Luca Maestri - Chief Financial Officer and Executive Vice President Ursula M. Burns - Chairman and Chief Executive Officer

Richard Gardner - Citigroup Inc, Research Division Keith F. Bachman - BMO Capital Markets U.S. Benjamin A. Reitzes - Barclays Capital, Research Division Mark A Moskowitz - JP Morgan Chase & Co, Research Division Shannon S. Cross - Cross Research LLC Chris Whitmore - Deutsche Bank AG, Research Division Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division Deepak Sitaraman - Crédit Suisse AG, Research Division Bill C. Shope - Goldman Sachs Group Inc., Research Division

Good morning, and welcome to the Xerox Corporation Fourth Quarter 2011 Earnings Release Conference Call hosted by Ursula Burns, Chairman of the Board and Chief Executive Officer. She is joined by Luca Maestri, Executive Vice President and Chief Financial Officer. During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor. At the request of Xerox Corporation, today's conference call is being recorded. Other recording and/or re-broadcasting of this call are prohibited without expressed permission of Xerox. [Operator Instructions] During this conference call, Xerox executives will make comments that contain forward-looking statements, which by their nature, address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein. At this time, I would like to turn the meeting over to Ms. Burns. Ms. Burns, you may begin. Ursula M. Burns: Good morning, and thanks for joining us today. We'll get started on Slide 3. We began 2011 with a clear articulation of our priorities. You see them listed here. While the statements themselves seem relatively simple, the complexity was in the implementations, especially during a year of unexpected external challenges. Here's a report card on how well we did. First, accelerating our Services business, growing it faster by diversifying our offerings and expanding globally. More of our total revenue now comes from Services than Technology. In 2011, revenue from Services grew 6%, which reflects an impressive 8% growth in Business Process Outsourcing and 9% growth in Document Outsourcing. Our IT Outsourcing business declined 4% during the year, but we're encouraged by our recent uplift in ITO signings. In total, our integrated sales activity resulted in a stronger pipeline and a 14% increase in new business signings. Second, maintaining our leadership in document technology. We not only continue to hold our #1 equipment revenue share position, but we also grew share in 2011. We did this by offering a more extensive and affordable portfolio of color products and by expanding our distribution to serve more small and midsized businesses around the world. Third, we are very good at managing our business with a disciplined focus on operational excellence. This gives us the financial flexibility to help offset pressures on the business whether it's economic uncertainty or necessary investments that drive growth. Either way, our focus is on delivering strong bottom line results. And by executing well on the first 3 priorities, we delivered on the fourth, expanding earnings and returning cash to shareholders. Full-year 2011 adjusted earnings per share grew 15%. We generated $2 billion in operating cash and bought back $700 million in Xerox shares during the year. That’s a buyback of 88 million shares or 71 million net of the pension contribution, which is more than we initially expected. So during the year where we faced our share of headwinds, I'm pleased with our progress and confident in our position to build more value for our business, for our clients and for our shareholders in 2012. I often say that some companies talk about transformation, but we're actually doing it. You're seeing the results of the company's strategic shift in our financial performance. But to understand how we are achieving these results, it's important to understand the breadth of our business. The Xerox brand is now in places that may seem unexpected, but the link between our well-regarded technology and our diverse services is one more common objective, which is simplifying for clients the way that work gets done so that they can operate more efficiently and more effectively. And as you would expect from Xerox, innovation remains core to what we do and how we strengthen our competitive advantage. Turn to Slide 4 for some examples of what I mean. Radical changes to managing information in healthcare are now being more embraced by healthcare providers and payers. We continue to advance our offerings and be recognized as a valuable player in the industry through our cloud-based technology, our advanced security protocols and deep expertise in the complexities of building and managing digital health systems. Two examples, 2 very good examples: one, with our recent acquisition of the Breakaway Group, which provides electronic medical record simulation technology, and our contract with the State of Iowa to run its health information exchange. Xerox innovation is also changing the status quo in some of the more basic ways that we live, like using public transportation. Through large-scale contracts with transit authorities, we're developing easy ways for commuters to pay with smartphones and debit