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Investor Relations

VIEWS: 37 PAGES: 60

									Investor Relations
2011 Investor Conference

Quarter 2 2011 Results
Forward-looking statements
This presentation contains"forward-looking statements" as defined in the Private Securities Litigation Reform Act
of 1995. 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 management’s
current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual
results to differ materially. These factors include but are not limited to: changes in economic conditions, political
conditions, trade protection measures, licensing requirements, environmental regulations and tax matters in the
United States and in the foreign countries in which we do business; changes in foreign currency exchange rates;
the outcome of litigation and regulatory proceedings to which we may be a party; actions of competitors; our
ability to expand equipment placements and to drive the expanded use of color in printing and copying;
development of new products and services; interest rates, cost of borrowing and access to credit markets; our
ability to protect our intellectual property rights; 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;
the risk that unexpected costs will be incurred; reliance on third parties for manufacturing of products and
provision of services; the risk that we will not realize all of the anticipated benefits from the acquisition of
Affiliated Computer Services, Inc.; our ability to recover capital investments; the risk that subcontractors, software
vendors and utility and network providers will not perform in a timely, quality manner; the risk that multi-year
contracts with governmental entities could be terminated prior to the end of the contract term; 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; 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 our Quarterly Report on Form 10-Q for the quarter ended March 31,
2011 and our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The
Company assumes no obligation to update any forward-looking statements as a result of new information or
future events or developments, except as required by law.
We have transformed….

                              2009                  2011
                        Technology-led          Services-led
                         ~25% Services          ~50% Services

       Revenue           $15.2 billion          ~$23 billion


        Market            $132 billion          $500 billion +
      Opportunity

                         Document        Document Outsourcing
       Services
    Leadership in....    Outsourcing     Business Process Outsourcing
                                         Information Tech Outsourcing

                                  ….into the world’s leading
enterprise for Business Process and Document Management

3
Continuing to deliver shareholder value

    Priorities
    •   Accelerate services business and capture significant opportunity
            Our
    •   Maintain leadership in technology
           Brand
    •   Drive operational excellence and deliver cost improvements
    •   Expand earnings and return cash to shareholders
             Global
              Presence

    Our Financial Model
    •   Continued revenue and operating margin growth
    •   Solid cash flow that will deliver shareholder value through:
                                                    Solid Cash Generation
          – Share repurchase
          – Acquisitions and dividends


4
Strategic vision

     Core Strengths               Businesses               Growth Drivers

    Our
    Brand
                                                             Services Led
                          Document         Technology
                         Outsourcing

    Global
    Presence                                                    Global
                                                              Expansion
                      Business Process    IT Outsourcing
    Renowned            Outsourcing

    Innovation
                                                           Grow High Value
                                                               Pages

    Services
    Operational
    Excellence
5
Growth focus areas
               Provide most diverse set of offerings in industry
    Services
               Deliver value through operational excellence
      Led
               Apply innovation to drive process automation

                        Expand BPO and ITO globally
           Global
         Expansion      Expand SMB participation

                        Capture developing markets opportunity

                                   Accelerate color transition
                    Grow
                 High-Value        Advance customized digital printing
                   Pages
                                   Extend lead in Document Outsourcing

6
 Our business model
                                                                                                                       Model Characteristics
                                                                                                                 Revenue growth driven by Services
                                                                                                                  • Approximately half of revenue from
                               2010                                               Guidance                          Services

                                                                                                      Steady      • Significant global opportunity
                    Guidance            Actuals                 2011*                    2012          State      • Acquisitions contribute 1 to 2% pts
Revenue
                      1 – 3%2              3%2           H2: 3 – 5%2                   4 – 6%          6%+       Operating margin improvement from:
Growth
                                                                                                                  • Cost initiatives
Operating                                                                                                         • Mix of business
                       ~10%               9.6%              10 – 11%                 11 – 12%
Margin1
                                                                                                                  • Growth leverage

Adjusted                                                                                             10 – 15%+   EPS growth of 10 to 15%+
                  $0.75 – $0.85           $0.94          $1.07 – $1.12 $1.18 – $1.28
EPS1                                                                                                   growth
                                                                                                                  • Share repurchase provides support to
                                                                                                                    EPS expansion
Operating
Cash Flow               11%                12%              ~9 –10%                     ~11%          ~11%       Annuity-driven, stable cash flow
% Revenue
                                                                                                                  • ~85% revenue from annuity
                                                                                                                  • Overall modest CAPEX requirements
                                                                                                                  • Enables return of capital to
                                                                                                                    shareholders



 7   * 2011 Guidance updated during Q2 2011 earnings call
     1Operating   margin, Adjusted EPS: see non-GAAP measures    2Pro-forma   at constant currency
        Strong capital structure and cash flow
(in billions)                                              2011                  2012               (in billions)                                          2011*      2012

Finance Debt                                                $ 6.2                 $6.2              Cash from Ops                                     $2.0 – $2.3   $2.6 – $2.9
                                                                                                    CAPEX                                                  $(0.5)     $(0.6)
Core Debt                                                   $ 2.4                 $2.4
                                                                                                    Free Cash Flow1                                   $1.5 – $1.8   $2.0 – $2.3
Total Debt                                                 ~$8.6                 ~$8.6
                                                                                                    Debt Reduction                                         $(0.6)        -
Debt forecast includes:
                                                                                                    Dividends                                              $(0.3)     $(0.3)
•            Early redemption and refinancing of $650M Trust Preferred
             Securities                                                                             Change in YE Cash Balance                              $0.3          -
•            Pay down $600M of term debt in 2011
                                                                                                    Available Cash                                         ~$1.0      ~$2.0
•            Maintain 7:1 leverage of finance assets
                                                                                                    * 2011 Guidance updated during Q2 2011 earnings call



                          Balanced Debt Maturities                                                                           Free Cash Flow Drivers
             1,600
                                                                                                        • Annuity-driven earnings growth
             1,200

                                                                                                        • Working capital in line with growth
$ millions




              800

                                                                                                        • Declining pension requirements after 2011
              400


                   0
                                                                                                        • Modest CAPEX requirements
                         11 012 013 014 015                 16 017 18 019      0+
                       20   2   2   2   2                 20      20  2     02
                                                               2          2                              Over $10B of free cash flow next 5 years
                         15 yr putable     notes2

