Xerox 2012 Annual Report Download - page 6

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Dear Fellow Shareholders,
This report is filled with numbers. In our big data world, numbers speak
volumes about results. They influence your investment decisions and
they influence the way we run our business. I’m an engineer by training
and lead with a strong passion for our brand and an obsession with the
numbers that indicate our progress. We’re a company going through
considerable change at a time when economies are uncertain, the
markets we serve are shifting and our “always on” connected world
requires a faster pace and a more competitive edge to win. Numbers
keep me grounded. They provide clarity of where we’ve been and
where we’re headed. Here’s a glimpse of what I mean…
52 percent of our revenue now comes from Services. While our brand
is still associated with our heritage in copying and printing, today more
than half of our business is linked to a diverse portfolio of outsourcing
services, including customer care (likely even for the company who
makes your smartphone), healthcare claims reimbursement (likely for
your private insurance company) and automated tolling and parking
transactions (think EZ Pass and then think how long commutes would
be without it).
84 percent of Xerox’s revenue is annuity based. That’s $18.9 billion
in revenue. A stable, less volatile base.
$2.6 billion in operating cash flow, which reflects the cash-generating
strength of this annuity-based business model.
#1 worldwide revenue market share leadership for our Document
Technology. This speaks to the continued power of the Xerox brand
in a market that we created and continue to benefit from through
healthy margins and established relationships in 160 countries.
1,900. That’s the total number of patents garnered by Xerox along
with our colleagues at the Palo Alto Research Center and at Fuji Xerox
last year alone, bringing to more than 11,500 the number of active
Letter to Shareholders
U.S. patents in our portfolio. This year, October 22 to be exact, marks
the 75th anniversary of when Chester Carlson made the first xerographic
image in his lab in New York City. His humble ways of applying innovation
to more easily share information continue to be a source of inspiration
for our research community. And, remarkably 75 years later, our
innovation focus remains very true to Chester’s – finding smarter ways
to strip away complexity and simplify how work gets done.
These numbers are a big part of today’s Xerox. We’re evolving every
day from the well-established copier company to the world’s leading
enterprise for business process and document management.
Our transformation comes with its share of challenges. In 2012,
we continued to face them head on – prioritizing where we needed
to make improvement and executing with precision to deliver. We
made progress. In some areas, the progress isn’t fast enough for me.
For example, as we ramp up growth in our Services business, we must
also improve our Services operating margin. That means being more
disciplined in how we execute large contracts, so we’re applying
innovation and identifying efficient ways to serve our clients better.
We increased margins in the fourth quarter of 2012 – and I expect that
the benefits of our operational focus in this area will deliver continued
improvement going forward.
Despite the economic headwinds we faced last year, I believe we
can improve revenue trends in our Document Technology business.
We understand the market dynamics, know the pressure points and
can identify where weakness is due to economy and where weakness
is due to secular concerns. We are also clear eyed on areas of greatest
growth potential – like in color printing and reaching more small and
mid-size businesses around the world. Last year, we were conservative
in the way we managed our Document Technology business. Due to
Ursula M. Burns
Chairman and
Chief Executive Officer