long-term in the Consolidated Balance Sheets in accordance with 
the asset or liability to which they relate or, when applicable, based on the expected timing of the reversal. Current 
deferred tax assets at December 31, 2014 and 2013 amounted to $382 and $209, respectively. 

The deferred tax assets for the respective periods were assessed for recoverability and, where applicable, a 
valuation allowance was recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, 
be realized in the future. The net change in the total valuation allowance for the years ended December 31, 2014 
and 2013 was a decrease of $76 and $40, respectively. The valuation allowance relates primarily to certain net 
operating loss carryforwards, tax credit carryforwards and deductible temporary differences for which we have 
concluded it is more-likely-than-not that these items will not be realized in the ordinary course of operations. 

Although realization is not assured, we have concluded that it is more-likely-than-not that the deferred tax assets, 
for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of 
operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and 
projected income from operating activities. The amount of the net deferred tax assets considered realizable, 
however, could be reduced in the near term if actual future income or income tax rates are lower than estimated, or 
if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary 
differences. 

At December 31, 2014, we had tax credit carryforwards of $579 available to offset future income taxes, of which $97 
are available to carryforward indefinitely while the remaining $482 will expire 2015 through 2029 if not utilized. We 
also had net operating loss carryforwards for income tax purposes of $1.1 billion that will expire 2015 through 2035, 
if not utilized, and $2.0 billion available to offset future taxable income indefinitely.

Xerox 2014 Annual Report

114

 
 
 
Note 18 – Contingencies and Litigation  

As more fully discussed below, we are involved in a variety of claims, lawsuits, investigations and proceedings 
concerning: securities law; governmental entity contracting, servicing and procurement law; intellectual property 
law; environmental law; employment law; the Employee Retirement Income Security Act (ERISA); and other laws 
and regulations. We determine whether an estimated loss from a contingency should be accrued by assessing 
whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing 
our litigation and regulatory matters using available information. We develop our views on estimated losses in 
consultation with outside counsel handling our defense in these matters, which involves an analysis of potential 
results, assuming a combination of litigation and settlement strategies. Should developments in any of these 
matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a 
material accrual, or should any of these matters result in a final adverse judgment or be settled for significant 
amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in 
the period or periods in which such change in determination, judgment or settlement occurs.

Additionally, guarantees, indemnifications and claims arise during the ordinary course of business from relationships 
with suppliers, customers and nonconsolidated affiliates when the Company undertakes an obligation to guarantee 
the performance of others if specified triggering events occur. Nonperformance under a contract could trigger an 
obligation of the Company. These potential claims include actions based upon alleged exposures to products, real 
estate, intellectual property such as patents, environmental matters, and other indemnifications. The ultimate effect 
on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the 
final outcome of these claims. However, while the ultimate liabilities resulting from such claims may be significant to 
results of operations in the period recognized, management does not anticipate they will have a material adverse 
effect on the Company's consolidated financial position or liquidity. As of December 31, 2014, we have accrued our 
estimate of liability incurred under our indemnification arrangements and guarantees. 

Brazil Tax and Labor Contingencies

Our Brazilian operations are involved in various litigation matters and have received or been the subject of 
numerous governmental assessments related to indirect and other taxes, as well as disputes associated with former 
employees and contract labor. The tax matters, which comprise a significant portion of the total contingencies, 
principally relate to claims for taxes on the internal transfer of inventory, municipal service taxes on rentals and 
gross revenue taxes. We are disputing these tax matters and intend to vigorously defend our positions. Based on 
the opinion of legal counsel and current reserves for those matters deemed probable of loss, we do not believe that 
the ultimate resolution of these matters will materially impact our results of operations, financial position or cash 
flows.

The labor matters principally relate to claims made by former employees and contract labor for the equivalent 
payment of all social security and other related labor benefits, as well as consequential tax claims, as if they were 
regular employees. As of December 31, 2014, the total amounts related to the unreserved portion of the tax and 
labor contingencies, inclusive of related interest, amounted to approximately $817 with the decrease from 
December 31, 2013 balance of approximately $933, primarily related to currency and closed cases partially offset 
by interest. With respect to the unreserved balance of $817, the majority has been assessed by management as 
being remote as to the likelihood of ultimately resulting in a loss to the Company. In connection with the above 
proceedings, customary local regulations may require us to make escrow cash deposits or post other security of up 
to half of the total amount in dispute. As of December 31, 2014 we had $135 of escrow cash deposits for matters we 
are disputing, and there are liens on certain Brazilian assets with a net book value of $18 and additional letters of 
credit of approximately $244, which include associated indexation. Generally, any escrowed amounts would be 
refundable and any liens would be removed to the extent the matters are resolved in our favor. We routinely assess 
all these matters as to probability of ultimately incurring a liability against our Brazilian operations and record our 
best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable.

Litigation Against the Company

In re Xerox Corporation Securities Litigation: A consolidated securities law action (consisting of 17 cases) was 
pending in the United States District Court for the District of Connecticut (the "Court"). Defendants were the 
Company, Barry Romeril, Paul Allaire and G. Richard Thoman. The consolidated action was a class action on behalf 
of all persons and entities who purchased Xerox Corporation common stock during the period October 22, 1998 
through October 7, 1999 inclusive ("Class Period") and who suffered a loss as a result of misrepresentations or 
omissions by Defendants as alleged by Plaintiffs (the “Class”). The Class alleged that in violation of Section 10(b) 

115

and/or 20(a) of the Securities Exchange Act of 1934, as amended (1934 Act), and SEC Rule 10b-5 thereunder, 
each of the defendants was liable as a participant in a fraudulent scheme and course of business that operated as a 
fraud or deceit on purchasers of the Company’s common stock during the Class Period by disseminating materially 
false and misleading statements and/or concealing material facts relating to the defendants’ alleged failure to 
disclose the material negative impact that the April 1998 restructuring had on the Company’s operations and 
revenues. The complaint further alleged that the alleged scheme: (i) deceived the investing public regarding the 
economic capabilities, sales proficiencies, growth, operations and the intrinsic value of the Company’s common 
stock; (ii) allowed several corporate insiders, such as the named individual defendants, to sell shares of privately 
held common stock of the Company while in possession of materially adverse, non-public information; and 
(iii) caused the individual plaintiffs and the other members of the purported class to purchase common stock of the 
Company at inflated prices. The complaint sought unspecified compensatory damages in favor of the plaintiffs and 
the other members of the purported class against all defendants, jointly and severally, for all damages sustained as 
a result of defendants’ alleged wrongdoing, including interest thereon, together with reasonable costs and expenses 
incurred in the action, including counsel fees and expert fees. In 2001, the Court denied the defendants’ motion for 
dismissal of the complaint. The plaintiffs’ motion for class certification was denied by the Court in 2006, without 
prejudice to refiling. In February 2007, the Court granted the motion of the International Brotherhood of Electrical 
Workers Welfare Fund of Local Union No. 164, Robert W. Roten, Robert Agius ("Agius") and Georgia Stanley to 
appoint them as additional lead plaintiffs. In July 2007, the Court denied plaintiffs’ renewed motion for class 
certification, without prejudice to renewal after a pre-filing conference to identify factual disputes the Court would be 
required to resolve in ruling on the motion. After that conference and Agius’s withdrawal as lead plaintiff and 
proposed class representative, in February 2008 plaintiffs filed a second renewed motion for class certification. In 
April 2008, defendants filed their response and motion to disqualify Milberg LLP as a lead counsel. On 
September 30, 2008, the Court entered an order certifying the class and denying the appointment of Milberg LLP as 
class counsel. Subsequently, on April 9, 2009, the Court denied defendants’ motion to disqualify Milberg LLP. On 
November 6, 2008, the defendants filed a motion for summary judgment. On March 29, 2013, the Court granted 
defendants' motion for summary judgment in its entirety. On April 26, 2013, plaintiffs filed a notice of appeal to the 
United States Court of Appeals for the Second Circuit. On September 8, 2014, the Second Circuit affirmed the 
District Court's decision dismissing the action. The deadline for plaintiffs to file a petition for certiorari before the 
United States Supreme Court expired on December 8, 2014; no petition was filed.  This matter is now closed.