               1
    8           Free Cash Flow, Cash from Core Ops and Free Core Cash Flow: see non-GAAP measures
               22011    assumes $288M under private placements is put (final maturity 2023)
    Committed to returning cash flow to shareholders
                                           Share Repurchase – Significant Opportunity

      Use of Available Cash Model          • Target >$700M in ‘11, ~60 to 70M shares
                                           • Target 100M+ shares in 2012
                                           • Targeting majority of available cash next
                                             five years
                        Share Repurchase
                             70 - 80%
                                           Acquisitions – Steady stream of tuck-ins
                                           • ~$300M in 2011
    Dividend                               • Services and distribution focused
    Growth                                 • Provides long-term revenue and earnings
     1 - 3%         Acquisitions             growth
                     15 - 25%              • Positions company in emerging areas

                                           Dividends
                                           • Potential for growth
                                           • Supported by stable and growing cash
                                             flow



9
 Segment characteristics
               Technology (~46% of Total)                                                    Services (~48% of Total)

 Revenue Growth (2012)                                      1 – 3%                 Revenue Growth (2012)               6 – 8%+

 Annuity % of Revenue                                        ~65%                  Annuity % of Revenue                 >90%

 Gross Margin                                             44 – 46%                 Gross Margin                       23 – 25%

 Operating Margin                                          9 – 11%                 Operating Margin                   11 – 13%


               Page                Rev /             % of                                   Contract Length      Time to Revenue
              Growth               Page             Pages               Revenue
                                                                                   ITO            3 to 7 yrs +      2 to 8 mos.
B&W                                  Flat            75%
                                                                                   BPO         2 to 10 yrs +      2 to 24 mos. +
Color                                                25%
                                                                                   DO             4 to 5 yrs        2 to 6 mos. +
Total


• Revenue growth driven by high-value pages and                                   • BPO longer ramp to revenue and profitability,
  distribution expansion                                                            but higher margins
• B&W becoming a smaller proportion of the                                        • ITO and Transportation more capital
  business                                                                          intensive
                                                                                  • Target renewal rate 85 to 90%

10
     Note: “Other” Segment – expect low single-digit revenue declines
 Multiple strategies for revenue growth

     Mix to higher growth areas – Services1
           • Market growing >5%
           • Synergies enhance


     Global expansion
           • Services penetration in Europe
           • Higher Technology growth in BRIM



     Acquisitions                                                Investment in Acquisitions

                                                 (in millions)
           • 1- 2 pts of growth                                                                    ~
           • Services
           • Distribution




                                                                 * Includes ACS standalone acquisitions
11    1   Calculated on estimated 2011 revenue
  Tuck-in acquisitions enhance market position
                                   2009                                      2010                                2011
                        (ACS deals pre-acquisition)


                           ITO            Customer Care      Transportation             HRO          Doc Mgmt            Customer Care
                           UK                Jamaica              UK                  Dallas, TX     Software             Netherlands
 Services                                                                                           San Jose, CA




                     Benefits websites    Pharmacy Audit                  Pharma Services                   Clinical Surveillance
                       St. Louis, MO      Philadelphia, PA                Boca Raton, FL                        Nashville, TN




Distribution
                      Akron, OH          San Diego, CA          Ireland               Macon, GA       Scotland              Chicago, IL



                                                         Fundamental Approach
      Services                                                                 Distribution
      • Well-run businesses with strong management                             • Well-run businesses with strong management
      • Accretive in Year 1, average 1x revenue                                • Accretive in Year 1, average 1x revenue
      • Size: most under $60M                                                  • Size: most under $30M
      • New capabilities, adjacent service areas or                            • Expand coverage in under-penetrated
        geographic presence                                                      markets

 12
Operating Margin - opportunity within a $20B+ cost base
 • Improves approximately 100 basis points in 2011 and expands further in 2012
 • Strong track record of executing on cost
 • Enablers more than offset investments and inflationary cost pressures

Enablers

             Operational Initiatives                Mix to Services                   Leverage


 •       Ongoing business optimization         •   Faster growth of       •       Operating leverage in
                                                   Services revenue               both Technology and
 •       Areas of focus: supply chain,                                            Services from:
         procurement, shared services,         •   Services margin over
         innovation                                1% pt higher               –    Higher volumes
                                                                              –    Services platform
 •       Near term benefit from:               •   Acquisitions can                extensions
     –   Cost synergies: >$200M in 2011/2012       accelerate trend
                                                                              –    Limited operating
     –   Restructuring: ~$350M in 2011/2012                                        expense growth
                                                                                   requirements


13
Services Slides
  Xerox + ACS = $10B Services business

                                                                              Services market
                                                                           addressable opportunity*


                                                                     2010 market size: $225 billion
                                            Business Processes       2010-2014 CAGR: 7%


                                                                     2010 market size: $45 billion
                                                                     2010-2014 CAGR: 6%
                                            Document Outsourcing

                                                                     2010 market size: $280 billion

                                            Information Technology   2010-2014 CAGR: 4%

                                                                       BPO/ITO revenue grew 7% CAGR
                                                                             over last five years



15 *Source: Internal Market Size Analysis
 Uniquely positioned in the Services market
                                                                Information
 Business Process                    Document                   Technology
   Outsourcing                      Outsourcing                 Outsourcing




                            Key Xerox differentiators

                    •   Diverse Services offerings
                    •   Global capabilities and opportunities
                    •   Large and diverse customer base
                    •   Innovation
16
The leader in Business Process and Document
Management

 900      Million healthcare
          claims processed
          annually
                                 #1    Equipment revenue
                                       market share leader
                                       worldwide
                                                             >50   Percent of digital
                                                                   production color
                                                                   pages produced on
                                                                   Xerox technology




     50   Percent of all
          electronic toll
          collection processed
          in the U.S.
                                 2/3   Of U.S. insured
                                       patients are
                                       touched by our
                                       services
                                                              3    Year leader in
                                                                   Gartner MPS Magic
                                                                   Quadrant




     #1   Worldwide rank in
          transportation
          services to
          governments
                                 >10   Thousand U.S.
                                       patents held
                                                             60    Percent of all U.S.
                                                                   child support
                                                                   payments processed
                                                                   annually




