The declaration and payment of future dividends is subject to the determination of the Company‟s Board of Directors,
in its sole discretion, after considering various factors, including the Company‟s financial condition, historical and
forecast operating results, and available cash flow, as well as any applicable laws and contractual covenants and any
other relevant factors. The Company‟s practice regarding payment of dividends may be modified at any time and from
time to time.
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 and tax matters in the United States and in the foreign countries in which
we do business; changes in foreign currency exchange rates; actions of competitors; 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; our ability to expand equipment placements; the
risk that subcontractors, software vendors and utility and network providers will not perform in a timely, quality manner;
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; our ability to recover capital investments; development of new
products and services; our ability to protect our intellectual property rights; interest rates, cost of borrowing and access
to credit markets; the risk that multi-year contracts with governmental entities could be terminated prior to the end of
the contract term; reliance on third parties for manufacturing of products and provision of services; our ability to drive
the expanded use of color in printing and copying; the outcome of litigation and regulatory proceedings to which we
may be a party; and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the
“Management‟s Discussion and Analysis of Financial Condition and Results of Operations” section and other sections
of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012 and our 2011
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.
Why Xerox?
3
• Shifted to a Services-led growth portfolio
• Maintaining Document Technology leadership
• Steady-state earnings expansion of 10%+
• Strong cash generation growing in line with earnings
• Committed to a balanced capital allocation strategy
Services-Led…
4
Building a business portfolio to generate
consistent, solid earnings growth
Services: Top-line growth and improving profitability
• Diversified BPO
• Managed Print Services
• Vertically-focused ITO
Document Technology: Bottom-line stability
• Consistent profitability through an annuity-based model
• Strong cash generation
• Sharp focus on operational efficiencies
…Innovation-Driven
Shifting to a Growth Portfolio
5
• Secular decline areas becoming smaller share of total revenue
• Approximately 2/3 of revenue will be Services-based by 2017, driving
Consistent revenue growth
Consistent earnings expansion
2009 2012 2017
Total Revenue $15.2B ~$22B+ ~$25B+
Services/Color: Growth
Office: Flat
High end B/W & Other:
Decline
Market growth based on projected 5-year CAGR from current year market projections.
Revenue % of total
Presence in more
than 160 countries
with an unrivaled
global delivery
model
Global Presence Our Brand
Worldwide
awareness and
ranked in top 100
global brands
Operational Excellence
Apply consistent
business practices,
scale platforms/
processes across
operations and
client accounts
Innovation
Invention and
innovation advance
process automation,
personalization and
data/image analytics
Our Core Strengths Enable Differentiation
6
Strategy for Growth and Shareholder Value
7
Create Sustained
Shareholder Value • EPS growth
• Strong cash flow
We apply our innovation and operational excellence while leveraging our global presence and our brand.
Expand globally Invest in new Services
Capitalize on
advantaged
verticals
Leverage Document
Technology leadership
Disciplined
management
of portfolio
Expand customer
relationships
Segment Characteristics
Revenue (2013) Mid-single digit
decline
Annuity % of Revenue ~70%
Segment Margin 9 – 11%
Revenue (2013) Mid-to-high single
digit growth
Annuity % of Revenue >90%
Segment Margin 10 – 12%
• Broad and diverse portfolio
– Differing growth and profitability profiles by line of
business
• Long-term contracts with high renewal rates
– Target renewal rate 85 to 90%
• Signings volatility driven by mega deals
– Varying contract lengths and “time to revenue/profit”
• Relatively modest CAPEX, around 3% of revenue
– ITO and Transportation more capital intensive
Services (~55% of Total Revenue) Document Technology (~40% of Total Revenue)
Secular Dynamics
Decline in B&W high-end <9%
of Tech Revenue
Migration to Services ~(2)% pts
impact on Tech Revenue
Growth in developing markets 3%
market CAGR thru „15
Offset to digital transition only 2%
of pages are digital
Moderate macro sensitivity especially on hardware
and unbundled supplies sales
Portfolio Dynamics
Limited macro sensitivity given largely recurring
revenue and diversity of business
8
Note: Expect “Other” segment revenue decline of mid-to-high single digits
Long-Term Revenue Growth Drivers
by 2017
Mix to
Services
~2/3rds
of revenue
• Markets growing > 5%
• Services as a % of total
expanding
• Portfolio management
and acquisitions
Growth areas offset areas of secular decline in printing
in 2012
Advantaged Verticals
~$2B healthcare
revenue
• Deep verticals focus in
Services
• Leader in emerging
areas, i.e. HIX
• Applying research and
innovation
in 2012
Global Expansion
<25% of Services
outside U.S.
• Services growth
internationally: focus on
Transportation, HRO and
Customer Care
• Emerging markets and
SMB opportunity in Doc.
