XRX-6.30.15-10Q


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
_______________
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to
Commission File Number 001-04471
  
XEROX CORPORATION
(Exact Name of Registrant as specified in its charter)
New York
 
16-0468020
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification No.)
P.O. Box 4505, 45 Glover Avenue
Norwalk, Connecticut
 
06856-4505
(Address of principal executive offices)
 
(Zip Code)
(203) 968-3000
(Registrant’s telephone number, including area code)
_________________________________________________  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No ý
Class
 
Outstanding at June 30, 2015
Common Stock, $1 par value
 
1,068,794,642 shares

Xerox 2015 Form 10-Q
1


FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and any exhibits to this Report may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements reflect Management's current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. Such factors include, but are not limited to: changes in economic conditions, political conditions, trade protection measures, licensing requirements and tax matters in the United States and in the foreign countries in which we do business; changes in foreign currency exchange rates; our ability to successfully develop new products, technologies and service offerings and to protect our intellectual property rights; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term and that civil or criminal penalties and administrative sanctions could be imposed on us if we fail to comply with the terms of such contracts and applicable law; the risk that our bids do not accurately estimate the resources and costs required to implement and service very complex, multi-year governmental and commercial contracts, often in advance of the final determination of the full scope and design of such contracts or as a result of the scope of such contracts being changed during the life of such contracts; the risk that subcontractors, software vendors and utility and network providers will not perform in a timely, quality manner; service interruptions; actions of competitors and our ability to promptly and effectively react to changing technologies and customer expectations; our ability to obtain adequate pricing for our products and services and to maintain and improve cost efficiency of operations, including savings from restructuring actions and the relocation of our service delivery centers; the risk that individually identifiable information of customers, clients and employees could be inadvertently disclosed or disclosed as a result of a breach of our security systems; the risk in the hiring and retention of qualified personnel; the risk that unexpected costs will be incurred; our ability to recover capital investments; the risk that our Services business could be adversely affected if we are unsuccessful in managing the start-up of new contracts; the collectibility of our receivables for unbilled services associated with very large, multi-year contracts; reliance on third parties, including subcontractors, for manufacturing of products and provision of services; our ability to expand equipment placements; interest rates, cost of borrowing and access to credit markets; the risk that our products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives; the outcome of litigation and regulatory proceedings to which we may be a party; and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 and our 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Xerox assumes no obligation to update any forward-looking statements as a result of new information or future events or developments, except as required by law.





 

Xerox 2015 Form 10-Q
1



XEROX CORPORATION
FORM 10-Q
June 30, 2015
TABLE OF CONTENTS
 
 
Page
 
Item 1.
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
Item 4.
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 6.
For additional information about Xerox Corporation and access to our Annual Reports to Shareholders and SEC filings, free of charge, please visit our website at www.xerox.com/investor. Any information on or linked from the website is not incorporated by reference into this Form 10-Q.
 

Xerox 2015 Form 10-Q
2


PART I — FINANCIAL INFORMATION
ITEM 1 — FINANCIAL STATEMENTS

XEROX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(in millions, except per-share data)
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
 
Sales
 
$
1,224

 
$
1,342

 
$
2,350

 
$
2,599

Outsourcing, maintenance and rentals
 
3,279

 
3,501

 
6,532

 
6,915

Financing
 
87

 
98

 
177

 
198

Total Revenues
 
4,590

 
4,941

 
9,059

 
9,712

Costs and Expenses
 
 
 
 
 
 
 
 
Cost of sales
 
776

 
832

 
1,450

 
1,610

Cost of outsourcing, maintenance and rentals
 
2,356

 
2,488

 
4,724

 
4,942

Cost of financing
 
32

 
36

 
65

 
72

Research, development and engineering expenses
 
142

 
143

 
283

 
288

Selling, administrative and general expenses
 
906

 
959

 
1,821

 
1,904

Restructuring and asset impairment charges
 
157

 
39

 
171

 
65

Amortization of intangible assets
 
79

 
78

 
156

 
155

Other expenses, net
 
68

 
65

 
114

 
104

Total Costs and Expenses
 
4,516

 
4,640

 
8,784

 
9,140

Income before Income Taxes and Equity Income
 
74

 
301

 
275

 
572

Income tax (benefit) expense
 
(9
)
 
73

 
30

 
115

Equity in net income of unconsolidated affiliates
 
29

 
33

 
63

 
75

Income from Continuing Operations
 
112

 
261

 
308

 
532

(Loss) income from discontinued operations, net of tax
 
(95
)
 
11

 
(61
)
 
26

Net Income
 
17

 
272

 
247

 
558

Less: Net income attributable to noncontrolling interests
 
5

 
6

 
10

 
11

Net Income Attributable to Xerox
 
$
12

 
$
266

 
$
237

 
$
547

 
 
 
 
 
 
 
 
 
Amounts Attributable to Xerox:
 
 
 
 
 
 
 
 
Net income from continuing operations
 
$
107

 
$
255

 
$
298

 
$
521

Net (loss) income from discontinued operations
 
(95
)
 
11

 
(61
)
 
26

Net Income Attributable to Xerox
 
$
12

 
$
266

 
$
237

 
$
547

 
 
 
 
 
 
 
 
 
Basic Earnings per Share:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.09