17
  Diversified Services offerings…
     Document Outsourcing                       Gov Solutions                    Commercial IT                    HR Services                Transportation Solutions
           (~34%)                                  (~12%)                           (~10%)                           (~8%)                            (~8%)
                                                                                                                                             •   Electronic toll collection
Managed Print Services (27%)              • State: Child support            • Data center outsourcing     • Consulting: retirement,          •                   collection
                                                                                                                                                 Electronic toll collection
                                            payment processing, tax and                                     health, comp                     •   Fare payment & collection
• Consolidating in-house                                                    • Network management                                             •         payment & collection
                                                                                                                                                 Fare payment & collection
  production and commercial                 revenue systems, eligibility
                                            determination & case mgmt,        services                    • Outsourcing: Employee            •   Commercial carrier
  printing under single point of                                                                            service center, data             •   Commercial carrier
                                                                                                                                                 Commercial carrier solutions
                                                                                                                                                 solutions
  control                                   electronic benefits transfer,   • Desktop management            management, payroll                  solutions
                                            unclaimed property services,                                                                     •   Automated motor carrier tax
• Designing, authoring and                  IT services                                                                                      •   Automated motor carrier
                                                                            • Help desk                   • Benefits Outsourcing: 401(k),    •   Automated processing
                                                                                                                                                 & regulatorymotor carrier
                                                                                                                                                 tax & regulatory processing
  translating technical and user                                                                            pension, health self-service         tax & regulatory processing
  information                             • Local: IT services,
                                            government records mgmt,        • Remote infrastructure         portal                           •
                                                                                                                                             •   Public safety photo
                                                                                                                                                 Public safety photo
 Communication & Marketing                                                    management                                                     •   Public safety
                                                                                                                                                 enforcement photo
                                                                                                                                                 enforcement
                                            public safety and justice                                     • Learning: technology services,       enforcement
       Services (7%)                        systems                         • Application services          content development,             •   Traffic & parking management
                                                                                                                                             •   Traffic & parking
• Creating personalized,                  • Federal: Student loan                                           administration                   •   Traffic & parking
                                                                                                                                                 management
  multi-channel marketing                   servicing, healthcare claims                                                                     •   management
                                                                                                                                                 DMV customer care
  communications                            processing, electronic                                                                           •   DMV customer care
                                            payment cards, admin                                                                             •   DMV customer care
                                            services, customer care



       Financial Services                     Healthcare Payer                  Gov Healthcare                   Customer Care                     Healthcare Provider
            (~6%)                                  (~6%)                            (~6%)                            (~6%)                               (~4%)
 • F&A: A/P, A/R, close
   process, procurement, cash             • Healthcare payer claim          • Medicaid administrative        • Wireless customer care:           • Consulting solutions
   mgmt., expense                           processing, billing, payment,     & fiscal agent solutions         customer acquisitions,
   reimbursement                            reconciliation,                                                    device support, loyalty           • Revenue cycle
 • Education: student loan                                                  • Pharmacy benefits                plans & collections                 management
   servicing, financial aid,              • Healthcare payer customer         management services
   enrollment mgmt.                         care, Web-based self service                                     • Retail: supply chain              • Analytical care
                                                                            • Children’s health                efficiency, inventory               management &
 • Financial Services: data               • Cost recovery, audit, cost        administration                   management, data                    workflow solutions
   processing services to auto              avoidance                                                          collection
   finance & leasing                                                        • Electronic health records
                                                                                                             • Travel: back office
 • Mortgage: imaging,                                                                                          processing, customer
   processing, administration                                                                                  care, on-line check-in
 • Credit card applications &                                                                                  support
   customer care




18    Above percentages represent
      percent of total Services revenue
                                                                           …focused management
  Services business mix

                                        Financial
                                        Services


                                                    Government
     Operating Profit %




                                                     Solutions


                                                                                                    Healthcare
                             Managed Print                            Transportation                  Payer
                               Services                                  Solutions                                Human
                                                        Healthcare                                               Resource
                                                         Provider                                                Services


                                                        Commercial IT
                                                                                                                            Customer
                                                                                  Government                                  Care
                            Communication                                          Healthcare
                            and Marketing                                           Solutions
                               Services




                                                                     Revenue Growth
 •     Diversity of portfolio protects against cyclicality in the economy and within verticals
 •     Each business has unique business dynamics
 •     Leveraged platforms drive higher margins


19 Note: The graphic above is a relative representation of the Services lines of business in 2011
 Xerox + ACS: A successful first year

     •   Global presence of Xerox
                                              •   Accelerating revenue growth
     •   Power of the Xerox brand
                                              •   Significant synergy signings
     •   Access to Xerox technology
         and innovation                       •   Over $5 billion synergy pipeline
                                              •   $100 million+ cost synergies
                     +                    =   •   Continued increase in Services
     •   Resources of a major player in           margin
         business process and IT              •   World’s leading enterprise for
         outsourcing                              business process and document
     •   Benchmark operational                    management
         excellence
     •   A powerful accelerator to our
         services-led strategy

20
 Services operational excellence
Leveraging consistent business practices and core competencies across all
lines of business

           Core Competencies

           •   Strategic Business Unit focus
           •   Achievement-based compensation
           •   Process engineering skills
           •   World-class technology
           •   Global production model
           •   Proprietary workflow software




21
     Innovation Example: Intelligent sensing
     To enable the next generation of transportation systems management, sensing
     devices will be connected and intelligent




      •   Novel sensing devices to enable applications such as speed detection,
          surveillance, license plate recognition, occupancy detection
      •   Innovative imaging and sensor based analytics that provide state of the
          art information for transportation applications
      •   Integrated systems of sensing devices that communicate with
          transportation infrastructure to support an intelligent transportation
          system

22
Technology Slides
           Printing trends: Well positioned in growth areas
                                                    Consumer                  Office Environment                         Production
                                                                          Desktop            Workgroup                    High-End
                                                          Inkjet          Printers            MFDs                         Devices

                  Market Size                             $25B               $34B                 $42B              $6B ($17B eligible offset)
                  & Growth1                                Flat              Flat            1% (color 4%)              5% (color 12%)


                       Xerox                           Do not           Less than 5%         Technology &                Technology &             Xerox
                      Position                       participate            share            Services leader             Services leader         Impact

                   Decline in
                   low-value
                                                           mobile workforce (smartphones/tablets)                                                 --
                   pages                                                                                                 distribute & view        ---
Industry Trends




