Filed by Xerox Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: Affiliated Computer Services, Inc.
Commission File No.: 1-12665
The proposed merger transaction involving Xerox and ACS will be submitted to the respective stockholders of Xerox and ACS for their consideration. In connection with the proposed merger, Xerox will file with the SEC a registration statement on Form S-4 that will include a joint proxy statement of Xerox and ACS that also constitutes a prospectus of Xerox. Xerox will mail the joint proxy statement/prospectus to its stockholders. Xerox and ACS urge investors and security holders to read the joint proxy statement/prospectus regarding the proposed transaction when it becomes available because it will contain important information. You may obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about Xerox and ACS, without charge, at the SEC’s Internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, when available, without charge, from Xerox’s website, www.xerox.com, under the heading “Investor Relations” and then under the heading “SEC Filings”. You may also obtain these documents, without charge, from ACS’s website, www.acs-inc.com, under the tab “Investor Relations” and then under the heading “SEC Filings”.
Xerox, ACS and their respective directors, executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies from the respective stockholders of Xerox and ACS in favor of the merger. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the respective stockholders of Xerox and ACS in connection with the proposed merger will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find information about Xerox’s executive officers and directors in its definitive proxy statement filed with the SEC on April 6, 2009. You can find information about ACS’s executive officers and directors in its definitive proxy statement filed with the SEC on April 14, 2009. You can obtain free copies of these documents from Xerox and ACS websites using the contact information above.
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. These factors include but are not limited to: the unprecedented volatility in the global economy; the risk that the future business operations of ACS will not be successful; the risk that we will not realize all of the anticipated benefits from our acquisition of ACS; the risk that customer retention and revenue expansion goals for the ACS transaction will not be met and that disruptions from the ACS transaction will harm relationships with customers, employees and suppliers; the risk that unexpected costs will be incurred; the outcome of litigation and regulatory proceedings to which we may be a party; actions of competitors; changes and developments affecting our industry; quarterly or cyclical variations in financial results; development of new products and services; interest rates and cost of borrowing; our ability to protect our intellectual property rights; our ability to maintain and improve cost efficiency of operations, including savings from restructuring actions; changes in foreign currency exchange rates; changes in economic conditions, political conditions, trade protection measures, licensing requirements and tax matters in the foreign countries in which we do business; reliance on third parties for manufacturing of products and provision of services; 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 quarters ended March 31, 2009 and June 30, 2009 and our 2008 Annual Report on Form 10-K and ACS’ 2009 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.
 Investor
Relations Xerox Acquisition of Affiliated Computer Services |
 2
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: the unprecedented volatility in the global economy; the risk that the future business operations of ACS will not be successful; the risk that we will not realize all of the anticipated benefits
from our acquisition of ACS; the risk that customer retention and revenue expansion goals for
the ACS transaction will not be met and that disruptions from the ACS transaction will harm
relationships with customers, employees and suppliers; the risk that unexpected costs
will be incurred; the outcome of litigation and regulatory proceedings to which we may be a party; actions of competitors; changes and developments affecting our industry; quarterly or cyclical variations in
