Condensed Consolidated Statemen
| Condensed Consolidated Statements of Income (Unaudited) (USD $) | ||
| In Millions, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| Revenues | ||
| Sales | $1,678 | $1,494 |
| Service, outsourcing and rentals | 2,870 | 1,880 |
| Finance income | 173 | 180 |
| Total Revenues | 4,721 | 3,554 |
| Costs and Expenses | ||
| Cost of sales | 1,082 | 1,004 |
| Costs of service, outsourcing and rentals | 1,871 | 1,100 |
| Equipment financing interest | 64 | 69 |
| Research, development and engineering expenses | 205 | 204 |
| Selling, administrative and general expenses | 1,099 | 1,004 |
| Restructuring and asset impairment charges | 195 | (2) |
| Acquisition-related costs | 48 | 0 |
| Amortization of intangible assets | 57 | 14 |
| Other expenses, net | 110 | 83 |
| Total Costs and Expenses | 4,731 | 3,476 |
| (Loss) Income before Income Taxes and Equity Income | (10) | 78 |
| Income tax expense | 22 | 19 |
| Equity in net loss of unconsolidated affiliates | (2) | (10) |
| Net (Loss) Income | (34) | 49 |
| Less: Net income attributable to noncontrolling interests | 8 | 7 |
| Net (Loss) Income Attributable to Xerox | ($42) | $42 |
| Basic (Loss) Earnings per Share | -0.04 | 0.05 |
| Diluted (Loss) Earnings per Share | -0.04 | 0.05 |
Condensed Consolidated Balance
| Condensed Consolidated Balance Sheets (Unaudited) (USD $) | ||
| In Millions, except Share data | Mar. 31, 2010
| Dec. 31, 2009
|
| Assets | ||
| Cash and cash equivalents | $1,010 | $3,799 |
| Accounts receivable, net | 3,198 | 1,702 |
| Billed portion of finance receivables, net | 233 | 226 |
| Finance receivables, net | 2,299 | 2,396 |
| Inventories | 1,018 | 900 |
| Other current assets | 1,022 | 708 |
| Total current assets | 8,780 | 9,731 |
| Finance receivables due after one year, net | 4,203 | 4,405 |
| Equipment on operating leases, net | 528 | 551 |
| Land, buildings and equipment, net | 1,663 | 1,309 |
| Investments in affiliates, at equity | 1,111 | 1,056 |
| Intangible assets, net | 3,584 | 598 |
| Goodwill | 8,463 | 3,422 |
| Deferred tax assets, long-term | 733 | 1,640 |
| Other long-term assets | 1,558 | 1,320 |
| Total Assets | 30,623 | 24,032 |
| Liabilities and Equity | ||
| Short-term debt and current portion of long-term debt | 1,296 | 988 |
| Accounts payable | 1,659 | 1,451 |
| Accrued compensation and benefits costs | 937 | 695 |
| Other current liabilities | 1,982 | 1,327 |
| Total current liabilities | 5,874 | 4,461 |
| Long-term debt | 8,668 | 8,276 |
| Liability to subsidiary trust issuing preferred securities | 649 | 649 |
| Pension and other benefit liabilities | 2,017 | 1,884 |
| Post-retirement medical benefits | 995 | 999 |
| Other long-term liabilities | 728 | 572 |
| Total Liabilities | 18,931 | 16,841 |
| Series A convertible preferred stock | 349 | 0 |
| Common stock | 1,380 | 871 |
| Additional paid-in capital | 6,443 | 2,493 |
| Retained earnings | 5,568 | 5,674 |
| Accumulated other comprehensive loss | (2,193) | (1,988) |
| Xerox Shareholders' Equity | 11,198 | 7,050 |
| Noncontrolling interests | 145 | 141 |
| Total Equity | 11,343 | 7,191 |
| Total Liabilities and Equity | $30,623 | $24,032 |
| Shares of common stock issued | 1,379,040 | 869,381 |
| Shares of common stock outstanding | 1,379,040 | 869,381 |
1_Condensed Consolidated Statem
| Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | ||
| In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| Cash Flows from Operating Activities: | ||
| Net (loss) Income | ($34) | $49 |
| Adjustments required to reconcile net (loss) income to cash flows from operating activities: | ||
| Depreciation and amortization | 241 | 169 |
| Provision for receivables | 50 | 68 |
| Provision for inventory | 9 | 16 |
| Net gain on sales of businesses and assets | (2) | (2) |
| Undistributed equity in net loss of unconsolidated affiliates | 3 | 10 |
| Stock-based compensation | 27 | 17 |
| Provision for litigation, net | 0 | 2 |
| Payments for securities litigation, net | 0 | (28) |
| Restructuring and asset impairment charges | 195 | (2) |
| Payments for restructurings | (39) | (87) |
| Contributions to pension benefit plans | (33) | (28) |
| (Increase) decrease in accounts receivable and billed portion of finance receivables | (197) | 167 |
| Increase in inventories | (137) | (105) |
| Increase in equipment on operating leases | (58) | (63) |
| Decrease in finance receivables | 131 | 113 |
| Decrease in other current and long-term assets | 21 | 17 |
| Increase (decrease) in accounts payable and accrued compensation | 169 | (168) |
| Decrease in other current and long-term liabilities | (54) | (105) |
| Net change in income tax assets and liabilities | (3) | 2 |
