Xerox 2008 Annual Report Download - page 14

Download and view the complete annual report

Please find page 14 of the 2008 Xerox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

Our Business
Our Business Model Fundamentals
Annuity
Model
Cash
Generation
Expanded
Earnings
One fundamental of our business model is our annuity model. Post
sale revenue growth is driven by increasing equipment installation
which increases the number of page-producing machines in the
field (“MIF”) and by expanding the document management
services we offer our customers. 73% of our 2008 total revenue
was post sale revenue that includes equipment maintenance and
consumable supplies, among other elements. We sell the majority
of our equipment through sales-type leases that we record as
equipment sale revenue. Equipment sales represented 27% of our
2008 total revenue.
Revenue stream
27%
73%
�73%
Approximately 73% of our revenue, “post sale” includes
annuity-based revenue from maintenance, services, supplies
and financing, as well as revenue from rentals and operating
lease arrangements.
�27%
The remaining 27% of our revenue comes from equipment
sales, from either lease arrangements that qualify as sales for
accounting purposes or outright cash sales.
The number of equipment installations and the growth in
document management services are key indicators of post sale
revenue trends. The mix of color pages is also a significant
indicator of post sale revenue trends because color pages use more
consumables per page than black-and-white. In addition,
expanding our market, particularly within the New Business of
Printing, is key to increasing pages and we have developed tools
and resources to be the leader in this large market opportunity.
Our consistent cash flow from operations is driven by recurring
revenues; this, along with modest capital investments, enables us
to provide a return to shareholders through:
• Buying back shares under our share repurchase program and
• Maintaining our quarterly dividend.
We anticipate expanding our future earnings through:
• Modest revenue growth;
• Driving cost efficiencies to balance gross profit and expense;
• Leveraging our share repurchase and
• Making accretive acquisitions.
12 Xerox 2008 Annual Report
�
�
�
• Expanding our distribution through acquisitions;