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Xerox Reports Third-Quarter 2013 Earnings

Xerox (NYSE:XRX) announced today third-quarter 2013 adjusted EPS of 26 cents, which excludes 4 cents related to the amortization of intangibles, resulting in GAAP EPS from continuing operations of 22 cents.

In the third quarter, total revenue of $5.3 billion was flat from the prior year or down 1 percent in constant currency.

Revenue from the company’s services business was up 3 percent with a segment margin of 9.9 percent. Services revenue now represents 56 percent of Xerox’s total revenue. The company’s document technology revenue declined 4 percent, or 5 percent in constant currency, with a segment margin of 12.1 percent.

“This quarter shows how we are successfully capturing the benefits of a diversified portfolio. Within services we continue to focus on improving our cost structure while maintaining investments in areas where we see opportunity, such as healthcare. In document technology, revenue declines stabilized with continued good profitability. We continue to see demand from small and midsize businesses in the United States, and positive trends in the high end of our business,” said Ursula Burns, Xerox chairman and chief executive officer. “Our approach remains the same: to focus on areas of differentiation and profitable growth while finding new ways to deliver operational improvements across the board.”

Third-quarter operating margin of 9.4 percent was up 0.5 points year over year. Gross margin was 31.5 percent. Selling, administrative and general expenses were 19.3 percent of revenue.

The company generated $961 million in operating cash flow in the quarter, and anticipates full year cash flow towards the higher-end of the $2.1 billion to $2.4 billion range.

Xerox expects fourth quarter 2013 GAAP earnings from continuing operations of 24 to 26 cents per share and adjusted EPS of 28 to 30 cents. Our guidance includes approximately 2 cents per share of restructuring charges and 2 cents from higher pension settlement expenses.

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