| Net change in derivative assets and liabilities | 18 | (40) |
| Other operating, net | 68 | 20 |
| Net cash provided by operating activities | 375 | 22 |
| Cash Flows from Investing Activities: | ||
| Cost of additions to land, buildings and equipment | (51) | (37) |
| Proceeds from sales of land, buildings and equipment | 19 | 3 |
| Cost of additions to internal use software | (25) | (28) |
| Acquisitions, net of cash acquired | (1,524) | (145) |
| Net change in escrow and other restricted investments | 15 | 0 |
| Net cash used in investing activities | (1,566) | (207) |
| Cash Flows from Financing Activities: | ||
| Net payments on secured financings | (4) | (25) |
| Net payments on other debt | (1,639) | (417) |
| Common stock dividends | (37) | (37) |
| Proceeds from issuances of common stock | 115 | 0 |
| Other financing, net | 0 | (3) |
| Net cash used in financing activities | (1,565) | (482) |
| Effect of exchange rate changes on cash and cash equivalents | (33) | (13) |
| Decrease in cash and cash equivalents | (2,789) | (680) |
| Cash and cash equivalents at beginning of period | 3,799 | 1,229 |
| Cash and Cash Equivalents at End of Period | $1,010 | $549 |
Basis of Presentation
| Basis of Presentation | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| 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 2009 Annual Report to Shareholders, which is incorporated by reference in our 2009 Annual Report on Form 10-K (2009 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 2009 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 (Loss) Income before Income Taxes and Equity Income as pre-tax (loss) income. |
Summary of Significant Accounti
| Summary of Significant Accounting Policies | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Revenue Recognition | Note 2 - Summary of Significant Accounting Policies Revenue Recognition As a result of our recent acquisition of Affiliated Computer Services, Inc. (ACS), a significant portion of our revenues are derived from service arrangements. The following summary is an update of our accounting policy, as included in our 2009 Annual Report, associated with revenue recognition for service arrangements (refer to Note 4 Acquisitions for information regarding the ACS acquisition): Services: Technical service revenues are derived primarily from maintenance contracts on our equipment sold to customers and are recognized over the term of the contracts. A substantial portion of our products are sold with full service maintenance agreements for which the customer typically pays a base service fee plus a variable amount based on usage. As a consequence, other than the product warranty obligations associated with certain of our low end products we do not have any significant product warranty obligations, including any obligations under customer satisfaction programs. Revenues associated with outsourcing, professional and value-added services are generally recognized as services are rendered, on the basis of the number of accounts or transactions processed. Information technology processing revenues are recognized as services are provided to the customer, generally at the contractual selling prices of resources consumed or capacity utilized by our customers. In those service arrangements where final acceptance of a system or solution by the customer is required, revenue is deferred until all acceptance criteria have been met. Revenues on cost reimbursable contracts are recognized by applying an estimated factor to costs as incurred, determined by the contract provisions and prior experience. Revenues on unit-price contracts are recognized at the contractual selling prices as work is completed and accepted by the customer. Revenues on time and material contracts are recognized at the contractual rates as the labor hours and direct expenses are incurred. Costs associated with service arrangements are generally recognized as incurred. Initial direct costs of an arrangement are capitalized and amortized over the contractual service period. Long-lived assets used in the fulfillment of the arrangements are capitalized and depreciated over the shorter of their useful life or the term of the contract. Losses on service arrangements are recognized in the period that the contractual loss becomes probable and estimable. Revenues on certain fixed price contracts where we provide information technology system development and implementation services are recognized over the contract term based on the percentage of development and implementation services that are provided during the period compared with the total estimated development and implementation services to be provided over the entire contract using guidance from ASC Topic 605-35 Revenue Recognition - Construction-Type and Certain Production-Type Contracts. These services require that we perform significant, extensive and complex design, development, modification or implementation activities of our cus |
| Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Recent Accounting Pronouncements Revenue Recognition In late 2009, the FASB issued the following new accounting guidance which is first applicable for our 2010 reporting: ASU No. 2009-14, Software (ASC Topic 985) - Certain Revenue Arrangements That Include Software Elements, a consensus of the FASB Emerging Issues Task Force. This guidance modifies the scope of ASC subtopic 985-605 Software-Revenue Recognition to exclude from its requirements (a) non-software components of tangible products and (b) software components of tangible products that are sold, licensed or leased with tangible products when the software components and non-software components of the tangible product function together to deliver the tangible products essential functionality. ASU No. 2009-13, Revenue Recognition (ASC Topic 605) - Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force. This guidance modifies previous requirements by allowing the use of the best estimate of selling price in the absence of vendor-specific objective evidence (VSOE) or verifiable objective evidence (VOE) (now referred to as TPE or third-party evidence) for determining the selling price of a deliverable. A vendor is now required to use its best estimate of the selling price when more objective evidence of the selling price cannot be determined. In addition, the residual method of allocating arrangement consideration is no longer permitted. We have adopted these updates effective for our fiscal year beginning January 1, 2010, and we are applying them prospectively from that date for new or materially modified arrangements.As described below, the adoption of these updates did not have, nor are they expected to have, a material effect on our financial condition or results of operations. With respect to the new software guidance, the modification in the scope of the industry-specific software revenue recognition guidance did not result in a change in the recognition of revenue for our equipment and services.Software included within our equipment and services has generally been considered incidental and therefore has been, and will continue to be, accounted for as part of the sale of equipment or services.Most of our equipment have both software and non-software components that function together to deliver the equipments essential functionality. The software scope modification is also not expected to change the recognition of revenue for software accessories sold in connection with our equipment or free-standing software sales as these transactions will continue to be accounted for under the industry-specific software revenue recognition guidance as separate software elements. With respect to the new guidance for arrangements with multiple deliverables, we enter into the following revenue arrangements that may consist of multiple deliverables: Bundled lease arrangements, which typically include both lease deliverables and non-lease deliverables. Lease deliverables include the equipment, financing, maintenance and executory costs.Non-lease deliverables generally consist of s |
Segment Reporting
| Segment Reporting | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Segment Reporting | Note 3 - Segment Reporting Our reportable segments are consistent with how we manage the business and view the markets we serve. In 2010, as a result of our acquisition of ACS, we realigned our internal financial reporting structure. (Refer to Note 4 Acquisitions for information regarding the ACS acquisition.) We will now report our financial performance based on the following two primary reportable segments Technology and Services. The Technology segment represents the combination of our former Production and Office segments excluding the document outsourcing business, which was previously included in these reportable segments. The Services segment represents the combination of our document outsourcing business, which includes Xeroxs historical business process services, and ACSs business process outsourcing and information technology outsourcing businesses. We believe this realignment will help us to better manage our business and view the markets we serve, which are primarily centered around equipment systems and outsourcing services. Our Technology segment operations involve the sale and support of a broad range of document systems from entry level to the high-end. Our Services segment operations involve delivery of a broad