Technology
9
SG&A
Long-Term Cost Opportunity Areas
• Shared services
• Legacy IT infrastructure
• Leveraging partners
$4B+
Supply Chain and Product Cost
• Supply chain optimization
• Direct and indirect purchasing
• Product simplification
~$4B
Cost Base
Services Delivery
• Remote device management
• Process automation
• Contract management
~$9B
Savings to enable Services investments; offset price and mix pressures
10
Q4 Restructuring Initiative
Services Workforce Optimization
• Reduction in management layers
• Better utilization of partner, at-home and off-shore
resources
• Process automation
Focus Area
~$80M
11
~$55M
~$50M ~$45M
Savings offsetting contract mix and market dynamics, drive margin improvement
Document Technology Infrastructure
• Across all areas, from supply chain to back-office support
• Capturing benefits of productivity and automation
• Leveraging partnerships with Fuji Xerox and others
Pension Expectations
Expense Funding
• Recognizes long term nature of pensions,
allows for smoothing effect
• Shift to defined contribution plans will
reduce burden over time
2011 2012 2013
$284M ~$310M1 Flat2 YOY
2011 2012 2013
$556M ~$500M1
• Local law / regulatory requirements
• Recent U.S. legislation lowers in short term
• No stock contribution planned in 2013
1Estimate for 2012
22013 estimate based on expectations as of 10/31/12
Stock contribution
• Low interest rate environment greatly impacted 2011 and 2012
• Expect further discount rate reduction to impact 2013
• Freezing of all major defined benefit plans already announced
2010
2010
$304M $237M
2009
$232M
2009
$122M Cash down2
>$100M YOY
12
2012 Forecast
Revenue
• Services growth in line with original expectations
• Document Technology impacted by macro environment, especially Europe
EPS
• Margin decline due to Services
• Adjusted EPS range updated to reflect previously announced restructuring
- ~$100M Restructuring in Q4 (~ 5 cents)
- ~$160M for FY 2012
Cash Flow and Capital Allocation
• In line with 2012 guidance, closer to high-end of range
• Shares outstanding on track for over 7% reduction vs. 2011 YE
FY 2012
Revenue Growth % Flat @ CC
Adjusted EPS (incl restructuring) $1.02 - $1.04
Cash From Operations $ 2.0 - $2.3B
CAPEX $ 0.5B
Free Cash Flow $ 1.5 - $1.8B
Share Repurchase $ 0.9 - $1.1B
Acquisitions $ 0.3 - $0.4B
Dividend $ 0.3B
Q4 2012
Restructuring Charge ~$100M
Adjusted EPS (incl restructuring) $0.28 - $0.30
13
Note: Q4 GAAP EPS range of $0.24 - $0.26 and FY 2012 of $0.87 to $0.89
Constant Currency (CC): see non-GAAP measures
Cash Flow
2013 Guidance
(in billions)
Operating Cash Flow $2.1 - $2.4
CAPEX $(0.5)
Free Cash Flow $1.6 - $1.9
Income Statement
Revenue Growth @ CC* Flat to up 2%
Services Up mid-to-high
single digits
Technology Down mid-single digits
Adjusted EPS1 $1.09 - $1.15
GAAP EPS $0.94 - $1.00
• Continued weak macro and low interest rate environment
• Services growth offsets Document Technology
revenue declines
• Modest operating margin improvement
• Share repurchase and restructuring support EPS
expansion
• Steady State goal: grow EPS 10%+
EPS Drivers
• Working capital flat
• Pension funding benefit YOY
• Restructuring payments flat YOY
• Finance Receivable sales consistent with 2012
• Steady State goal: grow cash flow in line with
earnings expansion
Cash Flow Drivers
14
*Revenue growth guidance excluding potential divestitures
1Adjusted for amortization of intangible assets
Constant Currency (CC): see non-GAAP measures
Capital Structure
• Investment Grade balance sheet
• Expect $8.6B of debt by 2012 year-
end, majority of debt associated with
financing
• Balanced debt maturity ladder
- ~$1B of debt coming due in 2013
• Maintain 7:1 leverage ratio of debt to equity on
finance assets
0
400
800
1,200
1,600
$ m
illio
ns
Expected Q4 2012
(in billions) Fin. Assets Debt
Financing
$5.9 $ 5.2
Core - $ 3.4
Total Xerox $ 5.9 $ 8.6
Debt Maturity Ladder
Core vs. Implied Financing Debt
15
• Xerox Financing business is at or
above benchmark with respect to
penetration rates, portfolio quality and
loss rates
• Opportunity to optimize Financing debt
cost and diversify funding structures
- Will employ modest amount of finance
receivable sales/securitizations
Capital Allocation
2012
Dividend Acquisitions
Share Repurchase
2013 balanced to deliver shareholder returns while maintaining investment grade leverage
• Dividend1: ~$300M, increasing 35% to 5.75 cents per share quarterly
• Acquisitions: up to $500M, focused on Services
• Share Repurchase: at least $400M, increasing authorization by $1B
• Debt Repayment: at least $400M
2013 Plan
Dividend
Acquisitions
Share Repurchase
Debt
Repayment
Opportunistic
2011
Dividend
Acquisitions
Debt
Repayment
Share Repurchase
16
~40%
~10%
~20%
~30% ~20% ~20%
~60%
1All dividends, including the planned increased dividend, are subject to declaration by the Xerox Board of Directors, in its sole
discretion. Dividend increase to be effective on dividend to be declared in February 2013 and payable on April 30, 2013
Business Process Outsourcing
$250 billion market
2011-2015 CAGR: 7%
A Leader in Growth Markets
18
Market leader in key growth areas:
• Health care services
• Transportation services
• Human resource services
Document Outsourcing
$48 billion market
2011-2015 CAGR: 7%
Created the MPS industry
• Continue as market share
leader today
• Broadened MPS portfolio for
channel partners
Information Technology
Outsourcing
$250 billion market
2011-2015 CAGR: 4%
• Expanding provider of
enterprise cloud services
• Leader in Help Desk &
Desktop Outsourcing
Source: Internal market size analysis
Our Differentiated Advantage
• Diverse business portfolio and customer base
• Deep vertical expertise
• Customer-focused innovation
• Operational excellence and global delivery
• Successful acquisition strategy
19
• F&A: A/P, A/R, close process, procurement, cash mgmt., expense reimbursement
• Student loan servicing, student financial aid, enrollment mgmt.
