xerox investor handout notes: market sizing based upon external sources and xerox internal analysis....

Xerox Investor Handout

Xerox Strategy Overview / Quarter 4 2014 Results

Forward-Looking Statements This presentation contains "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. These 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; actions of competitors; 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 multi-year contracts with governmental entities could be terminated prior to the end of the contract term; the risk in the hiring

and retention of qualified personnel; the risk that unexpected costs will be incurred; the risk that subcontractors, software vendors and utility and

network providers will not perform in a timely, quality manner; 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; development of new products and services; our ability to

protect our intellectual property rights; our ability to expand equipment placements; 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; service interruptions; interest rates,

cost of borrowing and access to credit markets; reliance on third parties, including subcontractors, for manufacturing of products and provision of

services; our ability to drive the expanded use of color in printing and copying; 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 our Quarterly Reports on Form 10-Q for the

quarters ended March 31, 2014, June 30, 2014, and September 30, 2014 and our 2013 Annual Report on Form 10-K filed with the Securities

and Exchange Commission. The Company 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.

On December 18, 2014, Xerox Corporation announced that it had entered into an agreement to sell its Information Technology Outsourcing

(ITO) business to Atos S.E. The transaction is subject to customary closing conditions and regulatory approval and is expected to close in the

first half of 2015. As a result of the pending sale of the ITO business, and having met applicable accounting requirements, Xerox will report the

ITO business as a discontinued operation. The forward looking statements contained in this presentation are subject to the risk that the sale of

the ITO business may not occur on the terms, within the time and/or in the manner as previously disclosed, if at all.

2

Our Message to You: Xerox is…

3

• Well-positioned and investing to grow in attractive services markets

• Applying innovation to lead transition of BPO to automated, analytics-driven outsourcing

• Executing to improve Services performance and consistency

• Leading in attractive areas of document technology while delivering strong

profitability and cash flow

• Disciplined in our capital allocation with focus on delivering shareholder value

• On a journey to be the most sought after customer partner and place to work

in our industry

Xerox Strategy

Apply technology and innovation to transform the way people work and live

Drive Operational Excellence Across Our Businesses

Innovate to

Differentiate Our

Offerings

Leverage Brand

Strength and Market

Position

Profitably Grow

Services in Attractive

Markets

Lead in Document

Technology

Engage, Develop and Support Our People

4

Xerox Value Proposition…

…targeting earnings per share expansion of 5 to 10%

Mix to

Services

~2/3rds

of Revenue

by 2017

Attractive

Markets

5%+ Services

Market

CAGR

Margin

Opportunity

~50 bps Expected 2015

Services

Margin

Improvement

Sustainable

Shareholder

Value

>50% FCF Return to

Shareholders

Lead in

Document

Technology

~$1.8B Expected 2015

Xerox Cash

from

Operations

5

Document Technology

Document Technology Strategy

7

Grow in

Developing

Markets

Innovate in All

We Do

Market focused strategy underpinned by operational excellence and talented workforce

Operational Excellence, Global Delivery and Economy of Scale


Lead in

Managed Print

Services

Channel

Expansion and

Market Reach

Lead in Graphic

Communications

Market Dynamics

8

Overall print market at one percent decline;

underlying dynamics offer opportunities

• Shift from traditional office printing to

Document Outsourcing

• Graphic Communications market is growing

– Driven by expanding digital and inkjet

capabilities

• Significant SMB market

– Also shifting to Print Services via direct

and indirect sales

• Growth in Developing Markets

– Enhanced by MPS and Production

markets

Source: internal Xerox estimates; excludes Asia-Pacific FX territories

Overall Print Market 2014 $ Billions, ‘14 – ’17 CAGR

Office (non-DO)

Total DO1

Prod / GC

(4)%

7%

3%

$66

$19

Total Market $91B (1)%

SMB – 71% Enterprise – 29%

(1)% (4)%

$6

NA – 38% DMO – 28%

(3)% 1%

EU – 34%

(3)%

Note 1: DO includes MPS, CPS and Workflow market estimates.

Note 2: SMB/LE and NA/EU/DMO only include Office non-DO and MPS.

Market Components - % of Market2

WW 1H14 Equipment Sale Revenue Share %

Xerox has been the leader

for 19 consecutive quarters

Technology Advances Sustain Industry Leadership

Sustained Market Share Leadership

Industry Recognition

Gold Ink Awards Europe Digital Press Award

Magic Quadrant for Managed Print Services,

Worldwide

IDC MarketScape WW MPS & Document

Services Hardcopy Vendor Analysis

2014 Quocirca MPS Landscape

A leader in The Forrester Wave™:

Managed Print Services

Xerox Corporation Mobile Print Solution 2

Outstanding Enterprise Mobile Print Solution

Xerox Corporation 2014 Document Imaging Solutions

Line of the Year

9

IDC: Published September 2014

Forrester: Published Q2 2012, Forrester Research, Inc.

Gartner: Published October 21, 2013 by Ken Weilerstein, Sharon McNee, Elizabeth Kim. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise

technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed

as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Xerox

21 17

14

11

[------- Competitors -------]

Market Leading Portfolio – SMB and Large Enterprise Broadest Portfolio of Print and Document Outsourcing Capabilities will enable MPS growth with the market and increased share of SMB market

15 New Workflow Offerings in 2014

Workflow Integration for Mobile and Cloud

Industry Leading Security

Cost Control and Sustainability

IT Enablers

ConnectKey®

Xerox® WorkCentre®

7845/7855


5945/5955

Xerox® Color

C60/70

Xerox®

WorkCentre®

6655


7220/7225


7970

Xerox® WorkCentre® 3655


5865/5875/5890

19 New Technology Offerings in 2014

ConnectKey®

ConnectKey®

ConnectKey®

ConnectKey®

ConnectKey®

ConnectKey®

10

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=FxsboFEMAvFeRM&tbnid=2JFuTKhTux6kkM:&ved=0CAUQjRw&url=http://www.intenseschool.com/boot_camp/cisco/&ei=Sic6UvKBIcnkyQHF7ID4Ag&bvm=bv.52288139,d.aWc&psig=AFQjCNFB24QMxNCcUoc_8CIoFob-mJolyA&ust=1379629254733699

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=JFiwKmIqkqZl_M&tbnid=njL4U5224x8ZyM:&ved=0CAUQjRw&url=http://www.telegraph.co.uk/technology/advice/9729499/Ask-Rick-problems-with-Autoscroll-on-Microsoft-Word.html&ei=jC06UrePNceGyAGGxYCABg&bvm=bv.52288139,d.aWc&psig=AFQjCNFBe_tZ9KgqHQzpZ8y5ruKI8MoAxA&ust=1379630859194217

Market Leading Portfolio – Graphic Communications Broadest Portfolio of Graphic Communications Offerings

to capture increased share of color growth and inkjet opportunity within the 50 trillion total production pages

Web-to-print

Variable Data Cross Media

Pre-press Color Management

Automation

7 New Workflow Offerings in 2014

Xerox® 8250 Production Printer

Xerox® Color J75 Press

Xerox® Color 800/1000 Presses

Xerox ® Versant 2100 Press

Xerox® Reference®

Xerox® CiPress® 500

Xerox® CiPress® 325

Xerox® eVolution® 150 /250

Xerox® iGen® 150 Digital Press

Xerox® Compact®

4 New Technology Offerings in 2014

11

Demonstrated Operational Excellence Across Value Chain…

Global Reach

Direct Sales Capability

Extensive Channels and

Partnerships

Broad Customer Relationships Sales Excellence and Productivity

Global Service

Remote Connectivity and Diagnostics

Global Delivery Center

Automation

Offering Innovation

Offshoring and Right-shoring

…drives sustained market share and strong operating margin.

