Xerox announced fourth-quarter 2014 adjusted earnings per share of 31 cents. Adjusted EPS excludes 5 cents related to the amortization of intangibles, resulting in GAAP EPS from continuing operations of 26 cents.
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As previously reported, these results reflect the pending sale of the company's ITO business to Atos, and the related presentation of the ITO business as a discontinued operation.
In the fourth quarter, total revenue of $5 billion was down 3 percent or 1 percent in constant currency. Revenue from the company's Services business, which represented 54 percent of total revenue, was $2.7 billion, up 1 percent or 3 percent in constant currency. Services margin was 9.8 percent.
Revenue from the company's Document Technology business, which represented 43 percent of total revenue, was $2.2 billion, down 8 percent or 6 percent in constant currency. Document Technology margin was 14.4 percent.
Fourth-quarter operating margin of 10.4 percent was up one percentage point over the same quarter a year ago. Gross margin was 32.1 percent, and selling, administrative and general expenses were 18.7 percent of revenue.
Xerox generated $857 million in cash flow from operations during the fourth quarter and $2.06 billion for the year. Xerox ended 2014 with a cash balance of $1.4 billion. The company repurchased $341 million in stock in the quarter and $1.07 billion for the full-year.
The board increased the company's quarterly cash dividend by 12 percent to 7 cents per share, beginning with the dividend payable on April 30, 2015.
For first-quarter 2015, Xerox expects GAAP earnings per share of 16 to 18 cents and adjusted EPS of 20 to 22 cents.
Xerox 2015 adjusted earnings per share guidance is $1.00 to $1.06, reflecting a 5 cent per share impact of recent shifts in currency rates, specifically the weakening of the Euro. Xerox expects full-year GAAP earnings per share from continuing operations of $0.83 to $0.89.
As a result of the ITO divestiture and recent shifts in currency rates, Xerox 2015 guidance for cash flow from operations is $1.7 to $1.9 billion and free cash flow is $1.3 to $1.5 billion, reflecting a negative $200 million impact to cash flow from operations and a negative $100 million impact to free cash flow. Xerox expects to offset the impact from the ITO sale on free cash flow by 2016. ■