Xerox 2011 Annual Report Download - page 54

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Management’s Discussion
52
EffectiveTaxreconciliation:
Year Ended December 31, 2011(1) Year Ended December 31, 2010
Pre-Tax Income Tax Effective Pre-Tax Income Tax Effective
(in millions) Income Expense Tax Rate Income Expense Tax Rate
As Reported $ 1,565 $ 386 24.7% $ 815 $ 256 31.4%
Adjustments:
Amortization of intangible assets 398 150 312 118
Loss on early extinguishment of liability 33 13 15 5
Xerox restructuring charge 483 166
ACS acquisition-related costs 77 19
ACS shareholders’ litigation settlement 36 —
Venezuela devaluation costs 21 —
Medicare subsidy tax law change — (16)
Adjusted $ 1,996 $ 549 27.5% $ 1,759 $ 548 31.2%
(1) For 2011, we only adjusted for Amortization of intangible assets and the Loss on early extinguishment of liability.
OperatingIncome/MarginReconciliation:
As Reported Pro-forma
(in millions) 2011 2010 2009 2010 2009
Total Revenue $ 22,626 $ 21,633 $ 15,179 $ 22,252 $ 21,082
Pre-tax Income 1,565 815 627 777 1,267
Adjustments:
Amortization of intangible assets 398 312 60 339 60
Xerox restructuring charge 33 483 (8) 483 (8)
Curtailment gain (107) — — — —
ACS acquisition-related costs — 77 72 77 104
Other expenses, net 322 389 285 444 382
Adjusted Operating Income $ 2,211 $ 2,076 $ 1,036 $ 2,120 $ 1,805
Pre-tax Income Margin 6.9% 3.8% 4.1% 3.5% 6.0%
Adjusted Operating Margin 9.8% 9.6% 6.8% 9.5% 8.6%
(1)
Pro-forma 2010 includes ACS’s 2010 estimated results from January 1 through February 6 in our reported 2010 results. Pro-forma 2009 includes ACS’s 2009 estimated results from
February 6 through December 31 in our reported 2009 results. ACS’s estimated results were adjusted to reflect fair value adjustments related to property, equipment and computer
software as well as customer contract costs. In addition, adjustments were made for deferred revenue, exited businesses, certain non-recurring product sales and other material non-
recurring costs associated with the acquisition.