financial results; development of new products and services; interest rates and cost of
borrowing; our ability to protect our intellectual property rights; our ability to maintain and
improve cost efficiency of operations, including savings from restructuring actions; changes in
foreign currency exchange rates; changes in economic conditions, political conditions, trade protection measures, licensing requirements and tax matters in the foreign countries in which we do business; reliance
on third parties for manufacturing of products and provision of services; 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 Xerox’s
Quarterly Report on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009,
Xerox’s 2008 Annual Report on Form 10-K and ACS’s 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Neither Xerox nor ACS assume any obligation to update
any forward- looking statements as a result of new information or future events or
developments, except as required by law. |
 3
• Executive summary • Combination overview • Financial impact Agenda |
 4
• Executive summary • Combination overview • Financial impact Agenda |
 5
Xerox to Acquire ACS • Compelling financial combination with strong strategic opportunities for growth by leveraging: – Xerox’s industry-leading document management, brand strength, global account management and R&D investments. – ACS’s industry-leading BPO capabilities, process automation competencies and services talent management. • Significant expense and revenue synergies Creates a new class of solutions provider with leading technology and expertise in document and business process management. |
 6
Transaction Overview Key Transaction Terms • Xerox acquires 100% of ACS Class A and Class B common stock • Consideration of approximately 70% stock and 30% cash • ACS shareholders will receive 4.935 Xerox shares and $18.60 in cash for each Class A and Class B share • Transaction includes refinancing of $2B of ACS debt • Issuing $300M of convertible preferred stock to ACS Class B shareholder Approvals and Timing • Regulatory and shareholder approval • Closing expected in 1Q ‘10 |
 Xerox +
ACS: A New Class of Solutions Provider • The lines between business process and document management are blurring • Customers need service providers with global capabilities offering a full range of solutions • Enterprises will continue to reduce costs through outsourcing • World leader in document and business process management • Global delivery network • Best-in-class document technologies and services • Leadership centered around the information needs of the business process • Compelling customer value through innovative, differentiated offerings Evolving market demand… …requires a new solutions provider 7 |
 8
The combination of Xerox and ACS yields a strong financial model Note: Combined Company on a pro forma basis, LTM – Last Twelve Months ¹ See slide 29 for explanation of non-GAAP measures World leader in document and business process management Total Revenue Annuity Revenue Services Revenue Operating Margin Adjusted EPS CAGR Free Cash Flow $22B LTM ~80% total revenue Accelerated expansion $10B LTM Double digit growth $2B LTM, 8+% of revenue 1 1 |
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Experienced and Deep Management Team • Ursula Burns Chief Executive Officer • Lawrence Zimmerman Vice Chairman and Chief Financial Officer • James Firestone Corp. Executive Vice President and President, Corporate Operations • Willem Appelo Corp. Senior Vice President and President, Xerox Global Business and Services Group • Stephen Cronin Corp. Senior Vice President and President, Xerox Global Services • Don Liu Corp. Senior Vice President and General Counsel • Lynn Blodgett President and Chief Executive Officer • Kevin Kyser Executive Vice President and Chief Financial Officer • Tom Burlin Executive Vice President and Chief Operating Officer • Tom Blodgett Executive Vice President and Chief Operating Officer • John Rexford Executive Vice President, Corporate Development • Lora Villarreal Executive Vice President and Chief People Officer • Tas Panos Executive Vice President and General Counsel Xerox ACS |