                   Growth in
                                                                             content explosion / mobile workforce                                 +
                   high-value                                                       color affordability (price per page decline)                 ++/-
                   pages
                                                                                                                  mass personalization            +

                   Consolidation                                                from desktops to MFDs                                             +/-
                   of devices
                                                                                                 move to services                                 ++

                                                    Overall Xerox markets expected to grow 1 to 3% CAGR

    24            Source: Internal Market Size Analysis
                  12010   – 2014 CAGR
 Technology growth dynamics

 B&W                                  Color                             Revenue                         Equipment         Total
 pages
declining
                          +           pages
                                     growing
                                                             +          per page
                                                                        growing
                                                                                                +        revenue
                                                                                                          growth
                                                                                                                    =   revenue
                                                                                                                         growth



                            Annuity revenue up



     Expect 2011 growth to be weighted towards annuity, factoring in:
     •   Higher annuity growth driven by greater proportion color and growth drivers
     •   Declines in black and white

     •   Lower equipment revenue growth following 2010 recovery




25       Note: Pages include estimates for developing markets, GIS and printers. Revenue is at constant currency.
 Multiple Technology growth strategies
            Color leadership                     Customized digital printing




Innovative, differentiated offerings deliver     Affordable color, workflow and new
       consistent share leadership                applications expand opportunities

        Distribution expansion                        Services & solutions




     Leverage partners and acquisitions to     Lead with services and solutions to deliver
     extend into SMB and growth markets          greater value to customers of all sizes

26
 Color leadership
      Significant
                                   Color market estimated to grow 4% CAGR1, color penetration only 19% of pages
     Opportunity

                                                                                                                        Worldwide 2010 Color
            Broad and Industry Leading Portfolio                                                                      Equipment Revenue % Share
                                                                                                                                                                     24
                                                                                                                                                         20
     High End                 7 devices launched last 24 months                                                                        15
                                                                                                                       8


                                                                                                                    [---------- Competitors ----------]            Xerox
     Mid Range 12 devices launched last 24 months
                                                                                                                              Xerox Color Revenue %2
                                                                                                                                                  41          45
                                                                                                                               35
          Entry              11 devices launched last 24 months


                                                                                                                               2006              2008         2010

      1
       2010 – 2014 CAGR           Source: Internal Market Size Analysis
27    Devices launched last 24 months as of May 2011
      2
       Xerox Color Revenue %: Color revenue % of total revenue excludes revenue from GIS and BPO/ITO where color data is not available or not relevant
 Customized digital printing
        Significant
                                                  Production color market estimated to grow 12% CAGR through 2014
       Opportunity


                                                       White bar = 2009-2013 decline
 Areas of Decline
          Transactional

                 Manuals
                                                                                           Digital Growth Drivers
                                                   Orange bar = 2009-2013 growth
 Areas of Growth
              Direct Mail                                                                Affordable        Data
               Collateral                                                                   Color        Availability
                    Books

     Packaging: Labels
                                                                                         Simplified
                                                                                                             Mass
                   Photo                                                               Workflow & New
                                                                                                        Personalization
        Fulfillment Kits                                                                Applications
             Newsletter

             Business ID


                                         Revenue
28      Source: Caslon & Company/Internal Market Size Analysis
 Expanding distribution to capture SMB opportunity
Significant                         •   SMB comprises approximately 75% of the Office market worldwide
Opportunity                         •   Xerox SMB market share over 10 pts lower than large enterprise market share


 Differentiated acquisition approach
                                                                                     1 Point of
 • Target well-run operations with committed management                             SMB Market     = ~$500M
 • Prefer companies that do not carry Xerox product                                    Share
 • Maintain local branding and sales/service infrastructure



 Leveraging partners to increase reach in SMB                                         Added over 120 partners
 • SMB buying patterns weighted toward dealers and resellers                              last 12 months
 • Xerox an attractive partner – portfolio breadth, services offerings



 Good progress, greater opportunity in front of us                                   Global Imaging U.S. coverage
 • Global Imaging acquired 12 dealerships since 2007                               in less than 50% of target markets
 • Europe expansion accelerating – Ireland, Scotland last 18 months


     Source: Internal Market Size Analysis
29
     Partner and acquisition figures are as of May 2011
 Lead with services and solutions
                                         Xerox Managed Print Services Continuum

                                  Xerox Partners                                   Xerox
                              (Channels and Alliances)                      (Sales and Services)


                                                       Mobile Print Solutions


                                                                                            Xerox
                    Global
                                                                                          Enterprise
                                                                                             Print
                                                                                           Services

                    Large
                                                                        Xerox Print
     Account size




                                                                         Services

                                                    Xerox
                    Medium                       Partner Print
                                                   Services

                                Xerox
                             Partner Print
                    Small       Tools


                                             Break / Fix Service, Warranty and Supplies


                                               Fleet size and level of sophistication
30
 Cloud-based Managed Print Services platform




                                                                              Customer Service Portal
                                                                           Web portal for customers to share
                                                                                 service information




                                  IT Infrastructure – Xerox, Partners and Alliances


     •   Platform exists today and serves all MPS offerings, direct as well as partners
     •   Level of sophistication and scale will drive platform elements
     •   Most sophisticated offerings help clients control all their print and provide for
         ongoing optimization


31
Second-Quarter 2011
Earnings Presentation
Ursula Burns
Chairman & CEO

Luca Maestri
Chief Financial Officer




                          July 22, 2011
Forward-Looking Statements
     This presentation contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of
     1995. 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 management’s current
     beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ
     materially. These factors include but are not limited to: changes in economic conditions, political conditions, trade
     protection measures, licensing requirements, environmental regulations and tax matters in the United States and in
     the foreign countries in which we do business; changes in foreign currency exchange rates; the outcome of litigation
     and regulatory proceedings to which we may be a party; actions of competitors; our ability to expand equipment
     placements and to drive the expanded use of color in printing and copying; development of new products and services;
     interest rates, cost of borrowing and access to credit markets; our ability to protect our intellectual property rights; 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; the risk that unexpected costs will be incurred; reliance on
     third parties for manufacturing of products and provision of services; the risk that we will not realize all of the
     anticipated benefits from the acquisition of Affiliated Computer Services, Inc.; our ability to recover capital
     investments; the risk that subcontractors, software vendors and utility and network providers will not perform in a
     timely, quality manner; the risk that multi-year contracts with governmental entities could be terminated prior to the
     end of the contract term; 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; 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 our Quarterly Report on Form 10-Q for the quarter
     ended March 31, 2011 and our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission.
     The Company assumes no obligation to update any forward-looking statements as a result of new information or
     future events or developments, except as required by law.