Global Delivery

Manufacturing Productivity

Global Sourcing

Product Cost and Portfolio Simplification

RD&E Efficiency and Alignment

Infrastructure Optimization 20%

45%

31%

4%

SAG

Equipment

Post Sale

& Managed

Services

Over $9B of

Addressable Spend1

% of Total

RD&E

Note 1: Includes operating expenses for Document Technology and Document Outsourcing.

12

Services

Services Strategy…

Manage Our

Portfolio of

Businesses

Grow

Globally

Transform the

Way We Work

Deliver

Operational

Excellence

Use Analytics

to Increase

Value

14


...will drive revenue growth and margin improvement.

$250 $290

$172

$203

$119

$145 $19

$23

2014 2017

Attractive Market Opportunity

$26 7%

$30 6%

$65 8%

$67 4%

Finance &Accounting

TransactionProcessing

HumanResources

CustomerCare

2017 Multi-Industry BPO

Notes: Market sizing based upon external sources and Xerox internal analysis. Document Outsourcing includes Managed Print

Services, Centralized Print Services and Workflow Solutions. Transaction processing includes outbound print management (non-DO).

Xerox announced on 12/18/14 that it has entered an agreement to sell its ITO business to Atos (expected close H1 2015).

$ Billions

$560B

$660B

IT Outsourcing (excl. apps)

Industry

Specific BPO

Multi-Industry

BPO

Document

Outsourcing

+4%

CAGR

+7%

CAGR

+6%

CAGR

+7%

CAGR

$11 7%

$15 5%

$16 7%

$21 9%

Health Payer

Transportation

Insurance(Life, P&C)

Government BPO(excl. health)

2017 Industry-Specific BPO

Total BPO

$348B

6% CAGR

15

Services Evolution Progressing…

Optimize Realize

Transition

16

Transition from decentralized

business unit structure to a global

operating model with industry go-to-

market and service delivery via

capabilities

Optimize performance through

platform consolidation, organizational

alignment, cost transformation and

industry driven solution sales.

Realize and enhance market

leading positions through industry

insight, innovative offerings and

delivery excellence.

Margin Focus

Growth Focus

...will drive margin expansion and revenue growth.

Industry Verticals and Global Capabilities Alignment

Financial

Services 13% of

Revenue

High Tech &

Comms 16% of

Revenue

Industrial,

Retail &

Hospitality 15% of

Revenue

Commercial

Healthcare 15% of

Revenue

Government

Healthcare 13% of

Revenue

Public

Sector (including

Transportation)

28% of

Revenue

17

Document Outsourcing

Managed Print Services / Centralized Print Services

Business Process Outsourcing

Customer Care / Communication & Marketing / Human Resources / Transaction Processing / Finance & Accounting

Professional Services

Note: Graphic has been updated to exclude the ITO business which was moved to discontinued operations following

announcement of planned sale to Atos

Margin Expansion Roadmap

GHS Recovery Plan

Global Capability Model Implementation Workforce and Non-Labor Cost Optimization /

Structural Optimization

Portfolio Management / Contract Management

18

2014 Margin 9.0%

Target Margin

10 - 12%

Investments: Sales, Leadership, Training, Tools, Offerings

10 - 15 bps

2015 Margin

9 - 10%

25+ bps

2015 Contribution Target Contribution

50 - 75 bps 100+ bps

25 - 50 bps 75 - 100 bps

(50 - 60) bps (50 - 60) bps

Platform Development 0 - 5 bps 25+ bps

Revenue Growth Acceleration Levers…

Acquisitions More Rapid

Growth Outside

the U.S.

Industry

Verticals /

Cross Selling /

Signings

Acceleration

New Large

Contract Yield

Reduced

Large Contract

Run-offs

...will drive revenue growth back to target model.

19

Government Healthcare Overview

Xerox Government Healthcare Facts:

• 36 states and DC supported by our solutions and services

• Almost 500 million claims processed annually

• Manage more than $59 billion in annual provider payments

• Largest provider of MMIS solutions

US healthcare spending is >15% of GDP and

growing, US government funding is >50%:

• XRX revenue nearly $1B, operating margin will show

considerable improvement in 2015

Growth Opportunities:

• Medicaid expansion and continued implementation

of ACA mandates, shift to managed care

• New states and broader participation with existing

clients

We are evolving our offerings and innovating to

address market changes:

• Enterprise – exclusively and specifically for Medicaid

• Analytics – fraud, waste & abuse (Metal Detector),

managed care

• Leveraging new technologies (mobile, social) to

improve health outcomes to new Medicaid consumer

20

Commercial Healthcare Overview

The global healthcare market is ~$48 billion, 7%

CAGR

• XRX revenue in excess of $1B, operating margin

and annual growth above target model

Healthcare Mega Trends:

Shift to consumer model, changing payment and risk

model, increasing care and quality measurement

Our Growth Strategy:

• Leverage core scale-based services

• Accelerate growth in vertical specific services

• Build and acquire new capabilities



• Analytics – Juvo, Digital Assistant, managed care

and fraud, waste & abuse

• Technology – Atrial Fibrillation Image Processing

Patient Becoming key

decision maker

21

Xerox Commercial Healthcare Facts:

• 2/3 of US insured patients are touched by XRX

• 1,900+ hospitals served

• 100% of top 20 US managed healthcare plans are clients

• Industry leader in size/capability across a number of key categories

Transportation Overview

The global transportation market is ~$13 billion,

5% CAGR

• XRX revenue nearly $1B, operating margin above

target model

Global Transportation Mega Trends:

Urbanization, changing demographics, always

connected, new business models

Our Growth Strategy – Urban Mobility: Series of

interrelated solutions designed to satisfy mobility

needs of mega cities, businesses and their citizens

today and in the future



• Parking – Merge® A smart grid for parking

• Electronic Tolling – Xerox Vehicle Passenger

Detection System™

Xerox Transportation Facts:

• US Industry leader across several offerings, also high global ranking

and industry recognition for leadership in excellence and innovation

• 35 countries host our transportation solutions worldwide

• $5 billion in electronic toll payments processed annually

• 37 billion public transit transactions managed annually

22

Human Resources Outsourcing and Consulting

The global HRS BPO market is ~$65 billion, 8% CAGR

• XRX revenue over $1B, operating margin and growth

varies by business area

Global HRS Mega Trends:

Private exchanges, focus on employee productivity, shift

to defined contribution versus defined benefit, employee

engagement, Business/Learner centric solutions

HRS and Professional Services Capabilities:

• Learning

• Buck Consulting

• Total Benefits and HR Outsourcing

We are evolving our offerings and innovations to


• Private Healthcare Exchange – RightOpt®

• BPaaS solutions – fully integrated SaaS applications

• Data Analytics – diagnostic, prescriptive and

predictive

• Learning Hub – integrated learning platform

23

Xerox HR Services Facts:

• Over 2,000 clients with 9M+ employees and retirees served

• Global footprint across 72 countries; addressing 23 languages

• 5M+ Learners supported globally

• Highly ranked by industry analysts across all major offerings

Document Outsourcing Overview

11.4 13.7

5.4

5.6 2.4

4.1

2014 2017

CAGR

+7%

$19.3B

$23.4B

Xerox Document Outsourcing

• Industry leader in market share and offerings as recognized by

several leading industry analyst firms

• Manage greater than:

– 1.5 million devices, Xerox and multi-vendor

– 5 billion printed pages per month

– 4 thousand sites

The global document outsourcing market is ~$19

billion, 7% CAGR

• XRX revenue exceeds $3B, operating margin above

Services average

Global Document Outsourcing Mega Trends:

Mobility, workflow automation, vertical applications

Our Global Growth Strategy:

• Lead with Next Gen MPS and CPS offerings

• Capture SMB share through channels

• Invest in and grow workflow automation



• Document Analytics – CompleteView Pro and Asset

DB, unique printing data assessment

• Secure Print Manager and Mobile Print Solution –

improved security and mobility

• Ignite Educator Support – efficiency and customized

approach in education

• Digital Alternatives – paperless workflow

Automate

and

Simplify

Secure

and

Integrate

Assess

and

Optimize

Market Sizing and Growth

CPS

Production

24

MPS

Office

Workflow

Financial Overview

Note: Xerox announced on 12/18/14 that it has

entered an agreement to sell its ITO business to Atos

(expected close H1 2015) and began reporting ITO as a

discontinued operation in Q4 2014 earnings. As a

result ITO is excluded from our results and guidance

unless otherwise noted.

Segment Business Dynamics

Target

Revenue Growth Mid-to-High single digit growth

Segment Margin 10 – 12%

• Services mix: 68% BPO, 32% DO

• Geographic mix: ~75% U.S., ~25% International

• Attractive market growth: BPO 6%+, DO 7%

• Broad and diverse BPO portfolio

– Over 60% of BPO portfolio with margins ≥10%

– Long-term contracts with high renewal rates

• Relatively modest CAPEX, < 3% of revenue

Services (~54% of Total Revenue) Document Technology (~43% of Total Revenue)

Macroeconomic sensitivity especially on hardware and

unbundled supplies sales

Limited macroeconomic sensitivity given largely

recurring revenue and diversity of business

1Office includes both Mid-Range and Entry products

Note: Expect “Other” segment revenue to decline mid-single digits

Target

Revenue Growth Mid-single digit decline

Segment Margin 10 – 12%

26

• Product mix: 57% Mid-Range, 23% High-End, 20% Entry

• Geographic mix: 62% N. America, 26% Europe, 12%

developing markets

• Office1 market declining 4%, High-End market growing 3%

driven by Color growth of 8%

– Migration to Doc Outsourcing impacts Office

– Area of highest secular decline, High-End B&W represents

<8% of Doc Tech business

• Ongoing restructuring and productivity actions support

continued strong margin

ITO Divestiture Summary

Announced planned sale of ITO business to Atos on December 18, 2014

• Cash consideration of $1.05B prior to closing adjustments, potential for incremental $50M at closing

• Transaction expected to close in the first half of 2015

• Worldwide strategic collaboration between Xerox and Atos - mutually beneficial to Xerox, Atos, our employees and our

customers

Significant milestone in Xerox’s ongoing portfolio management strategy

• Enables greater focus on expanding BPO and DO businesses where we have scale and differentiation

• Supports objective to grow our BPO business internationally

Impact to Earnings and use of Proceeds

• ITO moved to discontinued operations - ITO net revenue of $1.3B and operating profit of $107M in 2014

• Expect after-tax proceeds of approximately $850M, as a result, expect ~$1B in share repurchase and up to $900M in

acquisitions in 2015

• As previously communicated, expect ~6 cents of dilution in 2015 and neutral by 2016, reflecting timing of use of proceeds

27

2015 Guidance

2015

Revenue Growth @ CC Flat

Services Up 2 to 4%

Document Technology Down 4 to 5%

Adjusted EPS1 (incl restructuring) $1.00 - $1.06

GAAP EPS2 $0.83 - $0.89

Cash From Operations $1.7 - $1.9B

CAPEX $ 0.4B

Free Cash Flow $1.3 - $1.5B

Share Repurchase ~$1B

Acquisitions <$900M

Dividend ~$300M

Note: Revenue growth guidance excluding potential divestitures

Constant Currency (CC), Adjusted EPS and Free Cash Flow: see non-GAAP measures 1Adjusted for amortization of intangible assets 2GAAP EPS from Continuing Operations

Revenue

• Services revenue growth driven by BPO

• Document Tech CC declines moderate – Lower impact from prior Finance Receivable sales

• Expect (3) to (4) pts negative currency impact

Earnings

• FY EPS range $1.00 - $1.06, reflects a 5 cent

negative impact from recent currency shifts

• YOY Earnings Drivers

– Improving margin in Services

– Continued strong Doc Tech margin but lower YOY from

higher pension expense and currency

– FY Tax Rate of 25% to 27%

– Fewer shares

Cash flow guidance of $1.7 - $1.9B – Reflects expected timing of the sale of the ITO business

and currency impact

– Expect to offset the impact of ITO sale by 2016

28

(Reflects guidance from Q4 2014 Earnings call on 1/30/15)

13.7% 11 – 13%

Revenue / Price

Productivity (incl Restructuring) Currency

Pension Settlements

All Other*

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

2014 Productivity inclRestructuring

Pension Settlement 2015

29

2015 Document Technology Margin Bridge

2015 2014

*All Other includes higher benefits expense and investments in growth areas

2015 Services Margin Bridge

1Normal Business Dynamics: range for net impact of price declines, contract losses, new contract ramp and normal productivity 30