 10 A Powerful Shareholder Value Proposition • Transformational transaction that creates a new class of solutions provider • Leverages the strengths of two best-in-class companies to create a global, diversified leader in providing document management and services • Enhances Xerox’s strategic posture and positions the company for long-term growth, accelerated margin expansion and earnings appreciation • Strong combined management team with commitment to equity appreciation to drive shareholder value |
 11 • Executive summary • Combination overview • Financial impact Agenda |
 12 Xerox Today Generating strong and consistent cash flow through a challenging environment Investing in growth and winning in the marketplace Maintaining operating margins in tough environment through disciplined cost management Delivering and maintaining strong balance sheet Delivering on commitments ¹ See slide 29 for explanation of non-GAAP measures 1 $15.7 $15.9 $17.2 $17.6 $16.0 9.6% 10.0% 8.4% 7.4% 9.0% 2005 2006 2007 2008 LTM Revenue Operating margin $1.2 $1.3 $1.5 $1.2 $1.3 8.3% 8.8% 6.9% 8.7% 7.5% 2005 2006 2007 2008 2009E FCF % revenue Free cash flow ¹ generation ($B) Revenue and operating margin ¹ ($B) |
 13 ACS Today ACS is the largest worldwide diversified business process outsourcing company • Diversified portfolio of BPO services • Vertical focus on education, transportation, communication, healthcare, federal/ state/ local government, financial services, manufacturing, consumer goods and retail Strong revenue growth and margin performance through the recession • Record business signings, revenue and earnings in fiscal 2009 Recurring revenue under long-term contracts Highly-regarded management team Leverageable technology platforms Consistent cash flow generation Culture of flexibility, responsiveness, reliability and integrity Free cash flow ¹ generation ($M) Revenue and operating margin ¹ ($B) ¹ See slide 29 for explanation of non-GAAP measures Note: ACS has a June 30 fiscal year end $5.4 $5.8 $6.2 $6.5 10.6% 10.5% 10.5% 10.9% 2006 2007 2008 2009 Revenue Operating margin $518 $514 $378 $208 8.4% 7.9% 3.9% 6.6% 2006 2007 2008 2009 FCF % revenue th |
 14 ACS Commercial Services FY2009 Revenue Revenue Business Process Solutions $1.2B 32% Enterprise Solutions & Services $1.3B 33% IT Solutions $1.4B 35% Operating margins Enterprise Solutions & Services IT Solutions Business Process Solutions Q4FY09 Total Revenue Growth¹: 5% Q4FY09 Internal Revenue Growth: 2% $ millions ¹ Excluding divestitures: see slide 29 for explanation of non-GAAP measures • Complete service suites for customers • Focus on human capital management solutions, finance and accounting and education markets • Comprehensive IT outsourcing services • Focus on data centers, managed services, network services outsourcing • Remote infrastructure management • ACS leverages technology platforms and process management expertise to enable businesses to increase productivity $970 $974 $1,013 Q4FY08 Q3FY09 Q4FY09 9.8% 11.1% 11.0% Q4FY08 Q3FY09 Q4FY09 |
 15 ACS Government Solutions FY2009 Revenue Revenue Government Solutions $1.8B 70% Transportation Solutions $0.8B 30% Operating margins Government Solutions Transportation Solutions Q4FY09 Total Revenue Growth¹: 7% Q4FY09 Internal Revenue Growth: 5% $ millions ¹ Excluding divestitures: see slide 29 for explanation of non-GAAP measures $644 $637 $683 Q4FY08 Q3FY09 Q4FY09 17.7% 15.3% 14.8% Q4FY08 Q3FY09 Q4FY09 • ACS provides a wide range of BPO services to local, state and federal agencies • Services include: Child support solutions, Medicaid fiscal agent services, electronic benefits transfer, student loan processing and many others • Electronic Toll Collection (ETC) • Commercial Vehicle Operations • Motor Vehicle Services • Photo Enforcement, Violations Processing • Public Transport |
 16 Significantly Expanded Market Opportunity Source: IDC, Gartner and Xerox Internal Analysis Current Xerox Market BPO Market ITO Market Combined Addressable Market $250B ~6% CAGR $150B ~5 to 10% CAGR $132B ~4% CAGR $500B+ >6% CAGR Office: distribution expansion, color transition, services growth Production: • Infrastructure optimization • Global scale and efficiencies • Market leader: Xerox Leverage technology services and process expertise across vertical markets Consolidating a fragmented industry Expand service offerings with proven innovative solutions Market leader: ACS Leverage IT infrastructure to deliver: Differentiated BPO solutions Document Management Services Share leader across core markets Addressable market expanded by over 4x Enhanced growth profile Ability to leverage core strengths of each company into new opportunities digital |