33
Continuing to Deliver Shareholder Value

     Priorities
     •   Accelerate services business and capture significant opportunity
     •   Maintain leadership in technology
     •   Drive operational excellence and deliver cost improvements
     •   Expand earnings and return cash to shareholders


     Our Financial Model
     •   Continued revenue and operating margin growth
     •   Solid cash flow that will deliver shareholder value through:
           – Share repurchase
           – Acquisitions and dividends


34
Second-Quarter Overview
Adjusted EPS1 of $0.27 per share, GAAP EPS of $0.22 per share
 •   Compares to Q2 2010 adjusted EPS1 of $0.24, GAAP EPS of $0.16 per share

Q2 revenue up 2% helped by strong Euro
 •   Technology revenue flat
     –     Reflects impact of Japan natural disaster
 •   Services revenue up 6%
     –     BPO revenue grew 9%, Document Outsourcing 10% and ITO (10)%
     –     Good signings in Document Outsourcing; lower BPO and ITO signings

Cost and expense management
 •   Operating margin1 of 10.4%, up 0.3 pts YOY
 •   Gross margin of 33.4% improves over Q1
 •   Continued positive trends in SAG and R&D driven by restructuring and cost synergies

Balance sheet and cash flow performance
 •   Cash from operations of $347M
 •   Continue to expect available cash of $1 billion full year



35   1Adjusted   EPS, operating margin: see non-GAAP measures
Japan Update
Q2 impact as expected
• Demand exceeded availability of certain products and supplies
• Additional logistics costs incurred
• Fuji Xerox equity income slightly better than expected
• Production levels improving


Second half outlook
• Production to recover in Q3
• Backlogs will continue to improve and return to normal levels in Q4
• Fuji Xerox equity income difficult to project due to continuing
  challenges



36
Revenue

                                                                    2011                                               Segment Revenue
                                                                                                                         Contribution
     (in millions)                                                    Q2
     Total Revenue                                                  $5,614
      Growth                                                               2%
      CC Growth                                                          (1)%

     Annuity                                                       $ 4,689
      Growth                                                           2%
      CC Growth                                                          (1)%
     Annuity % of Revenue                                                 84%

     Equipment                                                         $ 925                                               Technology
      Growth                                                             (1)%                                              Services
      CC Growth                                                          (4)%
                                                                                                                           Other




37   Constant currency (CC): see non-GAAP measures
     Annuity revenue represents service, outsourcing and rentals, supplies, paper and other sales and finance income
Metrics
              MIF and Pages Growth - YOY                                                                                                  Color
                                                              Q2 ’11                                                                                           Q2 ’11
             Digital MIF                                              3%                            Revenue                                                    $1.7B
             Color MIF                                              15%                             Revenue Growth                                                6%
                                                                                                    Revenue Growth (CC)                                           1%
             Digital Pages 1                                       (4)%
             Color Pages1                                             8%                            Color % of MIF                                               34%
                                                                                                    Color % of Pages                                             26%

     •       Page metrics increasingly difficult to report as more pages move to services and indirect channels
     •       Install activity and revenue growth are best measures of the business


                                                            Services Signings Metrics (TCV)

                                                                   Q2 ’11                                                                                      Q2 ’11
         Signings                                                   $3.5B                      Signings Growth TTM                                             (10)%

         1
          Digital pages includes estimates for developing markets, GIS and printers. Estimation methodology for developing markets revised to better reflect
         trends in the business. Q1 2011 digital pages were (4)% and color pages were 8% using new methodology.
         MIF excludes printers, developing markets and GIS
38
         Constant currency (CC): see non-GAAP measures
Earnings
 (in millions, except per share data)
                                                                                                            B/(W)
                                                                                Q2 2011                     2010                                            Comments
 Revenue                                                                          $ 5,614                   $106                 Growth driven by Services

 Gross Margin                                                                       33.4%                                        Increased 0.4 pts sequentially

 RD&E                                                                                 $ 175                                      SAG and RD&E improvements driven by
 SAG                                                                              $ 1,119                                        restructuring and synergy savings

     SAG % of Revenue                                                                19.9%
 Adjusted Operating Income2                                                           $583                   $24
     Operating Income % of Revenue                                                   10.4%                 0.3 pts
 Adjusted Other, net1,2                                                                 $ 70
 Equity Income                                                                          $ 34
 Adjusted Tax Rate2                                                                   30%
 Adjusted Net Income – Xerox2                                                         $393                   $51
                                                                                                                                 13% earnings growth driven by operating profit,
 Adjusted EPS2                                                                      $ 0.27                 $ 0.03                equity income and lower interest expense

 Amortization of intangible assets                                                       0.04
 Loss on early extinguishment of liability                                               0.01

 GAAP EPS                                                                           $ 0.22                 $ 0.06                38% growth


      1
          Includes net income attributable to noncontrolling interest of $8M, restructuring credit of $9M and the loss on early extinguishment of liabilities of $33M
39    2
          Adjusted Operating Income, Adjusted Other, net, Adjusted Net Income – Xerox, Adjusted Tax Rate and Adjusted EPS: see non-GAAP measures
 Technology Segment
                                               Q2                     % B/(W) YOY                         Installs1
(in millions)                                 2011                   Act Cur   CC                           Entry
Total Revenue                                $2,552                        Flat   (4)%
                                                                                                                       Q2
Segment Profit                                $300                         10%           A4 Mono MFDs                 (6)%
                                                                                         A4 Color MFDs                (5)%
Segment Margin                               11.8%                    1.1 pts
                                                                                         Color Printers               (5)%

                                                                                                          Mid-Range
  •   Japan impact on revenue and cost offset by
      expense management                                                                                               Q2
  •   Segment margin improvement driven by                                               Mid-Range B&W MFDs            3%
      restructuring and synergy savings                                                  Mid-Range Color MFDs         10%
  •   Strong backlog positions us well for second half
  •   Good iGen and Xerox 800/1000 results                                                                High-End
       –   New 8080 product fills gap in Entry Production
                                                                                                                       Q2
           Color product category
                                                                                         High-End B&W                  2%
  •   Revenue mix: 21% Entry, 58% Mid-Range and
      21% High-End                                                                       High-End Color               (10)%


