Xerox 2010 Annual Report Download - page 72

Notes to the Consolidated
Financial Statements
Dollars in millions, except per-share data and unless otherwise indicated.
70 Xerox 2010 Annual Report
TMS Health: In October 2010, ACS acquired TMS Health (“TMS”), a
U.S.-based teleservices company that provides customer care services to
the pharmaceutical, biotech and healthcare industries, for approximately
$48 in cash. Through TMS, ACS improves communication between
pharmaceutical companies, physicians, consumers and pharmacists.
By providing customer education, product sales and marketing and
clinical trial solutions, ACS builds on the IT and BPO services it already
delivers to the healthcare and pharmaceutical industries.
ExcellerateHRO, LLP: In July 2010, ACS acquired ExcellerateHRO, LLP
(“EHRO”), a global benefits administration and relocation services provider,
for $125 net of cash acquired. This acquisition establishes ACS as one of
the world’s largest pension plan administrators and as a leading provider
of outsourced health and welfare and relocation services. The purchase
price was primarily allocated to intangible assets (consisting of customer
relationships of $32 and software of $8) and goodwill of $77 based on
third-party valuations and management’s estimates.
GIS Acquisitions
Georgia Duplicating Products: In September 2010, GIS acquired
Georgia Duplicating Products, an office equipment supplier, for
approximately $21 net of cash acquired.
ComDoc, Inc.: In February 2009, GIS acquired ComDoc, Inc. (“ComDoc”)
for approximately $145 in cash. ComDoc is one of the larger independent
office technology dealers in the U.S. and expands GIS’s coverage in Ohio,
Pennsylvania, New York and West Virginia. GIS also acquired another
business in 2009 for $18 in cash.
Saxon Business Systems: In 2008, GIS acquired Saxon Business
Systems, an office equipment supplier in Florida, for approximately $69
in cash, including transaction costs. GIS acquired three other similar
businesses in 2008 for a total of $17 in cash.
These acquisitions continue the development of GIS’s national network
of office technology suppliers to serve its expanding base of small and
mid-size businesses.
Summary – Other Acquisitions
The operating results of the acquisitions described above are not
material to our financial statements and are included within our results
from the respective acquisition dates. Excluding ACS, our remaining
2010 acquisitions contributed aggregate revenues of approximately
$140 to our 2010 total revenues from their respective acquisition dates.
The ACS acquisitions are included within our Services segment while the
other acquisitions, including the GIS acquisitions, are primarily included
within our Technology segment. The purchase prices were primarily
allocated to intangible assets and goodwill based on third-party
valuations and management’s estimates.
Goodwill of $2.3 billion is deductible for tax purposes as a result of
previous taxable acquisitions made by ACS. While the allocation of
goodwill among reporting units is not complete, we expect the majority
of the goodwill will be related to our Services segment.
Pro-forma impact of the acquisition: The unaudited pro-forma
results presented below include the effects of the ACS acquisition as
if it had been consummated as of January 1, 2010 and 2009. The
pro-forma results include the amortization associated with an estimate
for the acquired intangible assets and interest expense associated
with debt used to fund the acquisition, as well as fair value adjustments
for unearned revenue, software and land, buildings and equipment.
To better reflect the combined operating results, material non-recurring
charges directly attributable to the transaction have been excluded.
In addition, the pro-forma results do not include any anticipated
synergies or other expected benefits of the acquisition. Accordingly,
the unaudited pro-forma financial information below is not necessarily
indicative of future results of operations or results that might
have been achieved had the acquisition been consummated as of
January 1, 2010 or 2009.
2010 2009
Revenue $ 22,252 $ 21,781
Net income – Xerox 592 795
Basic earnings per share 0.41 0.57
Diluted earnings per share 0.41 0.56
Note: The pro-forma information presented above is on a different basis
than the pro-forma information provided in Management’s Discussion
and Analysis of Financial Condition and Results of Operations of this
Annual Report for the year ended December 31, 2010.
Other Acquisitions
Irish Business Systems Limited: In January 2010, we acquired Irish
Business Systems Limited (“IBS”) for approximately $29 net of cash
acquired. This acquisition expands our reach into the small and mid-size
business market in Ireland. IBS has eight offices located throughout
Ireland and is a managed print services provider and the largest
independent supplier of digital imaging and printing solutions in Ireland.
Veenman B.V.: In 2008, we acquired Veenman B.V. (“Veenman”),
expanding our reach into the small and mid-size business market
in Europe, for approximately $69 (€44 million) in cash, including
transaction costs. Veenman is the Netherlands’ leading independent
distributor of office printers, copiers and multifunction devices serving
small and mid-size businesses.
ACS Acquisitions
Spur Information Solutions: In November 2010, ACS acquired Spur
Information Solutions, one of the United Kingdom’s leading providers
of computer software used for parking enforcement, for $12 in cash. The
acquisition strengthens ACS’s broad portfolio of services that support
the transportation industry.