• Financial Services: data processing services to auto finance & leasing
Commercial IT
(~12%)
State Government
(~12%)
Diversified Services Offerings
• Data center outsourcing
• Network management services
• Desktop management
• Help desk
• Remote infrastructure management
• Application services
• Enterprise cloud services
HR Services
(~10%)
• Consulting: retirement, health, comp
• Outsourcing: Employee service center, data management, payroll
• Benefits Outsourcing: 401(k), pension, health self-service portal
• Learning: technology services, content development, administration
• Medicaid administrative solutions
• Health Information Exchange
• Child support payment processing
• Eligibility determination & case management
• Electronic benefits transfer
• IT services
• Pharmacy benefits management services
Financial Services
(~6%)
Healthcare Payer &
Pharma (~6%)
Customer Care
(~7%)
• Healthcare payer claim processing, billing, payment, reconciliation
• Healthcare payer customer care, Web-based self service
• Cost recovery, audit, cost avoidance
• Wireless customer care: customer acquisitions, device support, loyalty plans & collections
• Travel: back office processing, on-line check-in support, customer care
• Tech support and services
Document Outsourcing
(~30%)
• Electronic toll collection
• Fare payment & collection
• Commercial carrier solutions
• Traffic photo enforcement
• Traffic & parking mgmt.
• IT Services
• Government records mgmt.
Transportation & Local
Government (~8%)
Percentages represent percent of total Services revenue
Communication & Marketing Services (~4%)
• Creating personalized, multi-channel marketing communications
Managed Print Services (~26%)
• Optimizing, managing and rationalizing the operations of Xerox and non-Xerox devices
Central Government (~3%)
• Student loan servicing, healthcare claims processing, electronic payment cards
Retail, Travel &
Insurance (~3%)
• Transactional services for retail, travel and non-healthcare insurance companies
• Data entry, mailroom, imaging input and hosting, call centers, help desk
• Increased industry focus
Healthcare Provider
(~3%)
• Consulting solutions
• Revenue cycle management
• Analytical care management & workflow solutions
20
Services Metrics and Trends
Key Messages
• Pipeline continues to grow, partially due
to clients delaying decisions
• Improved renewal rate offsets lower
new business signings
• Margin pressured, reset range in near
term to 10 – 12%
Segment Margin Trend
New Business Signings Trend1 (TTM Annual Revenue)
Renewal Rate Trend
Other Drivers
• Line of business mix
• Contract ramp timing
• Renewal potential
• Price concessions
• Acquisition cadence
Pipeline Trend
21
87% 80%
87%
70%
85%
100%
23%
5% 9%
0%
20%
40%
2010 2011 Q3 '12
7%
15%
(3)% (1)
0
1
2
3
-5%
0%
5%
10%
15%
2010 2011 Q3 '12
in b
illio
ns
Total TTM %G TTM
1New Business Signings = ARR (Annual Recurring Revenue) + NRR (Non-Recurring Revenue)
11.4%2 11.1% 9.8%
2Pro-forma: see non-GAAP measures
Services – Portfolio Dynamics
Note: The graphic above is a relative representation of the Services lines of business in 2013
Human Resources
Financial Services
Healthcare Payer
Retail, Travel & Ins.