State of Texas v. Xerox Corporation, Xerox State Healthcare, LLC, and ACS State Healthcare, LLC, a Xerox 
Corporation: On May 9, 2014, the State of Texas, via the Texas Office of Attorney General (the “State”), filed a 
lawsuit in the 53rd Judicial District Court of Travis County, Texas. The lawsuit alleges that Xerox Corporation, Xerox 
State Healthcare, LLC, and ACS State Healthcare (collectively “Xerox” or “the Company”) violated the Texas 
Medicaid Fraud Prevention Act in the administration of its contract with the Texas Department of Health and Human 
Services (“HHSC”). The State alleges that the Company made false representations of material facts regarding the 
processes, procedures, implementation, and results regarding the prior authorization of orthodontic claims. The 
State seeks recovery of actual damages, two times the amount of any overpayments made as a result of unlawful 
acts, civil penalties, pre- and post-judgment interest, and all costs and attorneys’ fees. The State references the 
amount in controversy as exceeding hundreds of millions of dollars. Xerox filed its Answer in June, 2014 denying all 
allegations. Xerox will continue to vigorously defend itself in this matter.  We do not believe it is probable that we will 
incur a material loss in excess of the amount accrued for this matter. In the course of litigation, we periodically 
engage in discussions with plaintiff’s counsel for possible resolution of the matter. Should developments cause a 
change in our determination as to an unfavorable outcome, or result in a final adverse judgment or settlement for a 
significant amount, there could be a material adverse effect on our results of operations, cash flows and financial 
position in the period in which such change in determination, judgment, or settlement occurs.

Guarantees, Indemnifications and Warranty Liabilities

Indemnifications Provided as Part of Contracts and Agreements
We are a party to the following types of agreements pursuant to which we may be obligated to indemnify the other 
party with respect to certain matters: 

•  Contracts that we entered into for the sale or purchase of businesses or real estate assets, under which we 

customarily agree to hold the other party harmless against losses arising from a breach of representations and 
covenants, including obligations to pay rent. Typically, these relate to such matters as adequate title to assets 
sold, intellectual property rights, specified environmental matters and certain income taxes arising prior to the 
date of acquisition. 

Xerox 2014 Annual Report

116

•  Guarantees on behalf of our subsidiaries with respect to real estate leases. These lease guarantees may 

remain in effect subsequent to the sale of the subsidiary. 

•  Agreements to indemnify various service providers, trustees and bank agents from any third-party claims 

related to their performance on our behalf, with the exception of claims that result from third-party's own willful 
misconduct or gross negligence. 

•  Guarantees of our performance in certain sales and services contracts to our customers and indirectly the 

performance of third parties with whom we have subcontracted for their services. This includes indemnifications 
to customers for losses that may be sustained as a result of the use of our equipment at a customer's location. 

In each of these circumstances, our payment is conditioned on the other party making a claim pursuant to the 
procedures specified in the particular contract and such procedures also typically allow us to challenge the other 
party's claims. In the case of lease guarantees, we may contest the liabilities asserted under the lease. Further, our 
obligations under these agreements and guarantees may be limited in terms of time and/or amount, and in some 
instances, we may have recourse against third parties for certain payments we made. 

Patent Indemnifications
In most sales transactions to resellers of our products, we indemnify against possible claims of patent infringement 
caused by our products or solutions. In addition, we indemnify certain software providers against claims that may 
arise as a result of our use or our subsidiaries', customers' or resellers' use of their software in our products and 
solutions. These indemnities usually do not include limits on the claims, provided the claim is made pursuant to the 
procedures required in the sales contract. 

Indemnification of Officers and Directors
Our corporate by-laws require that, except to the extent expressly prohibited by law, we must indemnify Xerox 
Corporation's officers and directors against judgments, fines, penalties and amounts paid in settlement, including 
legal fees and all appeals, incurred in connection with civil or criminal action or proceedings, as it relates to their 
services to Xerox Corporation and our subsidiaries. Although the by-laws provide no limit on the amount of 
indemnification, we may have recourse against our insurance carriers for certain payments made by us. However, 
certain indemnification payments (such as those related to "clawback" provisions in certain compensation 
arrangements) may not be covered under our directors' and officers' insurance coverage. We also indemnify certain 
fiduciaries of our employee benefit plans for liabilities incurred in their service as fiduciary whether or not they are 
officers of the Company. Finally, in connection with our acquisition of businesses, we may become contractually 
obligated to indemnify certain former and current directors, officers and employees of those businesses in 
accordance with pre-acquisition by-laws and/or indemnification agreements and/or applicable state law.

Product Warranty Liabilities
In connection with our normal sales of equipment, including those under sales-type leases, we generally do not 
issue product warranties. Our arrangements typically involve a separate full service maintenance agreement with 
the customer. The agreements generally extend over a period equivalent to the lease term or the expected useful 
life of the equipment under a cash sale. The service agreements involve the payment of fees in return for our 
performance of repairs and maintenance. As a consequence, we do not have any significant product warranty 
obligations, including any obligations under customer satisfaction programs. In a few circumstances, particularly in 
certain cash sales, we may issue a limited product warranty if negotiated by the customer. We also issue warranties 
for certain of our entry level products, where full service maintenance agreements are not available. In these 
instances, we record warranty obligations at the time of the sale. Aggregate product warranty liability expenses for 
the three years ended December 31, 2014 were $25, $28 and $29, respectively. Total product warranty liabilities as 
of December 31, 2014 and 2013 were $11 and $14, respectively. 

Other Contingencies
We have issued or provided the following guarantees as of December 31, 2014:

• 

• 

$455 for letters of credit issued to i) guarantee our performance under certain services contracts; ii) support 
certain insurance programs; and iii) support our obligations related to the Brazil tax and labor contingencies.
$720 for outstanding surety bonds. Certain contracts, primarily those involving public sector customers, require 
us to provide a surety bond as a guarantee of our performance of contractual obligations. Of this amount, $19 is 
related to discontinued operations.

117

 
In general, we would only be liable for the amount of these guarantees in the event of default in our performance of 
our obligations under each contract; the probability of which we believe is remote. We believe that our capacity in 
the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow 
us to respond to future requests for proposals that require such credit support.

We have service arrangements where we service third-party student loans in the Federal Family Education Loan 
program (FFEL) on behalf of various financial institutions. We service these loans for investors under outsourcing 
arrangements and do not acquire any servicing rights that are transferable by us to a third-party. At December 31, 
2014, we serviced a FFEL portfolio of approximately 2.7 million loans with an outstanding principal balance of 
approximately $39.7 billion. Some servicing agreements contain provisions that, under certain circumstances, 
require us to purchase the loans from the investor if the loan guaranty has been permanently terminated as a result 
of a loan default caused by our servicing error. If defaults caused by us are cured during an initial period, any 
obligation we may have to purchase these loans expires. Loans that we purchase may be subsequently cured, the 
guaranty reinstated and the loans repackaged for sale to third parties. We evaluate our exposure under our 
purchase obligations on defaulted loans and establish a reserve for potential losses, or default liability reserve, 
through a charge to the provision for loss on defaulted loans purchased. The reserve is evaluated periodically and 
adjusted based upon management’s analysis of the historical performance of the defaulted loans. As of 
December 31, 2014, other current liabilities include reserves which we believe to be adequate. At December 31, 
2014, other current liabilities include reserves of approximately $3 for losses on defaulted loans purchased. In 
addition to potential purchase obligations arising from servicing errors, various laws and regulations applicable to 
student loan borrowers could give rise to fines, penalties and other liabilities associated with loan servicing errors.

Note 19 - Preferred Stock

Series A Convertible Preferred Stock
We have issued 300,000 shares of Series A convertible perpetual preferred stock with an aggregate liquidation 
preference of $300 and an initial fair value of $349. The convertible preferred stock pays quarterly cash dividends at 
a rate of 8% per year ($24 per year). Each share of convertible preferred stock is convertible at any time, at the 
option of the holder, into 89.8876 shares of common stock for a total of 26,966 thousand shares (reflecting an initial 
conversion price of approximately $11.125 per share of common stock), subject to customary anti-dilution 
adjustments. 

On or after February 5, 2015, if the closing price of our common stock exceeds 130% of the then applicable 
conversion price (currently $11.125 per share of common stock) for 20 out of 30 trading days, we have the right to 
cause any or all of the convertible preferred stock to be converted into shares of common stock at the then 
applicable conversion rate. The convertible preferred stock is also convertible, at the option of the holder, upon a 
change in control, at the applicable conversion rate plus an additional number of shares determined by reference to 
the price paid for our common stock upon such change in control. In addition, upon the occurrence of certain 
fundamental change events, including a change in control or the delisting of Xerox's common stock, the holder of 
convertible preferred stock has the right to require us to redeem any or all of the convertible preferred stock in cash 
at a redemption price per share equal to the liquidation preference and any accrued and unpaid dividends to, but 
not including, the redemption date. The convertible preferred stock is classified as temporary equity (i.e., apart from 
permanent equity) as a result of the contingent redemption feature.

