Xerox 2007 Annual Report Download - page 44

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42
Revenue
We sell the majority of our products and services under bundled lease arrangements, in
which our customers pay a monthly amount for the equipment, maintenance, services,
supplies and fi nancing over the course of the lease agreement. These arrangements are
benefi cial to our customers and us since, in addition to customers receiving a bundled
offering, these arrangements allow us to maintain the customer relationship for future
sales of equipment and services.
We analyze these arrangements to determine whether the equipment component meets
certain accounting requirements such that the equipment fair value should be recorded as
a sale at lease inception, that is, a sales-type lease. We allocate the remaining portion of
the monthly minimum payments to the various elements of the lease based on fair value
– service, maintenance, supplies and fi nancing – that we generally recognize over the term
of the lease agreement, and that we report as “post sale and other revenue” and “fi nance
income” revenue. In those arrangements that do not qualify as sales-type leases, which
have increased as a result of our services-led strategy, we recognize the entire monthly
payment over the term of the lease agreement, whether rental or operating lease, and
report it in “post sale and other revenue.” Our accounting policies for revenue recognition
for leases and bundled arrangements are included in Note 1-Summary of Signifi cant
Accounting Policies in the Consolidated Financial Statements in our 2007 Annual Report.
Our business
■ $9,078 U.S.
■ $5,888 Europe
■ $2,262 Other areas
Revenues by geography
(in millions)
Revenues by geography based on the location of the
unit reporting the revenue and includes export sales.
About 50% of our revenue is generated from customers
outside the U.S.