Customer Care
Commercial IT
Health- care
Provider
Central Gov’t
State Government
Transportation
Managed Print
Services
Comm. and Mktg. Services
Op
era
tin
g M
arg
in %
Revenue Growth
Focused on ongoing portfolio management
• Invest in areas of differentiation and scale
• Divest of non-core businesses
22
Growth Impact: (2) - (3)% (3) - (4)% 8 - 10% 3 - 4% 1 - 3%Mid to High
Single Digits
Beginning of Year85 - 90%
Renewal Rate
Price
Declines
Revenue
Ramp Pr Yrs
New Signings
Revenue
Ramp Cr Yr
New Signings
Acquisition
GrowthEnd of Year
7
8
1
Recurring
Revenue
Recurring
Revenue
~91% of Total ~91% of Total
0
2
3
4
5
6
Non-recurring
13
9
10
Non-recurring11
12
Services - Recurring Revenue Model
Good visibility to Services revenue growth, large portion of revenue under contract
23
(in
bill
ions)
We are Executing a Series of Initiatives to Expand
Margins
24
• We have a cost issue, not a revenue issue
− Productivity gains not sufficient to offset: • Intensity of new contract ramp
• Previous loss of high margin contracts
• Typical price erosion
• To move margins into the target range, we are: − Restructuring to streamline the organization
− Increasing the use of lower cost labor (off-shoring and at-home
working)
− Accelerating innovation • “Business Re-invention Center” leverages Xerox R&D and
improves the pace of technology adoption
Customer-Focused Innovation
25
Business analytics
Process automation
IT convergence
• Patient scheduling/outcomes analysis
• Parking price optimization
• Customer & product wireless analytics
• Cost containment
• Fraud protection
• Vector (EZ-Pass)
• Health Enterprise: Medicaid processing
• Content Management
• Call Simplicity
• Asset DB
• In Home Worker
Market Trends Innovation
Operational Excellence and Global Delivery
26
Customer accountability & empowerment
Global production resources
State of the art technology/platforms
Speed and flexibility
Healthcare: software & adjacencies
Acquisitions Enhance Market Position
HRO – adjacencies
Customer Care – analytics and geographic expansion
Other Services – software, geographic expansion & adjacencies
HRO
Pharma Services
Transportation Netherlands
Clinical Surveillance
Benefits
websites Pharmacy Audit
E-Discovery
Customer Care Data
Analytics - UK
• Well-run businesses with strong and committed management
• EPS and margin accretive in year one
• Requires disciplined portfolio management
Managed Print Italy
EMR Adoption
Student Enrollment Services
27
Vertical Expertise: Healthcare
A $2 billion business in a rapidly growing market
provider of commercial transaction processing
#1 U.S. states supported by government health services
percent of the top ten BCBS organizations are clients
100 of U.S. insured patients are touched by our services
billion dollars in drug expenditures managed per year
13
of the top 20 U.S. managed health plans are Xerox clients
U.S. states supported by MMIS services
13 years government health program experience
million people
served by
government health
services
36 34
19
2/3
40+
Broad and Deep Healthcare Offerings and Expertise
Providers Payers Pharma / Life
Sciences Government Employers
Broad process-based expertise
• Eligibility
• Customer care
• Analytics
• Claims processing
• Records management
Targeted focus areas
• Medicaid fiscal agent/MMIS
• Health Insurance Exchanges
• Pharmacy benefits management
• Revenue cycle management
$17B
Printing Market: Focus on Attractive Segments
Consumer Office Environment Production
Inkjet
Laser Printers
Workgroup MFPs
High-End Devices
Market Size & Growth1
Declining (5%)
12011 – 2015 CAGR
Source: Internal market size analysis
Xerox Position
Do not participate
Less than 7% share
Technology &
Services leader
Technology &
Services leader
Decline in
low-value
pages
color affordability (price per page decline)
mass personalization
distribute & view
mobile workforce (smartphones/tablets)
from desktops to MFPs
in-house printing
move to services
Growth in
high-value
pages
Consolidation
of devices
Ind
us
try T
ren
ds
-- -
+ ++/-
+
+/- ++
Xerox Impact
Xerox print markets in slow contraction, down low single digits;
current economic environment amplifies contraction
$23B $33B $44B
$6B
Declining (1%)
eligible offset
Declining (1%) Growing 3%
[Color 11%, B&W (11%)]
31
Strengthening Market Leadership
billion in R&D together with Fuji Xerox
$1.5 MPS Global Services delivery centers across the globe
10
percent high end equipment revenue market share
40 most extensive multifunction printer portfolio
#1
of Partner Print Services wins are new business
2/3 thousand active U.S. patents >10 percent MPS
Partner growth in 2012
50
year leader in
Gartner MPS
Magic Quadrant 5
equipment revenue market share leader worldwide
#1
32
22%
58%
20%
Entry Mid High-End
Document Technology Dynamics
• North America
largest and most
profitable geography
• Europe revenue and
margin under
pressure
• Developing markets
highest growth with
improving margins
• Mid-range largest
product segment,
most impacted by
migration to services
• High-end most
sensitive to economy
• Entry growth driven
by developing markets
• Majority of annuity
tied to contracted
revenue
• Equipment impacted
by 5 to 10% price
erosion, most sensitive
to economy
• Unbundled supplies
primarily sold through
indirect channels
33
52%
18%
30%
Annuity tied to contracts
Annuity from unbundled supplies
Equipment
61% 26%
13%
N. America Europe DMO
Document Technology Metrics and Trends
Revenue Trend (G% @ CC)
Document Technology Margin Trend
Install Growth
Key Messages
• Continued install growth, drives future
annuity
• Maintaining overall equipment revenue
market share leadership
• Margin at high-end of 9 – 11% range,
reflects cost initiatives
Other Drivers
• Product and color mix
• Pace of migration to Xerox Services
