Xerox Reports Fourth-Quarter 2015 Earnings

NORWALK, Conn., Jan. 29, 2016 – Xerox (NYSE: XRX) today announced its fourth-quarter financial results, delivering strong earnings and cash flow as a result of a continuous focus on productivity and business model optimization.

The company recorded fourth-quarter 2015 adjusted earnings per share of 32 cents, or GAAP EPS from continuing operations of 27 cents including the amortization of intangibles.

“We delivered solid performance in the fourth quarter, with earnings that were above our expectations, as a result of the progress we are making across both segments in optimizing our operating models,” said Ursula Burns, Xerox chairman and chief executive officer.

“In the face of a challenging environment, our Services segment drove sequential improvement in margin and double-digit year-over-year signings growth. Similarly, Document Technology was the industry equipment sales revenue market share leader for the 24th consecutive quarter and, through our continued focus on performance and productivity, maintained its strong margins.”

“Looking forward, we will continue to take actions that deliver value for shareholders and clients. This is reflected in the plan we announced today to separate into two market leading companies and implement a $2.4 billion strategic transformation program. We will do what is right to position our company for success through a focus on transforming our operations and optimizing our structure,” Burns added.

Fourth Quarter 2015 Results

Revenues were $4.7 billion in the quarter, down 8 percent or 5 percent in constant currency year-over-year. Annuity revenue was 83 percent of total revenue.

Fourth-quarter operating margin of 9.2 percent was down 1.2 percentage points from the same quarter a year ago. 

Gross margin was 31.3 percent, and selling, administrative and general expenses were 19.0 percent of revenue. 

Revenue from the company’s Services segment, which represented 57 percent of total revenue, was $2.6 billion, down 3 percent or flat in constant currency. Document Technology revenue was $1.9 billion, down 13 percent or 10 percent in constant currency. Services margin was 9.4 percent. Document Technology margin was 11.8 percent.

Xerox generated $878 million in cash flow from operations during the fourth quarter and ended 2015 with a cash balance of $1.4 billion. 

Full Year 2015 Results:

•       GAAP EPS from continuing operations of 49 cents, adjusted EPS of 98 cents

•       Total revenue of $18.2 billion*, $10.3 billion from Services*, $7.4 billion from Document Technology

•       Operating margin of 8.4 percent

•       Operating cash flow of $1.6 billion

•       Net income from continuing operations of $552 million, adjusted net income of $1.1 billion

•       Share repurchase of $1.3 billion, dividend payments of $326 million 

* Reported Total and Services revenue was $18.0 billion and $10.1 billion, respectively. All full-year 2015 results exclude the impact from the third quarter Health Enterprise settlement charge.

Full Year 2016 Guidance

For full-year 2016, Xerox expects GAAP earnings of $0.66 to $0.76 per share.

In 2016 the company plans to revise its calculation of adjusted EPS to exclude restructuring, certain retirement related costs as well as separation and related costs in addition to the amortization of intangibles. Based on this revised calculation, full-year 2016 adjusted EPS guidance is expected to be $1.10 to $1.20 per share. On a comparable basis, full-year 2015 adjusted EPS would have been $1.07 per share.

Xerox expects to generate operating cash flow of $1.3 to $1.5 billion and free cash flow of $1.0 to $1.2 billion in 2016.

For the first quarter of 2016, Xerox expects GAAP earnings of 5 to 8 cents per share and adjusted EPS of 21 to 24 cents per share.

Dividend Declaration and Planned Increase

Today, the company announced that its board of directors has declared an 11 percent increase in the company’s quarterly cash dividend to 7.75 cents per share on Xerox common stock. The dividend is payable on April 29, 2016 to shareholders of record on March 31, 2016.

The board also declared a quarterly cash dividend of $20 per share on Xerox Series A Convertible Perpetual Preferred Stock. The dividend is payable on April 1, 2016 to shareholders of record on March 15, 2016.

In 2016, Xerox will continue its practice of returning value to shareholders. It expects to use more than 50 percent of its free cash flow for share repurchases and dividends.

About Xerox

Xerox is helping change the way the world works. By applying our expertise in imaging, business process, analytics, automation and user-centric insights, we engineer the flow of work to provide greater productivity, efficiency and personalization. We conduct business in 180 countries, and our more than 140,000 employees create meaningful innovations and provide business process services, printing equipment, software and solutions that make a real difference for our clients – and their customers. Learn more at

Non-GAAP Measures: 

This release refers to the following non-GAAP financial measures:

•       Adjusted EPS for the fourth-quarter 2015, which excludes the amortization of intangible assets.

•       Adjusted net income and adjusted EPS (earnings per share) for the full-year 2015, which excludes the amortization of intangible assets, the second-quarter software impairment and third-quarter Health Enterprise (HE) charge.

•       Adjusted EPS for the first quarter and full-year 2016 guidance, which excludes the amortization of intangibles, restructuring, certain retirement related costs as well as certain separation and related costs.

•       Operating margin for the fourth-quarter and full-year 2015 that excludes certain costs and expenses.

•       Constant currency revenue growth for the fourth-quarter 2015, which excludes the effects of currency translation.

•    Adjusted revenue and Services segment revenues for the full-year 2015 that exclude the HE charge.

Refer to the “Non-GAAP Financial Measures” section of this release for a discussion of these non-GAAP measures and their reconciliation to the reported GAAP measure. 

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