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Document Technology Segment
Our Document Technology segment includes the sale of products and supplies, as well as the associated
maintenance and financing of those products.
Revenue
Year Ended December 31, Change
(in millions) 2014 2013 2012 2014 2013
Equipment sales $ 2,482 $2,727 $2,879 (9)% (5)%
Annuity revenue 5,876 6,181 6,583 (5)% (6)%
Total Revenue $8,358 $8,908 $9,462 (6)% (6)%
Revenue 2014
Document Technology revenue of $8,358 million decreased 6%, with no impact from currency. Document
Technology revenues exclude Document Outsourcing. Inclusive of Document Outsourcing, 2014 aggregate
document-related revenue decreased 4% from 2013, with no impact from currency. Total revenues include the
following:
•Equipment sales revenue decreased 9% with no impact from currency. The decrease in equipment sales
reflects weakness in entry products due to product launch timing, the continued migration of customers to our
growing partner print services offering (included in our Services segment), weakness in developing markets
due to economic instability and, price declines of approximately 5%. 2013 benefited from the ConnectKey mid-
range product launch, and the refresh cycle for several large accounts. Equipment sales in 2014 were
negatively impacted by lower sales in Russia due to economic instability.
•Annuity revenue decreased by 5%, with no impact from currency. The decrease reflects a modest decline in
total pages, weakness in developing markets and entry products due to product launch timing, a continued
decline in financing revenue as a result of prior period sales of finance receivables and lower receivables
balance due to lower originations. The overall decrease in Financing revenue from prior year contributed 1-
percentage point to the Annuity revenue decline and 1-percentage point impact to the overall Document
Technology revenue decline. Annuity revenue was also impacted by the continued migration of customers to
our partner print services offerings (included in our Services segment). Total digital page volumes declined 4%
despite a 2% increase in digital MIF.
Document Technology revenue mix was 20% entry, 57% mid-range and 23% high-end.
Segment Margin 2014
Document Technology segment margin of 13.7% increased 2.9-percentage points from prior year. The increase
was primarily driven by a 1.5-percentage point increase in gross margin as the benefits from restructuring and
productivity, lower pension expense, and favorable currency on Yen-based purchases and revenue mix more than
offset moderate price declines and the impact of lower financing revenues. SAG decreased as a percent of
revenue as lower pension and bad debt expense as well as benefits from restructuring and productivity
improvements more than offset the impact of overall lower revenues.
Total revenue for Document Technology is expected to decline 4 to 5% in 2015, excluding the impact of currency,
as projected declines in black-and-white printing are only partially offset by growth in color printing and in the
graphic communications and SMB markets. The expected 2015 revenue decline for the Document Technology
segment is consistent with the trend we have experienced for this segment over the past three years as we
continue to transform the Company from a technology-based equipment company to a document outsourcing
services-based entity and customers continue to migrate their business to more services-based offerings. These
services-based offerings are reported within our Services segment. This business is also heavily impacted by price
and page declines, which are secular declines being experienced across the industry. Although annual revenue
declines are expected to continue in 2015, we believe the declines in revenues will moderate in future years. We
expect to manage the profitability impact of any revenue declines through measures to improve productivity and
reduce costs and expenses.
Xerox 2014 Annual Report 44