Xerox 10-Q 3 Aug 09 2009 Q2 Quarterly report Financial data

100 - CONDENSED CONSOLIDATED ST

100 - CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Revenues
Sales	$1,602	$2,119	$3,096	$4,132
Service, outsourcing and rentals	1,951	2,207	3,831	4,320
Finance income	178	207	358	416
Total Revenues	3,731	4,533	7,285	8,868
Costs and Expenses
Cost of sales	1,065	1,400	2,069	2,719
Costs of service, outsourcing and rentals	1,100	1,275	2,200	2,506
Equipment financing interest	68	79	137	159
Research, development and engineering expenses	202	223	406	444
Selling, administrative and general expenses	1,013	1,170	2,017	2,294
Restructuring and asset impairment charges	(1)	63	(3)	66
Other expenses, net	87	69	184	935
Total Costs and Expenses	3,534	4,279	7,010	9,123
Income (Loss) before Income Taxes and Equity Income	197	254	275	(255)
Income tax expense (benefit)	59	59	78	(187)
Equity in net income (loss) of unconsolidated affiliates	9	29	(1)	57
Net Income (Loss)	147	224	196	(11)
Less: Net income attributable to noncontrolling interests	7	9	14	18
Net Income (Loss) Attributable to Xerox	$140	$215	$182	($29)
Basic Earnings (Loss) per Share	0.16	0.24	0.21	-0.03
Diluted Earnings (Loss) per Share	0.16	0.24	0.21	-0.03

200 - CONDENSED CONSOLIDATED BA

200 - CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
In Millions, except Share data	Jun. 30, 2009	Dec. 31, 2008
Assets
Cash and cash equivalents	$1,221	$1,229
Accounts receivable, net	1,872	2,184
Billed portion of finance receivables, net	243	254
Finance receivables, net	2,385	2,461
Inventories	1,141	1,232
Other current assets	776	790
Total current assets	7,638	8,150
Finance receivables due after one year, net	4,413	4,563
Equipment on operating leases, net	566	594
Land, buildings and equipment, net	1,373	1,419
Investments in affiliates, at equity	979	1,080
Intangible assets, net	621	610
Goodwill	3,445	3,182
Deferred tax assets, long-term	1,797	1,692
Other long-term assets	1,224	1,157
Total Assets	22,056	22,447
Liabilities and Equity
Short-term debt and current portion of long-term debt	1,342	1,610
Accounts payable	1,214	1,446
Accrued compensation and benefits costs	563	625
Other current liabilities	1,498	1,769
Total current liabilities	4,617	5,450
Long-term debt	6,695	6,774
Liability to subsidiary trust issuing preferred securities	648	648
Pension and other benefit liabilities	1,851	1,747
Post-retirement medical benefits	876	896
Other long-term liabilities	612	574
Total Liabilities	15,299	16,089
Common stock	870	866
Additional paid-in-capital	2,440	2,447
Retained earnings	5,448	5,341
Accumulated other comprehensive loss	(2,129)	(2,416)
Xerox Shareholders' Equity	6,629	6,238
Noncontrolling interests	128	120
Total equity	6,757	6,358
Total Liabilities and Equity	$22,056	$22,447
Shares of common stock, issued	869,081	864,777
Shares of common stock, outstanding	869,081	864,777