range of outsourcing services including document, business processing and IT outsourcing services.Our 2009 segment disclosures have been restated to reflect our new 2010 internal reporting structure. The Technology segment is centered around strategic product groups, which share common technology, manufacturing and product platforms.This segment includes the sale of document systems and supplies, provision of technical service and financing of products.Our products range from: Entry, which includes A4 devices and desktop printers. Mid-Range, which includes A3 devices that generally serve workgroup environments in mid to large enterprises. This includes products that fall into the following market categories: Color 41+ ppm priced at less than $100K and Light Production 91+ppm priced at less than $100K. High-End, which includes production printing and publishing systems that generally serve the graphic communications marketplace and large enterprises. The Services segment comprises three outsourcing service offerings, Document Outsourcing (which includes Managed Print Services and our historical Xerox Business Process Outsourcing services), Business Process Outsourcing and Information Technology Outsourcing. Document outsourcing services include service arrangements that allow customers to streamline, simplify and digitize their document-intensive business processes through automation and deployment of software application and tools and the management of their printing needs. Business process outsourcing services include service arrangements where we manage a customers business activity or process. Information technology outsourcing services include service arrangements where we manage a customers IT-related activities, such as application management and application development, data center operations, or testing and quality assurance. The segment classified as Other includes several |
Acquisitions
| Acquisitions | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Acquisitions | Note 4Acquisitions Affiliated Computer Services, Inc. On February5, 2010, the acquisition date, we acquired all of the outstanding equity of ACS in a cash-and-stock transaction valued at approximately $6.5 billion. ACS provides business process outsourcing (BPO) and information technology (IT) services and solutions to commercial and government clients worldwide. ACS delivers a full range of BPO and IT services, as well as end-to-end solutions to the public and private sectors and supports a variety of industries including education, energy, financial, government, healthcare, retail and transportation. ACSs revenues for the calendar year ended December 31, 2009 were $6.6 billion and they employed 78,000 people and operated in over 100 countries. Equity transaction: Each outstanding share of ACS Class A and Class B common stock was converted into a combination of 4.935 shares of Xerox common stock and $18.60 in cash for a combined value of $60.40 per share, or approximately $6.0 billion based on the closing price of Xerox common stock of $8.47 on the acquisition date. Approximately 489,800 thousand shares of Xerox common stock were issued. We also issued convertible preferred stock with a liquidation value of $300 and a fair value of $349 as of the acquisition date to ACSs Class B shareholder. All ACS stock options outstanding at closing were assumed by Xerox and converted into Xerox stock options. ACS stock options issued prior to August 2009, whether or not then vested and exercisable, became fully vested and exercisable in accordance with preexisting change-in-control provisions.ACS stock options issued in August 2009 will continue to vest and become exercisable for Xerox common stock in accordance with their original terms.For the August 2009 options, the portion of the estimated fair value associated with service prior to the close was recorded as part of the acquisition fair value with the remainder to be recorded as future compensation cost over the remaining vesting period. Each assumed ACS option became exercisable for 7.085289 Xerox common shares for a total of approximately 96,700 thousand shares at a weighted average exercise price of $6.79 per option. The estimated fair value associated with the Xerox options issued in exchange for the ACS options was approximately $222 based on a Black-Scholes valuation model utilizing the assumptions stated below. Approximately $168 of the estimated fair value was recorded as part of the acquisition fair value, and $54 is expected to be expensed over the remaining vesting period which is estimated to be approximately 3.9 years. Assumptions Pre-August 2009 Options August 2009 Options Strike price $ 6.89 $ 6.33 Expected volatility 37.90 % 38.05 % Risk-free interest rate 0.23 % 1.96 % Expected term 0.75 years 4.2 years Fair value of consideration transferred: The table below details the consideration transferred to acquire ACS (certain amounts reflect rounding adjustments): (shares in millions) Conversion Calculation Estimated Fair Value Form of Consideration ACS Class A shares |