       Constant currency (CC): see non-GAAP measures
 40    1 Installs include units sold in Technology and Services segments
Services Segment
                                                Q2                  % B/(W) YOY
(in millions)                                  2011                Act Cur    CC                                      Q2 Signings1
Total Revenue                                $2,672                   6%                   4%          Business Process Outsourcing         $1.8B
Segment Profit                                 $322                   1%
                                                                                                       Information Technology               $0.3B
Segment Margin                               12.1%                (0.5) pts                            Outsourcing

                                                                                                       Document Outsourcing                 $1.4B
     •    Continued strong BPO growth of 9% with
                                                                                                       Total                                $3.5B
          contributions from:
             –   HR services, healthcare payer and                                                     Signings Growth TTM                  (10)%
                 transportation

     •    ITO revenue decline of 10% driven by lower                                                   • Total signings up over 15% sequentially
          3rd party hardware and software sales
     •    Strong Document Outsourcing growth of                                                        • YOY BPO signings impacted by less
          10% driven by new signings                                                                     renewal opportunities (TX MMIS in ‘10)
     •    Revenue mix: 55% BPO, 33% Document                                                           • Expect strong BPO signings in Q3
          Outsourcing and 12% ITO



         Constant currency (CC): see non-GAAP measures
41       1Signings: total contract value of new business signings and renewals signed in the quarter
    Balance Sheet
                                      2011 Debt Trend                                                                       Balanced Debt Maturities
                                                                                                                  1,600


                                                                                                                  1,200
         $ billions




                                                                                                     $ millions
                                                                                                                   800


                                                                                                                   400


                                                                                                                       0
                                                                                                                                11        12        13        14        15        16        17        1 8 201 9 02 0
                                                                                                                                                                                                                       +
                                                                                                                           20        20        20        20        20        20        20        20             2
                                 Trust Preferred Securities                                                                      15 yr putable notes1


                                   Financing Dynamics                                                                           Strong Capital Structure
•   Xerox’s value proposition includes leasing of Xerox                                          •   Majority of debt supports financing business
    equipment
                                                                                                 •   Refinanced $650M Trust Preferred Securities in Q2
•   Maintain 7:1 leverage ratio of debt to equity on
    these finance assets                                                                         •   Successful $1B note offering in May
                                                              Q2 2011                            •   Debt forecast of $8.6B by year-end includes
          (in billions)                           Fin. Assets               Debt                     payment of $750M in senior notes, maturing in
          Financing                                    $7.2                 $ 6.3                    Aug 2011
          Core                                            -                 $ 3.0                •   Resuming share repurchase in Q3
          Total Xerox                                 $ 7.2                 $ 9.3                                  •       ~$700M second half

    42                1
                      2011 assumes $292M under private placements is put (final maturity 2023)
    Cash Flow
(in millions)                                                                          Q2 2011
Net Income                                                                                $ 327                     2011 Operating Cash Flow and
Depreciation and amortization                                                               298                            Available Cash
Restructuring and asset impairment charges                                                   (9)
Restructuring payments                                                                      (63)                                        Previous        New
Contributions to pension benefit plans                                                      (79)            (in billions)               Guidance      Guidance
Inventories                                                                                 (37)
                                                                                                            Operating Cash Flow            $2.5       $2.0 - $2.3
Accounts receivable and Billed portion of finance
                                                                                                  80
receivables*                                                                                                CAPEX                         $(0.6)        $(0.5)
Accounts payable and Accrued compensation                                                   (145)
                                                                                                            Free Cash Flow1                $1.9       $1.5 - $1.8
Equipment on operating leases                                                                (68)
Finance Receivables                                                                            65
                                                                                                            Debt Payment                  $(0.6)        $(0.6)
Other                                                                                        (22)
Cash from Operations                                                                       $ 347            Dividends                     $(0.3)        $(0.3)
CAPEX (incl. internal use software)                                                         (135)           Change in YE Cash Balance        -           $0.3
Acquisitions                                                                                 (94)
                                                                                                            Available Cash              $1.0 - $1.2     ~$1.0
Other                                                                                          14
Cash from Investing                                                                       $ (215)
Net Debt proceeds                                                                             690
Payments of liability to subsidiary trust                                                   (670)
Other                                                                                        (59)
Cash from Financing                                                                        $ (39)
Change in Cash and Cash Equivalents                                                            98
Ending Cash and Cash Equivalents                                                          $1,098

                1Free   Cash Flow: see non-GAAP measures
   43
                *Accounts Receivables includes collections of deferred proceeds from sales of receivables
Summary
Competitively advantaged with services-led, technology-driven growth strategy
     •      Services growth continues; driven by BPO and DO
     •      Technology to rebound in Q3 from Japan impact
     •      Significant Services pipeline


Restructuring and synergy savings drive margin improvement
     •      Operating margin of 10.4% above Q1 and prior year


Capital strategy contributes to profit; resuming share repurchase
     •      Lower debt balances resulting in lower interest expense
     •      Expect to repurchase 60 to 70M (~$700M) of shares in second half


Increasing 2011 EPS guidance*
     •      Q3 Adjusted EPS $0.24 - $0.26, GAAP EPS $0.20 - $0.22
     •      Full-year Adjusted EPS $1.07 - $1.12, GAAP EPS $0.91 - $0.96

44   *Guidance - Adjusted EPS: see non-GAAP measures
Appendix
   Restructuring and Synergy Update
                    Restructuring                                            Key Messages
Q2 2011 Pre-tax Savings                       ~ $65M   – Improves cost base productivity by optimizing infrastructure
                                                         in services and centralizing support functions

2011 Pre-tax Savings                         ~$270M    – Improves go to market by accelerating shifts in our business
                                                         model to more indirect channels in certain geographies
                                                       – Accelerates achievement of cost synergies
                                                       – Leverages digital product reliability and system
                                                         improvements
                                                       – Responds to adverse currency impact to cost
                                                       – Enables investments in the business


                         Synergy

   Q2 2011 Pre-tax Profit                   >$30M      – Well on track to meet Year 3 targets - cost and revenue
                                                       – Delivery and infrastructure drive 2011 savings
   2011 Pre-tax Profit                    >$120M
                                                       – Revenue synergies ramp but minimal contribution to profit
    Above are YOY increases in profit as a result of
    synergies and are net of investments to achieve
    synergies