• Developing markets growth
• Equipment price erosion
• Unbundled supplies sales
34
1% 0% (3)%
3%
(3)% (5)%
(10)%
(5)%
0%
5%
2010 2011 Sep YTD '12
DO + Tech Tech
10.5%
11.1% 10.9%
0%
4%
8%
12%
2010 2011 Sep YTD '12
Note: Install Growth excludes single-function mono printers; DO = Document Outsourcing
21%
0%
11% 13%
6% 8%
0%
10%
20%
30%
2010 2011 Sep YTD '12
Total Color
Constant Currency (CC): see non-GAAP measures
Customer aligned Organization Models
Focus on Simplification and Cost Reduction
Leveraging Shared Services
• Large Enterprises
– Services-led
• Channel Partner
– Low SG&A
• Graphic Communications
– Focused coverage
• Expand and leverage
partnerships
• Scaling remote device
management
• IT enablement for back
office and partner
management
• Product engineering and
sourcing
• Supply chain and
distribution
• Technical service and
supplies management
• Managed print services
delivery and support
Profitability and Cash Flow
Proactively streamlining infrastructure to align with market trends and
evolving customer requirements
35
Competitively Advantaged
$0
$20
$40
$60
$80
$100
2011 2012 2013 2014 2015
($B
)
Unmanaged Managed (MPS)
Superior ability to coordinate multi-
site delivery from local to global
Through MPS, manage any vendors
products, technical service and
supplies
Best in class remote device
management, help desk, technical
service, supplies management and
reporting
Success with Global Imaging
Systems, nearly 20% of Document
Technology with industry-leading
margins
Expanding in developing markets,
focus on BRIM1 countries
Providing greater value for partners
through expanded MPS, and most
extensive product line
WW Production Print
0%
100%
Pages Retail Value
Packaging
Offset
Digital
Market leader with world class
capabilities in productivity, digital
workflow and automation
Broadest product portfolio to
support Graphic Communications
Participating and investing in
inkjet-driven market expansion
Lead in Large Enterprises
Capture the SMB Opportunity
Digitize Production Printing
50 trillion pages, digital only 2%
36
SMB market more
than twice the size of
Large Enterprise 2x
Percent projected
SMB MPS CAGR
through 2015 17
Office Market Revenue
Source: Internal market size analysis
1BRIM – Brazil, Russia, India and Mexico
Third-Quarter 2012 Earnings Presentation
Ursula Burns
Chairman & CEO
Luca Maestri
Chief Financial Officer
October 23, 2012
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 and tax matters
in the United States and in the foreign countries in which we do business; changes in foreign currency
exchange rates; actions of competitors; 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; our ability to expand equipment placements; the risk that
subcontractors, software vendors and utility and network providers will not perform in a timely, quality
manner; 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; our ability to recover capital
investments; development of new products and services; our ability to protect our intellectual property rights;
interest rates, cost of borrowing and access to credit markets; the risk that multi-year contracts with
governmental entities could be terminated prior to the end of the contract term; reliance on third parties for
manufacturing of products and provision of services; our ability to drive the expanded use of color in printing
and copying; the outcome of litigation and regulatory proceedings to which we may be a party; and other
factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management‟s
Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012 and our 2011
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.
38
Global Perspective
39
Observations
• U.S. fiscal concerns create greater economic uncertainty
• Europe economies remain weak
• Developing markets relatively stable
Implications
• Government budget constraints: less funding for infrastructure advancements,
related services
• Increasing conservatism in large enterprises; delayed decision making
• Proactive management of cost; aligning resources with market conditions
Healthy annuity - 85% of revenue - and diversified portfolio
mitigate macro challenges
1Adjusted EPS, operating margin:
Third-Quarter Overview
Revenue down 3% or 1% CC and GAAP EPS of $0.21, Adj EPS1 of $0.25
Services revenue up 5%, 6% CC; margins remained pressured
• Services margin of 9.4% was below expectations, driven by:
Pressure on government contracts
Lower volumes in some areas of the business
Technology revenue down 10%, 7% CC; margins solid
• Revenue declines driven by lower equipment sales
• Annuity remains stable
EPS in line with expectations
• Continued strong Services revenue and Technology margin performance
• Good expense management
Cash flow from operations of $594M
• Cash from operations $228M higher YOY
• Share repurchase of $361M in Q3, $718M Sept YTD
40
Constant currency (CC):
41
Executing on our Strategy
• Providing IT service desk support for McDonald's restaurants in several key markets;
making Xerox one of the world's largest providers of restaurant support services.
• Consolidating and managing the North American IT infrastructure and data centers for
global energy company.
• Handling extensive call center services to support Medicare administration for large
healthcare payers.
• Providing consulting services to help healthcare providers meet government standards
for “Meaningful Use” of electronic health records.
Advancing IT infrastructures
Simplifying business in emerging markets
• Implementing MPS solution for invoicing and payroll integrated with devices and print
centers for Brazilian aircraft manufacturer.
• Managing retail account opening process in 9,000 branches of Latin American bank.
• Developing an advanced invoicing system for large Russian retailer.