1

~9%

9% - 10% Normal

Business Dynamics

Investments

Capability Model / Cost Optimization

Government Healthcare

Improvement

Portfolio / Contract

Management

5%

6%

7%

8%

9%

10%

11%

2014 Normal businessdynamics

Investments Cost Optimization Govt HealthcareImprovement

PortfolioManagement

20152015 2014

2015 EPS Bridge

1Reflects a ~(7) cent impact from the announced ITO divestiture and subsequent move of our ITO business to discontinued operations 2Other includes YOY impact of less asset sales, higher benefits expense and a higher tax rate

31 Adjusted (Adj) EPS: see non-GAAP measures

$1.07 $1.00 - $1.06

Tax Rate & Other2

(1) cent

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

2014 Adj EPS Margin exclSettlements

Shares Tax Rate/Other PensionSettlements

Currency 2014 Adj EPS

Margin

Improvement (exclSettlements and

currency)

4 - 6 cents Currency

(5) - (6) cents

Pension

Settlement

~(6) cents Shares

4 - 5 cents

2014 Adj

EPS1

2015 Adj

EPS

$0

$100

$200

$300

$400

2012 2013 2014E 2015E

DB Plan Cost DB Settlement Loss DC Plan Cost

$0

$100

$200

$300

$400

$500

2012 2013 2014E 2015E

DB Cash Contribution DB Stock Contribution

Pension Expectations

Expense DB Pension Funding

• DB plan cost has declined with pension plan freezes

• U.S. plan lump sum (settlement) option creates volatility

− 2012/2014 lower; 2015 expect higher settlements similar to 2013

$230M

• Local law / regulatory requirements

• U.S. legislation lowered near term requirements

• Increasing funding to gradually address liabilities

• Low interest rate environment impacts funding requirements and settlement loss volatility

• All major defined benefit (DB) pension plans frozen – reduces burden over time

~$340M $284M $363M $192M ~$335M $363M

$300M

$267M

~$82M ~$226M

$494M

32

Cash Flow Dynamics

Continued strong cash flow

2015 reflects moderating impact from

previous Finance Receivable sales

• Partially offset by higher pension

funding, ITO divestiture timing and

negative currency

• Expect to offset the impact of ITO sale

by 2016

No Finance Receivable sales planned

in 2015

2015 Cash From Ops guidance of $1.7

to $1.9B, FCF of $1.3 to $1.5B

33

(in billions) 2012 2013 2014 2015 Est.

Operating Cash Flow (OCF) $2.6 $2.4 $2.1 $1.7 - $1.9

Adjustments:

Cash from F/R Sales $(0.6) $(0.6) - -

Impact from prior F/R Sales - $0.3 ~$0.4 ~$0.3

Underlying OCF* $2.0 $2.1 $2.5 $2.0 - $2.2

Operating Cash Flow Trend

*Underlying OCF is reported OCF adjusted for the impacts of Finance Receivable sales. See non-GAAP measures.

Note: 2012 thru 2014 Operating Cash Flow includes a full-year of ITO contribution

$0

$1

$2

$3

2012 2013 2014 2015E

OCF Underlying OCF

(in

bill

ion

s)

Capital Allocation

2013

2015 balanced to deliver shareholder returns while continuing to invest in the business

• Dividend: ~$300M, ability to grow modestly in-line with share reduction and cash flow

• Acquisitions: up to $900M, focused on Services, reflects $400M increase due to expected ITO sale proceeds

• Share Repurchase: ~$1B, reflects $500M increase due to expected ITO sale proceeds

• Debt Repayment: none anticipated in 2015

2015 Plan

Opportunistic Acquisitions

Share Repurchase

Dividend Acquisitions

Dividend

Debt

Repayment

Share

Repurchase

$696M $296M

$434M

$155M

34

Share

Repurchase

Dividend

Debt

Repayment

Acquisitions

2014 Outlook

$1.07B

$340M

$300M ~$200M

~$1B

<$100M

<$900M

~$300M

Xerox Performance Based Incentive System (2014)

Short Term

Metric Weight

Adjusted EPS 50%

Operating Cash Flow 20%

Revenue Growth CC* 30%

Stock Ownership Guidelines

Annual

Cash

Pay-out

Role

Multiple of

Base Salary

Named Officers 3x

All Other Officers 2x

35

Long Term – Annual / 3yr Cumulative Targets

Metric Weight

Adjusted EPS 50%

Adjusted Operating Cash Flow 20%

Revenue Growth CC* 30%

Equity performance shares

3 year vesting from grant date

*Constant Currency (CC): see non-GAAP measures

Fourth-Quarter 2014

Earnings Presentation Ursula Burns Chairman & CEO

Kathy Mikells Chief Financial Officer

January 30, 2015

Xerox Direction

Annuity 83% of Total Revenue

Services 54% of Total Revenue

• Grow revenue

• Generate profits in line with industry’s best

• Strengthen and differentiate the portfolio

• Lead in Document Technology

• Support customers and our people

• Allocate capital to enhance shareholder returns

37

Fourth-Quarter Overview

Adjusted EPS1 of 31 cents, GAAP EPS2 of 26 cents Total revenue of $5.0B, down 3% or down 1% CC1

Services revenue up 1% or up 3% CC1; margin of 9.8% • Revenue growth driven by BPO; demonstrating progress on margin

Document Technology revenue down 8% or down 6% CC1; margin of 14.4% • Profit expansion driven by continued productivity and currency benefits as well as lower bad debt and pension

expense

Operating margin1 of 10.4%, up 100 bps YOY Cash from operations of $857M in Q4, $2.06B FY • Share repurchase of $341M in Q4, $1.07B FY

• Acquisitions of $34M in Q4, $340M FY

1Adjusted EPS, Constant Currency (CC) and Operating Margin: see non-GAAP measures

2GAAP EPS from Continuing Operations 38

(in millions, except per share data) Q4 2014 FY 2014 Comments

Revenue $ 5,033 $ 19,540 Translation currency impact: (2) pts on Q4, neutral for the full-year

CC1 Growth (1)% (2)%

Gross Margin 32.1% 32.0%

RD&E $ 150 $ 577

SAG $ 942 $ 3,788

SAG % of Revenue 18.7% 19.4%

Adjusted Operating Income1 $ 524 $ 1,881 Q4 operating profit grew in both Services and Document Technology

B/(W) YOY $ 34 $ 72

Operating Income % of Revenue 10.4% 9.6%

B/(W) YOY 1.0 pt 0.6 pts

Adjusted Other, net1 $ 99 $ 383 Adjusted Other $6M unfavorable YOY in Q4 and $102M unfavorable

YOY for the full-year

Equity Income $ 41 $ 160

Adjusted Tax Rate1 25.3% 24.9% Above 2013 tax rate of 23.9% in Q4 and 23.8% full-year

