Norwalk, Conn. – Xerox Corporation announced today fourth-quarter 2010 results that include adjusted earnings per share of 29 cents and $1.3 billion in operating cash flow. Adjusted EPS excludes 17 cents primarily related to restructuring charges and amortization of intangibles, resulting in GAAP EPS of 12 cents.
“We started 2010 with the acquisition of Affiliated Computer Services, which transformed our company into the world’s leading enterprise for business process and document management. And, we closed the year with results that reflect the benefits of our expanded services and competitive technology as well as the strength of our business model,” said Ursula Burns, Xerox chairman and chief executive officer. “In 2010, we grew adjusted earnings, increased revenue and generated $2.7 billion in operating cash – delivering across the board on our commitments and creating greater value for shareholders.”
Fourth-quarter revenue of nearly $6 billion was up 42 percent including a one point negative impact from currency. On a pro-forma basis, with ACS in the company’s results, total revenue grew 2 percent or 3 percent in constant currency. Revenue from technology, representing the sale of document systems, supplies, technical service and financing of products, was flat or up one percent in constant currency. Total install activity for Xerox equipment was up 6 percent, reflecting solid demand across all product segments. Revenue from services was up 5 percent on a pro-forma basis or 6 percent in constant currency, and represents the company’s business process, IT and document outsourcing offerings.
“Continued growth in our services business was driven by an 11 percent increase in revenue from our BPO offerings and 5 percent revenue growth from IT outsourcing. As important, signings for services were up 13 percent in the quarter,” added Burns. “In our technology business, increased distribution and the launch of 21 products last year led to an overall 6 percent equipment sales growth in the quarter. Combined, strength in services and the sale of more Xerox technology fuels our annuity and positions us well for continued growth this year and for the long term.”
Fourth-quarter gross margin was 33.6 percent, and selling, administrative and general expenses were 20 percent of revenue. On a pro-forma basis, operating margin of 10.4 percent was up one point from fourth-quarter 2009. For the full year, gross margin was 34.4 percent and SAG expenses were 21.2 percent of revenue. Pro-forma operating margin was 9.6 percent, up one point from full-year 2009.
The $1.3 billion in operating cash flow in the fourth quarter contributed to $2.7 billion in cash flow for the full year. From the time of the ACS acquisition in February 2010, Xerox reduced total debt by $1.9 billion to $8.6 billion. Xerox ended the year with a cash balance of $1.2 billion.
The company’s full-year 2010 net income was $606 million. Total revenue was $21.6 billion, up from $15.2 billion in 2009.
The company expects first-quarter 2011 GAAP earnings of 16 to 18 cents per share. First-quarter adjusted EPS is expected to be 20 to 22 cents per share.
Full-year 2011 GAAP earnings are expected to be 90 to 95 cents per share. Full-year adjusted earnings are expected to be $1.05 to $1.10 per share. The company also expects $1 billion to $1.2 billion in available cash for 2011.