Transforming the business of healthcare
(in millions) Q3
Total Revenue $5,423
Growth (3)%
CC Growth (1)%
Annuity $ 4,618
Growth (1)%
CC Growth 2%
Annuity % of Revenue 85%
Equipment $ 805
Growth (14)%
CC Growth (12)%
Constant currency (CC):
Revenue
2012
Annuity revenue represents service, outsourcing and rentals, supplies, paper and other sales and finance income
Segment Revenue
Contribution
42
48%
Technology
Services
Other
42%
52%
6%
(in millions, except per share data)
Q3 2012 B/(W) 2011 Comments
Revenue $ 5,423 $ (160) Down $48M at Constant Currency
Gross Margin 31% (1.7) pts Impacted by mix and Services pressure
RD&E $ 161 Continue to see benefits from restructuring and productivity actions SAG $ 1,050
SAG % of Revenue 19.4% 0.5 pts
Adjusted Operating Income1 $ 469 $ (67)
Operating Income % of Revenue 8.6% (1.0) pts Decline driven by Services
Adjusted Other, net1 $ 76 Restructuring $18M higher YOY
Equity Income $ 34
Adjusted Tax Rate1 24%
Adjusted Net Income – Xerox1 $ 333 $ (41)
Adjusted EPS1 $ 0.25
$(0.01)
Amortization of intangible assets 0.04
GAAP EPS $ 0.21
$(0.01)
Earnings
1Adjusted Operating Income, Adjusted Other, net, Adjusted Tax Rate, Adjusted Net Income – Xerox and Adjusted EPS:
43
• Consistent solid revenue growth
BPO up 9% CC
DO up 4% CC
ITO up 6% CC
• Revenue mix: 57% BPO,
31% DO and 12% ITO
• Segment margin remains
pressured
Sequential decline of 120 bps
driven by Government and lower
volume
YOY continue to see contract ramp
impacts
• BPO/ITO renewal rate of 86%,
within target range
Services Segment
Q3 % B/(W) YOY
(in millions) 2012 Act Cur CC
Total Revenue $2,847 5% 6%
Segment Profit $269 (17)%
Segment Margin 9.4% (2.5) pts
Constant currency (CC):
* Q1 „11 revenue growth is on a pro forma basis, 44
Revenue Growth Trend (CC)
Segment Margin Trend
5% 4%
5% 6%
10%
7% 6%
Q1 '11* Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12
10.3%
12.1% 11.9%
10.3%
9.3%
10.6%
9.4%
Technology Segment
Constant currency (CC):
Q3 % B/(W) YOY
(in millions) 2012 Act Cur CC
Total Revenue $2,259 (10)% (7)%
Segment Profit $245 (5)%
Segment Margin 10.8% 0.5 pts
• Total Revenue decline of 7%
Annuity revenue down 3% CC
Equipment sales impacted by a
tough market environment and
difficult YOY compare
• Revenue mix: 59% Mid-Range,
21% Entry and 20% High-End
• Including document outsourcing,
revenue declined 4% CC
• SMB including developing
markets relatively strong and
showing solid install growth
• Segment margin improves YOY
Includes gain of $23M associated
with finance receivables sale
45
Revenue Growth Trend (CC)
Segment Margin Trend
0%
(4)%
(1)%
(4)% (5)%
(4)%
(7)% (8)%
(6)%
(4)%
(2)%
0%
10.7%
11.8%
10.3%
11.7%
10.5%
11.3%
10.8%
Key Metrics
Constant currency (CC): Installs, color revenue, pages and MIF include both the Technology and Services segments. Color revenue and color pages
reflect revenue and pages from color capable devices.
Entry Installs Q3 YTD
A4 Mono MFDs 38% 23%
A4 Color MFDs 46% 42%
Color Printers 10% 3%
Mid-Range Installs
Mid-Range B&W MFDs (7)% (6)%
Mid-Range Color MFDs (14)% 4%
High-End Installs
High-End B&W (31)% (21)%
High-End Color 32% 46%
46
Q3
Business Process Outsourcing $2.0
Information Technology Outsourcing $0.4
Document Outsourcing $0.7
Total $3.1B
Signings Growth TTM (15)%
Signings Sequential growth 19%
Q3 YTD
Digital MIF 4% 3%
Color MIF 15% 14%
Digital Pages (3)% (2)%
Color Pages 9% 10%
Color Revenue (CC) (6)% (3)%
Install, MIF and Page Growth Signings and Renewal Rate
Q3
Renewal Rate (BPO and ITO) 86%
Total signings impacted by fewer mega deals, shorter
contract length and customer decision delays
Cash Flow
47
Cash Flow Analysis (in millions) Q3 2012
Net Income $ 288
Depreciation and amortization 339
Restructuring and asset impairment charges 14
Restructuring payments (30)
Contributions to defined benefit pension plans (73)
Inventories (44)
Accounts receivable and Billed portion of finance receivables*
(319)
Accounts payable and Accrued compensation 7
Equipment on operating leases (65)
Finance Receivables 412
Other 65
Cash from Operations
$ 594
Cash from Investing
$ (289)
Cash from Financing $ (230)
Change in Cash and Cash Equivalents 68
Ending Cash and Cash Equivalents $ 882
*Accounts Receivables includes collections of deferred proceeds from sales of receivables 1Working capital includes accounts receivable, accounts payable and inventory
• Cash flow driven by Net Income
• Working Capital1 and Finance Assets
essentially flat
• Lower YOY pension contributions
driven by calendarization
- Sep YTD $310M, $38M lower YOY
• Share repurchase of $361M and