Adjusted Net Income – Xerox1 $ 357 $ 1,280

Adjusted EPS1 $ 0.31

$ 1.07 Q4 guidance of 28 to 30 cents,

2013 actual: 27 cents in Q4 and $1.04 full-year

Amortization of intangible assets 0.05 0.17

GAAP EPS2 $ 0.26

$ 0.90

Earnings

1Constant currency (CC), Adjusted Operating Income, Adjusted Other, net, Adjusted Tax Rate, Adjusted Net Income – Xerox and Adjusted

EPS: see non-GAAP measures. 2GAAP EPS from Continuing Operations

39

Services Segment1 BPO revenue up 4% and DO up 1% at CC

• BPO driving Services growth improvement

Margin of 9.8%, improvement driven by BPO with

continued strong DO margin

• Sequential improvement across most BPO lines of

business including Government Healthcare

Signings

• Strong renewal quarter, BPO renewal rate of 93%

• New business signings4 (27)% in Q4 and (13)% TTM

• Significant new business deals awarded, not yet signed

Segment Margin Trend

Revenue Growth Trend (CC2,3)

Signings (TCV) Q4

Business Process Outsourcing $2.2

Document Outsourcing $1.0

Total $3.2B

YOY Growth 20%

TTM Growth (13)%

40

1Services results and historical data exclude ITO which was moved to discontinued operations following announcement of planned sale to Atos 2Constant currency (CC): see non-GAAP measures 32013 growth rates reflect reported growth as revised growth rates excluding ITO are not available at this time 4New Business Signings = ARR (Annual Recurring Revenue) + NRR (Non-Recurring Revenue)

Q4 % B/(W) YOY FY % B/(W) YOY

(in millions) 2014 Act Cur CC2 2014 Act Cur CC2

Total Revenue $2,725 1% 3% $10,584 1% 1%

Segment Profit $268 3% $956 (9)%

Segment Margin 9.8% 0.1 pt 9.0% (1.1) pt

9.7% 10.6% 10.3% 9.7%

8.6% 8.5% 9.1%

9.8%

5%

7%

9%

11%

Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14

4% 6%

3%

(2)% 0% 1% 1% 3%

(4)%

0%

4%

8%

Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14

Document Technology Segment

Segment Margin Trend

Revenue Growth Trend (CC1)

Strong segment profit growth and margin

• Continue to benefit from significant productivity actions,

favorable bad debt, pension and currency

Consistent overall revenue trend

• Currency and Eurasia weakness pressured growth

• Prior year finance receivable sale impacted revenue decline

by almost one point

Announced 20 new products in second half

• Good market reception for new products; well positioned

entering 2015

Entry Installs Q4

A4 Mono MFDs (25)%

A4 Color MFDs (9)%

Color Printers 9%

Mid-Range Installs

Mid-Range B&W MFDs (8)%

Mid-Range Color MFDs (1)%

High-End Installs

High-End B&W (19)%

High-End Color2 12%

41 1Constant currency (CC): see slide non-GAAP measures 2High-end color install growth impacted by digital front end (DFE) sales to Fuji Xerox, High-end up 7% in Q4 excluding DFE’s.

Q4 % B/(W) YOY FY % B/(W) YOY

(in millions) 2014 Act Cur CC1 2014 Act Cur CC1

Total Revenue $2,159 (8)% (6)% $8,358 (6)% (6)%

Segment Profit $310 14% $1,149 19%

Segment Margin 14.4% 2.8 pts 13.7% 2.9 pts

8.7%

10.8%

12.0%

11.6%

12.2% 14.4% 14.0% 14.4%

5%

10%

15%

Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14

(9)%

(5)% (5)% (6)%

(5)%

(7)% (6)% (6)%

(10)%

(5)%

0%Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14

Cash Flow

42

(in millions) Q4 2014 FY 2014

Net Income $ 162 $ 992

Depreciation and amortization 356 1,426

Restructuring and asset impairment charges 37 130

Restructuring payments (30) (133)

Contributions to defined benefit pension plans (78) (284)

Inventories 115 (22)

Accounts receivable and Billed portion of finance receivables1 151 (2)

Accounts payable and Accrued compensation 90 128

Net loss on sales of businesses and assets 172 134

Equipment on operating leases (79) (283)

Finance receivables1 (75) 69

Other 36 (92)

Cash from Operations

$ 857 $ 2,063

Cash from Investing

$ (129) $ (703)

Cash from Financing $ (297) $ (1,624)

Change in Cash and Cash Equivalents 396 (353)

Ending Cash and Cash Equivalents $ 1,411 $ 1,411

Cash From Ops $857M, $2.06B FY

• Underlying Cash from Ops2 $953M in Q4,

$2.5B FY

Net income includes non-cash loss on

pending sale of ITO business

Working capital seasonally a source in Q4,

modestly positive FY

CAPEX $114M, $452M FY

Acquisitions $34M, $340M FY

FY Share Repurchase of $1.07B and $289M of

Common Stock Dividends

2015 Cash From Ops guidance of $1.7 to

$1.9B, FCF3 of $1.3 to $1.5B

• Reflects ITO divestiture timing and negative

currency

1Accounts receivable includes collections of deferred proceeds from sales of receivables and finance receivables includes collections on

beneficial interest from sales of finance receivables

2See Underlying Cash Flow slide in Appendix 3Free Cash Flow (FCF): see non-GAAP measures

Capital Structure

Core debt level managed to

maintain investment grade

Over half of Xerox debt supports

finance assets

$1B of debt due in February and

$250M in June 2015

– Expect to re-finance during the year

and end 2015 with ~$7.7B of debt

43

Financing and Leverage • Xerox’s value proposition includes leasing of Xerox equipment

• Maintain 7:1 leverage ratio of debt to equity on these finance assets

Debt and Finance Asset Trend (in millions)

Q4 2014

(in billions) Fin. Assets Debt1

Financing $4.8 $ 4.2

Core - $ 3.5

Total Xerox $ 4.8 $ 7.7

$

0

2,000

4,000

6,000

8,000

10,000

2011 2012 2013 2014

Finance Debt Core Debt Finance Assets

1Debt excludes $75M in Capital Leases related to our ITO business, which were reclassified to a discontinued operations liability

account as a result of the move of ITO to discontinued operations

Repurchased $1.07B FY

Expect ~$1B in share repurchase in 2015

Announcing a 12% increase in quarterly

common dividend to 7 cents per share2

Expect ~$300M in dividend payments in

2015

Expect up to $900M in acquisitions in 2015

Capital Allocation Enhances Shareholder Returns

44

Share Repurchase Program

Dividend Program

1Ending fully diluted: see non-GAAP measures

2Dividend increase effective for common dividend payable on April 30, 2015

Shares Repurchased ($M)

Shares Outstanding (ending fully diluted1, in millions)

Dividend per share (annualized)