 
$
0.21

 
$
0.26

 
$
0.43

Discontinued operations
 
(0.08
)
 
0.01

 
(0.06
)
 
0.03

Total Basic Earnings per Share
 
$
0.01

 
$
0.22

 
$
0.20

 
$
0.46

Diluted Earnings per Share:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.09

 
$
0.21

 
$
0.26

 
$
0.43

Discontinued operations
 
(0.08
)
 
0.01

 
(0.06
)
 
0.02

Total Diluted Earnings per Share
 
$
0.01

 
$
0.22

 
$
0.20

 
$
0.45


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Xerox 2015 Form 10-Q
3


XEROX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(in millions)
 
2015
 
2014
 
2015
 
2014
Net income
 
$
17

 
$
272

 
$
247

 
$
558

Less: Net income attributable to noncontrolling interests
 
5

 
6

 
10

 
11

Net Income Attributable to Xerox
 
12

 
266

 
237

 
547

 
 
 
 
 
 
 
 
 
Other Comprehensive Income (Loss), Net(1):
 

 

 

 

Translation adjustments, net
 
194

 
92

 
(315
)
 
91

Unrealized (losses) gains, net
 
(19
)
 
15

 
10

 
41

Changes in defined benefit plans, net
 
67

 
(70
)
 
165

 
(154
)
Other Comprehensive Income (Loss), Net
 
242

 
37

 
(140
)
 
(22
)
Less: Other comprehensive income, net attributable to noncontrolling interests
 
1

 
1

 
—

 
1

Other Comprehensive Income (Loss), Net Attributable to Xerox
 
241

 
36

 
(140
)
 
(23
)
 
 
 
 
 
 
 
 
 
Comprehensive Income, Net
 
259

 
309

 
107

 
536

Less: Comprehensive income, net attributable to noncontrolling interests
 
6

 
7

 
10

 
12

Comprehensive Income, Net Attributable to Xerox
 
$
253

 
$
302

 
$
97

 
$
524


(1) Refer to Note 16 - Other Comprehensive Income (Loss) for gross components of Other Comprehensive Income (Loss), reclassification adjustments out of Accumulated Other Comprehensive Loss and related tax effects.


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Xerox 2015 Form 10-Q
4


XEROX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except share data in thousands)
 
June 30,
2015
 
December 31, 2014 (1)
Assets
 
 
 
 
Cash and cash equivalents
 
$
1,641

 
$
1,411

Accounts receivable, net
 
2,722

 
2,652

Billed portion of finance receivables, net
 
113

 
110

Finance receivables, net
 
1,328

 
1,425

Inventories
 
1,072

 
934

Assets of discontinued operations
 
—

 
1,260

Other current assets
 
956

 
1,082

Total current assets
 
7,832

 
8,874

Finance receivables due after one year, net
 
2,581

 
2,719

Equipment on operating leases, net
 
500

 
525

Land, buildings and equipment, net
 
1,078

 
1,123

Investments in affiliates, at equity
 
1,377

 
1,338

Intangible assets, net
 
1,890

 
2,031

Goodwill
 
8,810

 
8,805

Other long-term assets
 
1,948

 
2,243

Total Assets
 
$
26,016

 
$
27,658

Liabilities and Equity
 
 
 
 
Short-term debt and current portion of long-term debt
 
$
1,648

 
$
1,427

Accounts payable
 
1,568

 
1,584

Accrued compensation and benefits costs
 
664

 
754

Unearned income
 
428

 
431

Liabilities of discontinued operations
 
—

 
371

Other current liabilities
 
1,422

 
1,509

Total current liabilities
 
5,730

 
6,076

Long-term debt
 
5,998

 
6,314

Pension and other benefit liabilities
 
2,634

 
2,847

Post-retirement medical benefits
 
790

 
865

Other long-term liabilities
 
418

 
454

Total Liabilities
 
15,570

 
16,556

 
 
 
 
 
Series A Convertible Preferred Stock
 
349

 
349

 
 
 
 
 
Common stock
 
1,097

 
1,124

Additional paid-in capital
 
3,967

 
4,283

Treasury stock, at cost
 
(316
)
 
(105
)
Retained earnings
 
9,605

 
9,535

Accumulated other comprehensive loss
 
(4,299
)
 
(4,159
)
Xerox shareholders’ equity
 
10,054

 
10,678

Noncontrolling interests
 
43

 
75

Total Equity
 
10,097

 
10,753

Total Liabilities and Equity
 
$
26,016

 
$
27,658

 
 
 
 
 
Shares of common stock issued
 
1,096,623

 
1,124,354

Treasury stock
 
(27,828
)
 
(7,609
)
Shares of Common Stock Outstanding
 
1,068,795

 
1,116,745

(1) Certain prior year amounts have been revised - Refer to Note 1 - Basis of Presentation for additional information.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
 

Xerox 2015 Form 10-Q
5


XEROX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(in millions)
 
2015
 
2014
 
2015
 
2014
Cash Flows from Operating Activities:
 
 
 
 
 
 
 
 
Net income
 
$
17

 
$
272

 
$
247

 
$
558

Adjustments required to reconcile net income to cash flows from operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
297

 
376

 
593

 
721

Provision for receivables
 
14

 
22

 
32

 
38

Provision for inventory
 
10

 
4

 
16

 
14

Net loss (gain) on sales of businesses and assets
 
74

 
1

 
62

 
(29
)
Undistributed equity in net income of unconsolidated affiliates
 
(3
)
 