Note 20 – Shareholders’ Equity

Preferred Stock 
As of December 31, 2014, we had one class of preferred stock outstanding. See Note 19 - Preferred Stock for 
further information. We are authorized to issue approximately 22 million shares of cumulative preferred stock, $1.00 
par value per share.

Common Stock 
We have 1.75 billion authorized shares of common stock, $1.00 par value per share. At December 31, 2014, 113 
million shares were reserved for issuance under our incentive compensation plans, 48 million shares were reserved 
for debt to equity exchanges and 27 million shares were reserved for conversion of the Series A convertible 
preferred stock. 

Xerox 2014 Annual Report

118

Treasury Stock
We account for the repurchased common stock under the cost method and include such treasury stock as a 
component of our common shareholder's equity. Retirement of treasury stock is recorded as a reduction of 
Common stock and Additional paid-in capital at the time such retirement is approved by our Board of Directors.

The following provides cumulative information relating to our share repurchase programs from their inception in 
October 2005 through December 31, 2014 (shares in thousands): 

Authorized share repurchase programs

Share repurchase cost

Share repurchase fees

Number of shares repurchased

$

$

$

8,000

6,455

10

580,029

In 2014, the Board of Directors authorized an additional $1.5 billion in share repurchase bringing the total 
cumulative authorization to $8 billion. As of December 31, 2014, approximately $1.5 billion of that authority 
remained available.

The following table reflects the changes in Common and Treasury stock shares (shares in thousands):

Balance at December 31, 2011

Stock based compensation plans, net
Contributions to U.S. pension plan(1)

Acquisition of Treasury stock

Cancellation of Treasury stock

Balance at December 31, 2012

Stock based compensation plans, net

Acquisition of Treasury stock

Cancellation of Treasury stock

Conversion of 2014 9% Notes

Balance at December 31, 2013

Stock based compensation plans, net

Acquisition of Treasury stock

Cancellation of Treasury stock

Conversion of 2014 9% Notes

Balance at December 31, 2014

_____________________________

Common Stock
Shares

Treasury Stock
Shares

1,352,849

17,343

15,366

—

(146,862)

1,238,696

28,731

—

(58,102)

996

1,210,321

13,965

—

(100,928)

996

1,124,354

15,508

—

—

146,278

(146,862)

14,924

—

65,179

(58,102)

—

22,001

—

86,536

(100,928)

—

7,609

(1) 

Refer to Note 16 - Employee Benefits Plans for additional information.

Stock-Based Compensation

We have a long-term incentive plan whereby eligible employees may be granted restricted stock units (RSUs), 
performance shares (PSs) and non-qualified stock options. We grant stock-based awards in order to continue to 
attract and retain employees and to better align employees' interests with those of our shareholders. Each of these 
awards is subject to settlement with newly issued shares of our common stock. At December 31, 2014 and 2013, 50 
million and 59 million shares, respectively, were available for grant of awards.

Stock-based compensation expense was as follows:

Stock-based compensation expense, pre-tax

$

Income tax benefit recognized in earnings

2014

Year Ended December 31,
2013

2012

$

91

35

$

90

34

125

48

Restricted Stock Units: Compensation expense is based upon the grant date market price. The compensation 
expense is recorded over the vesting period, which is normally three years from the date of grant, based on 
management's estimate of the number of shares expected to vest.  

Performance Shares:  Prior to 2014, we granted officers and selected executives PSs that vest contingent upon 
meeting pre-determined Revenue, Earnings per Share (EPS) and Cash Flow from Operations targets. If the annual 

119

actual results for Revenue exceed the stated targets and if the cumulative three-year actual results for EPS and 
Cash Flow from Operations exceed the stated targets, then the plan participants have the potential to earn 
additional shares of common stock. This overachievement cannot exceed 50% of the original grant. 

Commencing in 2014, we expanded the PS program to include those employees who had previously been awarded 
RSUs, and modified the program to remove the annual performance component. All PSs granted in 2014 will vest 
contingent upon meeting cumulative goals for Revenue, EPS and Cash Flow from Operations over a three-year 
performance period. As before, if actual results exceed the stated targets, then the participants have the potential to 
earn additional shares of common stock: a maximum overachievement of 50% of the original grant for officers and 
selected executives and a maximum of 25% of the original grant for all other participants. All PSs entitle the holder 
to one share of common stock, payable after a three-year service period and the attainment of the stated goals.

The fair value of PSs is based upon the market price of our stock on the date of the grant. Compensation expense 
is recognized over the vesting period, which is normally three years from the date of grant, based on management's 
estimate of the number of shares expected to vest. If the stated targets are not met, any recognized compensation 
cost would be reversed.

Employee Stock Options: With the exception of the conversion of ACS options in connection with the ACS 
acquisition in 2010, we have not issued any new stock options associated with our employee long-term incentive 
plan since 2004. All stock options previously issued under our employee long-term incentive plan were fully 
exercised, cancelled or expired as of December 31, 2013. 

There were 6,115 thousand and 14,199 thousand ACS options outstanding at December 31, 2014 and 2013, 
respectively. The ACS options at December 31, 2014 generally expire within the next 3 years. 

Summary of Stock-based Compensation Activity

(shares in thousands)

Shares

2014

2013

2012

Weighted
Average Grant
Date Fair
Value

Shares

Weighted
Average Grant
Date Fair
Value

Shares

Weighted
Average Grant
Date Fair
Value

Restricted Stock Units

Outstanding at January 1

Granted

Vested

Cancelled

Outstanding at December 31

Performance Shares

Outstanding at January 1

Granted

Vested

Cancelled

Outstanding at December 31

19,079

$

926

(6,934)

(874)

12,197

8,058

$

16,967

(2,404)

(1,900)

20,721

Stock Options

Outstanding at January 1

14,199

$

Granted

Canceled/expired

Exercised

Outstanding at December 31

Exercisable at December 31

—

(215)

(7,869)

6,115

6,115

9.62

12.30

10.33

8.55

9.50

9.15

12.28

10.68

11.07

11.36

6.95

—

6.95

6.92

7.00

7.00

30,414

$

610

(9,992)

(1,953)

19,079

14,536

$

1,839

(6,817)

(1,500)

8,058

33,732

$

—

(1,298)

(18,235)

14,199

12,164

9.19

9.09

8.43

8.77

9.62

8.74

7.97

8.03

8.82

9.15

6.86

—

6.53

6.82

6.95

7.06

33,784

$

13,033

(14,848)

(1,555)

30,414

9,763

$

5,193

—

(420)

14,536

50,070

$

—

(8,617)

(7,721)

33,732

28,676

8.70

7.82

6.89

8.97

9.19

9.21

7.87

—

8.96

8.74

6.98

—

8.58

5.69

6.86

6.95

In 2013, we deferred the annual grant of RSUs and PSs from July 1, 2013 to January 1, 2014. RSUs granted in 
2013 represent off-cycle awards while PSs granted in 2013 represent overachievement shares associated with the 
2010 PSs grant, which vested in 2013. On January 1, 2014, we granted 8,395 thousand PSs with a grant date fair 
value of $12.17 per share (the deferral of the 2013 annual grant) and on July 1, 2014, we granted 8,518 thousand 
PSs with a grant date fair value of $12.38 per share (the 2014 annual grant).

Xerox 2014 Annual Report

120

 
1.2

2.2

169

287

42

2.8

The total unrecognized compensation cost related to non-vested stock-based awards at December 31, 2014 was as 
follows:

Awards

Restricted Stock Units

Performance Shares

Total

Unrecognized
Compensation

Remaining Weighted-
Average Vesting Period
(Years)

$

$

23

109

132

The aggregate intrinsic value of outstanding RSUs and PSs awards was as follows:

Awards

Restricted Stock Units

Performance Shares

December 31, 2014

$

Information related to stock options outstanding and exercisable at December 31, 2014 was as follows:

Aggregate intrinsic value

Weighted-average remaining contractual life (years)

$

42

$

2.8

Options

Outstanding

Exercisable

The total intrinsic value and actual tax benefit realized for vested and exercised stock-based awards was as follows:

December 31, 2014

December 31, 2013

December 31, 2012

Awards

Total
Intrinsic
Value

Cash
Received

Tax
Benefit

Total
Intrinsic
Value

Cash
Received

Tax
Benefit

Total
Intrinsic
Value

Cash
Received

Tax
Benefit

Restricted Stock Units

$

Performance Shares

Stock Options

85

30

42

$

— $

—

55

$

26

10

15

91

62

51

$

— $

—

124

30

22

19

$

117

$

— $

—

12

—

44

33

—

4

No Performance Shares vested in 2012 since the 2009 primary award grant that normally would have vested in 
2012 was replaced with a grant of Restricted Stock Units with a market based condition and therefore were 
accounted and reported for as Restricted Stock Units. 