$701

$1,052

$696

$1,071 ~ $1B

$0

$300

$600

$900

$1,200

2011 2012 2013 2014 2015

$0.17 $0.17 $0.23 $0.25 $0.28

$0.00

$0.50

2011 2012 2013 2014 2015

1,391 1,271 1,235 1,159

1,000

1,200

1,400

2011 2012 2013 2014

2015 Guidance

2015

Revenue Growth @ CC Flat

Services Up 2 to 4%

Document Technology Down 4 to 5%

Adjusted EPS1 (incl restructuring) $1.00 - $1.06

GAAP EPS2 $0.83 - $0.89

Cash From Operations $1.7 - $1.9B

CAPEX $ 0.4B

Free Cash Flow $1.3 - $1.5B

Share Repurchase ~$1B

Acquisitions <$900M

Dividend ~$300M

Note: Revenue growth guidance excluding potential divestitures

Constant Currency (CC), Adjusted EPS and Free Cash Flow: see non-GAAP measures 1Adjusted for amortization of intangible assets 2GAAP EPS from Continuing Operations 3 Excludes ITO which was moved to discontinued operations following announcement of planned sale to Atos

Revenue

• Services revenue growth driven by BPO

• Document Tech CC declines moderate – Lower impact from prior Finance Receivable sales

• Expect (3) to (4) pts negative currency impact

Earnings3

• FY EPS range $1.00 - $1.06, reflects a 5 cent

negative impact from recent currency shifts

• YOY Earnings Drivers

– Improving margin in Services

– Continued strong Doc Tech margin but lower YOY from

higher pension expense and currency

– FY Tax Rate of 25% to 27%

– Fewer shares

Cash flow guidance of $1.7 - $1.9B – Reflects expected timing of the sale of the ITO business

and currency impact

– Expect to offset the impact of ITO sale by 2016

45

Summary Progressing on Services profitability and growth initiatives

• Positive BPO revenue trend; managing portfolio and investments to drive better growth

• Made progress on Services margin in Q4, continuing to execute on margin expansion initiatives for sustainable margin

improvement

Continued strong profitability and execution in Document Technology

• Leader in attractive segments; well positioned entering 2015

• Focused on maintaining strong profitability through ongoing productivity initiatives

Strong annuity driven Cash Flow supports share repurchase, acquisitions and dividend expansion

• Announcing a 12% increase in the quarterly common dividend

Q1 and FY EPS guidance

• Q1 Adjusted EPS1 $0.20 - $0.22, GAAP EPS2 $0.16 - $0.18

– Includes approximately 2 cents restructuring

• FY Adjusted EPS1 revised to $1.00 - $1.06, GAAP EPS2 to $0.83 - $0.89

– Reflects approximately 5 cents of negative currency

46 1Guidance - Adjusted EPS: see non-GAAP measures

2GAAP EPS from Continuing Operations

Appendix

ITO Divestiture Summary Announced planned sale of ITO business to Atos on December 18, 2014

• Cash consideration of $1.05B prior to closing adjustments, potential for incremental $50M at closing

• Transaction expected to close in the first half of 2015

• Worldwide strategic collaboration between Xerox and Atos - mutually beneficial to Xerox, Atos, our employees and our

customers

Significant milestone in Xerox’s ongoing portfolio management strategy

• Enables greater focus on expanding BPO and DO businesses where we have scale and differentiation

• Supports objective to grow our BPO business internationally

Impact to Earnings and use of Proceeds

• ITO moved to discontinued operations - ITO net revenue of $1.3B and operating profit of $107M in 2014

• Expect after-tax proceeds of approximately $850M, as a result, expect ~$1B in share repurchase and up to $900M in

acquisitions in 2015

• As previously communicated, expect ~6 cents of dilution in 2015 and neutral by 2016, reflecting timing of use of proceeds

48

Metrics Reference – FY 2014

Entry Installs FY

A4 Mono MFDs (23)%

A4 Color MFDs (7)%

Color Printers Flat

Mid-Range Installs

Mid-Range B&W MFDs (13)%

Mid-Range Color MFDs 1%

High-End Installs

High-End B&W (13)%

High-End Color1 (7)%

FY

Business Process Outsourcing $7.6

Document Outsourcing $3.0

Total $10.6B

Signings Growth TTM (13)%

FY

Digital MIF 2%

Color MIF 12%

Digital Pages (4)%

Color Pages 4%

Color Revenue (CC2) (2)%

FY

Renewal Rate (BPO) 82%

Signings and Renewal Rate Install, MIF and Page Growth

Installs, color revenue, pages and MIF include both the Document Technology and Services segments. Color revenue and color pages reflect

revenue and pages from color capable devices. 1High-end color install growth impacted by digital front end (DFE) sales to Fuji Xerox, High-end up 6% FY excluding DFE’s. 49 2Constant currency: see non-GAAP measures

Revenue Trend

(in millions) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY

Total Revenue $4,857 $5,042 $4,900 $5,207 $20,006 $4,771 $4,941 $4,795 $5,033 $19,540

Growth (2)% (2)% (2)% (3)% (2)%

CC1 Growth (2)% (3)% (2)% (1)% (2)%

Annuity $ 4,133 $4,187 $4,090 $4,238 $16,648 $4,056 $4,160 $4,047 $4,173 $16,436

Growth (2)% (1)% (1)% (2)% (1)%

CC1 Growth (2)% (2)% (1)% Flat (1)%

Annuity % Revenue

85% 83% 83% 81% 83% 85% 84% 84% 83% 84%

Equipment $724 $855 $810 $969 $3,358 $715 $781 $748 $860 $3,104

Growth (1)% (9)% (8)% (11)% (8)%

CC1 Growth (2)% (9)% (8)% (9)% (7)%

2013

50 1Constant currency: see non-GAAP measures

2014

Note: 2013, Q1 2014, Q2 2014 and Q3 2014 are revised to remove business revenues that were reclassified to discontinued operations.

2013 quarterly growth are figures not available on a revised basis at this time.

Segment Revenue Trend


Services $2,584 $2,613 $2,596 $2,686 $10,479 $2,585 $2,651 $2,623 $2,725 $10,584

Growth Flat 1% 1% 1% 1%

CC1 Growth Flat 1% 1% 3% 1%

Document Technology $2,135 $2,263 $2,159 $2,351 $8,908 $2,044 $2,126 $2,029 $2,159 $8,358

Growth (4)% (6)% (6)% (8)% (6)%

CC1 Growth (5)% (7)% (6)% (6)% (6)%

Other $138 $166 $145 $170 $619 $142 $164 $143 $149 $598

Growth 3% (1)% (1)% (12)% (3)%

CC1 Growth 3% (2)% (2)% (11)% (3)%

2013

51

2014

1Constant currency: see non-GAAP measures

Note: 2013, Q1 2014, Q2 2014 and Q3 2014 are revised to remove business revenues that were reclassified to discontinued operations.

2013 quarterly growth are figures not available on a revised basis at this time.

Underlying Cash Flow

52

1Represents cash that would have been collected had we not sold finance receivables. Net of collections on beneficial interest.

