Segment Reporting

6 Months Ended

Jun. 30, 2011

Segment Reporting [Abstract]

Segment Reporting

Note 3 - 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 – Technology and Services. Our Technology segment includes the sale and support of a broad range of document systems from entry level to high-end. Our Services segment operations involve delivery of a broad range of outsourcing services including document, business processing and IT outsourcing services.

Our Technology segment is centered on strategic product groups, which share common technology, manufacturing and product platforms.  This segment includes the sale of document systems and supplies, technical services and product financing.  Our products range from:

·   “Entry,” which includes A4 devices and desktop printers; to

·   “Mid-range,” which includes A3 devices that generally serves 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.

The Services segment is comprised of three outsourcing service offerings:

·   Document Outsourcing (which includes Managed Print Services)

·   Business Process Outsourcing

·   Information Technology Outsourcing

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 application and tools and the management of their printing needs. Document outsourcing also includes revenues from our partner print services offerings. Business process outsourcing services includes service arrangements where we manage a customer’s business activity or process. Information technology outsourcing services include service arrangements where we manage a customer’s IT-related activities, such as application management and application development, data center operations or testing and quality assurance.

The segment classified as Other includes several units, none of which meet the thresholds for separate segment reporting. This group primarily includes Xerox Supplies Business Group (predominantly paper sales), Wide Format Systems, licensing revenues, GIS network integration solutions and electronic presentation systems and non-allocated Corporate items including non-financing interest, as well as 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)
2011
Technology	$	2,552	$	300		$	5,047	$	566
Services		2,672		322			5,256		588
Other		390		(73	)		776		(139	)
Total	$	5,614	$	549		$	11,079	$	1,015

2010
Technology	$	2,555	$	273		$	5,038	$	506
Services		2,529		319			4,372		522
Other		424		(93	)		819		(197	)
Total	$	5,508	$	499		$	10,229	$	831

	Three Months Ended June 30,						Six Months Ended June 30,
Reconciliation to Pre-tax Income	2011			2010			2011			2010
Segment Profit	$	549		$	499		$	1,015		$	831
Reconciling items:
Restructuring and asset impairment charges		9			(11	)		24			(206	)
Restructuring charges of Fuji Xerox		(4	)		(5	)		(15	)		(27	)
Acquisition-related costs		—			(15	)		—			(63	)
Amortization of intangible assets		(87	)		(85	)		(172	)		(142	)
Venezuelan devaluation costs		—			—			—			(21	)
ACS shareholders litigation settlement		—			(36	)		—			(36	)
Loss on early extinguishment of liability		(33	)		—			(33	)		—
Equity in net income of unconsolidated affiliates		(34	)		(28	)		(68	)		(26	)
Other		1			1			—			—
Pre-tax Income	$	401		$	320		$	751		$	310