At its annual meeting of shareholders today, Ursula Burns, chairman and CEO of Xerox (NYSE: XRX), discussed the company’s financial performance in 2015. In addition, Burns outlined the progress the company is making to enhance value for Xerox shareholders by separating into two public companies while driving a strategic transformation program to deliver $2.4 billion in cumulative savings over three years, which includes savings from ongoing and incremental productivity initiatives.
In her address to shareholders, Burns commented, “Despite the pressures of operating in an increasingly challenging market environment in 2015, we delivered on many of our goals and returned significant capital to our shareholders.”
Burns noted that Xerox delivered value for shareholders in 2015 by:
- Posting $18 billion in revenue
- Delivering adjusted earnings per share of 98 cents and GAAP earnings per share from continuing operations of 49 cents
- Delivering $1.6 billion in operating cash flow
- Returning $1.6 billion to shareholders through share repurchases and dividends
- Increasing its annual dividend by 11 percent for 2016
Burns added, “In 2015, we continued to optimize and position our portfolio for the future. By selling our Information Technology Outsourcing business and restructuring our government healthcare business, we achieved greater focus on higher margin growth segments in our Business Process Outsourcing and Document Outsourcing businesses. Additionally, in Document Technology we introduced nine new products that reinforced our reputation for market-leading innovation.
Burns concluded, “One of the most important decisions we made in 2015 was to conduct a comprehensive review of structural options for the company’s portfolio and capital allocation. This resulted in our decision in early 2016 to separate Xerox into two independent, publicly-traded companies – one comprising our Document Technology and Document Outsourcing businesses, and the other our Business Process Outsourcing business. Both will be significant Fortune 500-scale companies and leaders in their respective markets. With increased strategic focus and resources aligned to the specific needs of their markets, we can capitalize on the unique strengths of our Document Technology and BPO businesses and capture the value-creation opportunities that we see in each of them.”
During the last few months, the company has made substantial progress in building strong operational and financial foundations for both new companies. The company has set a target to file its initial Form 10 registration statement with the SEC in July, in line with its goal of completing the separation by year-end. As announced last month, the separation will be structured as a tax-free spinoff of the BPO business to current Xerox shareholders. And Xerox’s Board of Directors announced today that Burns will serve as chairman of the board of the Document Technology company following the separation.
Also at the annual meeting, shareholders elected the eight nominees to the Xerox board of directors by a majority of the votes cast: Ursula M. Burns, Richard J. Harrington, William Curt Hunter, Robert J. Keegan, Charles Prince, Ann N. Reese, Stephen H. Rusckowski and Sara Martinez Tucker.
In a separate vote, shareholders ratified the selection of PricewaterhouseCoopers LLP as the company’s independent, registered public accounting firm for 2016. Shareholders also approved, on an advisory basis, the 2015 compensation of Xerox’s named executive officers and approved the 2016 amendment and restatement of the company’s 2004 performance incentive plan. Shareholders did not approve a proposal concerning executive compensation metrics.
Today, the company announced that its board of directors declared a quarterly cash dividend of 7.75 cents per share on Xerox common stock. The dividend is payable on July 29, 2016 to shareholders of record on June 30, 2016.
The board also declared a quarterly cash dividend of $20 per share on Xerox Series A Convertible Perpetual Preferred Stock. The dividend is payable on July 1, 2016 to shareholders of record on June 15, 2016.
Xerox is helping change the way the world works. By applying our expertise in imaging, business process, analytics, automation and user-centric insights, we engineer the flow of work to provide greater productivity, efficiency and personalization. Our employees create meaningful innovations and provide business process services, printing equipment, software and solutions that make a real difference for our clients and their customers in 180 countries. On January 29, 2016, Xerox announced that it plans to separate into two independent, publicly-traded companies: a business process outsourcing company and a document technology company. Xerox expects to complete the separation by year-end 2016.
Non- GAAP Measures
This release refers to the non-GAAP financial measure “adjusted earnings per share” for full-year 2015, which excludes the amortization of intangible assets of $0.18, the second-quarter 2015 software impairment of $0.08 and the third-quarter 2015 Health Enterprise (HE) charge of $0.23.
This Release 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. 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, multiyear 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; the possibility that the proposed separation of the Business Process Outsourcing (BPO) business from the Document Technology and Document Outsourcing business will not be consummated within the anticipated time period or at all, including as the result of regulatory, market or other factors; the potential for disruption to our business in connection with the proposed separation; the potential that BPO and Document Technology and Document Outsourcing do not realize all of the expected benefits of the separation, 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 Report on Form 10-Q for the quarter ended March 31, 2016 and our 2015 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.