Inventories
| Inventories | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Inventories | Note 5 - Inventories The following is a summary of Inventories by major category: March31, 2010 December31, 2009 Finished goods $ 861 $ 772 Work-in-process 56 43 Raw materials 101 85 Total Inventories $ 1,018 $ 900 |
Investment in Affiliate, at Equ
| Investment in Affiliate, at Equity | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstarct] | |
| Investment in Affiliates, at Equity | Note 6 - Investment in Affiliates, at Equity Our equity in net loss of our unconsolidated affiliates was as follows: ThreeMonths EndedMarch31, 2010 2009 Fuji Xerox $ (5 ) $ (12 ) Other investments 3 2 Total Equity in Net Loss of Unconsolidated Affiliates $ (2 ) $ (10 ) Fuji Xerox Equity in net 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 loss for first quarter for both 2010 and 2009 includes after-tax restructuring charges of $22, primarily reflecting Fuji Xeroxs continued cost-reduction initiatives. Condensed financial data of Fuji Xerox was as follows: Three Months EndedMarch 31, 2010 2009 Summary of Operations: Revenues $ 2,857 $ 2,670 Cost and expenses 2,823 2,763 Income (loss) before income taxes 34 (93 ) Income tax expense (benefit) 29 (52 ) Net Income (Loss) - Fuji Xerox $ 5 $ (41 ) Weighted Average Rate(1) 90.67 93.78 (1) Represents Yen/U.S. Dollar exchange rate used to translate. |
Restructuring Programs
| Restructuring Programs | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Restructuring Programs | Note 7 - Restructuring Programs During the first quarter 2010, we recorded $195 of net restructuring and asset impairment charges, which included $183 of severance costs related to headcount reductions of approximately 2,300 employees, lease termination and asset impairment charges of $18 and $6 of net reversals primarily due to changes in estimated reserves from prior year initiatives.The first quarter actions applied equally to both North America and Europe, with approximately 10% related to our developing market countries.Of these actions, approximately 45% were focused on gross margin improvements, 30% on selling, administrative and general expense reductions and 25% on the optimization of research, development and engineering expense investments. Charges related to the restructuring or integration of ACS and Xerox operations were not material during the quarter.We expect to incur an additional $85 over the remainder of the year for restructuring actions which have not yet been finalized. Information related to restructuring program activity during the three months ended March 31, 2010 is outlined below: Severance and Related Costs Lease Cancellation and Other Costs Asset Impairments(1) Total Balance December 31, 2009 $ 54 $ 20 $ $ 74 Restructuring provision 183 14 4 201 Reversals of prior accruals (6 ) (6 ) Net current period charges(2) 177 14 4 195 Charges against reserve and currency (17 ) (2 ) (4 ) (23 ) Balance March 31, 2010 $ 214 $ 32 $ $ 246 (1) Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision. (2) Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown. Reconciliation to the Condensed Consolidated Statements of Cash Flows: Three Months EndedMarch 31, 2010 2009 Charges to reserve $ (23 ) $ (97 ) Asset impairment 4 Effects of foreign currency and other non-cash items (20 ) 10 Cash Payments for Restructurings $ (39 ) $ (87 ) The following table summarizes the total amount of costs incurred in connection with these restructuring programs by segment: Three Months EndedMarch 31,(1) 2010 2009 Technology $ 129 $ (2 ) Services 43 Other 23 Total Net Restructuring Charges $ 195 $ (2 ) (1) Adjusted to conform to our 2010 segment change. Refer to Note 3, Segment Reporting, for additional information related to segments. |
Interest Expense and Income
| Interest Expense and Income | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Interest Expense and Income | Note 8 - Interest Expense and Income Interest expense and interest income were as follows: Three Months EndedMarch31, 2010 2009 Interest expense(1) $ 153 $ 130 Interest income(2) $ 178 $ 185 (1) Includes Equipment financing interest, 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. |
Financial Instruments