300 - CONDENSED CONSOLIDATED ST

300 - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
In Millions	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Cash Flows from Operating Activities:
Net Income (Loss)	$147	$224	$196	($11)
Adjustments required to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization	168	178	337	323
Provision for receivables	78	35	146	65
Provision for inventory	13	24	29	43
Net gain on sales of businesses and assets	(7)	(15)	(9)	(22)
Undistributed equity in net (income) loss of unconsolidated affiliates	(4)	(2)	6	(29)
Stock-based compensation	14	20	31	40
Provision for litigation, net	0	0	0	795
Payments for securities litigation, net	0	0	(28)	0
Restructuring and asset impairment charges	(1)	63	(3)	66
Payments for restructurings	(78)	(22)	(165)	(59)
Contributions to pension benefit plans	(31)	(31)	(59)	(66)
Decrease (increase) in accounts receivable and billed portion of finance receivables	138	(40)	305	(68)
Decrease (increase) in inventories	187	(36)	82	(165)
Increase in equipment on operating leases	(64)	(84)	(127)	(161)
Decrease in finance receivables	118	96	231	220
Decrease (increase) in other current and long-term assets	27	28	44	(6)
(Decrease) increase in accounts payable and accrued compensation	(105)	40	(273)	(143)
Decrease in other current and long-term liabilities	(35)	(24)	(138)	(47)
Net change in income tax assets and liabilities	32	13	34	(287)
Net change in derivative assets and liabilities	(28)	(13)	(68)	10
Other operating, net	40	(12)	60	(4)
Net cash provided by operating activities	609	442	631	494
Cash Flows from Investing Activities:
Cost of additions to land, buildings and equipment	(11)	(55)	(48)	(99)
Proceeds from sales of land, buildings and equipment	6	27	9	36
Cost of additions to internal use software	(28)	(33)	(56)	(60)
Acquisitions, net of cash acquired	0	(138)	(145)	(142)
Net change in escrow and other restricted investments	(3)	(138)	(3)	(137)
Other investing, net	0	52	0	52
Net cash used in investing activities	(36)	(285)	(243)	(350)
Cash Flows from Financing Activities:
Net debt payments on secured financings	(15)	(59)	(40)	(147)
Net proceeds (payments) on other debt	151	325	(266)	571
Common stock dividends	(38)	(39)	(75)	(79)
Payments to acquire treasury stock, including fees	0	(377)	0	(712)
Repurchases related to stock-based compensation	(11)	(1)	(11)	(33)
Other financing, net	(5)	(3)	(8)	(4)
Net cash provided by (used in) financing activities	82	(154)	(400)	(404)
Effect of exchange rate changes on cash and cash equivalents	17	(2)	4	4
Increase (decrease) in cash and cash equivalents	672	1	(8)	(256)
Cash and cash equivalents at beginning of period	549	842	1,229	1,099
Cash and cash equivalents at end of period	$1,221	$843	$1,221	$843

600 - Basis of Presentation

600 - Basis of Presentation
	6 Months Ended Jun. 30, 2009 USD / shares
Basis of Presentation
Basis of Presentation	Note 1 Basis of Presentation References herein to we, us, our, the Company and Xerox refer to Xerox Corporation and its consolidated subsidiaries unless the context specifically requires otherwise. We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with the accounting policies described in our 2008 Annual Report to Shareholders, which is incorporated by reference in our 2008 Annual Report on Form 10-K (2008 Annual Report), and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. You should read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements included in our 2008 Annual Report. In our opinion, all adjustments which are necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented have been made. Interim results of operations are not necessarily indicative of the results of the full year. For convenience and ease of reference, we refer to the financial statement caption Income (Loss) before Income Taxes and Equity Income as pre-tax income (loss). On January1, 2009, we adopted SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No.51, which changed the presentation requirements for noncontrolling (minority) interests. Refer to Note 2 Recent Accounting Pronouncements Business Combinations and Noncontrolling Interests for more information.

601 - Recent Accounting Pronou

601 - Recent Accounting Pronouncements
	6 Months Ended Jun. 30, 2009 USD / shares
Recent Accounting Pronouncements
Recent Accounting Pronouncements	Note 2 Recent Accounting Pronouncements Fair Value Accounting In 2006, the FASB issued SFAS No.157, Fair Value Measurements (FAS 157). FAS 157 defines fair value, establishes a market-based framework or hierarchy for measuring fair value and expands disclosures about fair value measurements. FAS 157 is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value. FAS 157 does not expand or require any new fair value measures, however the application of this statement may change current practice. We adopted FAS 157 for financial assets and liabilities effective January1, 2008 and for non financial assets and liabilities effective January1, 2009. The adoption of FAS 157, which primarily affected the valuation of our derivative contracts, did not have a material effect on our financial condition or results of operations. In April 2009, the FASB issued three FASB Staff Positions (FSPs) in order to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This FSP relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. FSP FAS 115-2 and FAS 124-2 Recognition and Presentation of Other-Than-Temporary Impairments. This FSP applies to investments in debt securities for which other-than-temporary impairments may be recorded. If an entitys management asserts that it does not have the intent to sell a debt security and it is more likely than not that it will not have to sell the security before recovery of its cost basis, then an entity may separate other-than-temporary impairments into two components: 1) the amount related to credit losses (recorded in earnings) and 2) all other amounts (recorded in Other comprehensive income). FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP requires fair value disclosures for financial instruments that are not currently reflected on the balance sheet at fair value on a quarterly basis. We elected to early adopt these FSPs effective March31, 2009. The adoption of these FSPs did not have a material effect on our financial condition or results of operations. Business Combinations and Noncontrolling Interests In 2007, the FASB issued SFAS No.141 (revised 2007), Business Combinations (FAS 141(R)). FAS 141(R) requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition); establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the ac