121

 
Note 21 – Other Comprehensive (Loss) Income

Other Comprehensive (Loss) Income is comprised of the following:

Translation Adjustments (Losses) Gains

$

(736) $

(734) $

(194) $

(185) $

104

$

113

Year Ended December 31,

2014

2013

2012

Pre-tax

Net of Tax

Pre-tax

Net of Tax

Pre-tax

Net of Tax

Unrealized (Losses) Gains:

Changes in fair value of cash flow hedges
losses

Changes in cash flow hedges reclassed to 
earnings(1)

Other (losses) gains

Net Unrealized Gains (Losses)

Defined Benefit Plans (Losses) Gains

Net actuarial/prior service (losses) gains
Prior service amortization(2)
Actuarial loss amortization(2)

Fuji Xerox changes in defined benefit 
plans, net(3)
Other gains (losses)(4)

(20)

36

(1)

15

(1,291)

(46)

121

40

106

(10)

26

(1)

15

(861)

(29)

83

40

105

Changes in Defined Benefit Plans (Losses)
Gains

(1,070)

(662)

Other Comprehensive (Loss) Income

(1,791)

(1,381)

(1)

(1)

Less: Other comprehensive loss
attributable to noncontrolling interests

Other Comprehensive (Loss) Income
Attributable to Xerox

_____________________________

(126)

(89)

123

3

—

729

(45)

260

23

(17)

950

756

(1)

86

3

—

483

(29)

172

23

(17)

632

447

(1)

(50)

(37)

—

(87)

(852)

(64)

190

(13)

(55)

(794)

(777)

—

(35)

(28)

—

(63)

(578)

(39)

124

(13)

(55)

(561)

(511)

—

$

(1,790) $

(1,380) $

757

$

448

$

(777) $

(511)

(1)  Reclassified to Cost of sales - refer to Note 14 - Financial Instruments for additional information regarding our cash flow hedges.
(2)  Reclassified to Total Net Periodic Benefit Cost - refer to Note 16 - Employee Benefit Plans for additional information.
(3)  Represents our share of Fuji Xerox's benefit plan changes.
(4)  Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits in AOCL. 

Accumulated Other Comprehensive Loss (AOCL)
AOCL is comprised of the following: 

Cumulative translation adjustments

Other unrealized losses, net
Benefit plans net actuarial losses and prior service credits(1) 

Total Accumulated Other Comprehensive Loss Attributable to Xerox

_____________________________

(1) 

Includes our share of Fuji Xerox. 

December 31,

2014

2013

2012

$

$

(1,743) $

(1,010) $

(22)

(2,394)

(37)

(1,732)

(4,159) $

(2,779) $

(826)

(37)

(2,364)

(3,227)

Xerox 2014 Annual Report

122

 
Note 22 – Earnings per Share 

The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in 
thousands): 

Basic Earnings per Share:

Net income from continuing operations attributable  to Xerox

Accrued dividends on preferred stock

Net Income From Continuing Operations Available to Common
Shareholders

Net (loss) income from discontinued operations attributable to Xerox

Adjusted Net Income Available to Common Shareholders

Weighted-average common shares outstanding

Basic Earnings (Loss) per Share:

Continuing operations

Discontinued operations

Basic Earnings per Share

Diluted Earnings per Share:

Net income from continuing operations attributable to Xerox

Accrued dividends on preferred stock

Interest on Convertible Securities, net

Adjusted Net Income From Continuing Operations Available to
Common Shareholders

Net (loss) income from discontinued operations attributable to Xerox

Adjusted Net Income Available to Common Shareholders

Weighted-average common shares outstanding

Common shares issuable with respect to:

Stock options

Restricted stock and performance shares

Convertible preferred stock

Convertible securities

Adjusted Weighted Average Common Shares Outstanding

Diluted Earnings (Loss) per Share:

Continuing operations

Discontinued operations

Diluted Earnings per Share

Year Ended December 31,

2014

2013

2012

1,084

$

(24)

1,060

$

(115)

945

$

1,139

$

(24)

1,115

$

20

1,135

$

1,152

(24)

1,128

43

1,171

1,154,365

1,225,486

1,302,053

0.92

$

(0.10)

0.82

$

0.91

0.02

0.93

$

$

1,084

$

1,139

$

—

—

1,084

$

(115)

969

$

—

1

1,140

$

20

1,160

$

0.87

0.03

0.90

1,152

(24)

1

1,129

43

1,172

1,154,365

1,225,486

1,302,053

2,976

14,256

26,966

—

5,401

13,931

26,966

1,743

4,335

20,804

—

1,992

1,198,563

1,273,527

1,329,184

0.90

$

(0.09)

0.81

$

0.89

0.02

0.91

$

$

0.85

0.03

0.88

$

$

$

$

$

$

$

$

$

$

The following securities were not included in the computation of diluted earnings per share as they were either contingently issuable 
shares or shares that if included would have been anti-dilutive (shares in thousands):

Stock Options

Restricted stock and performance shares

Convertible preferred stock

Total Anti-Dilutive Securities

3,139

17,987

—

21,126

8,798

12,411

—

21,209

29,397

23,430

26,966

79,793

Dividends per Common Share

$

0.25

$

0.23

$

0.17

Note 23 – Subsequent Event
In January 2015, we completed the acquisition of Intrepid Learning Solutions, Inc. (Intrepid), a Seattle-based 
company, for $28 in cash. Intrepid provides outsourced learning services primarily in the aerospace manufacturing 
and technology industries. The acquisition of Intrepid will solidify the position of Xerox's Learning Services unit as a 
leading provider of end-to-end outsourced learning services, and will also add key vertical market expertise in the 
aerospace industry.

123

 
 
 
QUARTERLY RESULTS OF OPERATIONS (Unaudited) 

(in millions, except per-share data)
2014 (1) 

Revenues

Costs and Expenses

Income before Income Taxes and Equity Income

Income tax expense

Equity in net income of unconsolidated affiliates

Income from Continuing Operations

Income (loss) from discontinued operations, net of tax

Net Income

Less: Net income - noncontrolling interests

Net Income Attributable to Xerox

Basic Earnings per Share(2):

Continuing operations

Discontinued operations

Total Basic Earnings per Share

Diluted Earnings per Share(2):

Continuing operations

Discontinued operations

Total Diluted Earnings per Share

2013 (1) 

Revenues

Costs and Expenses

Income before Income Taxes and Equity Income

Income tax expense

Equity in net income of unconsolidated affiliates

Income from Continuing Operations

Income (loss) from discontinued operations, net of tax

Net Income

Less: Net income - noncontrolling interests

Net Income Attributable to Xerox

Basic Earnings per Share(2):

Continuing operations

Discontinued operations

Total Basic Earnings per Share:

Diluted Earnings per Share(2):

Continuing operations

Discontinued operations

Total Diluted Earnings per Share

 _________________

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Full
Year 

$

4,771

$

4,941

$

4,795

$

5,033

$

19,540

4,500

271

42

42

4,640

301

73

33

4,509

286

66

44

4,685

348

78

41

18,334

1,206

259

160

271

$

261

$

264

$

311

$

1,107

15

11

8

(149)

(115)

286

$

272

$

272

$

162

$

5

6

6

6

281

$

266

$

266

$

156

$

0.22

$

0.21

$

0.22

$

0.26

$

0.01

0.01

0.01

(0.13)

0.23

$

0.22

$

0.23

$

0.13

$

0.22

$

0.21

$

0.21

$

0.26

$

0.01

0.01

0.01

(0.13)

0.23

$

0.22

$

0.22

$

0.13

$

992

23

969

0.92

(0.10)

0.82

0.90

(0.09)

0.81

4,857

$

5,042

$

4,900

$

5,207

$

20,006

4,571

286

46

47

4,728

314

61

36

4,583

317

79

43

4,881

326

67

43

18,763

1,243

253

169

287

$

289

$

281

$

302

$

1,159

13

(12)

10

9

20

300

$

277

$

291

$

311

$

1,179

4

6

5

5

20

296

$

271

$

286

$

306

$

1,159

0.23

$

0.23

$

0.22

$

0.24

$

0.01

(0.01)

0.01

0.01

0.24

$

0.22

$

0.23

$

0.25

$

0.22

$

0.22

$

0.21

$

0.23

$

0.01

(0.01)

0.01

0.01

0.23

$

0.21

$

0.22

$

0.24

$

0.91

0.02

0.93

0.89

0.02

0.91

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

(1)  All periods have been revised to reflect our Discontinued Operations. Refer to Note 4 - Divestitures in our Consolidated Financial 

Statements, which is incorporated here by reference, for additional information.