Dividends of $69M
• Continue to expect Cash from
Operations between $2.0 and $2.3B
for FY 2012
Balance Sheet and Capital Allocation 2012 Debt Trend
Financing
• Xerox‟s value proposition includes leasing of
Xerox equipment
• Maintain 7:1 leverage ratio of debt to equity on
these finance assets
Q3 2012
(in billions) Fin. Assets Debt
Financing
$6.2 $ 5.41
Core - $ 3.94
Total Xerox $ 6.2 $ 9.35
Key Messages
• Majority of debt related to financing of
customer equipment
• Capital allocation strategy on track
Repurchased $718M YTD, 65M net reduction in
common shares outstanding
Q3 acquisitions $156M, $243M YTD
• Expect year-end debt levels flat to 2011
48
$ b
illio
ns 8.6
9.6 9.2 9.4 8.6
(in billions) Guidance Progress
Cash from Ops $2.0 - $2.3 √
CAPEX $(0.5) √
Free Cash Flow1 $1.5 - $1.8 √
Share Repurchase $0.9 - $1.1 √
Acquisitions $0.3 - $0.4 √
Dividends $0.3 √
Capital Allocation Status
1Free Cash Flow:
Summary
*Guidance - Adjusted EPS and Constant currency (CC): 49
Annuity-based business model provides stability
• 85% of total revenue
• Up 2% CC, driven by Services
Diverse portfolio provides differentiated advantage
• Continued strong Services growth
• Maintaining market-leading position in Document Technology
Margin pressure in Services
• Focusing on broader operational efficiencies
Cash flow on track for $2.0 to $2.3B FY
• Continue to expect to repurchase $0.9 to $1.1B of shares
EPS guidance excluding restructuring
• Q4 Adj EPS $0.33 - $0.35, Q4 GAAP EPS $0.29 - $0.31
• FY Adj EPS $1.07 - $1.09, FY GAAP EPS $0.92 - $0.94
Appendix
51
(in millions) FY FY Pro -forma FY
Pro -forma Q1 Q2 Q3
Total Revenue $ 15,179 $ 21,633 $ 22,626 $5,503 $5,541 $5,423
Growth (14%) 43% 3% 5% 2% 1% (1)% (3)%
CC Growth (11%) 43% 3% 3% Flat 2% 1% (1)%
Annuity $ 11,629 $ 17,776 $ 18,770 $ 4,692 $ 4,695 $ 4,618
Growth (10%) 53% 1% 6% 2% 1% Flat (1)%
CC Growth (7%) 54% 2% 4% 1% 2% 2% 2%
Annuity % Revenue
77% 82% 83% 85% 85% 85%
Equipment $ 3,550 $ 3,857 $ 3,856 $ 811 $ 846 $ 805
Growth (24%) 9% 9% Flat Flat (2)% (9)% (14)%
CC Growth (23%) 10% 10% (1)% (1)% (1)% (6)% (12)%
Constant currency:
Revenue
2009 2010 2011
Note: Pro-forma revenue growth adjusts 2009 and 2010 results to include ACS historical results for the comparable periods.
2012
52
(in millions) FY Pro -forma FY
Pro -forma Q1 Q2 Q3
Services $ 9,637 $10,837 $2,821 $2,806 $2,847
Growth nm 3% 12% 6% 9% 5% 5%
CC Growth nm 3% 11% 5% 10% 7% 6%
Technology $ 10,349 $ 10,259 $ 2,338 $2,370 $2,259
Growth 3% 3% (1)% (1)% (6)% (7)% (10)%
CC Growth 3% 3% (3)% (3)% (5)% (4)% (7)%
Other $ 1,647 $ 1,530 $ 344 $365 $317
Growth 1% 1% (7)% (7)% (11)% (6)% (13)%
CC Growth 1% 1% (9)% (9)% (10)% (4)% (11)%
Constant currency:
Segment Revenue Trend
2010 2011 2012
Note: Pro-forma revenue growth adjusts 2009 and 2010 results to include ACS historical results for the comparable periods.
“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.
• Net income and Earnings per share (“EPS”)
• Effective tax rate
In 2012 and 2011 we adjusted for the 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.
We also calculate and utilize an Operating income and margin earnings measure by adjusting our pre-tax income and margin amounts to
exclude certain expenses. In addition to the amortization of intangibles, operating income and margin also exclude Other expenses, net
as well as Restructuring and asset impairment charges. Other expenses, net is primarily composed of non-financing interest expense and
also includes other non-operating costs and expenses. Restructuring and asset impairment charges consist of costs primarily related to
severance and benefits for employees pursuant to formal restructuring and workforce reduction plans. Such charges are expected to yield
future benefits and savings with respect to our operational performance. We exclude these amounts in order to evaluate our current and
past operating performance and to better understand the expected future trends in our business.
“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.
Non-GAAP Financial Measures
54
“Pro-forma Basis”: Reported 2010 services segment margin was 11.7%, reported 2010 constant currency revenue growth was 177%
and reported 2011 constant currency revenue growth was 12%. To better understand the trends in our business, we discuss our 2011
and 2010 operating results by comparing them against adjusted prior-period results which include ACS historical results for the
comparable period. We acquired ACS on February 5, 2010 and ACS‟s results subsequent to that date are included in our reported results.