2

 
(34
)
 
(40
)
Stock-based compensation
 
23

 
24

 
45

 
50

Restructuring and asset impairment charges
 
157

 
38

 
171

 
65

Payments for restructurings
 
(30
)
 
(36
)
 
(61
)
 
(72
)
Contributions to defined benefit pension plans
 
(57
)
 
(68
)
 
(98
)
 
(105
)
Increase in accounts receivable and billed portion of finance receivables
 
(6
)
 
(150
)
 
(245
)
 
(389
)
Collections of deferred proceeds from sales of receivables
 
62

 
106

 
134

 
226

Increase in inventories
 
(67
)
 
(43
)
 
(193
)
 
(103
)
Increase in equipment on operating leases
 
(69
)
 
(66
)
 
(139
)
 
(123
)
Decrease in finance receivables
 
6

 
18

 
78

 
54

Collections on beneficial interest from sales of finance receivables
 
12

 
21

 
27

 
42

Decrease (increase) in other current and long-term assets
 
11

 
(24
)
 
(60
)
 
(118
)
Decrease in accounts payable and accrued compensation
 
(21
)
 
(96
)
 
(38
)
 
(88
)
Decrease in other current and long-term liabilities
 
(57
)
 
(82
)
 
(83
)
 
(108
)
Net change in income tax assets and liabilities
 
17

 
43

 
49

 
72

Net change in derivative assets and liabilities
 
14

 
(20
)
 
2

 
(21
)
Other operating, net
 
(55
)
 
(17
)
 
(43
)
 
(33
)
Net cash provided by operating activities
 
349

 
325

 
462

 
611

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
Cost of additions to land, buildings and equipment
 
(77
)
 
(102
)
 
(152
)
 
(186
)
Proceeds from sales of land, buildings and equipment
 
—

 
2

 
16

 
35

Cost of additions to internal use software
 
(25
)
 
(21
)
 
(45
)
 
(40
)
Proceeds from sale of businesses
 
930

 
15

 
933

 
15

Acquisitions, net of cash acquired
 
(20
)
 
(227
)
 
(48
)
 
(281
)
Other investing, net
 
23

 
7

 
29

 
11

Net cash provided by (used in) investing activities
 
831

 
(326
)
 
733

 
(446
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
Net proceeds (payments) on debt
 
53

 
(299
)
 
(97
)
 
(295
)
Common stock dividends
 
(77
)
 
(73
)
 
(147
)
 
(141
)
Preferred stock dividends
 
(6
)
 
(6
)
 
(12
)
 
(12
)
Proceeds from issuances of common stock
 
4

 
19

 
14

 
39

Excess tax benefits from stock-based compensation
 
1

 
3

 
3

 
6

Payments to acquire treasury stock, including fees
 
(395
)
 
(204
)
 
(611
)
 
(479
)
Repurchases related to stock-based compensation
 
—

 
—

 
(1
)
 
(1
)
Distributions to noncontrolling interests
 
(2
)
 
(1
)
 
(56
)
 
(17
)
Other financing
 
(1
)
 
—

 
(1
)
 
(10
)
Net cash used in financing activities
 
(423
)
 
(561
)
 
(908
)
 
(910
)
Effect of exchange rate changes on cash and cash equivalents
 
12

 
2

 
(57
)
 
(12
)
Increase (decrease) in cash and cash equivalents
 
769

 
(560
)
 
230

 
(757
)
Cash and cash equivalents at beginning of period
 
872

 
1,567

 
1,411

 
1,764

Cash and Cash Equivalents at End of Period
 
$
1,641

 
$
1,007

 
$
1,641

 
$
1,007


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Xerox 2015 Form 10-Q
6


XEROX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per-share data and where otherwise noted)

Note 1 – Basis of Presentation
References herein to “we,” “us,” “our,” the “Company” and “Xerox” refer to Xerox Corporation and its consolidated subsidiaries unless the context suggests otherwise.
We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with the accounting policies described in our 2014 Annual Report on Form 10-K (2014 Annual Report), and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. You should read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements included in our 2014 Annual Report.
In our opinion, all adjustments which are necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented have been made. These adjustments consist of normal recurring items. Interim results of operations are not necessarily indicative of the results of the full year.
For convenience and ease of reference, we refer to the financial statement caption “Income before Income Taxes and Equity Income” as “pre-tax income.”
In December 2014 we announced an agreement to sell our Information Technology Outsourcing (ITO) business to Atos SE (Atos). As a result of this agreement and having met applicable accounting requirements, we reported the ITO business as held for sale and a discontinued operation at December 31, 2014. The sale was completed in June 2015. In 2014 we also completed the disposal of two smaller businesses - Xerox Audio Visual Solutions, Inc. (XAV) and Truckload Management Services (TMS) - that were also reported as discontinued operations. All prior periods have been reclassified to conform to the presentation of these businesses as discontinued operations. Refer to Note 5 - Divestitures for additional information regarding discontinued operations.
During second quarter 2015, in connection with Fuji Xerox’s (FX) payment of its semi-annual dividend, we determined that the dividends were no longer subject to an additional tax as a result of a change in the U.K. - Japan Tax Treaty in December 2014. As of December 31, 2014, we had a deferred tax liability of $44 associated with this additional tax on the undistributed earnings of FX through that date. This deferred tax liability was no longer required as a result of the change in the Tax Treaty and, therefore, should have been reversed in December 2014. There was no impact on operating cash flows from this adjustment. We assessed the materiality of this error on our 2014 financial statements and concluded that it was not material to the fourth quarter or annual period. However, due to the impact of this adjustment on the current year consolidated financial statements, the accompanying unaudited Condensed Consolidated Balance Sheet has been revised as of December 31, 2014 to increase retained earnings by $44 and decrease our deferred tax liabilities by the same amount.