2Underlying OCF is reported OCF adjusted for the impacts of Finance Receivable sales: see non-GAAP measures


Operating Cash Flow (OCF) $286 $325 $595 $857 $2,063 ($87) $533 $961 $968 $2,375

Adjustments:

Cash From F/R Sales - - - - - - - ($384) ($247) ($631)

Impact from prior F/R Sales1 $123 $112 $102 $96 $433 $89 $58 $68 $119 $334

Underlying OCF2$409 $437 $697 $953 $2,496 $2 $591 $645 $840 $2,078

2014 2013

Discontinued Operations Summary – Q4

53

1ITO Income from operations for both the 2014 and 2013 fourth quarters includes intangible amortization and other expenses of

approximately $9 million.

(in millions) ITO Other Total ITO Other Total

Revenues 327$ -$ 327$ 341$ 55$ 396$

Income (loss) from operations (1) 16$ -$ 16$ 21$ (2)$ 19$

Loss on disposal (181) - (181) - (2) (2)

Net (loss) income before income

taxes (165) - (165) 21 (4) 17

Income tax benefit (expense) 16 - 16 (7) (1) (8)

(Loss) income from discontinued

operations, net of tax (149)$ -$ (149)$ 14$ (5)$ 9$

Diluted (loss) earnings per share

from discontinued operations (0.13)$ 0.01$

Total diluted earnings per share,

inclusive of discontinued operations 0.13$ 0.24$

Three Months Ended December 31,

2014 2013

Discontinued Operations Summary – FY

54

1ITO Income from operations for the full-year 2014 and 2013 includes intangible amortization and other expenses of

approximately $33 million and $31 million, respectively.

(in millions) ITO Other Total ITO Other Total

Revenues 1,320$ 45$ 1,365$ 1,335$ 496$ 1,831$

Income (loss) from operations (2) 74$ (1)$ 73$ 70$ 3$ 73$

Loss on disposal (181) (1) (182) - (25) (25)

Net (loss) / income before income

taxes (107) (2) (109) 70 (22) 48

Income tax benefit / (expense) (5) (1) (6) (24) (4) (28)

(Loss) / income from discontinued

operations, net of tax (112)$ (3)$ (115)$ 46$ (26)$ 20$

Diluted (loss) earnings per share

from discontinued operations (0.09)$ 0.02$

Total diluted earnings per share,

inclusive of discontinued operations 0.81$ 0.91$

Year Ended December 31,

2014 2013

Discontinued Operations Revision Summary

55

Revised for the reclassification of the ITO business from Services segment to discontinued operations. Segment

profit for our other segments, Document Technology and Other, were impacted by minor reallocation of expenses

as well as rounding.

(in millions)

Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q3 YTD

Revenues

Services 2,584$ 2,613$ 2,596$ 2,686$ 10,479$ 2,585$ 2,651$ 2,623$ 7,859$

Document Technology 2,135 2,263 2,159 2,351 8,908 2,044 2,126 2,029 6,199

Other 138 166 145 170 619 142 164 143 449

Total Revenues 4,857$ 5,042$ 4,900$ 5,207$ 20,006$ 4,771$ 4,941$ 4,795$ 14,507$

Segment Profit (Loss)

Services 250$ 276$ 268$ 261$ 1,055$ 222$ 226$ 240$ 688$

Document Technology 186 245 260 273 964 249 306 284 839

Other (68) (61) (54) (34) (217) (50) (75) (82) (207)

Segment Profit (Loss) 368$ 460$ 474$ 500$ 1,802$ 421$ 457$ 442$ 1,320$

Segment Margin

Services 9.7% 10.6% 10.3% 9.7% 10.1% 8.6% 8.5% 9.1% 8.8%

Document Technology 8.7% 10.8% 12.0% 11.6% 10.8% 12.2% 14.4% 14.0% 13.5%

Other (49.3%) (36.7%) (37.2%) (20.0%) (35.1%) (35.2%) (45.7%) (57.3%) (46.1%)

Segment Margin 7.6% 9.1% 9.7% 9.6% 9.0% 8.8% 9.2% 9.2% 9.1%

2013 2014

Non-GAAP Measures

57

“Adjusted Earnings Measures”: To better understand the trends in our business, we believe it is necessary to adjust the following amounts determined in

accordance with GAAP to exclude the effects of certain items as well as their related income tax effects.

• Net income and Earnings per share (“EPS”)

• Effective tax rate

In 2014 and 2013, we adjusted for the amortization of intangible assets. The amortization of intangible assets is driven by our acquisition activity which can vary

in size, nature and timing as compared to other companies within our industry and from period to period. Accordingly, due to the incomparability of acquisition

activity among companies and from period to period, we believe exclusion of the amortization associated with intangible assets acquired through our acquisitions

allows investors to better compare and understand our results. The use of intangible assets contributed to our revenues earned during the periods presented and

will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

We also calculate and utilize an Operating income and margin earnings measure by adjusting our pre-tax income and margin amounts to exclude certain items.

In addition to the amortization of intangible assets, operating income and margin also exclude Other expenses, net as well as Restructuring and asset

impairment charges. Other expenses, net is primarily comprised of non-financing interest expense and also includes certain other non-operating costs and

expenses. Restructuring and asset impairment charges consist of costs primarily related to severance and benefits for employees pursuant to formal

restructuring and workforce reduction plans. Such charges are expected to yield future benefits and savings with respect to our operational performance. We

exclude these amounts in order to evaluate our current and past operating performance and to better understand the expected future trends in our business.

“Constant Currency”: To better understand trends in our business, we believe that it is helpful to adjust revenue to exclude the impact of changes in the

translation of foreign currencies into U.S. dollars. We refer to this adjusted revenue as “constant currency.” Currencies for developing market countries (Latin

America, Brazil, Middle East, India, Eurasia and Central-Eastern Europe) that we operate in are reported at actual exchange rates for both actual and constant

revenue growth rates because (1) these countries historically have had volatile currency and inflationary environments and (2) our subsidiaries in these countries

have historically taken pricing actions to mitigate the impact of inflation and devaluation. Management believes the constant currency measure provides

investors an additional perspective on revenue trends. Currency impact can be determined as the difference between actual growth rates and constant currency

growth rates.

Non-GAAP Financial Measures

58

“Free Cash Flow”: To better understand the trends in our business, we believe that it is helpful to adjust cash flows from operations to exclude amounts for

capital expenditures including internal use software. Management believes this measure gives investors an additional perspective on cash flow from operating

activities in excess of amounts required for reinvestment. It provides a measure of our ability to fund acquisitions, dividends and share repurchase. It also is

used to measure our yield on market capitalization. A reconciliation of this non-GAAP financial measure and the most directly comparable measure calculated

and presented in accordance with GAAP is set forth in the slide entitled “2015 Guidance”.