 17 A Powerful Combination Combined Market Opportunity • Winning in a $132B Document Technology Market • Leading BPO and IT Services company winning in a large and growing BPO / ITO market • Poised to capture incremental share of a $500B+ market with leadership in key segments and best-in-class capabilities Go To Market • Leveraging a large and global direct sales force of over 7,500 and world-class Brand • Leveraging deep vertical and horizontal expertise with expanding global delivery platform • Global player with scale, brand, sales coverage and global delivery platform Technology • Heritage of innovation and commitment to investment – R&D resources of $1.5B annually • Proven ability to leverage technology to enhance BPO capabilities • Leverage Xerox technology to deliver enhanced BPO services providing more value and advantage to customers Business Model • Recurring revenue based on long-term contracts and high customer retention • Strong organic growth and recurring revenue based on long-term contracts and high customer retention • Complementary business modes with stable recurring revenue and strong annuity driven cash flow Customers • Loyal and global customer base with over 47% of revenue generated outside the U.S. • Loyal and entrenched customer base, primarily in the U.S. • Huge, entrenched customer base with very little overlap |
 18 Complementary Businesses U.S. $14.6B 65% Europe $5.6B 25% Combined Geographic Segments Products/ Services Segments BPO $5.1B 79% ITO $1.4B 21% U.S. $6.0B 92% Other $0.5B 8% BPO $6B 27% Post Sale excl Services $8.8B 39% Equipment Sales $4.0B 18% Post Sale $12.0B 75% Equipment Sales $4.0B 25% U.S. $8.6B 53% Other $2.1B 14% Europe $5.3B 33% Scale $22B revenue Nearly 50% services International expansion opportunities Cross-selling opportunities ~20% customer overlap Other $2.3B 10% ITO $1.4B, 6% MPS $2.3B 10% (LTM Revenue, in Billions) Note: MPS is Managed Print Services |
 19 Material Synergies Expense Synergies • Overlapping public company costs • Cross-deploy Xerox technology and ACS’ process expertise to increase automation and efficiency Revenue Synergies • Penetrate Xerox global accounts with ACS’ BPO solutions • Penetrate ACS ITO accounts with Managed Print Services offering • Use Xerox technology to create new automated and differentiated BPO services • Year 1 pre-tax cost synergies > $95M • $300M to $400M in annualized pre-tax cost synergies in three years • Synergy assumption includes cumulative $50M to $75M of restructuring costs over three years • Additional cash benefits – $250M+ over 3 years • Upside revenue synergy potential significantly higher than cost synergies Tangible and Achievable Synergies |
 20 Implementation Plan and Priorities Phase 0 4Q 2009 Phase 1 1H 2010 Phase 2 2H 2010 and Beyond Cost Savings Go To Market Technology Innovation Detailed, phased plans in place for each synergy area Operational Objectives Guiding Principles • Organizationally manage ACS as an end-to-end business • Minimize organizational disruption • Support office established to drive synergy opportunities • Xerox BPO integrated into ACS • Xerox Account General Management leveraged to drive sales |
 21 Powerful Expense Synergies Opportunity Enable better Xerox cost efficiency Enable better ACS cost efficiency Create a more efficient corporate structure • Deploy Xerox IP and technology to gain efficiencies in ACS BPO – Equipment – Workflow tools – Document management • Integrate ACS’s corporate structure into Xerox – Eliminate overlap – Create process and infrastructure efficiencies • Leverage Xerox’s procurement practices at ACS Powerful incremental cost opportunities Combination benefits • Apply ACS methodologies to Xerox – ACS expertise and a heritage of successful implementation • Leverage ACS global delivery platform, including offshore capabilities and BPO centers |