| Financial Instruments | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Derivative Instruments and Hedging Activities | Note 9 - Financial Instruments 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 March 31, 2010 and December 31, 2009, pay variable/receive fixed interest rate swaps with notional amounts of $2,550 and $2,350 and net asset fair values of $11 and $1, 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 2010 or 2009. The following is a summary of our fair value hedges at March31, 2010: Debt Instrument Year First Designated Notional Amount Net Fair Value Weighted Average Interest RatePaid Interest Rate Received Basis Maturity Senior Notes due 2012 2009 $ 1,100 $ 4.08 % 5.50 % Libor 2012 Senior Notes due 2013 2009 400 4 3.76 % 5.65 % Libor 2013 Senior Notes due 2014 2009 750 7 5.61 % 8.25 % Libor 2014 Senior Notes due 2015 2010 200 (1 ) 1.64 % 4.25 % Libor 2015 Senior Notes due 2016 2009 100 1 3.11 % 6.40 % Libor 2016 Total $ 2,550 $ 11 Terminated Swaps During the three months ended March 31, 2010, interest rate swaps that had been designated as fair value hedges of certain debt instruments were terminated. These terminated interest rate swaps had an aggregate notional value of $600. The fair value adjustment of $(12) to the debt instruments is being amortized to interest income over the remaining term of the related notes. Foreign Exchange Risk Management We are a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts, to hedge certain foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities. Foreign Currency-denominated Assets and Liabilities We generally utilize forward foreign exchange contracts to hedge these exposures. Changes in the value of these currency derivatives are recorded in earnings together with the offsetting foreign exchange gains and losses on the underlying assets and liabilities. Forecasted Purchases and Sales in Foreign Currency We generally utilize forward foreign exchange contracts and purchased option contracts to hedge these anticipated tran |
| Summary of Other Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis | Note 9 - Financial Instruments Summary of Other Financial Assets and 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: March 31, 2010 December 31, 2009 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 1,010 $ 1,010 $ 3,799 $ 3,799 Accounts receivable, net 3,198 3,198 1,702 1,702 Short-term debt 1,296 1,313 988 1,004 Long-term debt 8,668 8,967 8,276 8,569 Liability to subsidiary trust issuing preferred securities 649 672 649 814 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. |
Employee Benefit Plans
| Employee Benefit Plans | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Employee Benefit Plans | Note 10 - Employee Benefit Plans The components of Net periodic benefit cost and other amounts recognized in Other comprehensive income were as follows: Pension Benefits Retiree Health Three Months Ended March 31, Three Months Ended March 31, 2010 2009 2010 2009 Components of Net Periodic Benefit Costs: Service cost $ 46 $ 44 $ 2 $ 2 Interest cost 120 121 14 15 Expected return on plan assets (120 ) (124 ) Recognized net actuarial loss 16 5 Amortization of prior service credit (5 ) (5 ) (6 ) (10 ) Recognized settlement loss 31 15 Net Periodic Benefit Cost 88 56 10 7 Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: Amortization of net prior service credit 5 5 6 10 Amortization of net actuarial losses (47 ) (20 ) Total Recognized in Other Comprehensive Income(1) (42 ) (15 ) 6 10 Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income $ 46 $ 41 $ 16 $ 17 (1) Amount represents the pre-tax effect included within Other comprehensive income. The amount, net of tax, is included within Note 11 Shareholders Equity. During the three months ended March 31, 2010, we made contributions of $33 and $24 to our pension plans and our other post-retirement benefit plans, respectively. We presently anticipate contributing an additional $230 to our pension plans and $79 to our other post-retirement benefit plans in 2010 for a total of $263 for pension plans and $103 for other post-retirement benefit plans. |
Shareholders' Equity