(2) 

The sum of quarterly earnings per share may differ from the full-year amounts due to rounding, or in the case of diluted earnings per 
share, because securities that are anti-dilutive in certain quarters may not be anti-dilutive on a full-year basis. 

Xerox 2014 Annual Report

124

 
 
 
 
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 

DISCLOSURE 

None 
ITEM 9A. CONTROLS AND PROCEDURES 

Management's Responsibility for Financial Statements 

Our management is responsible for the integrity and objectivity of all information presented in this annual report. 
The consolidated financial statements were prepared in conformity with accounting principles generally accepted in 
the United States of America and include amounts based on management's best estimates and judgments. 
Management believes the consolidated financial statements fairly reflect the form and substance of transactions 
and that the financial statements fairly represent the Company's financial position and results of operations. 

The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly 
with the independent auditors, PricewaterhouseCoopers LLP, the internal auditors and representatives of 
management to review accounting, financial reporting, internal control and audit matters, as well as the nature and 
extent of the audit effort. The Audit Committee is responsible for the engagement of the independent auditors. The 
independent auditors and internal auditors have access to the Audit Committee. 

Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of our principal executive officer and principal
financial officer, or persons performing similar functions, the effectiveness of our disclosure controls and 
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end 
of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial 
officer have concluded that, as of the end of the period covered by this report, our disclosure controls and 
procedures were effective to ensure that information we are required to disclose in the reports that we file or submit 
under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within 
the time periods specified in the Securities and Exchange Commission’s rules and forms relating to Xerox 
Corporation, including our consolidated subsidiaries, and was accumulated and communicated to the Company’s 
management, including the principal executive officer and principal financial officer, or persons performing similar 
functions, as appropriate to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, 
as such term is defined in the rules promulgated under the Securities Exchange Act of 1934. Under the supervision 
and with the participation of our management, including our principal executive, financial and accounting officers, 
we have conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 
framework in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring 
Organizations of the Treadway Commission. 

Based on the above evaluation, management concluded that our internal control over financial reporting was 
effective as of December 31, 2014. 

The effectiveness of our internal control over financial reporting as of December 31, 2014 has been audited by 
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which 
appears in Part II, Item 8 of this Form 10-K. 

Changes in Internal Control over Financial Reporting 
In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no 
change identified in our internal control over financial reporting that occurred during the last fiscal quarter that has 
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION 

None

125

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 

The information regarding directors is incorporated herein by reference to the section entitled “Proposal 1 - Election 
of Directors” in our definitive Proxy Statement (2015 Proxy Statement) to be filed pursuant to Regulation 14A of the 
Securities Exchange Act of 1934, as amended, for our Annual Meeting of Stockholders to be held on May 20, 2015. 
The Proxy Statement will be filed within 120 days after the end of our fiscal year ended December 31, 2014. 

The information regarding compliance with Section 16(a) of the Securities and Exchange Act of 1934 is 
incorporated herein by reference to the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” 
of our 2015 Proxy Statement. 

The information regarding the Audit Committee, its members and the Audit Committee financial experts is 
incorporated by reference herein from the subsection entitled “Committee Functions, Membership and Meetings” in 
the section entitled “Proposal 1 - Election of Directors” in our 2015 Proxy Statement. 

We have adopted a code of ethics applicable to our principal executive officer, principal financial officer and 
principal accounting officer. The Finance Code of Conduct can be found on our website at: http://www.xerox.com/
investor and then clicking on Corporate Governance. Information concerning our Finance Code of Conduct can be 
found under "Corporate Governance" in our 2015 definitive Proxy Statement and is incorporated here by reference.

Executive Officers of Xerox 

The following is a list of the executive officers of Xerox, their current ages, their present positions and the year 
appointed to their present positions. 

Each officer is elected to hold office until the meeting of the Board of Directors held on the day of the next annual 
meeting of shareholders, subject to the provisions of the By-Laws. 

Name 
Ursula M. Burns*

James A. Firestone

Jeffrey Jacobson

Kathryn A. Mikells

Robert K. Zapfel

Don H. Liu

Thomas J. Maddison

Herve Tessler

Joseph H. Mancini, Jr.

Age
56

60

55

49

60

53

51

51

56

*  Member of Xerox Board of Directors 

Present Position

Chairman of the Board and Chief Executive Officer

Executive Vice President;
President, Corporate Strategy & Asian Operations

Executive Vice President;
President, Technology Business

Executive Vice President and
Chief Financial Officer

Executive Vice President;
President, Services Business

Executive Vice President,
General Counsel and Secretary 

Senior Vice President, Chief Human Resources Officer

Senior Vice President,
President, Corporate Operations

Vice President and Chief Accounting Officer

Year Appointed
to Present
Position  
2010

2008

2014

2013

2014

2007

2010

2014

2013

Xerox
Officer
Since
1997

1998

2012

2013

2014

2007

2010

2010

2010

Each officer named above, with the exception of Jeffrey Jacobson, Robert Zapfel and Kathryn A. Mikells, has been 
an officer or an executive of Xerox or its subsidiaries for at least the past five years. 

Prior to joining Xerox in 2012, Mr. Jacobson was the Chairman, President and CEO of Presstek, Inc. from 2007 to 
2012.  Prior to that, he was a Corporate Vice President and the Chief Operating Officer - Graphic Communications 
Group, of the Eastman Kodak Company from 2005 to 2007 and before that held various senior leadership positions 
with Kodak Polychrome Graphics from 1998 to 2005. 

Prior to joining Xerox in 2014, Mr. Zapfel was General Manager, North America, Global Technology Services, at 
International Business Machines Corp. (IBM) from 2011 to 2013. Mr. Zapfel is a 35-year veteran of IBM who held a 
host of senior leadership positions in Services, including head of IBM’s Global Technology Services business for the 

Xerox 2014 Annual Report

126

 
Americas, head of its Global Delivery organization, and head of Strategy. He also ran the Travel and Transportation 
and Financial Services verticals, as well as the services operations in Latin America. In addition, he ran IBM’s global 
financing unit.

Prior to joining Xerox in 2013, Ms. Mikells was with ADT Corporation where she was Chief Financial Officer from 
April 2012 to 2013. Prior to that she was Chief Financial Officer with Nalco and before that she held various senior 
leadership roles during her 16 year career with UAL Corporation.

ITEM 11. EXECUTIVE COMPENSATION

The information included under the following captions under “Proposal 1-Election of Directors” in our 2015 definitive 
Proxy Statement is incorporated herein by reference: “Compensation Discussion and Analysis”, “Summary 
Compensation Table”, “Grants of Plan-Based Awards in 2014”, “Outstanding Equity Awards at 2014 Fiscal Year-
End”, “Option Exercises and Stock Vested in 2014”, “Pension Benefits for the 2014 Fiscal Year”, “Nonqualified 
Deferred Compensation for the 2014 Fiscal Year”, “Potential Payments upon Termination or Change in Control”, 
“Summary of Director Annual Compensation, "Compensation Committee Interlocks and Insider Participation” and 
“Compensation Committee”. The information included under the heading “Compensation Committee Report” in our 
2015 definitive Proxy Statement is incorporated herein by reference; however, this information shall not be deemed 
to be “soliciting material” or to be “filed” with the Commission or subject to Regulation 14A or 14C, or to the liabilities 
of Section 18 of the Exchange Act of 1934, as amended.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED 

STOCKHOLDER MATTERS

Information regarding security ownership of certain beneficial owners and management and securities authorized 
for issuance under equity compensation plans is incorporated herein by reference to the subsections entitled 
“Ownership of Company Securities,” and “Equity Compensation Plan Information” under “Proposal 1- Election of 
Directors” in our 2015 definitive Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 

Information regarding certain relationships and related transactions is incorporated herein by reference to the 
subsection entitled “Certain Relationships and Related Person Transactions” under “Proposal 1- Election of 
Directors” in our 2015 definitive Proxy Statement. The information regarding director independence is incorporated 
herein by reference to the subsections entitled “Corporate Governance” and “Director Independence” in the section 
entitled “Proposal 1 - Election of Directors” in our 2015 definitive Proxy Statement. 