Accordingly, for the comparison of our reported 2011 results to 2010, we included ACS‟s 2010 estimated results for the period January 1
through February 5, 2010 in our reported 2010 results (pro-forma 2010). For the comparison of our reported 2010 results to 2009, we
included ACS‟s 2009 estimated results for the period February 6 through December 31 in our reported 2009 results (pro-forma 2009). We
refer to these comparisons against adjusted results as “pro-forma” basis comparisons. ACS‟s historical results for these periods 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 provide a more enhanced assessment than the actual comparisons, given the
size and nature of the ACS acquisition.
“Free Cash Flow”: To better understand the trends in our business, we believe that it is helpful to adjust cash flows from operations to
exclude 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. 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.
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.
Non-GAAP Financial Measures
55
GAAP EPS to Adjusted EPS Guidance Track
Q4 2012 FY 2012
GAAP EPS $0.24 - $0.26 $0.87 - $0.89
Adjustments:
Amortization of intangible assets 0.04 0.15
Adjusted EPS $0.28 - $0.30 $1.02 - $1.04
Earnings Per Share guidance
56
57
Q3 GAAP EPS to Adjusted EPS Track
(2) Represents common shares outstanding at September 30, 2012 as well as shares associated with our
Series A convertible preferred stock plus dilutive potential common shares as used in the calculation of
earnings per share for the three months ended September 30, 2012.
(1) Average shares for the calculation of adjusted EPS for the three months ended September 30, 2012 and 2011 include 27 million of
shares associated with the Series A convertible preferred stock and therefore the related quarterly dividends of $6 million are excluded.
We evaluate the dilutive effect of the Series A convertible preferred stock on an "if-converted" basis.
(in millions; except per share amounts) Net Income EPS Net Income EPS
Reported 282$ 0.21$ 320$ 0.22$
Adjustments:
Amortization of intangible assets 51 0.04 54 0.04
Adjusted 333$ 0.25$ 374$ 0.26$
Weighted average shares for adjusted EPS(1) 1,346 1,453
Fully diluted shares at September 30, 2012(2) 1,325
Three Months Ended
September 30, 2012
Three Months Ended
September 30, 2011
58
Q3 Adjusted Operating Income/Margin
(in millions) Profit Revenue Margin Profit Revenue Margin
Reported pre-tax income 317$ 5,423$ 5.8% 367$ 5,583$ 6.6%
Adjustments:
Amortization of intangible assets 82 87
Xerox restructuring charge (credit) 14 (4)
Other expenses, net 56 86
Adjusted Operating 469$ 5,423$ 8.6% 536$ 5,583$ 9.6%
Equity in net income of unconsolidated
affiliates 34 43
Fuji Xerox restructuring charge 5 1
Other expenses, net* (56) (85)
Segment Profit/Revenue 452$ 5,423$ 8.3% 495$ 5,583$ 8.9%
* Includes rounding adjustments.
Three Months Ended Three Months Ended
September 30, 2012 September 30, 2011
59
Q3 Adjusted Other, net
Three Months Ended
(in millions) September 30, 2012
Other expenses, net - Reported 56$
Adjustments:
Xerox restructuring charge 14
Net income attributable to noncontrolling interests 6
Other expenses, net - Adjusted 76$
60
Q3 Adjusted Effective Tax Rate
(in millions)
Pre-Tax
Income
Income
Tax
Expense
Effective
Tax
Rate
Pre-Tax
Income
Income
Tax
Expense
Effective
Tax Rate
Reported 317$ 63$ 19.9% 367$ 81$ 22.1%
Adjustments:
Amortization of intangible assets 82 31 87 33
Adjusted 399$ 94$ 23.6% 454$ 114$ 25.1%
Three Months Ended Three Months Ended
September 30, 2012 September 30, 2011
61
Q3 Services Revenue Breakdown
Note: ITO growth includes 3 pts of growth from intercompany services which is eliminated in total services
(in millions) 2012 2011 Change
Revenue
CC
Change
Business Processing Outsourcing 1,633$ 1,520$ 7% 9%
Document Outsourcing 897 885 1% 4%
Information Technology Outsourcing 361 342 6% 6%
Less: Intra-Segment Eliminations (44) (30) * *
Total Revenue - Services 2,847$ 2,717$ 5% 6%
* Percent change not meaningful.
Three Months Ended September 30,
62
Sep YTD Services Revenue Breakdown
Note: ITO growth includes 3 pts of growth from intercompany services which is eliminated in total services
(in millions) 2012 2011 Change
Revenue
CC
Change
Business Processing Outsourcing 4,876$ 4,467$ 9% 10%
Document Outsourcing 2,684 2,591 4% 6%
Information Technology Outsourcing 1,037 989 5% 5%
Less: Intra-Segment Eliminations (123) (74) * *
Total Revenue - Services 8,474$ 7,973$ 6% 8%
* Percent change not meaningful.
Nine Months Ended September 30,
63
Pro forma Revenue Breakdown