602 - Segment Reporting

602 - Segment Reporting
	6 Months Ended Jun. 30, 2009 USD / shares
Segment Reporting
Segment Reporting	Note 3 Segment Reporting Our reportable segments are consistent with how we manage the business and view the markets we serve. Our reportable segments are Production, Office and Other. The Production and Office segments are centered around strategic product groups which share common technology, manufacturing and product platforms, as well as classes of customers. The Production segment includes black-and-white products which operate at speeds over 90 pages per minute (ppm) excluding 95 ppm with an embedded controller and color products which operate at speeds over 40 ppm excluding 50, 60 and 70 ppm products with an embedded controller. Products include the Xerox iGen3 and iGen4 digital color production press, Xerox Nuvera, DocuTech, DocuPrint and DocuColor families, as well as older technology light-lens products. These products are sold predominantly through direct sales channels to Fortune 1000, graphic arts, government, education and other public sector customers. The Office segment includes black-and-white products which operate at speeds up to 90 ppm as well as 95 ppm with an embedded controller and color products up to 40 ppm as well as 50, 60 and 70 ppm products with an embedded controller. Products include the suite of CopyCentre, WorkCentre, WorkCentre Pro Phaser and ColorQube digital multifunction systems, DocuColor color multifunction products, color laser, solid ink color printers and multifunction devices, monochrome laser desktop printers, digital and light-lens copiers and facsimile products and non-Xerox branded products with similar specifications. These products are sold through direct and indirect sales channels to global, national and mid-size commercial customers as well as government, education and other public sector customers. The segment classified as Other includes several units, none of which met the thresholds for separate segment reporting. This group primarily includes Xerox Supplies Business Group (predominantly paper sales), Value-Added Services, Wide Format Systems, Xerox Technology Enterprises, royalty and licensing revenues, GIS network integration solutions and electronic presentation systems, equity net income and non-allocated Corporate items. Other segment profit (loss) includes the operating results from these entities, other less significant businesses, our equity in net income (loss) from Fuji Xerox and certain costs which have not been allocated to the Production and Office segments, including non-financing interest as well as other items included in Other expenses, net. Operating segment revenues and profitability for the three months ended June30, 2009 and 2008 were as follows: Production Office Other Total 2009 Segment revenues $ 1,095 $ 2,126 $ 510 $ 3,731 Segment profit (loss) $ 51 $ 229 $ (66 ) $ 214 2008 Segment revenues $ 1,337 $ 2,526 $ 670 $ 4,533 Segment prof

603 - Acquisition

603 - Acquisition
	6 Months Ended Jun. 30, 2009 USD / shares
Acquisitions
Acquisition	Note 4 Acquisition In February 2009, Global Imaging Systems, Inc. (GIS) acquired ComDoc, Inc. (ComDoc) for approximately $145 in cash. ComDoc is one of the larger independent dealers in the U.S. and expands GISs coverage in Ohio, Pennsylvania, New York and West Virginia. This acquisition continues GISs expansion of a national network of office technology suppliers to serve its growing base of small and mid-size businesses. The operating results of ComDoc are not material to our financial statements and are included within our Office segment from the date of acquisition. The purchase price was primarily allocated to intangible assets and goodwill based on third-party valuations and managements estimates.