“Underlying Cash Flow”: To better understand the trends in our business, we believe that it is helpful to adjust cash flows from operations for the cash flow

impacts from our sales of finance receivables. The sale of finance receivables has a significant impact on operating cash flows in the period of sale as well as on

collections in subsequent periods due to the long term nature of these receivables. In addition to providing a better understanding of the underlying trends in cash

flows from operations, management believes this measure gives investors an additional perspective on comparing and analyzing the year-over-year changes in

our cash flows as well as the impacts of these sales on cash flows in the period. A reconciliation of this non-GAAP financial measure and the most directly

comparable measure calculated and presented in accordance with GAAP is set forth in the slide entitled “Underlying Cash Flows”.

Management believes that these non-GAAP financial measures provide an additional means of analyzing the current periods’ results against the corresponding

prior periods’ results. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results

prepared in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP

measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly

uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-

GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in

part on the performance of our business based on these non-GAAP measures.

Unless otherwise noted, reconciliations of these non-GAAP financial measures and the most directly comparable measures calculated and presented in

accordance with GAAP are set forth on the following slides.

Non-GAAP Financial Measures

59

Q4 GAAP EPS to Adjusted EPS Track

(in millions; except per share amounts) Net Income EPS Net Income EPS

Reported(1)305$ 0.26$ 297$ 0.23$

Adjustments:

Amortization of intangible assets 52 0.05 47 0.04

Adjusted 357$ 0.31$ 344$ 0.27$

Weighted average shares for adjusted EPS(2) 1,171 1,261

Fully diluted shares at end of period(3) 1,159

Three Months Ended

December 31, 2014

Three Months Ended

December 31, 2013

(2) Average shares for the calculation of adjusted EPS include 27 million of shares associated with the Series A

convertib le preferred stock and therefore the related quarterly dividend was excluded.

(3) Represents common shares outstanding at December 31, 2014 as well as shares associated with our

Series A convertib le preferred stock plus dilutive potential common shares as used for the calculation of diluted

earnings per share in the fourth quarter 2014.

(1) Net Income and EPS from continuing operations attributable to Xerox.

60

FY GAAP EPS to Adjusted EPS Track

(in millions; except per share amounts) Net Income EPS Net Income EPS

Reported(1)1,084$ 0.90$ 1,139$ 0.89$

Adjustments:

Amortization of intangible assets 196 0.17 189 0.15

Adjusted 1,280$ 1.07$ 1,328$ 1.04$

Weighted average shares for adjusted EPS(2) 1,199 1,274

Fully diluted shares at end of period(3) 1,159__________

December 31, 2014

Year Ended Year Ended

(2) Average shares for the calculation of adjusted EPS include 27 million of shares associated with the Series A

convertib le preferred stock and therefore the related quarterly dividend was excluded.

(3) Represents common shares outstanding at December 31, 2014 as well as shares associated with our

Series A convertib le preferred stock plus dilutive potential common shares as used for the calculation of diluted

earnings per share in the fourth quarter 2014.

December 31, 2013

(1) Net Income and EPS from continuing operations attributable to Xerox.

61

GAAP EPS to Adjusted EPS Guidance Track

Q1 2015 FY 2015

GAAP EPS from Continuing Operations $0.16 - $0.18 $0.83 - $0.89

Adjustments:

Amortization of intangible assets 0.04 0.17

Adjusted EPS $0.20 - $0.22 $1.00 - $1.06

Note: GAAP and Adjusted EPS guidance includes anticipated restructuring

Earnings Per Share Guidance

62

Q4 Adjusted Operating Income/Margin

(in millions) Profit Revenue Margin Profit Revenue Margin

Reported pre-tax income (1)348$ 5,033$ 6.9% 326$ 5,207$ 6.3%

Adjustments:

Amortization of intangible assets 83 76

Xerox restructuring charge 36 55

Other expenses, net 57 33

Adjusted Operating 524$ 5,033$ 10.4% 490$ 5,207$ 9.4%

Three Months Ended Three Months Ended

December 31, 2014 December 31, 2013

(1) Profit and Revenue from continuing operations attributable to Xerox.

63

FY Adjusted Operating Income/Margin

(in millions) Profit Revenue Margin Profit Revenue Margin

Reported pre-tax income (1)1,206$ 19,540$ 6.2% 1,243$ 20,006$ 6.2%

Adjustments:

Amortization of intangible assets 315 305


Other expenses, net 232 146

Adjusted Operating 1,881$ 19,540$ 9.6% 1,809$ 20,006$ 9.0%



(1) Profit and Revenue from continuing operations attributable to Xerox.

64

Q4 and FY Adjusted Other, net


(in millions) December 31, 2014 December 31, 2013

Other expenses, net - Reported 57$ 33$

Adjustments:


Net income attributable to noncontrolling interests 6 5

Other expenses, net - Adjusted 99$ 93$


(in millions) December 31, 2014 December 31, 2013

Other expenses, net - Reported 232$ 146$

Adjustments:


Net income attributable to noncontrolling interests 23 20

Other expenses, net - Adjusted 383$ 281$

65

Q4 and FY Adjusted Effective Tax Rate

(in millions)

Pre-Tax

Income

Income

Tax

Expense

Effective

Tax

Rate

Pre-Tax

Income

Income

Tax

Expense

Effective

Tax Rate

Reported(1) 348$ 78$ 22.4% 326$ 67$ 20.6%

Adjustments:

Amortization of intangible assets 83 31 76 29

Adjusted 431$ 109$ 25.3% 402$ 96$ 23.9%

(in millions)

Pre-Tax

Income

Income

Tax

Expense

Effective

Tax

Rate

Pre-Tax

Income

Income

Tax

Expense

Effective

Tax Rate

Reported(1) 1,206$ 259$ 21.5% 1,243$ 253$ 20.4%

Adjustments:

Amortization of intangible assets 315 119 305 116

Adjusted 1,521$ 378$ 24.9% 1,548$ 369$ 23.8%

(1) Pre-Tax Income and Income Tax Expense from continuing operations attributable to Xerox.





66

Q4 and FY Services Revenue Breakdown

Note: The above table has been revised to reflect the reclassification of the ITO business to discontinued operations. Additionally,

2013 Business Process Outsourcing (BPO) revenues have been revised to conform to the 2014 presentation of revenues.

(in millions) 2014 2013 Change

Revenue

CC

Change 2014 2013 Change

Revenue

CC

Change

Business Processing Outsourcing 1,877$ 1,824$ 3% 4% 7,304$ 7,244$ 1% 1%

Document Outsourcing 874 889 (2%) 1% 3,388 3,337 2% 2%

Less: Intra-Segment Eliminations (26) (27) (4%) (4%) (108) (102) 6% 6%

Total Revenue - Services 2,725$ 2,686$ 1% 3% 10,584$ 10,479$ 1% 1%

2,725 2,686 10,584 10,479

Three Months Ended December 31, Year Ended December 31,

xerox investor handout notes: market sizing based upon external sources and xerox internal analysis....

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