cards, doing away with the inefficient token and ticket systems. And no matter where you work, where you work takes you, in the office, on the road or at home, we help ensure that printing is accessible and affordable. We do that through continuously extending and refreshing our product portfolio, especially in color and by broadening our Managed Services -- Managed Print Services. Our MPS offerings continue to win the praise of industry analysts. More important, they win new business with clients like British Airways that recently tapped Xerox for a 5-year enterprise print services contract. In all 3 areas, we've developed repeatable, scalable and integrated solutions. This is our approach to real business, improving our clients' productivity by simplifying the way that they serve their clients. Our results in the fourth quarter reflect progress in these and other areas. So please turn to Slide 5 for a review of Q4 performance. In the fourth quarter, we delivered adjusted EPS of $0.33. That's up 14% from a year ago. Our GAAP -- on a GAAP basis, earnings were $0.26 per share. This includes $0.07 related to the amortization of intangibles. Total fourth quarter revenue of $6 billion were flat. Revenue from our Services business was up 6%. However, revenue from our Technology business was down 5%. While our Technology business improved throughout the year in the United States and in developing markets, we saw a drop-off during Q4 in Technology sales across Europe. The strength of our Services business model is particularly evident when we're faced with macro issues. Our Services provide cost-efficient ways for our clients to run more productive enterprises, and our multiyear Services contracts benefit our business for the long term through a healthy base of recurring revenue. Signings for BPO, Document Outsourcing and IT Outsourcing were up 15% in the fourth quarter. The increase in Services signings continues to put near-term pressure on margins as we make initial investments to implement new contracts. As a result, operating margin of 10% was down 0.4 points. Gross margin was 32.2 points, in line with our range. And we balance our investments by continuing to improve SAG, with selling, administrative and general expenses now at 19.3% of revenue. Q4 cash from operations was approximately $1.3 billion. And as I mentioned previously, we delivered on our commitment to generate $2 billion in full-year operating cash. We're continuing to use available cash for acquisitions and share repurchase. In a moment, Luca will provide a more detailed -- more detail on cash flow, as well as review our balance sheet and reporting segments. Then we'll both take your questions. But first, let's look -- take a little closer look at our top line results on Slide 6. Here you see what -- that Services now represents 48% of our total revenue, up from 45% a year ago and continuing to grow in proportion to our total revenue. It's an important metric that reflects investments in building our outsourcing portfolio and expanding our offerings globally. As I mentioned, total revenue of $6 billion was flat in the quarter. Annuity revenue, which is 80% of the total, was flat or up 1% in constant currency. Equipment sale revenue was down 3% or 2% in constant currency, largely due to the weakness in Europe. While operating in this challenging economic environment, we've grown our global market share for equipment revenue. And installs of Xerox equipment grew 8% in the fourth quarter, a good indication of future annuity. During the year, we launched 27 products, with an emphasis on broadening our color portfolio for both production and office markets. And we've -- and we expanded our channels of distribution. As a result, our MIF, that's machines in the field, for our color devices grew 14% in 2011, an important contributor to our annuity stream. Growth in Services is also a big benefit to our annuity. We continue to focus on joint sales activities between Xerox and ACS. In 2011, this resulted in more than 300 revenue synergy deals, delivering significant total contract value for the company. These deals include a multiyear contract with a major consumer goods company, to manage their IT Systems, and enterprise print services win with a large financial investment firm and expanding our business with one of Latin America's largest banks to now support their commercial foreign exchange operations. To further accelerate our joint sales activities, we increasingly see the value of going to market as one Xerox, demonstrating to our clients that our Services-led, Technology-driven strategy offers value to their business through the strength of our offerings, the power of our innovation and the expertise of our people. Therefore, we're retiring the ACS brand in many areas of our Services business and will lead with Xerox as a master brand that now represents the world's largest enterprise for business process and document management. It's more than a logo change. It reflects the progress that we've made in transforming the company, the meaningful growth in front of us and the value we’re building for stakeholders. With that, let me turn it over to Luca, and I'll be back to wrap up and open the call to your questions. Luca?

