Xerox 2002 Annual Report Download - page 20

18
A reconciliation of the above presentation of
revenues to the revenue classifications included in
our Consolidated Statements of Income is as follows
($ in millions):
Year Ended December 31,
2002 2001 2000
Sales $ 6,752 $ 7,443 $ 8,839
Less: Supplies, paper and
other sales (2,851) (3,114) (3,575)
Equipment Sales $ 3,901 $ 4,329 $ 5,264
Service, outsourcing and rentals $ 8,097 $ 8,436 $ 8,750
Add: Supplies, paper and
other sales 2,851 3,114 3,575
Post sale and other revenue $10,948 $11,550 $12,325
2002 Equipment sales of $3.9 billion declined 10 per-
cent from $4.3 billion in 2001 and included a benefit of
one percentage point from currency. Year-over-year
equipment sales declines moderated throughout
2002, reflecting the success of our 2002 product
launches in the key areas of monochrome digital mul-
tifunction, as well as in Production and Office color.
Approximately 35 percent of the decline was due to a
decrease in light-lens equipment sales due to cus-
tomers that transitioned to digital technology. Less
than 5 percent of our 2002 Equipment sales were for
light-lens devices and we expect this declining trend
to continue. Approximately 30 percent of the
Equipment sales decline was due to our exit from the
SOHO segment in 2001 and the remainder of the
decline was caused by a combination of the weak
economy, marketplace competition and price pres-
sures which approximated 5 to 10 percent and our
decision to reduce participation in aggressively priced
bids and tenders in Europe, as we reoriented our
focus from market share to profitable revenue.
2001 Equipment sales of $4.3 billion declined
18 percent from $5.3 billion in 2000 and included an
unfavorable currency impact of one percentage point.
Over one-third of the decline was due to our exit from
the SOHO segment in 2001 and the sale of our China
operations in 2000. Approximately one-quarter of the
decline was due to customers that transitioned from
light lens to digital technology. The balance of the
decline reflected a combination of economic weak-
ness, competitive price pressures which approximat-
ed 5 to 10 percent and our decision to reduce
participation in aggressively priced bids and tenders
in Europe, as we reoriented our focus from market
share to profitable revenue.
Post sale and other revenue consists of service,
supplies, paper, rental, facilities management and
other revenues derived from the equipment installed
at customer locations and the volume of prints and
copies that our customers make on that equipment,
as well as associated services. 2002 Post sale and
other revenue of $10.9 billion, declined 5 percent from
$11.5 billion in 2001, including a favorable impact of
one percentage point from currency. Over half of the
total decline in 2002 Post sale and other revenue was
due to a reduction in the amount of equipment instal-
lations at certain DMO customer locations, as a result
of reduced placements in recent periods and our exit
from the SOHO segment in the second half of 2001.
The balance of the decline included lower page print
volumes and customers that transitioned from light-
lens to digital technology, reflecting weak mono-
chrome equipment installations in the Production and
Office segments which have not yet been offset by
growth in color. Within Post sale and other revenue,
2002 supplies, paper and other sales of $2.9 billion
declined 8 percent from 2001 predominantly due to
supplies declines reflecting our second half 2001
SOHO exit, lower DMO equipment installations and
production and office light-lens declines. Service, out-
sourcing and rental revenue of $8.1 billion declined
4 percent from 2001 predominantly due to lower
rental revenues as the result of a reduction in the level
of equipment installations at certain DMO customers
in both current and prior periods.
2001 Post sale and other revenue of $11.5 billion,
declined 6 percent from $12.3 billion in 2000 and
included the adverse impact from currency translation
of one percentage point. Approximately 40 percent of
the decline occurred in our DMO segment as a result of
reduced equipment installations in that segment and
15 percent was due to the sale of our China operations
in 2000. The remainder of the decline resulted from
decreases in Production monochrome and Office light
lens, and our decision to prioritize more profitable rev-
enue, which were only partially offset by strong dou-
ble-digit growth in color and monochrome digital
multifunction. Within Post sale and other revenue, 2001
supplies, paper and other sales of $3.1 billion declined
13 percent from 2000 due to lower paper sales reflect-
ing reduced volumes and reduced Production, Office
and DMO supplies revenues reflecting the declines dis-
cussed above. Service, outsourcing and rental revenue
of $8.4 billion were 4 percent lower than 2000 as lower
service and rental revenues were only partially offset
by document outsourcing growth.
2002 Finance income revenue declined 11 percent
from 2001, reflecting lower 2002 equipment sales, our
full exit from the financing business in the Nordic coun-
tries and in Italy, as well as our partial exit of this busi-
ness in The Netherlands and Germany. 2001 Finance
income revenue declined 3 percent from 2000, reflect-
ing lower equipment sales and the initial effects of our
transition to a third-party finance provider in the Nordic
countries.