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Product category: Printing Pre-Press Systems and Materials (Repro, Platemakers, CTP, Workflow, Document Management, Design Software, etc.)
News Release from: Xerox
Edited by the Printingtalk Editorial Team on 27 January 2006

Xerox Racks Up US$978m For Year

Xerox announced yesterday that fourth quarter sales of equipment produced revenue of US$4.5 billion, an increase of one per cent from the full-year 2004.

Xerox announced yesterday that fourth quarter sales of equipment produced revenue of US$4.5 billion, an increase of one per cent from the full-year 2004 Total revenue of US$15.7 billion, which remains unchanged from 2004

Net income for the full year of 2005 was US$978 million or 94 cents per share, an increase of nine per cent from the full-year, 2004.

Debt balance stood at US$7.3 billion, a reduction of US$2.8 billion from year-end 2004.

Operating cash flow was US$1.4 billion and the year-end cash and short-term investments balance of US$1.6 billion.

The fourth-quarter 2005 earnings per share of 27 cents, reflected an 18 per cent increase in net income from the fourth-quarter of 2004.

The company also announced plans to repurchase an additional US$500 million of its common stock and said it expects to deliver full-year 2006 earnings at the high end of the company's expectations.

"Our earnings performance in the fourth quarter met expectations with increased gross margins, lower costs and operational improvements," said Anne M Mulcahy, Xerox's chairman and chief executive officer.

"We delivered another quarter - and another year - of earnings growth.

Our strong financial position, with full-year operating cash flow of US$1.4 billion, gives us the flexibility to invest back in the business and enhance shareholder value through an expanded share repurchase plan.

During the quarter, equipment sales were affected by a more significant shift in product mix with stronger sales of lower-priced systems.

At the same time, demand and installation activity accelerated for key products, such as entry-level colour production systems and office desktop multifunction devices," added Mulcahy.

She explained: "This increased activity fuels future post-sale revenue - the engine of growth for Xerox's annuity-based business.

We're confident that the short-term impact on equipment sales revenue will deliver long-term gains in top-line growth.

Just as important is that our leadership in digital colour printing continues to deliver strong results." Revenue from colour grew 17 per cent in the fourth quarter and colour now represents 32 per cent of Xerox's total revenue, up five points from the previous year.

In the fourth quarter, the company's equipment sales and total revenue of US$4.3 billion were affected by three points of currency, contributing to a two per cent decline.

On a constant currency basis, total revenue and equipment sales grew one per cent.

Post-sale and financing revenue, which represents about 70 per cent of Xerox's total revenue, declined two per cent and was flat in constant currency.

Xerox's production business provides commercial printers and document-intensive industries with digital technology and services that enables on-demand, personalised printing.

Total production revenue declined two per cent in the fourth quarter and grew two per cent in constant currency.

Installations of production monochrome systems increased 19 per cent, reflecting the success of the Xerox 4110 light production system and growth in production publishing.

Production colour installations grew 58 per cent, driven by increased demand for the Docucolor 240/250 multifunction system and the Xerox iGen3 digital production press.

In Xerox's office business, revenue declined three per cent and was flat in constant currency.

Installations of digital office monochrome systems were up by 20 per cent, largely due to increased placements of Xerox Workcentre desktop multifunction systems.

In office colour, installations of multifunction systems were up by 53 per cent on the success of the recently launched office version of the Docucolor 240/250 systems.

Installation activity in colour printers was up 27 per cent.

The company also cited continued improvement in its developing operations with significant growth in Eurasia and central and eastern Europe fuelling total revenue growth of 11 per cent.

Xerox's focus on productivity improvements resulted in lower expenses and improved gross margins.

Selling, administrative and general expenses decreased by US$37 million compared to the previous year and were 24.6 per cent of revenue in the fourth quarter.

Gross margins were 41.4 per cent, a year-over-year increase of about half a point, added the company.

In the fourth quarter, Xerox generated operating cash flow of US$631 million.

The company ended the year with US$1.6 billion in cash and short-term investments, whilst also repurchasing US$433 million of its common stock during the fourth quarter.

Debt was down by US$2.8 billion compared to the previous year and declined by about US$200 million from the third quarter of 2005.

Building on the company's October 2005 announcement of a US$500 million stock buy-back programme, Xerox now plans to use its cash flow to repurchase an additional US$500 million in its common stock over the next six months to 12 months, primarily through open-market purchases.

Xerox said that it expects the first-quarter 2006 earnings in the range of 20-23 cents per share.

The company also reiterated its full-year 2006 guidance of US$1.00-US$1.07 per share.

Mulcahy indicated that she now expected the company will deliver full-year earnings in the high end of that range.

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