  46
Revenue

                   2009                                                                   2010                                                                        2011
                                                  Pro -                    Pro -                    Pro -                  Pro -                    Pro -               Pro -
(in millions)            FY               Q11                      Q2                       Q3                      Q4                    FY                    Q1                  Q2
                                                 forma                    forma                    forma                  forma                    forma               forma


Total Revenue       $ 15,179          $ 4,721                 $ 5,508                 $ 5,428                  $ 5,976              $ 21,633                $ 5,465             $ 5,614

Growth                 (14%)              33%        5%           48%         2%          48%          2%         42%         2%          43%          3%      16%        2%        2%

CC Growth              (11%)              30%        2%           49%         3%          50%          4%         43%         3%          43%          3%      15%        2%      (1)%




Annuity             $ 11,629          $ 3,899                 $ 4,578                 $ 4,521                  $ 4,778              $ 17,776                $ 4,639             $ 4,689

Growth                 (10%)              40%        4%           58%        Flat         57%         Flat        56%         1%          53%          1%      19%        3%        2%


CC Growth                (7%)             37%        2%           59%         1%          59%          2%         57%         3%          53%          2%      19%        2%      (1)%


Annuity %                77%              83%                     83%                     83%                      80%                    82%                  83%                 84%
Revenue


Equipment            $ 3,550            $ 822                   $ 930                   $ 907                  $ 1,198                $ 3,857                $ 826               $ 925

Growth                 (24%)               7%        7%           12%        12%          13%        13%            4%        4%           9%          9%      Flat      Flat     (1)%

CC Growth              (23%)               4%        4%           14%        14%          15%        15%            6%        6%          10%        10%       Flat      Flat     (4)%




  47        Constant currency and pro-forma: see non-GAAP measures
            1
              Q1 2010 results include only a partial quarter of ACS results, from the ACS acquisition date of February 5, 2010 to March 31, 2010
Non-GAAP Measures
   Non-GAAP financial measures
“Adjusted Earnings Measures”: To better understand the trends in our business and the impact of the ACS acquisition, 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. Note: In 2011, adjustments are expected to be limited to the amortization of intangible assets and other
discrete items:
     • Net income and Earnings per share (“EPS”)
     • Operating income and margin
The above have been adjusted for the following items:
•Restructuring and asset impairment charges (including those incurred by Fuji Xerox) (2010 only): Restructuring and asset impairment
charges consist of costs primarily related to severance and benefits for employees terminated pursuant to formal restructuring and
workforce reduction plans. We exclude these charges because we believe that these historical costs do not reflect expected future operating
expenses and do not contribute to a meaningful evaluation of our current or past operating performance. In addition, such charges are
inconsistent in amount and frequency. Such charges are expected to yield future benefits and savings with respect to our operational
performance.
•Acquisition related costs (2010 only): We incurred significant expenses in connection with our acquisition of ACS which we generally would
not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related costs include transaction
and integration costs, which represent external incremental costs directly related to completing the acquisition and the integration of ACS
and Xerox. We believe it is useful for investors to understand the effects of these costs on our total operating expenses.
•Amortization of intangible assets: 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 have also excluded the following additional items given the
discrete, unusual or infrequent nature of these items on our results of operations for the period – 1) Loss on early extinguishment of liability
(2011); 2) Loss on early extinguishment of debt (2010); 3) ACS shareholder litigation settlement (2010); 4) Venezuela devaluation costs
(2010); and 5) Medicare subsidy tax law change (income tax effect only) (2010). We believe exclusion of these items allows investors to
better understand and analyze the results for the period as compared to prior periods as well as expected trends in our business.




  49
  Non-GAAP financial measures
“Constant Currency”: To better understand trends in our business, we believe that it is helpful to adjust revenue to exclude the impact of changes in
the translation of foreign currencies into U.S. dollars. We refer to this adjusted revenue as “constant currency.” Currencies for developing market
countries (Latin America, Brazil, Middle East, India, Eurasia and Central-Eastern Europe) that we operate in are reported at actual exchange rates for
both actual and constant revenue growth rates because (1) these countries historically have had volatile currency and inflationary environments and (2)
our subsidiaries in these countries have historically taken pricing actions to mitigate the impact of inflation and devaluation. Management believes the
constant currency measure provides investors an additional perspective on revenue trends. Currency impact can be determined as the difference
between actual growth rates and constant currency growth rates.

“ Free Cash Flow”: To better understand the trends in our business, we believe that it is helpful to adjust Cash Flows from Operations to subtract
amounts for capital expenditures including internal use software. Management believes this measure gives investors an additional perspective on cash
flow from operating activities in excess of amounts required for reinvestment in long-lived assets. It provides a measure of our ability to fund
acquisitions, dividends and share repurchase. It also is used to measure our yield on market capitalization.

“Pro-Forma Basis”: To better understand the trends in our business, we discuss our 2010 and 2011 operating results by comparing them against
adjusted 2009 and 2010 results which include ACS historical results for the comparable period. We refer to comparisons against these adjusted results
as “pro-forma” basis comparisons. ACS historical results have been adjusted to reflect fair value adjustments related to property, equipment and
computer software as well as customer contract costs. In addition, adjustments were made for deferred revenue, exited businesses and other material
non-recurring costs associated with the acquisition. We believe comparisons on a pro-forma basis are more meaningful than the actual comparisons
given the size and nature of the ACS acquisition. We believe the pro-forma basis comparisons allow investors to have a better understanding and
additional perspective of the expected trends in our business as well as the impact of the ACS acquisition on the Company’s operations.

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.

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 slides.

Note: The non-GAAP reconciliation information for guidance is not available at this time.