Thank you, Ursula, and good morning, everyone. As Ursula just explained, revenue was flat in the quarter, both at actual and constant currency. Services continue to show good growth, up 6%. And Technology was down 5%, affected by the weakness that we saw in Europe. Operating margin in Q4 was 10%, a sequential improvement from Q3, in line with seasonality, but down 0.4 year-over-year. Gross margin of 32.2% was lower year-over-year due to the shift of business towards Services and the ramp of new contracts. We expect this gross margin dynamic to continue in the near term as Services growth accelerates and new contracts start up. We partially offset the gross margin impact through disciplined expense management. Both R&D and SG&A ratios continue to show significant improvement from restructuring and synergies. Within SG&A, bad debts increased year-over-year by $12 million, as improvements in North America were more than offset by higher write-offs in southern Europe. For the full year, operating margins grew by 30 basis points. We deployed several cost and expense reduction initiatives to offset the disruption from the natural disaster in Japan during the first half and ongoing currency headwinds. Below the line, we had improved results from lower interest expense and higher equity income at Fuji Xerox. Also, in the quarter, we made 2 one-off entries which are worth mentioning. We realized a $66 million after-tax pension curtailment gain that is associated with our decision in Q4 to fully freeze after December 2012 any further service and benefit accruals in the Xerox defined benefit pension plans in the U.S. This impact was partially offset by a restructuring charge of $39 million after-tax we took to improve the efficiency of our operations and help counter the pressures in the macro environment. As a result, adjusted EPS in Q4 was $0.33 and grew 14% year-over-year. The only adjustment to reported EPS was the amortization of intangibles. It should be noted, this adjustment was higher than in previous quarters because in Q4, we accelerated the amortization of the intangibles related to the ACS trade name, following our decision to discontinue the use of the ACS brand going forward. For the full year, adjusted EPS grew 15% and GAAP EPS more than doubled. Let us now move to the Services segment on Slide 8. The 6% revenue growth in Services is a reflection of the breadth and diversity of our portfolio. Within Services, BPO growth accelerated, it was up 8%. And Document Outsourcing was also up 8%. ITO revenue was down 6%. The 8% growth in BPO came from both commercial and government. Commercial growth was driven by financial services, customer care and recent acquisitions. Government revenue growth came primarily from the ramping of the California Medicaid contract. The 8% increase in Document Outsourcing reflects both the impact of strong new signings and benefits from our partner print services offerings, which began to be reported in Document Outsourcing this year and are accelerating. The competitiveness of our product portfolio and our unique document management software and tools continue to clearly differentiate us in the marketplace. ITO revenue was down 6% in Q4, driven by 2 main factors: past contract losses and lower product resale revenues. On the positive side, during 2011, ITO signings were at $3.4 billion and up by more than 150% year-over-year. The impact of a few contract losses will continue to have an effect on revenues through midyear, at which time the ramp in new signings will deliver revenue growth. Total signings for the entire Services business increased 15% year-on-year in Q4, and the trailing 12-month signings calculation is now flat, even after including the California Medicaid new business and the Texas Medicaid renewal, both signed in 2010. Our pipeline continues to be healthy and is up 5%, including synergies. Segment margin of 10.3% was down 1.7 points year-over-year due to the contract startup costs and lower renewal rates we just discussed. California Medicaid alone impacted margins by over 0.5 points. We expect this margin pressure to remain in the near term but to gradually improve as we move through 2012. Let's now turn to the Technology slide. Technology revenue was down 5% or 4% at constant currency. The largest factor in this decline was the slowdown in Europe where equipment revenue was down 15%. It should also be noted that as planned, our Technology results are impacted by the launch of our partner print services, which have been very successful and are reported in Document Outsourcing. In spite of the revenue decline, segment margin of 11.7% was flat year-over-year and at the highest level for the year in line with seasonality. Overall, a good result, thanks to strong control and expense control. Looking at our product segments in detail. Entry install performance improved in the quarter, although revenue was impacted by price and mix. We're building momentum in this segment with the recent launch of a new price-competitive platform providing both mono and color capabilities. Entry represented about 21% of our Technology revenue. Mid-range was the strongest performing area in Q4 and for the full year, thanks to our strong color portfolio. This is the product segment that was also most impacted by the disaster in Japan. As we had expected, supply availability has now returned to normal, and the backlog, while healthy, is not artificially high due to the product constraints. Mid-range accounted for 57% of our Technology revenue. High-end results were mixed. With continued strong performance in production color, driven by iGen4 and the 800/1000 Color Press, we're also improving our performance in entry production color with the recent launch of our Xerox 770 system. High end represented 22% of our Technology revenue. Going into 2012, we're very confident in our Technology offerings, given our market share gains and recent improvements we have made to our industry-leading portfolio. Moving on to our key metrics on Slide 10. Our most relevant operational metrics this quarter were quite positive. Total Services signing of $4.2 billion were up 15% year-over-year, with over $1 billion of signings in each of the 3 lines of business. For the year, we signed over $14 billion, flat year-over-year even with the 2 large