Xerox 2015 Form 10-Q
7


The following table presents the effect of this correction on our Consolidated Statements of Income for all periods affected:
 
 
Three Months Ended December 31, 2014
 
Year Ended December 31, 2014
 
 
As Reported
 
As Revised
 
As Reported
 
As Revised
Income tax expense
 
$
78

 
$
34

 
$
259

 
$
215

Income from Continuing Operations
 
311

 
355

 
1,107

 
1,151

Net Income
 
162

 
206

 
992

 
1,036

Net Income Attributable to Xerox
 
156

 
200

 
969

 
1,013

Net Income Attributable to Xerox - continuing operations
 
305

 
349

 
1,084

 
1,128

 
 
 
 
 
 
 
 
 
Basic Earnings per Share:
 
 
 
 
 
 
 
 
Continuing Operations
 
$
0.26

 
$
0.30

 
$
0.92

 
$
0.96

Total Basic Earnings per Share
 
0.13

 
0.17

 
0.82

 
0.86

 
 
 
 
 
 
 
 
 
Diluted Earnings per Share:
 
 
 
 
 
 
 
 
Continuing Operations
 
$
0.26

 
$
0.30

 
$
0.90

 
$
0.94

Total Diluted Earnings per Share
 
0.13

 
0.17

 
0.81

 
0.85



The following table presents the effect this correction had on our Consolidated Balance Sheet at December 31, 2014:
 
 
December 31, 2014
 
 
As Reported
 
As Revised
Other long-term liabilities
 
$
498

 
$
454

Total Liabilities
 
16,600

 
16,556

Retained earnings
 
9,491

 
9,535

Xerox shareholders' equity
 
10,634

 
10,678

Total Equity
 
10,709

 
10,753

The correction did not have an effect on the Company’s operating cash flows. The following table presents the effect on the individual line items within operating cash flows of our Consolidated Statement of Cash Flows for the year ended December 31, 2014:
 
 
Year Ended December 31, 2014
 
 
As Reported
 
As Revised
Net income
 
$
992

 
$
1,036

Net change in income tax assets and liabilities
 
29

 
(15
)


Note 2 – Recent Accounting Pronouncements
Fair Value Measurements: In May 2015, the FASB issued ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent). The update removes the requirement to categorize within the fair value hierarchy all investments for which fair value is being measured using the net asset value per share practical expedient. The amendments also remove the requirements to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value practical expedient. ASU 2015-07 is effective for our fiscal year beginning January 1, 2016, and is not expected to have a material impact on our financial condition, results of operations or cash flows.

Xerox 2015 Form 10-Q
8

Intangibles - Goodwill and Other - Internal Use Software: In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal Use Software - Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The update provides guidance on fees paid by an entity in a cloud computing arrangement and whether an arrangement includes a license to the underlying software. If a cloud computing arrangement includes a software license, then the entity should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract. The guidance in this update does not change GAAP for an entity's accounting for service contracts. Additionally, this update does not change the accounting guidance for a provider of cloud computing services. This update is effective for our fiscal year beginning January 1, 2016. The adoption of this standard is not expected to have a material effect on our financial condition, results of operations or cash flows.
Interest: In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Debt issuance costs are currently reported as a deferred charge in Other long-term assets and were $33 at June 30, 2015. This update is effective for our fiscal year beginning January 1, 2016 with early adoption permitted. The adoption of this standard is not expected to have a material effect on our financial condition, results of operations or cash flows.
Consolidation: In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update reduces the number of consolidation models by changing the evaluation of (a) limited partnerships and similar entities, (b) whether fees paid to a decision maker or service provider are variable interests in a variable interest entity, and (c) variable interests in a VIE held by related parties. This update is effective for our fiscal year beginning January 1, 2016 with early adoption permitted, and is applied on a retrospective or modified retrospective basis. The adoption of this standard is not expected to have a material effect on our financial condition, results of operations or cash flows.
Income Statement: In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20) - Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. ASU 2015-01 is effective for our fiscal year beginning January 1, 2016, with early adoption permitted. The standard primarily involves presentation and disclosure and, therefore, is not expected to have a material impact on our financial condition, results of operations or cash flows.
Derivatives and Hedging: In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815) - Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. ASU 2014-16 does not change the current criteria in GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify how current GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. ASU 2014-16 is effective for our fiscal year beginning January 1, 2016, with early adoption permitted. The adoption of this standard is not expected to have a material impact on our financial condition, results of operations, or cash flows.
Disclosures of Going Concern Uncertainties: In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 provides guidance regarding management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for our fiscal year beginning January 1, 2016, with early adoption permitted. We do not expect the adoption of this standard to have an impact on our financial condition, results of operations, or cash flows.