ITEM 14. PRINCIPAL AUDITOR FEES AND SERVICES 

The information regarding principal auditor fees and services is incorporated herein by reference to the section 
entitled “Proposal 2 - Ratification of Election of Independent Registered Public Accounting Firm” in our 2015 
definitive Proxy Statement.

127

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 

(a) 

(1)  Index to Financial Statements and Financial Statement Schedule, incorporated by reference or filed as part 

of this report:

  Report of Independent Registered Public Accounting Firm including Report on Financial Statement 

Schedule;

  Consolidated Statements of Income for each of the years in the three-year period ended December 31, 

2014;

  Consolidated Statements of Comprehensive Income for each of the years in the three-year period 

ended December 31, 2014;

  Consolidated Balance Sheets as of December 31, 2014 and 2013;

  Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 

31, 2014;

  Consolidated Statements of Shareholders' Equity for each of the years in the three-year period ended 

December 31, 2014;

  Notes to the Consolidated Financial Statements;

  Schedule II - Valuation and Qualifying Accounts for the three years ended December 31, 2014; and

  All other schedules are omitted as they are not applicable, or the information required is included in the 

financial statements or notes thereto.

(2)  Supplementary Data:

  Quarterly Results of Operations (unaudited); and

  Five Years in Review.

(3)  The exhibits filed herewith or incorporated herein by reference are set forth in the Index of Exhibits 

included herein.

(b) 

The management contracts or compensatory plans or arrangements listed in the “Index of Exhibits” that 
are applicable to the executive officers named in the Summary Compensation Table which appears in 
Registrant's 2015 Proxy Statement or to our directors are preceded by an asterisk (*).

Xerox 2014 Annual Report

128

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly 
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

XEROX CORPORATION

/s/  URSULA M. BURNS
Ursula M. Burns
Chairman of the Board and 
Chief Executive Officer
February 24, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the 
following persons on behalf of the registrant and in the capacities and on the date indicated. 

February 24, 2015 

Signature

Title

Chairman of the Board, Chief Executive Officer and Director

Executive Vice President and Chief Financial Officer

Vice President and Chief Accounting Officer

Director

Director

Director

Director

Director

Director

Director

Principal Executive Officer:
/S/    URSULA M. BURNS
Ursula M. Burns
Principal Financial Officer:
/S/    KATHRYN A. MIKELLS
Kathryn A. Mikells

Principal Accounting Officer:
/S/    JOSEPH H. MANCINI, JR.
Joseph H. Mancini, Jr.
/S/    RICHARD J. HARRINGTON

Richard J. Harrington
/S/    WILLIAM CURT HUNTER

William Curt Hunter
/s/    ROBERT J. KEEGAN

Robert J. Keegan
/S/    CHARLES PRINCE

Charles Prince
/S/    ANN N. REESE

Ann N. Reese
/s/    SARA MARTINEZ TUCKER 

Sara Martinez Tucker
/S/    MARY AGNES WILDEROTTER

Mary Agnes Wilderotter

129

 
 
 
 
 
 
 
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
For the three years ended December 31, 2014 

(in millions) 

2014 Allowance for Losses:

Accounts Receivable

Finance Receivables

2013 Allowance for Losses:

Accounts Receivable

Finance Receivables

2012 Allowance for Losses:

Accounts Receivable

Finance Receivables

$

$

$

$

$

$

Balance
at beginning
of period 

Additions
charged to
bad debt
provision (1) 

Amounts
(credited)
charged to
other income
statement
accounts (1) 

Deductions
and other, net
of recoveries (2) 

Balance
at end
of period 

112

154

266

108

170

278

102

201

303

$

$

$

$

$

$

$

$

$

20

33

53

39

81

120

$

$

44

75

119

$

(3) $

3

— $

(2) $

5

3

3

5

8

$

$

$

(41) $

(59)

(100) $

(33) $

(102)

(135) $

(41) $

(111)

(152) $

88

131

219

112

154

266

108

170

278

 __________
(1)  Bad debt provisions relate to estimated losses due to credit and similar collectibility issues. Other charges (credits) relate to adjustments to 

reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations. 

(2)  Deductions and other, net of recoveries primarily relates to receivable write-offs, but also includes the impact of foreign currency translation 

adjustments and recoveries of previously written off receivables. 

Xerox 2014 Annual Report

130

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INDEX OF EXHIBITS
Document and Location 

Restated Certificate of Incorporation of Registrant filed with the Department of State of the State
of New York on February 21, 2013.

Incorporated by reference to Exhibit 3(a) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 2012. See SEC File Number 001-04471.
By-Laws of Registrant, as amended through May 21, 2009.
Incorporated by reference to Exhibit 3(b) to Registrant's Current Report on Form 8-K dated May
21, 2009 (filed May 28, 2009). See SEC File Number 001-04471.
Indenture dated as of December 1, 1991, between Registrant and Citibank, N.A., as trustee,
relating to unlimited amounts of debt securities, which may be issued from time to time by
Registrant when and as authorized by or pursuant to a resolution of Registrant's Board of
Directors (the “December 1991 Indenture”).
Incorporated by reference to Exhibit 4(a) to Registrant's Registration Statement Nos. 33-44597,
33-49177 and 33-54629. See SEC File Number 001-04471.
Instrument of Resignation, Appointment and Acceptance dated as of February 1, 2001, among
Registrant, Citibank, N.A., as resigning trustee, and Wilmington Trust Company, as successor
trustee, relating to the December 1991 Indenture.
Incorporated by reference to Exhibit 4(a)(2) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 filed on June 7, 2001. See SEC File Number 001-04471.
Instrument of Resignation, Appointment and Acceptance dated as of July 30, 2008, among
Registrant, Wilmington Trust Company, as prior trustee, Citibank,, N.A. as prior paying agent,
registrar and issuing and paying agent, and The Bank of New York Mellon, as successor trustee,
relating to the December 1991 Indenture.
Incorporated by reference to Exhibit 4(a)(3) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2008. See SEC File Number 001-04471.
Indenture, dated as of June 25, 2003, between Registrant and Wells Fargo, as trustee, relating to
unlimited amounts of debt securities which may be issued from time to time by Registrant when
and as authorized by or pursuant to a resolution of Registrant's Board of Directors (the “June 25,
2003 Indenture”).
Incorporated by reference to Exhibit 4.1 to Registrant's Current Report on Form 8-K dated June
25, 2003. See SEC File Number 001-04471.
Form of Third Supplemental Indenture, dated as of March 20, 2006, to the June 25, 2003
Indenture.
Incorporated by reference to Exhibit 4(b)(6) to Registrant's Current Report on Form 8-K dated
March 20, 2006. See SEC File Number 001-04471.
Form of Fourth Supplemental Indenture, dated as of August 18, 2006, to the June 25, 2003
Indenture.
Incorporated by reference to Exhibit 4(b)(7) to Registrant's Current Report on Form 8-K dated
August 18, 2006. See SEC File Number 001-04471.
Form of Sixth Supplemental Indenture, dated as of May 17, 2007 to the June 25, 2003 Indenture.
Incorporated by reference to Exhibit 4(b)(2) to Registrant's Registration Statement No.
333-142900. See SEC File Number 001-04471.
Form of Amended and Restated Credit Agreement dated as of March 18, 2014 between
Registrant and the Initial Lenders named therein, Citibank, N.A., as Administrative Agent, and
Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and BNP Paribas Securities Corp. as Joint Lead Arrangers and Joint Bookrunners
(the “Credit Agreement”).
Incorporated by reference to Exhibit 4(c) to Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014. See SEC File Number 001-04471.
Form of Indenture dated as of December 4, 2009 between Xerox Corporation and the Bank of
New York Mellon, as trustee, relating to an unlimited amount of senior debt securities.
Incorporated by reference to Exhibit 4(b)(5) to Post-Effective Amendment No. 1 to Registrant's
Registration Statement No. 333-142900. See SEC File Number 001-04471.
Indenture, dated as of June 6, 2005, by and between Affiliated Computer Services, Inc. (“ACS”)
as Issuer and The Bank of New York Trust Company, N.A. as Trustee (the “June 6, 2005
Indenture”).