604 - Inventories

604 - Inventories
	6 Months Ended Jun. 30, 2009 USD / shares
Inventories
Inventories	Note 5 Inventories The following is a summary of Inventories by major category: June30, 2009 December31, 2008 Finished goods $ 972 $ 1,044 Work-in-process 66 80 Raw materials 103 108 Total Inventories $ 1,141 $ 1,232

605 - Investment in Fuji Xerox

605 - Investment in Fuji Xerox and Other Unconsolidated Affiliates
	6 Months Ended Jun. 30, 2009 USD / shares
Investment in Fuji Xerox and Other Unconsolidated Affiliates
Investment in Fuji Xerox and Other Unconsolidated Affiliates	Note 6 Investment in Fuji Xerox and Other Unconsolidated Affiliates Our equity in net income (loss) of our unconsolidated affiliates was as follows: ThreeMonths EndedJune30, SixMonths EndedJune30, 2009 2008 2009 2008 Fuji Xerox $ 5 $ 26 $ (7 ) $ 52 Other investments 4 3 6 5 Total $ 9 $ 29 $ (1 ) $ 57 Condensed financial data of Fuji Xerox was as follows: Three Months Ended June30, Six Months Ended June30, 2009 2008 2009 2008 Summary of Operations Revenues $ 2,252 $ 2,671 $ 4,922 $ 5,704 Costs and expenses 2,205 2,451 4,968 5,273 Income (loss) before income taxes 47 220 (46 ) 431 Income taxes 26 83 (26 ) 166 Noncontrolling interests 2 4 Net Income (Loss) Attributable to Fuji Xerox $ 21 $ 135 $ (20 ) $ 261 Equity in net income (loss) 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. Equity income (loss) for the six months ended June30, 2009 and 2008 includes after-tax restructuring charges of $31 and $13, respectively, primarily reflecting Fuji Xeroxs continued cost-reduction initiatives.

606 - Restructuring Programs

606 - Restructuring Programs
	6 Months Ended Jun. 30, 2009 USD / shares
Restructuring Programs
Restructuring Programs	Note 7 Restructuring Programs Information related to restructuring program activity during the six months ended June30, 2009 is outlined below. Severanceand RelatedCosts LeaseCancellation and Other Costs Total Balance December31, 2008 $ 320 $ 32 $ 352 Restructuring provision 21 5 26 Reversals of prior accruals (28 ) (1 ) (29 ) Net current period charges(1) (7 ) 4 (3 ) Charges against reserve and currency (158 ) (8 ) (166 ) Balance June30, 2009 $ 155 $ 28 $ 183 (1) Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown. Reconciliation to the Condensed Consolidated Statements of Cash Flows: ThreeMonths EndedJune30, Six Months EndedJune30, 2009 2008 2009 2008 Charges to reserve, all programs $ (69 ) $ (21 ) $ (166 ) $ (56 ) Effects of foreign currency and other non-cash (9 ) (1 ) 1 (3 ) Payments for Restructurings $ (78 ) $ (22 ) $ (165 ) $ (59 ) The following table summarizes the total amount of costs incurred in connection with these restructuring programs by segment: ThreeMonths EndedJune30, Six Months EndedJune30, 2009 2008 2009 2008 Production $ (1 ) $ 28 $ (2 ) $ 29 Office (1 ) 27 (2 ) 29 Other 1 8 1 8 Total Net Charges $ (1 ) $ 63 $ (3 ) $ 66

607 - Debt

607 - Debt
	6 Months Ended Jun. 30, 2009 USD / shares
Debt
Debt	Note 8 Debt In May 2009, we issued $750 of 8.25% senior notes due 2014 (the 2014 Senior Notes) at 99.982 percent of par resulting in net proceeds of approximately $745. The 2014 Senior Notes accrue interest at the rate of 8.25%per annum, payable semi-annually and, as a result of the discount, have a weighted average effective interest rate of 8.25%. Debt issuance costs of approximately $5 were deferred. The 2014 Senior Notes rank equally with our other existing senior unsecured indebtedness. Proceeds from the offering were used to repay borrowings under the Credit Facility and for general corporate purposes. In April 2009, we amended our $2 billion Credit Facility with affiliates of Citibank, N.A. and JPMorgan Chase Bank, N.A., as joint lead arrangers and joint bookrunners, and a group of lenders. The amendment increased the permitted leverage ratio (principal debt/consolidated EBITDA) to 4.25x through June30, 2010. The permitted leverage ratio after June30, 2010 then resets to 3.75x until maturity. The amendment included a re-pricing of the Credit Facility such that borrowings will bear interest at LIBOR plus a spread (including fees) that varies between 2.50% and 4.50%, subject to our credit rating at the time of borrowing. Based on our current credit rating, the applicable all in spread would be 3.50%.