50
     2010 GAAP EPS to Adjusted EPS track

                                                              Year Ended
                                                          December 31, 2010
              Reported                                    $            0.43

              Adjustments:
              Xerox and Fuji Xerox restructuring charge                0.26
              ACS Acquisition-related costs                            0.04
              Amortization of intangible assets                        0.14
              ACS shareholders litigation settlement                   0.03
              Venezuela devaluation costs                              0.02
              Medicare subsidy tax law change                          0.01
              Loss on early extinguishment of debt                     0.01
                                                                       0.51

              Adjusted                                    $            0.94




51
 GAAP EPS to Adjusted EPS Guidance Track

                                                      Earnings Per Share
                                                 Q3 2011              FY 2011


     GAAP EPS                                     $0.20 - $0.22        $0.91 - $0.96

     Adjustments:
     Amortization of intangible assets                     0.04                 0.15
     Loss on early extinguishment of liability                -                 0.01
                                                           0.04                 0.16
     Adjusted EPS                                 $0.24 - $0.26        $1.07 -$1.12




52
Q2 GAAP EPS to Adjusted EPS Track
                                                                   Three Months Ended                Three Months Ended
                                                                                    (1)
                                                                     June 30, 2011                      June 30, 2010
         (in millions; except per share amounts)              Net Income         EPS             Net Income         EPS
         Reported                                              $     319       $   0.22           $     227       $   0.16

         Adjustments:
         Amortization of intangible assets                              54                0.04               53         0.04
         Loss on early extinguishment of liability                      20                0.01           -               -
         Xerox and Fuji Xerox restructuring charges                                                       12            0.01
         ACS acquisition-related costs                                                                    14            0.01
         ACS shareholder's litigation settlement                                                          36            0.02
                                                                        74                0.05           115            0.08
         Adjusted                                              $       393     $          0.27   $       342      $     0.24

         Weighted average shares for adjusted EPS                                     1,465                             1,446
         __________
         (1) For 2011, we are only adjusting for Amortization of intangible assets and the Loss on extinguishment of liability.



     Average shares for the calculation of adjusted EPS for the second quarter 2011 were 1,465 million and include 27 million shares
     associated with the Series A convertible preferred stock and therefore the quarterly dividend of $6 million is excluded. Second
     quarter 2010 shares of 1,446 million also include the 27 million shares associated with the Series A convertible preferred stock and
     therefore the quarterly dividend of $6 million is excluded. We evaluate the dilutive effect of the Series A convertible stock on an
     “if converted” basis.




53
 Q2 Adjusted Operating Income/Margin


                                                 Three Months Ended                       Three Months Ended
                                                    June 30, 2011                            June 30, 2010
(in millions)                           Profit        Revenue         Margin     Profit       Revenue          Margin
Reported pre-tax income               $    401        $ 5,614           7.1%   $    320       $ 5,508            5.8%
Adjustments:
Xerox restructuring (credit) charge        (9)                                      11
ACS acquisition-related costs               -                                       15
Amortization of intangible assets          87                                       85
Other expenses, net                       104                                      128
  Adjusted Operating                  $   583         $ 5,614          10.4%   $   559        $ 5,508           10.1%




54
     Q2 Adjusted Other, net


                                                             Three Months Ended
       (in millions)                                            June 30, 2011
       Other expenses, net - Reported                        $              104

       Adjustments:
       Xerox restructuring credit                                           (9)
       Loss on early extinguishment of liability                           (33)
       Net income attributable to noncontrolling interests                   8
       Other expenses, net - Adjusted                        $              70




55
 Q2 Adjusted Effective Tax Rate

                                                      Three Months Ended                         Three Months Ended
                                                         June 30, 2011(1)                           June 30, 2010
                                                            Income                                     Income
                                                 Pre-Tax      Tax       Effective           Pre-Tax      Tax      Effective
 (in millions)                                   Income     Expense Tax Rate                Income     Expense Tax Rate

 Reported                                        $    401      $   108          26.9%       $    320     $    112         35.0%

 Adjustments:
 Amortization of intangible assets                     87            33                           85           32
 Loss on early extinguishment of liability             33            13                            -            -
 Xerox restructuring charge                                                                       11            4
 ACS acquisition-related costs                                                                    15            1
 ACS shareholders' litigation settlement                                                          36            -
 Adjusted                                        $    521      $   154          29.6%       $    467     $    149         31.9%

 _______________
 (1) For 2011, we are only adjusting for Amortization of intangible assets and the Loss on early extinguishment of liability.




56
 Q2 Services Revenue Breakdown

     Services Segment:                            Three Months Ended June 30,

     (in millions)                                    2011              2010 (1)    Change

     Document Outsourcing                         $         886     $         808    10%
     Business Processing Outsourcing                      1,494             1,369     9%
     Information Technology Outsourcing                     316               352   (10%)
     Less: Intra-Segment Eliminations                       (24)              -        *
     Total Revenue - Services                     $       2,672     $       2,529     6%



     *Percent change not meaningful.

     NOTES:
     (1) BPO was adjusted to include historic Xerox BPO services.




57
     2011 Cash Flow Guidance


       (in millions)                                        Full Year 2011
       Cash from Operations - Reported                         $2,000 - $2,300

       Adjustment:
       Cost of additions to land, buildings and equipment
       and Cost of additions to internal use software                    (500)

       Free Cash Flow                                          $1,500 - $1,800




58
2010 Adjusted Operating Income / Margin


                                                          Year Ended
                                                       December 31, 2010
     (in millions)                            Amount       Revenue         Margin
     Pre-tax Income/Margin - Reported     $       815     $   21,633          3.8%


     Adjustments:
     Xerox restructuring charge                   483
     Acquisition-related costs                     77
     Amortization of intangible assets            312
     Other expenses, net                          389

     Operating Income/Margin - Adjusted   $      2,076    $   21,633           9.6%




59
2010 pro-forma revenue reconciliation

     Total Xerox:                                                     Year Ended December 31,

                                               As Reported    As Reported     Pro-forma                    Pro-forma
                                                                                        (1)
     (in millions)                                2010           2009            2009         Change        Change

     Revenue Category
         Equipment sales                       $    3,857     $    3,550     $     3,550        9%             9%
         Supplies, paper and other                  3,377          3,096           3,234        9%             4%
     Sales                                          7,234          6,646           6,784        9%             7%
     Service, outsourcing and rentals              13,739          7,820          13,585       76%             1%
     Finance income                                   660            713             713       (7%)           (7%)
     Total Revenues                            $   21,633     $   15,179     $    21,082        43%            3%



     NOTES:
     (1) Pro-forma reflects ACS's 2009 estimated results from February 6th through December 31st in 2009 adjusted to
         reflect fair value adjustments related to property, equipment and computer software as well as customer
         contract costs. In addition, adjustments were made for deferred revenue, exited businesses and other
         material non-recurring costs associated with the acquisition.




60

								
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