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17Xerox 2009 Annual Report
Research and Development
Investment in R&D is critical for competitiveness in our fast-paced
markets. More than two-thirds of our equipment sales are from products
launched during the past two years. Research activities are conducted
in the United States, Canada, Europe and Asia – often in collaboration
with Fuji Xerox Co., Ltd. (“Fuji Xerox”).
Our R&D drives innovation and customer value by:
• Creating new differentiated products and services;
• Enabling cost competitiveness through continuous and disruptive
innovation for products and services;
• Enabling new ways to serve customers;
• Creating new business opportunities that drive future growth
and reach new customers; and
• Creating sustainable/green products, solutions and services.
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 financing over the
course of the lease agreement. These arrangements are beneficial to
our customers and to 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 financing – that we
generally recognize over the term of the lease agreement, and that we
report as “post sale revenue.” In those arrangements that do not qualify
as sales-type leases, we recognize revenue over the term of the lease
agreement, whether rental or operating lease, and report it in post sale
revenue. Our accounting policies for revenue recognition for leases and
bundled arrangements are included in Note 1 – Summary of Significant
Accounting Policies in the Consolidated Financial Statements in this
2009 Annual Report.
Revenues by Geography
(in millions)
n฀$8,156 U.S.
n฀$4,971 Europe
n฀$2,052 Other Areas
Revenues by geography are based on the location of
the unit reporting the revenue and includes exports sales.
Approximately 50% of our revenue is generated from
customers outside the U.S.
$4,971
$2,052
$8,156
Creating the future today by pioneering
high-impact technologies that enable us to
lead in our core markets and to create future
markets for Xerox.
RD&E Expenses
(in millions)
$912
$148
$764
$840
$134
$750
’08 ’07
$884
’09
$127
$713
n฀R&D
n฀Sustaining Engineering
Fuji Xerox invested
$796 million in
R&D in 2009,
$788 million in
2008 and $672
million in 2007.