 22 Powerful Revenue Opportunities Opportunity Solutions examples • Leverage Xerox’s global client base and account management infrastructure to drive sales of ACS solutions • Targeting opportunities across verticals and geographies Introduce expanded offerings to Xerox’s accounts Introduce expanded offerings to ACS ITO & BPO accounts Create new ACS capabilities with Xerox IP and technology • Leverage ACS’s existing ITO customers to pull Xerox services and solutions • Extends ACS ITO from computing infrastructure to print infrastructure • Apply Xerox’s IP and technology to enhance ACS BPO for improved value propositions • Potential new joint offerings • ACS Healthcare Payer & Provider Solutions • Finance & Accounting Solutions • Customer Care Solutions • Human Resources Outsourcing • Mortgage and Financial Services • Government Solutions • Managed Print Services (successful strategy with current Xerox ITO partners) • Expand ACS infrastructure outsourcing from computing to print infrastructure • Document Production and Publishing solutions • Xerox Litigation Services Powerful incremental revenue opportunities Transformational opportunities • Automated Traffic Management Xerox image processing ACS traffic management • Immigration Processing Xerox Smarter Documents ACS U.S. entry processing • Advanced Healthcare Processing Xerox Smarter Documents ACS healthcare claim processing |
 23 • Executive summary • Combination overview • Financial impact Agenda |
 24 • Technology leadership • Ability to drive cost efficiencies to balance gross profit / expense • Accretive acquisitions • + 70% recurring revenue • Driven by: • Equipment installs • MIF, pages and color • Services • Consistent cash flow from operations • Driven by recurring revenue • Modest capital investment • Focus on returning capital to shareholders Xerox’s key pillars will be enhanced by the core elements of ACS’s business model • + 85% recurring revenue • Strong organic growth profile • Driven by: • BPO leadership • Long-term contracts • Diversity of businesses, clients, and markets served • Highly cash flow generative • Annuity model results in stable cash flow profile • Accretive to Xerox standalone cash flow • Global delivery capabilities with strong offshore presence • Expertise in applying proprietary technologies to business processes • Process expertise to drive efficiencies • Acquisition core competency Annuity Model Expanded Earnings Cash Generation |
 25 Enhanced Pro Forma Operating Metrics • $22B+ revenue with strong growth prospects • Nearly 50% of revenues from services • Improved operating margin leverage - accelerates return to 10%+ • Strong operating and free cash flow Revenue Operating Margin Free Cash Flow (LTM Revenue, in Millions) $16,025 $22,548 Xerox Pro Forma 7.4% 8.3% Xerox ¹ Pro Forma $1,439 $1,953 Xerox ¹ Pro Forma ¹ Note: Pro forma figures represent the sum of Xerox and ACS’s results and do not make any other
adjustments for synergies or otherwise ¹ See slide 29 for explanation of non-GAAP measures |
 26 Strong Balance Sheet and Liquidity Profile Liquidity • Maintains significant liquidity with cash on hand and revolver capacity – $2.6B of revolver capacity plus cash on hand • Significant debt reduction with strong free cash flow • Commitment to investment grade Debt $3.0 $2.6 $ billions Note: Pro forma reflects the estimated effects of the acquisition on cash and debt as of
6/30/09 $ billions $1.2 $1.2 $1.4 $1.8 Standalone Pro Forma Cash Undrawn revolving credit facility $8.0 $11.6 $1.4 $5.0 Standalone Pro Forma Debt Core debt |
 27 A Compelling Financial Profile • Enhanced profitability and growth profile • Recurring, annuity business model • Accelerated margin expansion • Strong and consistent revenue and cash flow Attractive Financial Model Opportunity for Value Creation Strong Balance Sheet • Significant synergy potential arising from new revenue opportunities and operating efficiencies • Enhancing revenue growth, operating margins, free cash flow and adjusted earnings in Year 1 • Committed to maintaining investment grade rating – Significant liquidity profile pro forma – Approximately $1.0 billion to be financed through combined company cash and existing revolving credit agreement – Approximately $3.0 billion to be financed in capital markets
