Xerox 2009 Annual Report Download - page 23

21Xerox 2009 Annual Report
Fuji Xerox
Fuji Xerox is an unconsolidated entity in which we currently own
a 25 percent interest and FUJIFILM Holdings Corporation (“FujiFilm”)
owns a 75 percent interest. Fuji Xerox develops, manufactures and
distributes document processing products in Japan, China, Hong Kong,
other areas of the Pacific Rim, Australia and New Zealand. We retain
significant rights as a minority shareholder. Our technology licensing
agreements with Fuji Xerox ensure that the two companies retain
uninterrupted access to each other’s portfolio of patents, technology
and products.
International Operations
We are incorporating by reference the financial measures by geographical
area for 2009, 2008 and 2007 that are included in Note 2 – Segment
Reporting in the Consolidated Financial Statements in our 2009 Annual
Report. See also the risk factors entitled “Our business, results of operations
and financial condition may be negatively impacted by economic
conditions abroad, including fluctuating foreign currencies and shifting
regulatory schemes” in Part 1, Item 1A of Form 10-K.
Backlog
We believe that backlog, or the value of unfilled orders, is not
a meaningful indicator of future business prospects because of
the significant proportion of our revenue that follows equipment
installation, the large volume of products we deliver from shelf
inventories and the shortening of product life cycles.
Seasonality
Our revenues are affected by such factors as the introduction of
new products, the length of sales cycles and the seasonality
of technology purchases. As a result, our operating results are difficult
to predict. These factors have historically resulted in lower revenue
in the first quarter than in the immediately preceding fourth quarter.
Other Information
Xerox is a New York corporation, organized in 1906, and our principal
executive offices are located at 45 Glover Avenue, P.O. Box 4505,
Norwalk, Connecticut 06856-4505.
Our telephone number is [phone].
On the Investor Information section of our Internet website, you
will find our annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and any amendments to these
reports. We make these documents available as soon as we can
after we have filed them with, or furnished them to, the Securities
and Exchange Commission.
Our Internet address is www.xerox.com.
Manufacturing and Supply
Our manufacturing and distribution facilities are located around the
world. The company’s largest manufacturing site is in Webster, New
York, where we make fusers, photoreceptors, Xerox® iGen and Nuvera
systems, components, consumables and other products. Additionally
we have an EA Toner plant located in Webster, New York, which was
built in 2007. Our remaining primary manufacturing operations are
located in: Dundalk, Ireland, for our high-end production products
and consumables; and Wilsonville, Oregon, for solid ink products,
consumable supplies and components for our Office segment
products. We also have a major facility in Venray, Netherlands, which
handles supplies manufacturing and supply chain management
for the Eastern Hemisphere.
We are currently in the third year of a master supply agreement
with Flextronics, a global electronics manufacturing services company,
to outsource portions of manufacturing for our Office segment.
The agreement has a three-year term, with two additional one-
year extension periods at our option. Our inventory purchases from
Flextronics currently represent approximately 20 percent of our overall
worldwide inventory procurement and production. Pricing for inventory
sourced through Flextronics is generally market-based. We have agreed
to purchase from Flextronics some products and consumables within
specified product families, although we do have the ability to source
product from other suppliers without penalty to the extent needed.
Flextronics is required to acquire inventory based on our forecasted
requirements and must maintain sufficient manufacturing capacity
to satisfy these requirements. Under certain circumstances, we may
become obligated to purchase inventory that remains unused for
more than 180 days, becomes obsolete or remains unused on the
termination of the supply agreement. If Flextronics were unable to
continue to supply product, it would not result in a material disruption
to our business, because Flextronics primarily provides contract
assembly labor and we continue to manage the inbound sourcing
and supply chain management of raw materials and sub-assembly
parts. In addition, we own the tooling and technology that Flextronics
currently uses to produce our products; there are a number of alternative
suppliers that could replace the contract assembly labor Flextronics
provides and we have business resumption plans in place for Flextronics
and other similar suppliers.
We acquire other office products from various third parties in order
to increase the breadth of our product portfolio and meet channel
requirements. We have arrangements with Fuji Xerox under which
we purchase and sell products, some of which are the result of
mutual research and development arrangements. Refer to Note
7 – Investments in Affiliates, at Equity in the Consolidated Financial
Statements in our 2009 Annual Report for additional information
regarding our relationship with Fuji Xerox.