XML 25 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Segment Reporting
 6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Segment Reporting
Segment Reporting
Our reportable segments are aligned with how we manage the business and view the markets we serve. We report our financial performance based on the following two primary reportable segments – Services and Document Technology. Our Services segment operations involve delivery of business process and document outsourcing services for a broad range of customers from small businesses to large global enterprises. Our Document Technology segment includes the sale and support of a broad range of document systems from entry level to high-end.
In the first quarter of 2016, we revised our segment reporting to reflect the following changes:
•
The transfer of the Education/Student Loan business from the Services segment to Other as a result of the expected continued run-off of this business. The business does not meet the threshold for separate segment reporting.
•
The exclusion of the non-service elements of our defined-benefit pension and retiree-health plan costs from Segment profit.

Prior year amounts were accordingly revised to reflect these changes.

The Services segment is comprised of two outsourcing service offerings:
 
•
Business Process Outsourcing (BPO)
•
Document Outsourcing (which includes Managed Print Services) (DO)
Business process outsourcing services include service arrangements where we manage a customer’s business activity or process. We provide multi-industry offerings such as customer care, transaction processing, finance and accounting, and human resources, as well as industry-focused offerings in areas such as healthcare, transportation, financial services, retail and telecommunications. Document outsourcing services include service arrangements that allow customers to streamline, simplify and digitize their document-intensive business processes through automation and deployment of software applications and tools and the management of their printing needs. Document outsourcing also includes revenues from our partner print services offerings.
Our Document Technology segment includes the sale of document systems and supplies, provision of technical service and financing of products. Our products groupings range from:
 
•
“Entry,” which includes A4 devices and desktop printers; to
•
“Mid-range,” which includes A3 devices that generally serve workgroup environments in mid to large enterprises and includes products that fall into the following market categories: Color 41+ ppm priced at less than $100K and Light Production 91+ ppm priced at less than $100K; to
•
“High-end,” which includes production printing and publishing systems that generally serve the graphic communications marketplace and large enterprises.
Customers range from small and mid-sized businesses to large enterprises. Customers also include graphic communication enterprises as well as channel partners including distributors and resellers. Segment revenues reflect the sale of document systems and supplies, technical services and product financing.

Other includes several units, none of which meet the thresholds for separate segment reporting. This group includes paper sales in our developing market countries, Wide Format Systems, licensing revenues, Global Imaging Systems (GIS) network integration solutions, Education/Student Loan business, electronic presentation systems and non-allocated corporate items including non-financing interest and other items included in Other expenses, net.
Operating segment revenues and profitability were as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Segment
Revenue
 
Segment Profit (Loss)
 
Segment
Revenue
 
Segment Profit(Loss)
2016
 
 
 
 
 
 
 
Services 
$
2,470

 
$
236

 
$
4,952

 
$
426

Document Technology
1,752

 
221

 
3,391

 
388

Other
163

 
(80
)
 
323

 
(146
)
Total
$
4,385

 
$
377

 
$
8,666

 
$
668

2015
 
 
 
 
 
 
 
Services
$
2,526

 
$
181

 
$
4,993

 
$
368

Document Technology
1,880

 
235

 
3,710

 
467

Other
184

 
(62
)
 
356

 
(109
)
Total
$
4,590

 
$
354

 
$
9,059

 
$
726


 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
Reconciliation to Pre-tax Income
 
2016
 
2015
 
2016
 
2015
Segment Profit
 
$
377

 
$
354

 
$
668

 
$
726

Reconciling items:
 
 
 
 
 
 
 
 
Restructuring and related costs
 
(71
)
 
(157
)
 
(197
)
 
(171
)
Restructuring charges of Fuji Xerox
 
(1
)
 
(1
)
 
(1
)
 
(2
)
Business transformation costs(1)
 
—

 
(3
)
 
(1
)
 
(7
)
Amortization of intangible assets
 
(78
)
 
(79
)
 
(167
)
 
(156
)
Non-service retirement-related costs(2)
 
(32
)
 
(10
)
 
(78
)
 
(52
)
Equity in net income of unconsolidated affiliates
 
(22
)
 
(29
)
 
(59
)
 
(63
)
Separation costs(3)
 
(28
)
 
—

 
(36
)
 
—

Other
 
—

 
(1
)
 
—

 
—

Pre-tax Income
 
$
145

 
$
74

 
$
129

 
$
275


__________________________
(1)
Business transformation costs represent incremental costs incurred directly in support of our business transformation and restructuring initiatives such as compensation costs for overlapping staff, consulting costs and training costs.
(2)
Represents the non-service elements of our defined-benefit pension and retiree-health plan costs. Refer to Note 13 - Employee Benefit Plans for details regarding these elements.
(3)
Separation costs are expenses incurred in connection with Xerox's planned separation into two independent, publicly-traded companies. These costs are primarily for third-party investment banking, accounting, legal, consulting and other similar types of services. Refer to Note 1 - Basis of Presentation for additional information regarding Xerox's planned separation.