608 - Interest Expense and Inco

608 - Interest Expense and Income
	6 Months Ended Jun. 30, 2009 USD / shares
Interest Expense and Income
Interest Expense and Income	Note 9 Interest Expense and Income Interest expense and interest income were as follows: Three Months EndedJune30, Six Months EndedJune30, 2009 2008 2009 2008 Interest expense(1) $ 131 $ 144 $ 261 $ 278 Interest income(2) 184 216 369 437 (1) Includes Equipment financing interest expense, as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income. (2) Includes Finance income, as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

609 - Financial Instruments

609 - Financial Instruments
	6 Months Ended Jun. 30, 2009 USD / shares
Financial Instruments
Derivative Instruments and Hedging Activities	Note 10 Financial Instruments (1) 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. Fair Value Hedges For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings. As of June30, 2009 and December31, 2008, pay variable/receive fixed interest rate swaps with notional amounts of $1,150 and $675 and net (liability) asset fair values of $(3) and $53, respectively, 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 2009 or 2008. The following is a summary of our fair value hedges at June30, 2009: Debt Instrument and Maturity Year Designated As Hedge Notional Amount Net Fair Value Weighted Average Interest RatePaid Interest Rate Received Basis Senior Notes due 2012 2009 $ 250 $ (2 ) 4.13 % 5.50 % Libor Senior Notes due 2013 2009 400 (4 ) 3.80 % 5.65 % Libor Senior Notes due 2014 2009 500 3 5.42 % 8.25 % Libor Total $ 1,150 $ (3 ) Cash Flow Hedges We have a pay fixed/receive variable interest rate swap with a notional amount of $150 and a net liability fair value of $2 at June30, 2009 and December31, 2008, that was designated and accounted for as a cash flow hedge. This swap was structured to hedge the LIBOR interest rate of the floating Senior Notes due 2009 by converting it from a variable rate instrument to a fixed rate instrument. No ineffective portion was recorded to earnings for the six months ended June30, 2009, and all components of the derivative gain or loss was included in the assessment of hedged effectiveness. Terminated Swaps There were no swaps terminated during the three months ended June30, 2009, which were designated as fair value hedges. During the three months ended March31, 2009, interest rate swaps which had been designated as fair value hedges of certain debt instruments were terminated. These terminated interest rate swaps had an aggregate notional value of $675. The associated net fair value adjustment of $(34) to the debt instruments is being amortized as an offset to interest expense over the remaining term of the related notes. (2) Foreign Exchange Risk Management We use certain derivative instruments to manage the exposures associated with the foreign currency exchange risks discussed below. Foreign Currency Denominated Assets and Liabilities We generally uti
Fair Value of Other Assets & Liabilities Not Measured at Fair Value on a Recurring Basis	Summary of Other Assets Liabilities Not Measured at Fair Value on a Recurring Basis The estimated fair values of our other financial assets and liabilities not measured at fair value on a recurring basis were as follows: June30, 2009 December31, 2008 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 1,221 $ 1,221 $ 1,229 $ 1,229 Accounts receivable, net 1,872 1,872 2,184 2,184 Short-term debt 1,342 1,363 1,610 1,593 Long-term debt 6,695 6,546 6,774 5,918 Liability to subsidiary trust issuing preferred securities 648 506 648 555 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, as well as our Liability to subsidiary trust issuing preferred securities, was estimated based on quoted market prices for publicly traded securities or on the current rates offered to us for debt of similar maturities. 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.

