Xerox 2009 Annual Report Download - page 8

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Strategically and financially, extending our global brand into
business process outsourcing is all about growth acceleration
and value creation – more value for our customers through
a broader set of technology and services offerings, and more
sustainable value for our shareholders by strengthening our
financial profile. In fact, the benefits to our business are
immediate, including:
•
Giving us scale and leadership in business process outsourcing,
a market that is growing at a rate of 5 percent per year.
•
Increasing our already strong free cash flow4, which is
expected to exceed $2 billion per year or more than 8 percent
of annual revenue.
•
Strengthening our annuity-based business model.
Through multi-year service contracts for BPO and document
management, Xerox’s recurring revenue will represent
80 percent of total revenue.
•
Enhancing our profitable revenue growth. Through cost
and revenue synergies, we expect to increase our operating
margin by 1 percent per year through 2012, which will expand
earnings by 15 to 20 percent.
The acquisition would not have been possible without the
approval of Xerox shareholders who voted overwhelmingly for
it. In fact, more than 96 percent of the votes cast gave us the
green light. We can’t tell you how gratifying that is and we are
committed to giving you a good return on this investment.
Xerox People: Our Greatest Asset
We are feeling good about where we are and where we’re
heading. Much of our optimism comes from the investments
we have made, but much of it comes also from the caliber
and commitment of Xerox people. We both spend a lot of
time with Xerox customers. Wherever we go around the world,
our customers sing the praises of Xerox people. They are our
competitive advantage.
Last year, our people received more than 350 awards. They were
won by Xerox people in every corner of the globe and they were
given for our innovation, technology, products and services; for
our leadership in diversity, sustainability, corporate responsibility
and community involvement; for being well-managed, using
Lean Six Sigma exceptionally well, exhibiting a strong sense of
values and ethics and being a good place to work.
One award was especially gratifying. J.D. Power and Associates
recognized Xerox for providing “an outstanding customer service
experience.” This is the fourth consecutive year that Xerox people
have been awarded this coveted distinction.
Awards like these confirm what we already know – that we
are privileged to lead a wonderful group of people. It’s a
responsibility we take quite seriously. And, it’s one of the key
reasons we so carefully planned the transition of one Chief
Executive Officer to another that took place on July 1, 2009.
The transition was smooth and natural as we knew it would be –
another sign of the values and culture of this special company.
Despite the recession and its impact on our revenue, we
exceeded our financial expectations in most respects last year
and generated $2.2 billion in operating cash. We brought a
new array of technology to market. We increased our distribution
to bring the Xerox brand to more businesses of any size in more
places around the world. We announced the ACS acquisition,
significantly expanding our portfolio of services. And, we had
a seamless transfer of leadership at the helm.
“Despite the recession and its impact on our
revenue, we exceeded our financial expecta tions
in most respects and generated $2.2 billion in
operating cash.”
4 Free cash flow equals cash flows from operations less capital expenditures including internal
use software.