3(a)

3(b)

4(a)(1)

4(a)(2)

4(a)(3)

4(b)(1)

4(b)(2)

4(b)(3)

4(b)(4)

4(c)

4(d)

4(e)(1)

131

4(e)(2)

4(e)(3)

4(f)

10

*10(a)(1)

*10(a)(2)

10(b)

10(c)

*10(d)(1)

*10(d)(2)

*10(d)(3)

*10(d)(4)

*10(e)(1)

Incorporated by reference to Exhibit 4.1 to ACS's Current Report on Form 8-K, filed June 6, 2005.
See SEC File Number 001-12665.
Second Supplemental Indenture, dated as of June 6, 2005, to the June 6, 2005 Indenture.
Incorporated by reference to Exhibit 4.3 to ACS's Current Report on Form 8-K, filed June 6, 2005.
See SEC File Number 001-12665.
Third Supplemental Indenture, dated as of February 5, 2010, to the June 6, 2005 Indenture
between Boulder Acquisition Corp., the successor to ACS, and The Bank of New York Trust
Company, N.A.
Incorporated by reference to Exhibit 4(j)(4) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2009. See SEC File Number 001-04471.
Instruments with respect to long-term debt where the total amount of securities authorized
thereunder does not exceed 10 percent of the total assets of Registrant and its subsidiaries on a
consolidated basis have not been filed. Registrant agrees to furnish to the Commission a copy of
each such instrument upon request.
The management contracts or compensatory plans or arrangements listed below that are
applicable to the executive officers named in the Summary Compensation Table which appears in
Registrant's 2015 Proxy Statement or to our directors are preceded by an asterisk (*).
Registrant's Form of Separation Agreement (with salary continuance) - February 2010.
Incorporated by reference to Exhibit 10(a)(1) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2009. See SEC File Number 001-04471.
Registrant's Form of Separation Agreement (without salary continuance) - February 2010.
Incorporated by reference to Exhibit 10(a)(2) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2009. See SEC File Number 001-04471.
[Reserved]

[Reserved]

Registrant's 2004 Equity Compensation Plan for Non-Employee Directors, as amended and
restated as of May 21, 2013 (“2004 ECPNED”).
Incorporated by reference to Exhibit 10(d)(1) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2013.  See SEC File Number 001-04471.
Form of Agreement under 2004 ECPNED.
Incorporated by reference to Exhibit 10(d)(2) to Registrant's Quarterly Report on Form 10-Q for
the Quarter ended March 31, 2005.  See SEC File Number 001-04471.
Form of Grant Summary under 2004 ECPNED.
Incorporated by reference to Exhibit 10(d)(3) to Registrant's Quarterly Report on Form 10-Q for
the Quarter ended March 31, 2005. See SEC File Number 001-04471.
Form of DSU Deferral under 2004 ECPNED.
Incorporated by reference to Exhibit 10(d)(4) to Registrant's Quarterly Report on Form 10-Q for
the Quarter ended March 31, 2005. See SEC File Number 001-04471.
Registrant's 2004 Performance Incentive Plan, as amended and restated as of May 24, 2012
("2012 PIP").

Incorporated by reference to Exhibit 10(e)(26) to Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2012. See SEC File Number 001-04471.

*10(e)(2)

Performance Elements for 2012 Executive Long-Term Incentive Program (“2012 ELTIP”).

Incorporated by reference to Exhibit 10(e)(21) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. See SEC File Number 001-04471.

*10(e)(3)

Form of Executive Long-Term Incentive Award under 2012 ELTIP (Performance Shares).

Incorporated by reference to Exhibit 10(e)(22) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. See SEC File Number 001-04471.

*10(e)(4)

Form of Executive Long-Term Incentive Program Award Summary under 2012 ELTIP
(Performance Shares).

Incorporated by reference to Exhibit 10(e)(23) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. See SEC File Number 001-04471.

*10(e)(5)

Form of Executive Long-Term Incentive Program Restricted Stock Unit Retention Award Summary
under 2012 ELTIP.

Xerox 2014 Annual Report

132

 
 
 
Incorporated by reference to Exhibit 10(e)(24) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. See SEC File Number 001-04471.

*10(e)(6)

Form of Restricted Stock Unit Retention Award under 2012 ELTIP.

*10(e)(7)

*10(e)(8)

*10(e)(9)

Incorporated by reference to Exhibit 10(e)(25) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. See SEC File Number 001-04471.
Annual Performance Incentive Plan for 2013.
Incorporated by reference to Exhibit 10(e)(17) to Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2013.  See SEC File Number 001-04471.
Performance Elements for 2013 Executive Long-Term Incentive Program ("2013 ELTIP").
Incorporated by reference to Exhibit 10(e)(24) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2012. See SEC File Number 001-04471.
Form of Executive Long-Term Incentive Award under 2013 ELTIP (Performance Shares).
Incorporated by reference to Exhibit 10(e)(25) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2012. See SEC File Number 001-04471.

*10(e)(10)

Form of Executive Long-Term Incentive Program Award Summary under 2013 ELTIP
(Performance Shares).

Incorporated by reference to Exhibit 10(e)(26) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2012. See SEC File Number 001-04471.

*10(e)(11)

Form of Executive Long-Term Incentive Program Restricted Stock Unit Retention Award Summary
under 2013 ELTIP.

Incorporated by reference to Exhibit 10(e)(24) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. See SEC File Number 001-04471.

Form of Restricted Stock Unit Retention Award under 2013 ELTIP.

Incorporated by reference to Exhibit 10(e)(25) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. See SEC File Number 001-04471.
Amendment No. 1 dated as of December 11, 2013 to 2012 PIP.
Incorporated by reference to Exhibit 10(e)(23) to Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2013.  See SEC File Number 001-04471.
Annual Performance Incentive Plan for 2014.
Performance Elements for 2014 Executive Long-Term Incentive Plan.
Incorporated by reference to Exhibit 10(e)(25) to Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2013.  See SEC File Number 001-04471.
Form of Award Agreement under 2012 PIP (Performance Shares).
Incorporated by reference to Exhibit 10(e)(26) to Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2013.  See SEC File Number 001-04471.
Form of Award Summary under 2012 PIP (Performance Shares).
Incorporated by reference to Exhibit 10(e)(27) to Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2013.  See SEC File Number 001-04471.
Form of Award Agreement under 2012 PIP (Retention Restricted Stock Units).
Incorporated by reference to Exhibit 10(e)(28) to Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2013.  See SEC File Number 001-04471.
Form of Award Summary under 2012 PIP (Retention Restricted Stock Units).
Incorporated by reference to Exhibit 10(e)(29) to Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2013.  See SEC File Number 001-04471.
Annual Performance Incentive Plan for 2015 (“2015 APIP”)

Performance Elements for 2015 Executive Long-Term Incentive Program ("2015 ELTIP")

Form of Award Agreement under 2015 ELTIP (Performance Shares)

Form of Award Agreement under 2015 ELTIP (Retention Restricted Stock Units)

Letter Agreement dated March 19, 2014 between Registrant and Robert K. 
Zapfel, Executive Vice President and President, Services of Registrant.

2004 Restatement of Registrant's Unfunded Supplemental Executive Retirement Plan, as
amended and restated December 4, 2007 (“2007 USERP”).

*10(e)(12)

*10(e)(13)

*10(e)(14)
*10(e)(15)

*10(e)(16)

*10(e)(17)

*10(e)(18)

*10(e)(19)

*10(e)(20)

*10(e)(21)

*10(e)(22)

*10(e)(23)

*10(f)

*10(g)(1)

133

*10(g)(2)

*10(g)(3)

*10(g)(4)

Incorporated by reference to Exhibit 10(g)(1) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2007. See SEC File Number 001-04471.
Amendment dated December 4, 2007 to Registrant's 2007 USERP.
Incorporated by reference to Exhibit 10(g)(2) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2007. See SEC File Number 001-04471.
Amendment No. 1 dated December 11, 2008 to Registrant's 2007 USERP.
Incorporated by reference to Exhibit 10(g)(3) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2008. See SEC File Number 001-04471.
Amendment No. 2 dated April 28, 2011 to Registrant's 2007 USERP.

Incorporated by reference to Exhibit 10(g)(4) to Registrant's Quarterly Report on Form 10-Q for
the Quarter ended June 30, 2011. See SEC File Number 001-04471.

*10(g)(5)

Amendment No. 3 dated December 7, 2011 to Registrant's 2007 USERP.

*10(h)

10(i)

*10(j)(1)

*10(j)(2)

*10(k)(1)

*10(k)(2)

*10(k)(3)

*10(l)

10(m)

*10(n)

10(o)

*10(p)

Incorporated by reference to Exhibit 10(g)(5) to Registrant's Current Report on Form 8-K dated
December 7, 2011. See SEC File Number 001-04471.
1996 Amendment and Restatement of Registrant's Restricted Stock Plan for Directors, as
amended through February 4, 2002.
Incorporated by reference to Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2004. See SEC File Number 001-04471.