610 - Employee Benefit Plans

610 - Employee Benefit Plans
	6 Months Ended Jun. 30, 2009 USD / shares
Employee Benefit Plans
Employee Benefit Plans	Note 11Employee Benefit Plans The components of Net periodic benefit cost and other amounts recognized in Other comprehensive income were as follows: Three Months Ended June30, Six Months Ended June30, Pension Benefits Retiree Health Pension Benefits Retiree Health 2009 2008 2009 2008 2009 2008 2009 2008 Net periodic benefit cost: Service cost $ 41 $ 52 $ 2 $ 4 $ 85 $ 107 $ 4 $ 8 Interest cost 122 144 16 23 243 288 31 45 Expected return on plan assets (126 ) (166 ) (250 ) (331 ) Recognized net actuarial loss 7 9 12 19 1 Amortization of prior service credit (6 ) (5 ) (11 ) (3 ) (11 ) (10 ) (21 ) (6 ) Recognized settlement loss 13 3 28 11 Net periodic benefit cost 51 37 7 24 107 84 14 48 Other changes in plan assets and benefit obligations recognized in Other comprehensive income: Amortization of net prior service credit 6 5 11 3 11 10 21 6 Net actuarial losses (20 ) (12 ) (40 ) (30 ) (1 ) Total recognized in Other comprehensive income(1) (14 ) (7 ) 11 3 (29 ) (20 ) 21 5 Total recognized in Net periodic benefit cost and Other comprehensive income $ 37 $ 30 $ 18 $ 27 $ 78 $ 64 $ 35 $ 53 (1) Amount represents the pre-tax effect included within Other comprehensive income. The amount, net of tax, is included within Note 12, Shareholders Equity. During the six months ended June30, 2009, we made contributions of $59 and $57 to our pension plans and our other post-retirement benefit plans, respectively. We presently anticipate contributing an additional $51 to our pension plans and $51 to our other post-retirement benefit plans in 2009 for a total of $110 for pension plans and $108 for other post-retirement benefit plans.

611 - Shareholders' Equity

611 - Shareholders' Equity
	6 Months Ended Jun. 30, 2009 USD / shares
Shareholder Equity
Shareholder's Equity	Note 12 Shareholders Equity (in millions, except share data in thousands) Common Stock Shares Common Stock Amount Additional Paid-In Capital Retained Earnings AOCL (1) Xerox Shareholders Equity Non- controlling Interests Total Equity Balance at December 31, 2008 864,777 $ 866 $ 2,447 $ 5,341 $ (2,416 ) $ 6,238 $ 120 $ 6,358 Net income 42 42 7 49 Translation adjustments (274 ) (274 ) (274 ) Changes in defined benefit plans (2) (35 ) (35 ) (35 ) Other unrealized losses, net (5 ) (5 ) (5 ) Comprehensive (Loss) Income $ (272 ) $ 7 $ (265 ) Cash dividends declared-common stock ($0.0425 per share) (38 ) (38 ) (38 ) Stock option and incentive plans, net 10 17 17 17 Distributions to noncontrolling interests (3 ) (3 ) Balance at March 31, 2009 864,787 $ 866 $ 2,464 $ 5,345 $ (2,730 ) $ 5,945 $ 124 $ 6,069 Net income 140 140 7 147 Translation adjustments 726 726 726 Changes in defined benefit plans (2) (121 ) (121 ) (121 ) Other unrealized losses, net (4 ) (4 ) (4 ) Comprehensive Income $ 741 $ 7 $ 748 Cash dividends declared-common stock ($0.0425 per share) (37 ) (37 ) (37 ) Stock option and incentive plans, net 4,294 4 (3 ) 1 1 Tax loss on stock option and incentive plans, net (21 ) (21 ) (21 ) Distributions to noncontrolling interests (3 ) (3 ) Balance at June 30, 2009 869,081 $ 870 $ 2,440 $ 5,448 $ (2,129 ) $ 6,629 $ 128 $ 6,757 (1) Refer to Accumulated Other Comprehensive Loss (AOCL) section for additional information. (2) Refer to Note 11, Employee Benefit Plans for additional information. Comprehensive Income Comprehensive income for the three and six months ended June 30, 2009 and 2008 is as follows: Three Months Ended June 30, Six Months Ended June 30, 200