Medicaid deals in the prior year compare. New business signings for the year were up 14%. Looking at the Document-related metrics, please keep in mind that these include the Technology segment, plus Document Outsourcing. Total color revenue was up 2%, both actual and constant currency. Digital machines in field continue to grow, was up 3% in total, 14% for color-capable devices. Lastly, digital pages were stable and down 3%, with pages from color devices up 9% both in Q4 and for the full year. All color segments showed strong install growth, and total installs for the company were up 8% in the quarter. This did not translate into equipment revenue growth, even [ph] price erosion and mix impacts, but this will feed annuity over time. Moving on to the cash flow slide. Cash from operations of almost $1.3 billion was in line with Q4 of 2010 for a full-year total of $2 billion. Earnings contributed $383 million. And consistent with normal seasonality, working capital during the quarter was a source of $696 million. For the year, working capital was essentially flat. Pension cash contributions in the quarter were $78 million and $426 million for the year, which is about $200 million higher than our 2010 funding. We expect a similar level of pension contributions in 2012 due to a very significant drop in the discount rate in spite of truly outstanding returns that we achieved in 2011 on our plan assets. CapEx of $134 million was in line with the annual trend, and we had limited M&A activity during the quarter. Let us turn to the next slide to quickly review the uses of our operating cash flow in 2011. So we generated $2 billion of cash from operations. CapEx came in as anticipated at $501 million full year. And the resulting free cash flow of $1.5 billion was used as follows: we paid down over $600 million in debt, and we have now repaid the debt we took on for the ACS acquisition. We ended the year with $8.6 billion of debt, of which $6 billion can be associated with the financing of Xerox equipment for our customers. The finance debt is calculated assuming a 7:1 leverage of our finance assets of $6.9 billion. We also had $265 million in dividend payments, and our current yield sits at approximately 2%. Our focus was to deploy our available cash primarily towards the share repurchase program. As mentioned earlier, we repurchased $700 million worth of shares at an average price of $7.97. We also continue to invest in tuck-in acquisitions, spending $212 million full year, primarily in Services. Let me now move to guidance for 2012. For revenue growth in 2012, we are guiding to 2%-plus at constant currency. We expect Services to grow mid to high single-digits with growth accelerating throughout the year and Technology to be flat to modestly lower, given a macro environment and our strategy to lead with our Managed Print Services offerings. We expect GAAP EPS in the range of $0.97 to $1.03 and adjusted EPS in the range of $1.12 to $1.18. The change in guidance from May of last year is driven by a pension expense increase of well over $100 million because of the significant decline in discount rates, negative currency dynamics and worsened economic outlook in Europe. Our earnings estimate would put us in a position to deliver strong cash flow between $2 billion and $2.3 billion. This is also lower than we were assuming back in May of 2011 due to 3 main factors: revised earnings as I just explained; pension funding in line with 2011. This is $200 million higher than previously assumed due to the historically low discount rate and restructuring payments of approximately $150 million instead of an earlier assumption of nominal payments. We took a $61 million restructuring charge in Q4 and anticipate taking a modest amount of additional restructuring in 2012. This will allow us to improve our operating leverage and offset some of the cost pressure in the environment. We expect operating cash flow to be negative in Q1, with higher pension contributions adding to the typical working capital seasonality. On CapEx, we're planning for investments of $500 million, which will result in free cash flow of between $1.5 billion to $1.8 billion. Our capital allocation priorities remain unchanged. In 2012, we expect to repurchase between $900 million and $1.1 billion worth of shares, skewed to the second half of the year, consistent with our cash generation seasonality. We are announcing today that our board increased the share repurchase authorization by $500 million, so it now stands at over $1.3 billion. We anticipate spending between $300 million and $400 million on acquisitions, with primary focus on expanding our Services offerings. And dividends are planned to be a use of around $300 million given current payout and number of shares outstanding. With that, I would turn it back to Ursula to wrap up. Ursula M. Burns: Thanks, Luca. Let me quickly wrap up so that we can get to your questions. 2011 presented its share of challenges, and our performance in the fourth quarter and for the full year reflects our operational discipline in delivering strong bottom line results while scaling our Services business and maintaining our leadership in Document Technology. Signings continue to grow for our diverse services offerings. Installs are up for our industry-leading technology. Both of these areas contribute to a healthy annuity stream that serves us well for the long term. In the near term, we are planning for continued economic weakness. So we're being somewhat guarded with our expectations and remain focused on operational efficiency. For the first quarter, our expectations are for adjusted earnings of $0.21 to $0.24 per share, including $0.01 to $0.02 of restructuring. And as Luca noted, we expect full-year adjusted EPS of $1.12 to $1.18. Throughout 2012, our productivity initiatives will be balanced with making the necessary investments to expand our Services business and aggressively pursue growth opportunities in key markets around the world. And our business model will continue to yield strong cash flow. We're confident we have the right strategy, the competitive strength, the skilled leadership team and a disciplined focus on execution to build on our progress. With that, I thank you again for joining us today, and let's open it up to questions for Luca and me.