Xerox 2015 Form 10-Q
9


Stock Compensation: In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update is effective for our fiscal year beginning January 1, 2016 and early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our financial condition, results of operations or cash flows.
Revenue Recognition: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for our fiscal year beginning January 1, 2018, with early adoption permitted for fiscal years beginning January 1, 2017. The standard will be adopted using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements.
Discontinued Operations: In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The update changes the requirements for reporting discontinued operations in Subtopic 205-20. A discontinued operation may include a component of an entity or a group of components of an entity, or a business. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business or a major equity method investment.
Additionally, the update requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. This update was effective prospectively for our fiscal year beginning January 1, 2015. The standard primarily involves presentation and disclosure and, therefore, is not expected to have a material impact on our financial condition, results of operations or cash flows.
Service Concession Arrangements: In January 2014, the FASB issued ASU 2014-05, Service Concession Arrangements (Topic 853). This update specifies that an entity should not account for a service concession arrangement within the scope of this update as a lease in accordance with Topic 840, Leases. The update does not provide specific accounting guidance for various aspects of service concession arrangements but rather indicates that an entity should refer to other Topics as applicable to account for various aspects of a service concession arrangement. The update was effective for our fiscal year beginning January 1, 2015. The adoption of this standard did not have a material effect on our financial condition, results of operation or cash flows.

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

Xerox 2015 Form 10-Q
10


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 document-intensive business processes through automation and deployment of software applications and tools and the management of their printing needs. Document outsourcing services also include revenues from our partner print services offerings.
Our Document Technology segment includes the sale of products that share common technology, manufacturing and product platforms. 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 midsize 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.

The segment classified as 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 and electronic presentation systems, 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)
2015
 
 
 
 
 
 
 
Services
$
2,569

 
$
192

 
$
5,083

 
$
381

Document Technology
1,880

 
228

 
3,710

 
431

Other
141

 
(76
)
 
266

 
(138
)
Total
$
4,590

 
$
344

 
$
9,059

 
$
674

2014
 
 
 
 
 
 
 
Services
$
2,651

 
$
226

 
$
5,236

 
$
448

Document Technology
2,126

 
306

 
4,170

 
555

Other
164

 
(75
)
 
306

 
(125
)
Total
$
4,941

 
$
457

 
$
9,712

 
$
878


Xerox 2015 Form 10-Q
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Three Months Ended
June 30,
 
Six Months Ended
June 30,
Reconciliation to Pre-tax Income
 
2015
 
2014
 
2015
 
2014
Segment Profit
 
$
344

 
$
457

 
$
674

 
$
878

Reconciling items:
 
 
 
 
 
 
 
 
Restructuring and asset impairment charges, and related costs(1)
 
(160
)
 
(46
)
 
(178
)
 
(75
)
Restructuring charges of Fuji Xerox
 
(1
)
 
1

 
(2
)
 
(2
)
Amortization of intangible assets
 
(79
)
 
(78
)
 
(156
)
 
(155
)
Equity in net income of unconsolidated affiliates
 
(29
)
 
(33
)
 
(63
)
 
(75
)
Other
 
(1
)
 
—

 
—

 
1

Pre-tax Income
 
$
74

 
$
301

 
$
275

 
$
572

__________________________
(1)
Includes business transformation costs of $3 and $7 for the three months ended June 30, 2015 and June 30, 2014, respectively, and $7 and $10 for the six months ended June 30, 2015 and June 30, 2014, respectively. 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.

Note 4 – Acquisitions
In January 2015, we acquired Intellinex LLC (Intellinex), formerly Intrepid Learning Solutions, Inc., a Seattle-based company, for $28 in cash. Intellinex provides outsourced learning services primarily in the aerospace manufacturing and technology industries. The acquisition of Intellinex will solidify the position of Xerox's Learning Services unit as a leading provider of end-to-end outsourced learning services, and adds key vertical market expertise in the aerospace industry. Intellinex is included in our Services segment.
During 2015 we also acquired one additional business in our Services segment for approximately $14 in cash, and one additional business in our Document Technology segment for approximately $6 in cash.
The operating results of these acquisitions are not material to our financial statements and are included within our results from the acquisition dates. The purchase prices were allocated primarily to intangible assets, goodwill and internal use software based on third-party valuations and management’s estimates.

Note 5 – Divestitures
Information Technology Outsourcing (ITO)
In December 2014 we announced an agreement to sell the ITO business to Atos. As a result of this agreement and having met applicable accounting requirements, in the fourth quarter 2014, we began reporting the ITO business (disposal group) as a Discontinued Operation. All prior periods were accordingly revised to conform to this presentation. The sale was completed on June 30, 2015. The final sale price of approximately $940 ($930 net of cash sold) reflects closing adjustments, including an adjustment for changes in net asset values and additional proceeds for the condition of certain assets at the closing. Atos also assumed approximately $85 of capital lease obligations and pension liabilities. Net after-tax proceeds are estimated to be approximately $850, which reflects expected cash taxes as well as our transaction and transition costs associated with the disposal. The ITO business included approximately 9,600 employees in 42 countries, who were transferred to Atos upon closing.
In fourth quarter 2014, we recorded a net pre-tax loss of $181 related to the pending sale, reflecting the write-down of the carrying value of the ITO disposal group, inclusive of goodwill, to its estimated fair value less costs to sell. In 2015, we recorded an additional net pre-tax loss of $72 ($68 in second quarter 2015) primarily related to adjustment of the sales price and related expenses associated with the disposal, as well as reserves for certain obligations and indemnifications we retained as part of the final closing negotiations. In addition, in second quarter 2015 we recorded tax expense of $54 primarily related to the difference between the book basis and tax basis of allocated goodwill, which could only be recorded upon final disposal of the business.
The transaction continues to be subject to post-closing adjustments primarily related to a final true-up of net assets and other indemnification obligations. The additional loss recorded in the second quarter 2015 reflects current estimates for these items. In the event there are additional charges associated with this disposal, we will record such amounts through discontinued operations in future periods.