[Reserved]
Registrant's Universal Life Plan as amended and restated as of August 26, 2013.
Incorporated by reference to Exhibit 10(j)(1) to Registrant's Quarterly Report on Form 10-Q for the
Quarter ended September 30, 2013. See SEC File Number 001-00471.
Participant Agreement for Registrant's Universal Life Plan.

Incorporated by reference to Exhibit 10(j)(2) to Registrant's Quarterly Report on Form 10-Q for the
Quarter ended September 30, 2013. See SEC File Number 001-00471.

Registrant's Deferred Compensation Plan for Directors, as amended and restated December 5,
2007 (“DCPD”).
Incorporated by reference to Exhibit 10(k)(1) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2007. See SEC File Number 001-04471.
Amendment dated December 5, 2007 to DCPD.
Incorporated by reference to Exhibit 10(k)(2) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2007. See SEC File Number 001-04471.
Amendment No. 2 dated May 17, 2010 to DCPD.
Incorporated by reference to Exhibit 10(k)(3) to Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2010. See SEC File Number 001-04471.
Registrant's Deferred Compensation Plan for Executives, 2004 Restatement, as amended
through August 11, 2004.
Incorporated by reference to Exhibit 10(l) to Registrant's Quarterly Report on Form 10-Q for the
Quarter ended September 30, 2004. See SEC File Number 001-04471.
Separation Agreement dated May 11, 2000 between Registrant and G. Richard Thoman, former 
President and Chief Executive Officer of Registrant.
Incorporated by reference to Exhibit 10(n) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2005. See SEC File Number 001-04471.
Uniform Rule dated December 17, 2008 for all Deferred Compensation Promised by Registrant.
Incorporated by reference to Exhibit 10(r) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2008. See SEC File Number 001-04471.
2006 Technology Agreement, effective as of April 1, 2006, by and between Registrant and Fuji
Xerox Co., Ltd.
Incorporated by reference to Exhibit 99.1 to Registrant's Current Report on Form 8-K dated March
9, 2006. See SEC File Number 001-04471.**
Form of Severance Agreement entered into with various executive officers, effective October
2010.
Incorporated by reference to Exhibit 10(t) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2010. See SEC File Number 001-04471.

Xerox 2014 Annual Report

134

 
 
 
*10(q)

*10(r)(1)

*10(r)(2)

*10(s)

*10(t)

*10(u)

*10(v)

12

21
23
31(a)
31(b)
32

101.CAL
101.DEF
101.INS
101.LAB
101.PRE
101.SCH

Senior Executive Agreement dated September 27, 2009 among ACS, Registrant and Lynn
Blodgett.
Incorporated by reference to Exhibit 10.2 to ACS's Current Report on Form 8-K dated September
27, 2009. See SEC File Number 001-12665.
Affiliated Computer Services, Inc. (“ACS”) 1997 Stock Incentive Plan (“ACS 1997 SIP”)
Incorporated by reference to Appendix D to ACS's Joint Proxy Statement on Schedule 14A, filed
November 14, 1997. See SEC File Number 001-12665.
Amendment No. 1 dated October 28, 2004 to ACS 1997 SIP.
Incorporated by reference to Exhibit 4.6 to ACS's Registration Statement on Form S-8, filed
December 6, 2005. See SEC File Number 001-12665.
ACS Amended and Restated 2007 Equity Incentive Plan.
Incorporated by reference to Exhibit 10.1 to ACS's Current Report on Form 8-K filed August 21,
2009. See SEC File Number 001-12665.
ACS 401(k) Supplemental Plan, effective as of July 1, 2000, as amended.
Incorporated by reference to Exhibit 10.15 to ACS's  Annual Report on Form 10-K for the fiscal
year ended June 30, 2004. See SEC File Number 001-12665.
Letter Agreement dated March 25, 2013 between Registrant and Kathryn A. Mikells, Executive
Vice President and Chief Financial Officer of Registrant.
Incorporated by reference to Exhibit 10(f) to Registrant's Current Report on Form 8-K dated
March 26, 2013. See SEC File Number 001-04471.
Master Plan Amendment dated May 2, 2011 to Registrant-Sponsored Benefit  
Plans.

Incorporated by reference to Exhibit 10(bb) to Registrant's Quarterly Report on Form 10-Q for the
Quarter ended June 30, 2011. See SEC File Number 001-04471.
Computation of Ratio of Earnings to Fixed charges and the Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
Subsidiaries of Registrant.
Consent of PricewaterhouseCoopers LLP.
Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
Certification of CEO and CFO pursuant to 18 U.S.C. §1350 as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002.
XBRL Taxonomy Extension Calculation Linkbase.
XBRL Taxonomy Extension Definition Linkbase.
XBRL Instance Document.
XBRL Taxonomy Extension Label Linkbase.
XBRL Taxonomy Extension Presentation Linkbase.
XBRL Taxonomy Extension Schema Linkbase.

**Pursuant to the Freedom of Information Act and/or a request for confidential treatment filed with the Securities and Exchange Commission 
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended, the confidential portion of this material has been omitted and filed 
separately with the Securities and Exchange Commission.

135

 
 
 
Inside

Inside

1  Letter to Shareholders

  8  Board of Directors

1  Letter to Shareholders

  8  Board of Directors

6  Financial Measures

  9  Officers

6  Financial Measures

  9  Officers

7  Non-GAAP Measures

 10  FYI

7  Non-GAAP Measures

 10  FYI

  2014 Form 10-K Insert

  2014 Form 10-K Insert

Financial Highlights

Financial Highlights

(in millions, except EPS)

(in millions, except EPS)

Total revenue

Total revenue

Equipment sales

Annuity revenue

Equipment sales

Annuity revenue

Net income from continuing operations – Xerox

Net income from continuing operations – Xerox

Adjusted net income* – Xerox

Adjusted net income* – Xerox

Diluted earnings per share from continuing operations

Diluted earnings per share from continuing operations

Adjusted earnings per share*

Adjusted earnings per share*

Net cash provided by operating activities

Net cash provided by operating activities

Adjusted operating margin*

Adjusted operating margin*

2014

 $19,540 

 3,104 

 16,436 

 1,084 

 1,280 

 0.90 

 1.07 

 2,063 

9.6%

2013

2014

 $20,006 

 $19,540 

 3,358 

 16,648 

 1,139 

 1,328 

 0.89 

 1.04 

 2,375 

9.0%

 3,104 

 16,436 

 1,084 

 1,280 

 0.90 

 1.07 

 2,063 

9.6%

2013

 $20,006 

 3,358 

 16,648 

 1,139 

 1,328 

 0.89 

 1.04 

 2,375 

9.0%

*     See Non-GAAP Measures on Page 7 for the reconciliation of the difference between this financial measure that is not in compliance with Generally Accepted 

*     See Non-GAAP Measures on Page 7 for the reconciliation of the difference between this financial measure that is not in compliance with Generally Accepted 

Accounting Principles (GAAP) and the most directly comparable financial measure calculated in accordance with GAAP.

Accounting Principles (GAAP) and the most directly comparable financial measure calculated in accordance with GAAP.

Note:  Income Statement items have been revised for all periods to reflect our Discontinued Operations. Refer to Note 4 – Divestitures – in our Consolidated  

Note:  Income Statement items have been revised for all periods to reflect our Discontinued Operations. Refer to Note 4 – Divestitures – in our Consolidated  

Financial Statements.

Financial Statements.

XER410ABTS_AnnualReport_Cover_v1_150316.indd   2

XER410ABTS_AnnualReport_Cover_v1_150316.indd   2

3/20/15   1:44 PM

3/20/15   1:44 PM

 
 
 
 
 
 
Xerox Corporation
45 Glover Avenue
P.O. Box 4505
Norwalk, CT  06856-4505
United States
203.968.3000
www.xerox.com

Paper from responsible sources

2014  

Annual Report 

X

e

r

o

x

2

0

1

4

A

n

n

u

a

l

R

e

p

o

r

t

© 2015 Xerox Corporation. All rights reserved. Xerox®, Xerox and Design®, 
ColorQube®, ConnectKey®, Maven®, iGen®, iGen4®, CiPress®, DocuColor®, 
Xerox FreeFlow®, Xerox Nuvera®, Phaser® and WorkCentre® are trademarks 
of Xerox Corporation in the U.S. and/or other countries. BR13936

002CSN47A1

XER410ABTS_AnnualReport_Cover_v1_150316.indd   1

3/20/15   1:43 PM