[Operator Instructions] Your first question comes from the line of Ben Reitzes with Barclays Capital. Benjamin A. Reitzes - Barclays Capital, Research Division: Luca, given the lower cash flow estimates and the pension being $400 million-plus in terms of funding, do you plan to issue more equity like you did a quarter or 2 ago to fund the pension? And is that an option to you? And what would be the offsetting share count impact?

So Ben, yes. Pension contributions are going to be, in total, similar to what we've seen in 2011. So at this point, even though we have not made a final decision, we are planning to issue stock in a similar size of what we've done in 2011. Bear in mind that the contributions to the pension plan this year is going to be skewed towards the first half as opposed to the second half as we had last year. Benjamin A. Reitzes - Barclays Capital, Research Division: Is there any benefit to issue equity and be buying back stock at the same time rather than just fund the pension with cash and then just buy back less stock? Is there a reason that -- to go through the motions of buying back stock while you're issuing equity?

The reason is the same that I talked about last year. It really gives us a bit more flexibility with our cash. It allows us to be more consistent in the market as we buy back the stock. And frankly, particularly because these contributions this year are so skewed towards the first half, we want to make sure that we retain appropriate cash balances throughout the year. Benjamin A. Reitzes - Barclays Capital, Research Division: Can you just recap how many shares you issued in the last tranche? This is 16 million, right?

16.6 million shares. Benjamin A. Reitzes - Barclays Capital, Research Division: Right. So that -- when you say similar size, maybe you do it a few times like that.