Xerox 2015 Form 10-Q
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Other Discontinued Operations:
Other discontinued operations include the 2014 closure of Xerox Audio Visual Solutions, Inc. (XAV) and the 2014 sale of our Truckload Management Services, Inc. (TMS) business.
Summarized financial information for our Discontinued Operations is as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
ITO
 
Other
 
Total
 
ITO
 
Other
 
Total
 
ITO
 
Other
 
Total
 
ITO
 
Other
 
Total
Revenues
 
$
308

 
$
—

 
$
308

 
$
341

 
$
17

 
$
358

 
$
619

 
$
—

 
$
619

 
$
669

 
$
38

 
$
707

Income (loss) from operations (1), (2)
 
43

 
—

 
43

 
23

 
—

 
23

 
104

 
—

 
104

 
44

 
(1
)
 
43

Loss on disposal
 
(68
)
 
—

 
(68
)
 
—

 
(2
)
 
(2
)
 
(72
)
 
—

 
(72
)
 
—

 
—

 
—

Net (loss) income before income taxes
 
$
(25
)
 
$
—

 
$
(25
)
 
$
23

 
$
(2
)
 
$
21

 
$
32

 
$
—

 
$
32

 
$
44

 
$
(1
)
 
$
43

Income tax expense
 
(70
)
 
—

 
(70
)
 
(9
)
 
(1
)
 
(10
)
 
(93
)
 
—

 
(93
)
 
(16
)
 
(1
)
 
(17
)
(Loss) income from discontinued operations, net of tax
 
$
(95
)
 
$
—

 
$
(95
)
 
$
14

 
$
(3
)
 
$
11

 
$
(61
)
 
$
—

 
$
(61
)
 
$
28

 
$
(2
)
 
$
26

_______________
(1)
ITO Income from operations excludes depreciation and amortization expenses of approximately $41 and $80 (including $7 and $14 for intangible amortization) for the three and six months ended June 30, 2015, respectively, since the business was held for sale.
(2)
ITO Income from operations includes intangible amortization and other expenses of approximately $8 and $16 for the three and six months ended June 30, 2014, respectively.

The following is a summary of the major categories of assets and liabilities of the ITO business held for sale at December 31, 2014:
 
 
December 31, 2014
Accounts receivable, net
 
$
213

Other current assets
 
146

Land, buildings and equipment, net
 
220

Intangible assets, net
 
197

Goodwill
 
337

Other long-term assets
 
147

Total Assets of Discontinued Operations
 
$
1,260

 
 
 
Current portion of long-term debt
 
$
31

Accounts payable
 
32

Accrued pension and benefit costs
 
9

Unearned income
 
64

Other current liabilities
 
112

Long-term debt
 
44

Pension and other benefit liabilities
 
25

Other long-term liabilities
 
54

Total Liabilities of Discontinued Operations
 
$
371



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Note 6 – Accounts Receivable, Net
Accounts receivable, net were as follows:
 
 
June 30, 2015
 
December 31, 2014
Amounts billed or billable
 
$
2,485

 
$
2,421

Unbilled amounts
 
319

 
318

Allowance for doubtful accounts
 
(82
)
 
(87
)
Accounts Receivable, Net
 
$
2,722

 
$
2,652


Unbilled amounts include amounts associated with percentage-of-completion accounting and other earned revenues not currently billable due to contractual provisions. Amounts to be invoiced in the subsequent month for current services provided are included in amounts billable, and at June 30, 2015 and December 31, 2014 were approximately $926 and $945, respectively.

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. The allowance for uncollectible accounts receivable is determined principally on the basis of past collection experience, as well as consideration of current economic conditions and changes in our customer collection trends.
Accounts Receivable Sales Arrangements
Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and liquidity management. We have facilities in the U.S., Canada and several countries in Europe that enable us to sell certain accounts receivable without recourse to third-parties. The accounts receivable sold are generally short-term trade receivables with payment due dates of less than 60 days.
All of our arrangements involve the sale of our entire interest in groups of accounts receivable for cash. In most instances a portion of the sales proceeds are held back by the purchaser and payment is deferred until collection of the related receivables sold. Such holdbacks are not considered legal securities nor are they certificated. We report collections on such receivables as operating cash flows in the Condensed Consolidated Statements of Cash Flows because such receivables are the result of an operating activity and the associated interest rate risk is de minimis due to its short-term nature. Our risk of loss following the sales of accounts receivable is limited to the outstanding deferred purchase price receivable. These receivables are included in the caption “Other current assets” in the accompanying Condensed Consolidated Balance Sheets and were $59 and $73 at June 30, 2015 and December 31, 2014, respectively.
Under most of the arrangements, we continue to service the sold accounts receivable. When applicable, a servicing liability is recorded for the estimated fair value of the servicing. The amounts associated with the servicing liability were not material.
Of the accounts receivable sold and derecognized from our balance sheet, $539 and $580 remained uncollected as of June 30, 2015 and December 31, 2014, respectively.
Accounts receivable sales were as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Accounts receivable sales
$
586