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 28 Non-GAAP Measures |
 29 Non-GAAP Financial Measures To better understand the trends in our business and the impact of this transaction post-acquisition, we
believe it will be necessary to adjust diluted earnings per share to exclude the effects of the
following items: (1) the amortization of purchased intangible assets; (2) restructuring and asset impairment charges; and (3) acquisition related costs. Management believes that excluding the
effects of these items will enable investors to better understand and analyze the impact of
this transaction as well as results for a particular period as compared to prior periods. Management also expects to use this non-GAAP financial measure in its own evaluation of Xerox's performance,
particularly when comparing performance to prior periods. 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 and
certain additions to intangible assets. Management believes this measure provides
investors an additional perspective on cash flows from operations in excess of amounts required for reinvestments. Free Cash Flow provides a measure of our ability to fund acquisitions, repay debt, pay dividends and
repurchase shares. Additionally, we believe that it is helpful to adjust Free Cash Flow to
exclude the net payments made for the securities-related litigation matter. Management believes that excluding the effects of these payments helps investors better understand and analyze the current
periods’ results given the nature and size of the payments and their relation to prior
period events. A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on slides 30, 31 and 32. To better understand the trends in Xerox’s business, we believe that it is helpful to adjust
Operating Margins to exclude restructuring and asset impairment charges, other expenses and a
2008 equipment write off. For ACS, we excluded the 2006 gain recognized on the sale of a
business and the 2007 software impairment charge. Management believes that excluding the effects of these items helps investors better understand and analyze the results and provides a better measure of comparability given
the discrete nature of these items to their respective periods. A reconciliation of these
non-GAAP financial measures and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on slides 33 and 34. To better understand the trends in the ACS business, we believe that it is helpful to adjust revenues to
exclude amounts related to businesses that were subsequently divested. Management
believes that these divested businesses are not strategic to the ongoing operations and
excluding these revenues will enable investors to better analyze results for a particular period and the performance of our continuing operations. A reconciliation of these non-GAAP financial measures and the most
directly comparable measures calculated and presented in accordance with GAAP are set forth on
slide 35. 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, Xerox’s reported results prepared in accordance with GAAP. “Adjusted EPS": “Free Cash Flow” “Adjusted Free Cash Flow": “Adjusted Operating Margin”: “Adjusted Revenue Growth”: |
 30 Pro Forma Adjusted Free Cash Flow Reconciliation Free Cash Flow and Adjusted Free Cash Flow Xerox ACS Pro-Forma Combined (in millions) Operating Cash Flow 1,076 $
877 $
1,953
$
Capital expenditures (155) (320) (475) Internal use software (125) - (125) Additions to other intangible assets - (43) (43) Free Cash Flow 796 $
514 $
1,310
$
Payments for securities
litigation, net 643 - 643 Adjusted Free Cash Flow 1,439 $
514 $
1,953
$
Year Ended June 30, 2009
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 31 Xerox Adjusted Free Cash Flow Reconciliation Xerox Adjusted Free Cash Flow 2005 2006 2007 2008 (in millions) Operating Cash Flow - As Reported 1,420 $
1,617 $
1,871 $
939 $
Payments for securities litigation, net - - - 615 Operating Cash Flow - As Adjusted 1,420 1,617 1,871 1,554 Capital expenditures (181) (215) (236) (206) Internal use software (56) (79) (123) (129) Adjusted Free Cash Flow 1,183 $
1,323 $
1,512 $
1,219 $
Total Revenues 15,701 $ 15,895 $ 17,228 $ 17,608 $ Operating Cash Flow % of Revenue 9.0% 10.2% 10.9% 5.3% Adjusted Free Cash Flow % of Revenue 7.5% 8.3% 8.8% 6.9% Year Ended December 31, |