We would be looking to do -- I'm talking about the absolute amount that we're talking about, right? I mean, last year, we did about 130 million. It's probably going to be a similar size. And obviously, the amount of shares is going to be depending on the share price on that day. But we're thinking of doing one single contribution in stock. Benjamin A. Reitzes - Barclays Capital, Research Division: Okay. Then my follow-up issue is with regard to cash flow. So it sounds like you were at $2.6 billion, $2.9 billion in cash flow from ops. Now we're at $2 billion to $2.3 billion, so call it $600 million of a difference. You're going to issue some equity for pension, so it sounds like pensions may be $200 million of the lowered cash flow from the May. Can you talk about where the extra $400 million in lower cash flow is coming from now if I'm right on the pension?

You're right on the pension. And if you remember, when we were talking at the Investor Conference back in May, we gave guidance on earnings of $118 million to $128 million. So that's come down. So we got about $200 million in earnings there. And I think when you think about earnings, you need to think about currency, you need to think about the economic outlook for Europe. And also the pension expense itself is $100 million higher than we were expecting at the time. So we got about $200 million in earnings, $200 million in pensions. And restructuring, we're going to be doing a bit of restructuring. We talked about $150 million of restructuring in 2012, but we were expecting only nominal payments back in May. So that's the rough math, Ben. Benjamin A. Reitzes - Barclays Capital, Research Division: Okay. So that gets us to the $600 million. And then with all that, my final question is, okay, we know about 2012 now. You just went through the bridge, really. Does 2013 have a snapback now if we have flattish cash flow this year slightly up? And then due to all these headwinds, where current rates are today and best we know, without giving earnings guidance or anything technically, do we have a snapback in cash flow next year or do similar factors keep it flattish next year?

The one thing that I can tell you right now, all else being equal, that pension is necessarily going to be a tailwind going into 2013 and '14 and '15. So we are at a point where you've got discount rates which are historical lows given the dynamics of our pension plans. We've now frozen future service and accruals, so we kind of capped the exposure there. We've had great a return on assets on the pension plan during 2011. So if discount rates do not come down further, then you could have certainly well over $100 million just from pension moving forward. And then of course, we're going to be trying to grow the business and all the other things that should bring additional earnings into the company.