| Shareholders' Equity | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Shareholders' Equity | Note 11 Shareholders Equity (in millions) Common Stock Additional Paid-in Capital Retained Earnings AOCL(1) Xerox Shareholders Equity Non- controlling Interests Total Equity Balance at December31, 2009 $ 871 $ 2,493 $ 5,674 $ (1,988 ) $ 7,050 $ 141 $ 7,191 Net (loss) income (42 ) (42 ) 8 (34 ) Translation adjustments (308 ) (308 ) (1 ) (309 ) Changes in defined benefit plans(2)(3) 99 99 99 Other unrealized gains 4 4 4 Comprehensive (Loss) Income $ (247 ) $ 7 $ (240 ) ACS Acquisition(4) 490 3,825 4,315 4,315 Cash dividends declared-common stock(5) (61 ) (61 ) (61 ) Cash dividends declared-preferred stock(6) (3 ) (3 ) (3 ) Stock option and incentive plans, net 19 122 141 141 Tax benefit on stock option and incentive plans, net 3 3 3 Distributions to noncontrolling interests (3 ) (3 ) Balance at March 31, 2010 $ 1,380 $ 6,443 $ 5,568 $ (2,193 ) $ 11,198 $ 145 $ 11,343 Common Stock Additional Paid-in Capital Retained Earnings AOCL(1) Xerox Shareholders Equity Non- controlling Interests Total Equity Balance at December31, 2008 $ 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)(3) (35 ) (35 ) (35 ) Other unrealized losses (5 ) (5 ) (5 ) Comprehensive (Loss) Income $ (272 ) $ 7 $ (265 ) Cash dividends declared-common stock(5) (38 ) (38 ) (38 ) Stock option and incentive plans, net 17 17 17 Distributions to noncontrolling interests (3 ) (3 ) Balance at March 31, 2009 $ 866 $ 2,464 $ 5,345 $ (2,730 ) $ 5,945 $ 124 $ 6,069 (1) Refer to the Accumulated Other Comprehensive Loss (AOCL) section for additional information. (2) Refer to Note 10, Employee Benefit Plans for additional information. (3) Includes currency gains of $42 and $17 in 2010 and 2009, respectively, and our share of Fuji Xerox changes in defined benefit plans of $36 and $(56) for 2010 and 2009, respectively. (4) See Note 4 Acquisitions for further information. (5) Cash d |
Earnings per Share
| Earnings per Share | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Earnings per Share | Note 12 - Earnings per Share The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in thousands): Three Months Ended March 31, 2010 2009 Basic (Loss) Earnings per Share: Net (loss) income attributable to Xerox $ (42 ) $ 42 Accrued dividends on preferred stock (3 ) Adjusted Net (Loss) Income Available to Common Shareholders $ (45 ) $ 42 Weighted-average common shares outstanding 1,175,732 866,944 Basic (Loss) Earnings per Share $ (0.04 ) $ 0.05 Diluted (Loss) Earnings per Share: Net (loss) income attributable to Xerox $ (42 ) $ 42 Accrued dividends on preferred stock (3 ) Adjusted Net (Loss) Income Available to Common Shareholders $ (45 ) $ 42 Weighted-average common shares outstanding 1,175,732 866,944 Common shares issuable with respect to: Stock options 319 Restricted stock and performance shares 10,589 Adjusted Weighted Average Common Shares Outstanding 1,175,732 877,852 Diluted (Loss) Earnings per Share $ (0.04 ) $ 0.05 The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands): Stock options 96,881 42,742 Restricted stock 27,727 5,116 Convertible securities 1,992 1,992 Convertible preferred stock 26,966 153,566 49,850 Dividends per common share $ 0.0425 $ 0.0425 The computation of diluted earnings per share for the three months ended March 31, 2010 did not include the effects of 26 million shares as a result of the net loss in the period and to do so would have been anti-dilutive. |
Contingencies
| Contingencies | |
| 3 Months Ended
Mar. 31, 2010 | |
| Notes to Financial Statements [Abstract] | |
| Contingencies | Note 13 - Contingencies 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 March 31, 2010, the total amounts related to the unreserved portion of the tax and labor contingencies, inclusive of any related interest, amounted to approximately $1,238, with the increase from December31, 2009 balance of approximately $1,225 primarily related to current-year interest and indexation, partially offset by 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 March 31, 2010 we had $240 of escrow cash deposits for matters we are disputing, and there are liens on certain Brazilian assets with a net book value of $18 and additional letters of credit of approximately $133. 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 |
| Other Contingencies | Note 13 - Contingencies Other Contingencies Certain contracts, primarily those involving public sector customers, require us to provide a surety bond or a letter of credit as a guarantee of performance. As of March 31, 2010, $667 of our outstanding surety bonds and $50 of our outstanding letters of credit secure our performance of contractual obligations with our customers. Approximately $18 of our letters of credit secures our casualty insurance and vendor programs and other corporate obligations. In general, we would only be liable for the amount of these guarantees in the event of default in our performance of our obligations under each contract; the probability of which we believe is remote. We believe that our capacity in the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support. We have service arrangements where we service third party student loans in the Federal Family Education Loan program (FFEL) on behalf of various financial institutions. We service these loans for investors under outsourcing