 
$
726

 
$
1,188

 
$
1,548

Deferred proceeds
57

 
96

 
119

 
220

Loss on sales of accounts receivable
3

 
4

 
6

 
8

Estimated decrease to operating cash flows(1)
(27
)
 
(31
)
 
(10
)
 
(20
)
__________________________
(1)
Represents the difference between current and prior period receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and, (iii) currency.

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Note 7 - Finance Receivables, Net
Sale of Finance Receivables
In 2013 and 2012, we transferred our entire interest in certain groups of lease finance receivables to third-party entities for cash proceeds and beneficial interests. The transfers were accounted for as sales with derecognition of the associated lease receivables. There have been no transfers of finance receivables since the year ended December 31, 2013. We continue to service the sold receivables and record servicing fee income over the expected life of the associated receivables.
The following is a summary of our prior sales activity.
 
 
Year Ended December 31,
 
 
2013
 
2012
Net carrying value (NCV) sold
 
$
676

 
$
682

Allowance included in NCV
 
17

 
18

Cash proceeds received
 
635

 
630

Beneficial interests received
 
86

 
101

Pre-tax gain on sales
 
40

 
44

Net fees and expenses
 
5

 
5

The principal value of finance receivables derecognized from our balance sheet was $376 and $549 (sales value of approximately $404 and $596) at June 30, 2015 and December 31, 2014, respectively.

Summary
The lease portfolios transferred and sold were all from our Document Technology segment, and the gains on these sales were reported in Financing revenues within the Document Technology segment. The ultimate purchaser has no recourse to our other assets for the failure of customers to pay principal and interest when due beyond our beneficial interests, which were $56 and $77 at June 30, 2015 and December 31, 2014, respectively, and are included in Other current assets and Other long-term assets in the accompanying Condensed Consolidated Balance Sheets. Beneficial interests of $46 and $64 at June 30, 2015 and December 31, 2014, respectively, are held by bankruptcy-remote subsidiaries and therefore are not available to satisfy any of our creditor obligations. We report collections on the beneficial interests as operating cash flows in the Condensed Consolidated Statements of Cash Flows because such beneficial interests are the result of an operating activity, and the associated interest rate risk is de minimis considering their weighted average lives of less than 2 years.

The net impact from the sales of finance receivables on operating cash flows is summarized below:
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
Impact from prior sales of finance receivables(1)
 
$
(89
)
 
$
(137
)
 
$
(194
)
 
$
(286
)
Collections on beneficial interest
 
15

 
25

 
33

 
51

Estimated Decrease to Operating Cash Flows
 
$
(74
)
 
$
(112
)
 
$
(161
)
 
$
(235
)
____________________________ 
(1)     Represents cash that would have been collected had we not sold finance receivables.
Finance Receivables – Allowance for Credit Losses and Credit Quality
Finance receivables include sales-type leases, direct financing leases and installment loans. Our finance receivable portfolios are primarily in the U.S., Canada and Europe. We generally establish customer credit limits and estimate the allowance for credit losses on a country or geographic basis. Our policy and methodology used to establish our allowance for doubtful accounts has been consistently applied over all periods presented.
 

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The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment in finance receivables:
Allowance for Credit Losses:
 
United States
 
Canada
 
Europe
 
Other(3)
 
Total
Balance at December 31, 2014
 
$
41

 
$
20

 
$
58

 
$
12

 
$
131

Provision
 
2

 
1

 
5

 
3

 
11

Charge-offs
 
—

 
(3
)
 
(1
)
 
(1
)
 
(5
)
Recoveries and other(1)
 
—

 
—

 
(6
)
 
—

 
(6
)
Balance at March 31, 2015
 
$
43

 
$
18

 
$
56

 
$
14

 
$
131

Provision
 
1

 
1

 
6

 
2

 
10

Charge-offs
 
(1
)
 
(2
)
 
(5
)
 
(2
)
 
(10
)
Recoveries and other(1)
 
(1
)
 
1

 
3

 
—

 
3

Balance at June 30, 2015
 
$
42

 
$
18

 
$
60

 
$
14

 
$
134

Finance receivables as of June 30, 2015 collectively evaluated for impairment(2)
 
$
1,710

 
$
397

 
$
1,619

 
$
430

 
$
4,156

 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2013
 
$
45

 
$
22

 
$
81

 
$
6

 
$
154

Provision
 
3

 
2

 
7

 
3

 
15

Charge-offs
 
(1
)
 
(4
)
 
(5
)
 
(2
)
 
(12
)
Recoveries and other(1)
 
1

 
—

 
—

 
—

 
1

Balance at March 31, 2014
 
$
48

 
$
20

 
$
83

 
$
7

 
$
158

Provision
 
1

 
2

 
11

 
1

 
15

Charge-offs
 
—

 
(4
)
 
(8
)
 
