Xerox 2015 Annual Report Download - page 32

The potential negative impact of the events described above could have a material adverse effect on our business,
financial condition, results of operations and prospects, whether we are constituted as two independent publicly-
traded companies after the proposed separation is completed or as one company as currently constituted.
We derive significant revenue and profit from commercial and federal government contracts awarded
through competitive bidding processes, including renewals, which can impose substantial costs on us, and
we will not achieve revenue and profit objectives if we fail to accurately and effectively bid on such
projects.
Many of these contracts are extremely complex and require the investment of significant resources in order to
prepare accurate bids and proposals. Competitive bidding imposes substantial costs and presents a number of
risks, including: (i) the substantial cost and managerial time and effort that we spend to prepare bids and proposals
for contracts that may or may not be awarded to us; (ii) the need to estimate accurately the resources and costs that
will be required to implement and service any contracts we are awarded, sometimes in advance of the final
determination of their full scope and design; (iii) the expense and delay that may arise if our competitors protest or
challenge awards made to us pursuant to competitive bidding, and the risk that such protests or challenges could
result in the requirement to resubmit bids, and in the termination, reduction, or modification of the awarded
contracts; and (iv) the opportunity cost of not bidding on and winning other contracts we might otherwise pursue.
Adverse events or developments in any of these bidding risks and uncertainties could materially and negatively
impact our business, financial condition, results of operations and cash flow.
For our services contracts, we rely to a significant extent on third-party providers, such as subcontractors,
a relatively small number of primary software vendors, utility providers and network providers; if they
cannot deliver or perform as expected or if our relationships with them are terminated or otherwise change,
our business, results of operations and financial condition could be materially adversely affected.
Our ability to service our customers and clients and deliver and implement solutions depends to a large extent on
third-party providers such as subcontractors, a relatively small number of primary software vendors and utility
providers and network providers meeting their obligations to us and our expectations in a timely, quality manner.
Our business, revenues, profitability and cash flows could be materially and adversely affected and we might incur
significant additional liabilities if these third-party providers do not meet these obligations or our or our clients'
expectations or if they terminate or refuse to renew their relationships with us or were to offer their products to us
with less advantageous prices and other terms than we previously had. In addition, a number of our facilities are
located in jurisdictions outside of the United States where the provision of utility services, including electricity and
water, may not be consistently reliable and, while there are backup systems in many of our operating facilities, an
extended outage of utility or network services could have a material adverse effect on our operations, revenues,
cash flow and profitability.
We face significant competition and our failure to compete successfully could adversely affect our results
of operations and financial condition.
We operate in an environment of significant competition, driven by rapid technological developments, changes in
industry standards, and demands of customers to become more efficient. Our competitors range from large
international companies to relatively small firms. Some of the large international companies have significant
financial resources and compete with us globally to provide document processing products and services and/or
business process services in each of the markets we serve. We compete primarily on the basis of technology,
performance, price, quality, reliability, brand, distribution and customer service and support. Our success in future
performance is largely dependent upon our ability to compete successfully in the markets we currently serve, to
promptly and effectively react to changing technologies and customer expectations and to expand into additional
market segments. To remain competitive, we must develop services, applications and new products; periodically
enhance our existing offerings; remain cost efficient; and attract and retain key personnel and management. If we
are unable to compete successfully, we could lose market share and important customers to our competitors and
that could materially adversely affect our results of operations and financial condition.
Our profitability is dependent upon our ability to obtain adequate pricing for our products and services and
to improve our cost structure.
Our success depends on our ability to obtain adequate pricing for our services and products and that will provide a
reasonable return to our shareholders. Depending on competitive market factors, future prices we obtain for our
services and products may decline from previous levels. In addition, pricing actions to offset the effect of currency
devaluations may not prove sufficient to offset further devaluations or may not hold in the face of customer
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