 32 ACS Adjusted Free Cash Flow Reconciliation ACS Free Cash Flow 2006 2007 2008 2009 (in millions) Operating Cash Flow 639 $
738 $
827 $
877 $
Capital expenditures (395) (317) (268) (320) Additions to other intangible assets (36) (43) (41) (43) Free Cash Flow 208 $
378 $
518 $
514 $
Total Revenues 5,354 $ 5,772 $ 6,161 $ 6,523 $ Operating Cash Flow % of Revenue 11.9% 12.8% 13.4% 13.4% Free Cash Flow % of Revenue 3.9% 6.6% 8.4% 7.9% Year Ended June 30, |
 33 Xerox Adjusted Operating Margin Reconciliation Year Ended Xerox Adjusted Operating Margin 2005 2006 2007 2008 June 30, 2009 (in millions) Income before Income Taxes and Equity Income (Pre-Tax Income) 830 $
808 $
1,438 $
(114) $
416 $
Restructuring and asset impairment
charges 366 385 (6) 429 360 Other expenses, net 224 336 295 1,122 371 Equipment write-off - - - 39 39 Pre-Tax Income - As Adjusted 1,420 $
1,529 $
1,727 $
1,476 $
1,186 $
Total Revenues 15,701 $ 15,895 $ 17,228 $ 17,608 $ 16,025 $
Pre-Tax Income Margin - As Reported 5.3% 5.1% 8.3% (0.6%) 2.6% Pre-Tax Income Margin - As Adjusted 9.0% 9.6% 10.0% 8.4% 7.4% Year Ended December 31, |
 34 ACS Adjusted Operating Margin Reconciliation ACS Adjusted Operating Margin 2006 2007 (in millions) Operating Income - As Reported 617 $
537 $
Gain on sale of business (33) - Software impairment charge - 76 Operating Income - As Adjusted 584 $
613 $
Total Revenues 5,354 $ 5,772 $ Operating Margin - As Reported 11.5% 9.3% Operating Margin - As Adjusted 10.9% 10.6% Year Ended June 30, |
 35 ACS Adjusted Revenue Growth ACS Internal and Adjusted Revenue Growth by Segment Reconciliation Internal and Adjusted Revenue Growth June 30, 2008 June 30, 2009 % Growth (in millions) Total Commercial Revenue - As Reported 970 $
1,013
$
4% Divested revenues (5) - Total Commercial Revenue - As Adjusted 965 1,013 5% Acquired revenues (3) (34) Internal Commercial Services Revenue 962 $
979 $
2% Total Government Revenue - As Reported 644 $
683 $
6% Divested revenues (4) - Total Government Revenues - As Adjusted 640 683 7% Acquired revenues (4) (13) Internal Government Solutions Revenue 636 $
670 $
5% Three Months Ended |
 36 Rule 425 Statement The proposed merger transaction involving Xerox and ACS will be submitted to the respective stockholders of
Xerox and ACS for their consideration. In connection with the proposed merger, Xerox will
file with the SEC a registration statement on Form S-4 that will include a joint proxy
statement of Xerox and ACS that also constitutes a prospectus of Xerox. Xerox will mail
the joint proxy statement/prospectus to its stockholders. Xerox and ACS urge investors and security holders to read the joint proxy statement/prospectus regarding the proposed transaction when it becomes available because it
will contain important information. You may obtain a free copy of the joint proxy
statement/prospectus, as well as other filings containing information about Xerox and ACS,
without charge, at the SEC’s Internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, when available, without charge, from Xerox’s website, www.xerox.com, under the heading “Investor
Relations” and then under the heading “SEC Filings”. You may also obtain these documents, without charge, from ACS’s
website, www.acs-inc.com, under the tab “Investor Relations” and then under the heading “SEC
Filings”. Xerox, ACS and their respective directors, executive officers and certain other members of management and
employees may be deemed to be participants in the solicitation of proxies from the respective
stockholders of Xerox and ACS in favor of the merger. Information regarding the persons
who may, under the rules of the SEC, be deemed participants in the solicitation of the
respective stockholders of Xerox and ACS in connection with the proposed merger will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find information about the
Xerox’s executive officers and directors in its definitive proxy statement filed with the SEC on April 6, 2009. You can find
information about ACS’s executive officers and directors in its definitive proxy statement filed with the SEC on April 14,
2009. You can obtain free copies of these documents from Xerox and ACS websites using the
contact information above. |
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