1

 
(11
)
Recoveries and other(1)
 
—

 
2

 
—

 
—

 
2

Balance at June 30, 2014
 
$
49

 
$
20

 
$
86

 
$
9

 
$
164

Finance receivables as of June 30, 2014 collectively evaluated for impairment(2)
 
$
1,684

 
$
421

 
$
2,170

 
$
339

 
$
4,614

 __________________
(1)
Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.
(2)
Total Finance receivables exclude the allowance for credit losses of $134 and $164 at June 30, 2015 and 2014, respectively.
(3)
Includes developing market countries and smaller units.
We evaluate our customers based on the following credit quality indicators:
•
Investment grade: This rating includes accounts with excellent to good business credit, asset quality and the capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance. The rating generally equates to a Standard & Poors (S&P) rating of BBB- or better. Loss rates in this category are normally minimal at less than 1%.
•
Non-investment grade: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. This rating generally equates to a BB S&P rating. Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the higher loss rates are largely offset by the higher rates of return we obtain on such leases. Loss rates in this category are generally in the range of 2% to 4%.
•
Substandard: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include customers who were downgraded during the term of the lease from investment and non-investment grade status when the lease was originated. Accordingly, there is a distinct possibility for a loss of principal and interest or customer default. The loss rates in this category are around 10%.

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Credit quality indicators are updated at least annually and the credit quality of any given customer can change during the life of the portfolio. Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:
 
June 30, 2015
 
December 31, 2014
 
Investment
Grade
 
Non-investment
Grade
 
Substandard
 
Total
Finance
Receivables
 
Investment
Grade
 
Non-investment
Grade
 
Substandard
 
Total
Finance
Receivables
Finance and other services
$
191

 
$
177

 
$
59

 
$
427

 
$
195

 
$
159

 
$
55

 
$
409

Government and education
556

 
13

 
4

 
573

 
589

 
13

 
3

 
605

Graphic arts
150

 
81

 
83

 
314

 
148

 
79

 
90

 
317

Industrial
91

 
41

 
16

 
148

 
92

 
41

 
18

 
151

Healthcare
87

 
25

 
14

 
126

 
84

 
26

 
14

 
124

Other
55

 
40

 
27

 
122

 
55

 
38

 
29

 
122

Total United States
1,130

 
377

 
203

 
1,710

 
1,163

 
356

 
209

 
1,728

Finance and other services
55

 
34

 
11

 
100

 
54

 
31

 
12

 
97

Government and education
67

 
8

 
2

 
77

 
76

 
8

 
2

 
86

Graphic arts
51

 
41

 
29

 
121

 
58

 
49

 
36

 
143

Industrial
24

 
13

 
4

 
41

 
24

 
13

 
4

 
41

Other
35

 
20

 
3

 
58

 
34

 
19

 
4

 
57

Total Canada
232

 
116

 
49

 
397

 
246

 
120

 
58

 
424

France
224

 
208

 
109

 
541

 
253

 
234

 
129

 
616

U.K./Ireland
246

 
95

 
4

 
345

 
255

 
101

 
6

 
362

Central(1)
217

 
216

 
28

 
461

 
230

 
278

 
30

 
538

Southern(2)
31

 
145

 
30

 
206

 
60

 
148

 
36

 
244

Nordics(3)
23

 
43

 
—

 
66

 
25

 
49

 
1

 
75

Total Europe
741

 
707

 
171

 
1,619

 
823

 
810

 
202

 
1,835

Other
167

 
205

 
58

 
430

 
195

 
163

 
40

 
398

Total
$
2,270

 
$
1,405

 
$
481

 
$
4,156

 
$
2,427

 
$
1,449

 
$
509

 
$
4,385

_____________________________

(1)
Switzerland, Germany, Austria, Belgium and Holland.
(2)
Italy, Greece, Spain and Portugal.
(3)
Sweden, Norway, Denmark and Finland.


Xerox 2015 Form 10-Q
17


The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:
 
June 30, 2015
 
Current
 
31-90
Days
Past Due
 
>90 Days
Past Due
 
Total Billed
 
Unbilled
 
Total
Finance
Receivables
 
>90 Days
and
Accruing
Finance and other services
$
7

 
$
2

 
$
2

 
$
11

 
$
416

 
$
427

 
$
12

Government and education
16

 
3

 
3

 
22

 
551

 
573

 
25

Graphic arts
14

 
1

 
1

 
16

 
298

 
314

 
8

Industrial
4

 
1

 
1

 
6

 
142

 
148

 
7

Healthcare
3

 
1

 
1

 
5

 
121

 
126

 
5

Other
4

 
—

 
—

 
4

 
118

 
122

 
4

Total United States
48

 
8

 
8

 
64

 
1,646

 
1,710

 
61

Canada
9

 
2

 
1

 
12

 
385

 
397

 
11

France
—

 
—

 
1

 
1

 
540

 
541

 
31

U.K./Ireland
2

 
1

 
—

 
3

 
342

 
345

 
1

Central(1)
4

 
2

 
1

 
7

 
454

 
461

 
6

Southern(2)
12

 
4

 
3

 
19

 
187

 
206

 
10

Nordics(3)
1

 
—

 
—

 
1

 
65

 
66

 
3

Total Europe
19

 
7

 
5

 
31

 
1,588

 
1,619

 
51

Other