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Notes to the Consolidated
Financial Statements
Dollars in millions, except per-share data and unless otherwise indicated.
67Xerox 2010 Annual Report
The following is a reconciliation of segment profit to pre-tax income
(loss) for the three years ended December 31, 2010:
2010 2009 2008
Total Segment Profit $ 1,875 $ 838 $ 1,345
Reconciling items:
Restructuring and asset impairment charges (483) 8 (429)
Restructuring charges of Fuji Xerox (38) (46) (16)
Acquisition-related costs (77) (72) —
Amortization of intangible assets (312) (60) (54)
Venezuelan devaluation costs (21) — —
ACS shareholders’ litigation settlement (36) — —
Litigation matters(1) — — (774)
Loss on early extinguishment of debt (15) — —
Equity in net income of unconsolidated affiliates (78) (41) (113)
Equipment write-off and other — — (38)
Pre-tax Income (Loss) $ 815 $ 627 $ (79)
(1) The 2008 provision for litigation represents $670 for the Carlson v. Xerox Corporation court-approved settlement, as well as provisions for other litigation matters including
$36 for the probable loss related to the Brazil labor-related contingencies.
Geographic area data is based upon the location of the subsidiary
reporting the revenue or long-lived assets and is as follows for the three
years ended December 31, 2010:
Revenues Long-Lived Assets(1)
2010 2009 2008 2010 2009 2008
United States $ 13,801 $ 8,156 $ 9,122 $ 1,764 $ 1,245 $ 1,386
Europe 5,332 4,971 6,011 741 717 680
Other areas 2,500 2,052 2,475 309 262 248
Total Revenues and Long-Lived Assets $ 21,633 $ 15,179 $ 17,608 $ 2,814 $ 2,224 $ 2,314
(1) Long-lived assets are comprised of (i) land, buildings and equipment, net, (ii) equipment on operating leases, net, (iii) internal use software, net and (iv) product software, net.
Equity transaction: Each outstanding share of ACS Class A and Class
B common stock was converted into a combination of 4.935 shares
of Xerox common stock and $18.60 in cash for a combined value of
$60.40 per share, or approximately $6.0 billion based on the closing
price of Xerox common stock of $8.47 on the acquisition date. 489,802
thousand shares of Xerox common stock were issued. We also issued
convertible preferred stock with a liquidation value of $300 and a fair
value of $349 as of the acquisition date to ACS’s Class B shareholder.
Note 3 – Acquisitions
Affiliated Computer Services, Inc.
On February 5, 2010 (“the acquisition date”), we acquired all of the
outstanding equity of ACS in a cash-and-stock transaction valued at
approximately $6.5 billion. ACS provides business process outsourcing
and information technology (“ITO”) services and solutions to commercial
and government clients worldwide. ACS delivers a full range of BPO and
IT services, as well as end-to-end solutions to the public and private
sectors and supports a variety of industries including education, energy,
financial, government, healthcare, retail and transportation. ACS’s
revenues for the calendar year ended December 31, 2009 were $6.6
billion and they employed 78,000 people and operated in over 100
countries on the acquisition date.