612 - Earnings per Share

612 - Earnings per Share
	6 Months Ended Jun. 30, 2009 USD / shares
Earnings per Share
Earnings per Share	Note 13Earningsper Share The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in thousands): Three Months Ended June30, Six Months Ended June30, 2009 2008 2009 2008 Basic Earnings (Loss) per Share: Net income (loss) attributable to Xerox $ 140 $ 215 $ 182 $ (29 ) Weighted average common shares outstanding 870,161 889,791 868,782 900,189 Basic Earnings (Loss) per Share $ 0.16 $ 0.24 $ 0.21 $ (0.03 ) Diluted Earnings (Loss) per Share: Net income (loss) attributable to Xerox $ 140 $ 215 $ 182 $ (29 ) Interest on Convertible Securities, net Adjusted Net income (loss) available to common shareholders $ 140 $ 215 $ 182 $ (29 ) Weighted average common shares outstanding 870,161 889,791 868,782 900,189 Common shares issuable with respect to: Stock options 325 5,229 322 Restricted stock and performance shares 6,448 5,662 8,144 Convertible securities 1,992 1,992 Adjusted weighted average common shares outstanding 878,926 902,674 877,248 900,189 Diluted Earnings (Loss) per Share $ 0.16 $ 0.24 $ 0.21 $ (0.03 ) Dividends per Common Share $ 0.0425 $ 0.0425 $ 0.085 $ 0.085 The computation of diluted earnings per share for the three and six months ended June30, 2009 and 2008 did not include the effects of approximately 49million shares and 22million shares, respectively, because to do so would have been anti-dilutive. The computation of diluted earnings per share for the six months ended June30, 2008 also did not include an additional 13million shares because of the net loss in that period and to do so would have been anti-dilutive.

613 - Contingencies

613 - Contingencies
	6 Months Ended Jun. 30, 2009 USD / shares
Contingencies
Contingencies	Note 14Contingencies 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 position. 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 June30, 2009, the total amounts related to the unreserved portion of the tax and labor contingencies, inclusive of any related interest, amounted to approximately $1,058, with the increase from December31, 2008 balance of approximately $839 primarily related to currency. 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 June30, 2009 we had $205 of escrow cash deposits for matters we are disputing and there are liens on certain Brazilian assets with a net book value of $36 and additional letters of credit of approximately $119. 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. Legal Matters As more fully discussed below, we are involved in a variety of claims, lawsuits, investigations and proceedings concerning securities law, intellectual property law, environmental law, employment law and the Employee Retirement Income Security Act (ERISA). 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 sett

614 - Subsequent Event

614 - Subsequent Event
	6 Months Ended Jun. 30, 2009 USD / shares
Subsequent Event
Subsequent Events	Note 15 Subsequent Events We have performed an evaluation of subsequent events through August3, 2009, which is the date the financial statements were issued.

Document Information

Document Information
	6 Months Ended Jun. 30, 2009 USD / shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Amendment Description	None
Document Period End Date	2009-06-30

Entity Information

Entity Information (USD $)
	6 Months Ended Jun. 30, 2009
Entity Information [Line Items]
Entity Registrant Name	Xerox Corporation
Entity Central Index Key	0000108772
Entity Tax Identification Number	160468020
Entity Legal Form	10-Q
Entity Incorporation, State Country Name	New York, United States of America
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float	$5,631,647,939
Entity Common Stock, Shares Outstanding	869,081,472
Entity Listings [Line Items]
Trading Symbol	xrx
Entity Listing, Primary	Yes
Entity Listing, Security Trading Currency	US Dollar
Entity Listing, Par Value Per Share	1
Entity Addresses [Line Items]
Entity Address, Address Description	Principal Executive Offices
Entity Address, Address Line One	P.O. Box 4505
Entity Address, Address Line Two	45 Glover Avenue
Entity Address, City or Town	Norwalk
Entity Address, State or Province	Connecticut
Entity Address, Country	United States of America
Entity Address, Postal Zip Code	06856-4505
Entity Contact Personnel [Line Items]
Contact Personnel Name	Douglas Marshall
Contact Personnel Email Address	Douglas.Marshall@xerox.com