arrangements and do not acquire any servicing rights that are transferable by us to a third party. At March 31, 2010, we serviced a FFEL portfolio of approximately 4.7 million loans with an outstanding principal balance of approximately $59.0 billion. Some servicing agreements contain provisions that, under certain circumstances, require us to purchase the loans from the investor if the loan guaranty has been permanently terminated as a result of a loan default caused by our servicing error. If defaults caused by us are cured during an initial period, any obligation we may have to purchase these loans expires. Loans that we purchase may be subsequently cured, the guaranty reinstated and the loans repackaged for sale to third parties. We evaluate our exposure under our purchase obligations on defaulted loans and establish a reserve for potential losses, or default liability reserve, through a charge to the provision for loss on defaulted loans purchased. The reserve is evaluated periodically and adjusted based upon managements analysis of the historical performance of the defaulted loans. As of March 31, 2010, other current liabilities include reserves which we believe to be adequate. In connection with the acquisition of ACS, the Company agreed to provide certain tax and prior employment agreement-related indemnities to former officers and directors of ACS.Management does not anticipate any potential claims under these indemnities would have a material adverse effect on the Companys financial statements taken as a whole and accordingly no value has been assigned for financial reporting purposes. |
Document Information
| Document Information | |
| 3 Months Ended
Mar. 31, 2010 | |
| Document Information [Text Block] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Document Period End Date | 2010-03-31 |
Entity Information
| Entity Information (USD $) | ||
| 3 Months Ended
Mar. 31, 2010 | Jun. 30, 2009
| |
| Entity [Text Block] | ||
| Entity Registrant Name | Xerox Corporation | |
| Entity Central Index Key | 0000108772 | |
| 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 | 1,379,040,400 | |
| Document Fiscal Year Focus | 2,010 | |
| Document Fiscal Period Focus | Q1 |
link
| link | |
| 3 Months Ended
Mar. 31, 2010 | |
| Earnings per Share | |
| Earnings per Share | Note 12 - Earnings per Share The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in thousands): Three Months Ended March 31, 2010 2009 Basic (Loss) Earnings per Share: Net (loss) income attributable to Xerox $ (42 ) $ 42 Accrued dividends on preferred stock (3 ) Adjusted Net (Loss) Income Available to Common Shareholders $ (45 ) $ 42 Weighted-average common shares outstanding 1,175,732 866,944 Basic (Loss) Earnings per Share $ (0.04 ) $ 0.05 Diluted (Loss) Earnings per Share: Net (loss) income attributable to Xerox $ (42 ) $ 42 Accrued dividends on preferred stock (3 ) Adjusted Net (Loss) Income Available to Common Shareholders $ (45 ) $ 42 Weighted-average common shares outstanding 1,175,732 866,944 Common shares issuable with respect to: Stock options 319 Restricted stock and performance shares 10,589 Adjusted Weighted Average Common Shares Outstanding 1,175,732 877,852 Diluted (Loss) Earnings per Share $ (0.04 ) $ 0.05 The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands): Stock options 96,881 42,742 Restricted stock 27,727 5,116 Convertible securities 1,992 1,992 Convertible preferred stock 26,966 153,566 49,850 Dividends per common share $ 0.0425 $ 0.0425 The computation of diluted earnings per share for the three months ended March 31, 2010 did not include the effects of 26 million shares as a result of the net loss in the period and to do so would have been anti-dilutive. |
| Notes to Financial Statements [Abstract] | |
| Investment in Affiliates, at Equity | Note 6 - Investment in Affiliates, at Equity Our equity in net loss of our unconsolidated affiliates was as follows: ThreeMonths EndedMarch31, 2010 2009 Fuji Xerox $ (5 ) $ (12 ) Other investments 3 2 Total Equity in Net Loss of Unconsolidated Affiliates $ (2 ) $ (10 ) Fuji Xerox Equity in net 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 loss for first quarter for both 2010 and 2009 includes after-tax restructuring charges of $22, primarily reflecting Fuji Xeroxs continued cost-reduction initiatives. Condensed financial data of Fuji Xerox was as follows: Three Months EndedMarch 31, 2010 2009 Summary of Operations: Revenues $ 2,857 $ 2,670 Cost and expenses 2,823 2,763 Income (loss) before income taxes 34 (93 ) Income tax expense (benefit) 29 (52 ) Net Income (Loss) - Fuji Xerox $ 5 $ (41 ) Weighted Average Rate(1) 90.67 93.78 (1) Represents Yen/U.S. Dollar exchange rate used to translate. |