Xerox 2009 Annual Report Download - page 31

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29Xerox 2009 Annual Report
Management’s Discussion
Revenue2008
Production revenue of $5,237 million decreased 1%, including a
1-percentage point benefit from currency, reflecting:
•2% increase in post sale revenue as growth from color, continuous
feed and light production products offset declines in revenue from
black-and-white high-volume printing systems and light lens devices.
•10% decrease in equipment sales revenue, primarily reflecting pricing
declines in both black-and-white and color production systems, driven
in part by weakness in the U.S.
•1% increase in installs of production color products driven in part
by Xerox® 700 and iGen4 activity, as well as color continuous feed.
•6% decline in installs of production black-and-white systems driven
primarily by declines in installs of light production systems.
OperatingProfit2009
Production operating profit of $217 million decreased $177 million
from 2008. The decrease is primarily the result of lower gross profit
flow-through from revenue declines which were partially offset by lower
RD&E and SAG spending as a result of favorable currency and cost
reductions. The improvement in SAG was mitigated by an increase in
bad debt provisions.
Production
Revenue2009
Production revenue of $4,545 million decreased 13%, including
a 3-percentage point negative impact from currency, reflecting:
•10% decrease in post sale revenue with a 3-percentage point
negative impact from currency, as declines were driven in part
by lower black-and-white page volumes and lower revenue from
entry production color products which reflect the weak economic
environment during the year.
•22% decrease in equipment sales revenue, with a 2-percentage
point negative impact from currency. The decline in revenue across
all product groups reflects lower installs driven by the weak economic
environment and delays in customer spending on technology.
•11% decline in installs of production color products, as entry
production color declines were partially offset by increased Xerox®
700 installs and iGen4.
•22% decline in installs of production black-and-white systems,
reflecting declines in all product groups.
Revenues by segment for the years ended 2009, 2008 and 2007
were as follows:
Year Ended December 31,
(in millions) Production Office Other Total
2009
Equipment sales $ 1,031 $ 2,363 $ 156 $ 3,550
Post sale revenue 3,514 6,213 1,902 11,629
Total Revenues $ 4,545 $ 8,576 $ 2,058 $ 15,179
Segment Profit (Loss) $ 217 $ 835 $ (274) $ 778
Operating Margin 4.8% 9.7% (13.3)% 5.1%
2008
Equipment sales $ 1,325 $ 3,105 $ 249 $ 4,679
Post sale revenue 3,912 6,723 2,294 12,929
Total Revenues $ 5,237 $ 9,828 $ 2,543 $ 17,608
Segment Profit (Loss) $ 394 $ 1,062 $ (165) $ 1,291
Operating Margin 7.5% 10.8% (6.5)% 7.3%
2007
Equipment sales $ 1,471 $ 3,030 $ 252 $ 4,753
Post sale revenue 3,844 6,443 2,188 12,475
Total Revenues $ 5,315 $ 9,473 $ 2,440 $ 17,228
Segment Profit (Loss) $ 562 $ 1,115 $ (89) $ 1,588
Operating Margin 10.6% 11.8% (3.7)% 9.2%
Note: Install activity percentages include the Xerox-branded product shipments to GIS.