Your next question comes from the line of Shannon Cross with Cross Research. Shannon S. Cross - Cross Research LLC: My first question is with regard to Europe. Ursula, can you give us a little more color on sort of linearity during the quarter, where you specifically saw some of the weakness? And have you seen any changes as we've entered 2012? Ursula M. Burns: So on linearity, it's got worse as the quarter went on. If you recall last quarter, we spoke about Europe, and we were guarded because we still had positive results in Europe or good results in Europe where we knew -- we were suspecting that something would happen. It started to happen in the early parts of the quarter, and it definitely continued throughout the quarter. And I don't see any -- foresee any significant change in either direction in Europe. That's the way that we're planning. We're planning for continued weak activity in Europe. So linearity, yes, it got worse as the quarter went on. And it's all over Europe. Obviously, southern Europe, the Italy, Spain, Portugal, Greece, et cetera, are worse than the rest of Europe, but we do see weakness even in the stronger countries where decisions are delayed and activity is a little bit lower, et cetera, et cetera. So we do see a significant change in Europe. Interestingly enough, balance that off against what's happening in Europe, in United States in developing markets, developing markets were strong throughout the year. It had up and down based on war here or war there but strong business throughout the year. In the U.S., as the year went on and we implemented changes and kind of rationalized, our coverage got better every quarter -- every month and every quarter. So we see a relatively strong, on the equipment side, U.S. business and a strong developing market business offset by weakness in Europe. Shannon S. Cross - Cross Research LLC: Okay, great. And can you talk a bit about the Services business just in terms of the contracts that you've signed, the 14%, I think, or 15% year-over-year increase in signings? Like what type of contracts are you signing? Where are you seeing the strength? And maybe talk a little bit about ITO as well. Ursula M. Burns: Yes. So think about Services signings almost across-the-board. So we've signed in the public sector. We've signed transportation contracts with -- in Pennsylvania Transportation Authority, for example, which we announced earlier. We signed in a private sector with airlines, with banks. So we are seeing a broad range of signings primarily in the U.S., obviously, which is where most of our business is, but we also have signings in Latin America in developing markets and signings in Europe. As we spoke before, Europe is in the BPO business, and the ITO business is the smaller portion of our business, the smaller portion. And we did a change in strategy at the end of the third quarter, in the third quarter, to move an executive there to actually manage, stickhandle our European business, which is particularly important now because we're seeing some headwinds in Europe, not yet in the Services business but we want to make sure that we start up that business with the right cost base in mind. So across-the-board, signings everywhere, it's really good. ITO signings were unbelievably strong. We are managing ITO. The ITO business is one that clearly we're learning about as we go through more and more. ITO signing, as you know, we have some cancels from last quarter that are hitting us on the revenue side this quarter. We also have a business in the ITO that's a resale business, the equipment resale business, that while good, should not be our major focus and will not be our major focus on a go-forward basis that also puts some pressure on our revenue. So our purpose with ITO is twofold. One is to actually accompany the rest of the business that we have and make us felt more relevant in the rest of the business to Document Outsourcing and the BPO business. But in and of itself is to get around these things that you're now hearing, the vernacular sick [ph] verticals, where you're not just selling a bunch of technology, you're not just selling some software, you're actually trying to sell a solution around the vertical market. Healthcare is the most obvious one to talk about. It's one that we're spending the most time on. So ITO, what we're doing with ITO is repositioning it. Focusing on longer-term, more higher-value engagements with our clients, focusing on -- assuring that we renew. This is a problem that should not exist. Renewal should not be a problem for us, and it was in quarter 3 and would have been in quarter 4. So we're focusing on actually changing that and making sure that we actually have value with our clients and intimacy with our clients. ITO should be good. Shannon S. Cross - Cross Research LLC: Okay. And then my last question is just sort of more of a philosophical one. As you think about the fact that you're getting strong growth from services and good signings but it's clearly impacting the margin a little bit with the pressure that you're seeing in Europe, how do you sort of balance and think about the investment required on the services side versus the growth, given some of the macro trends that are out there? Ursula M. Burns: It's a great question, by the way. And the way I would think about this is to think both in the short- and the longer-term, right? So in the short term, we have to make sure that anything that we sign falls within a set of parameters that allow us to deliver it with high quality and not sink our financials, right? So we get lots of deals proposed. Some of them would not be good if we took them in the beginning. If we did a lot of California Medicaid, I said this over and over again, we would be having a significant and broader problem. By the way, the good news is to winning at least 1 or 2 or 3 Medicaids because they are big and foundational for our business. So what we do with signing is we look to make sure that we can operate them well, that we can actually stand them up, that we can deliver the revenue, the SLAs, the revenue and the profits that we want and have strong margins. That's in the short term. In the long term, we try to make sure that we have platforms that are repeatable, that lightens the load. We stay close to our customers that keeps our renewal rates high, and we continue to expand outside of the areas that we have today to continue to grow our services offerings. So the way that we think about services, it is an engine for growth. And if we and when we operate it well, it actually does fuel the growth that we're seeing today, 6% growth even with a very poor ITO revenue quarter.

Your next question comes from the line of Ananda Baruah with Brean Murray. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: My first one, I guess, is on operating margin. There was an explicit operating margin guidance for 2012, and it feels kind of flattish, I guess, after we adjust for the share buyback. But I just wanted to confirm that and get your thoughts.

Yes, Ananda, to confirm, I think we're planning around operating margins to be flat to slightly up. As you go through the year, probably, they're going to be accelerating throughout the year because you're going to be seeing better growth as we go through 2012, but flat to slightly up. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: Okay, great. And I guess just sort of follow-up to the Services comment you guys made. The BPO signings, I guess, just optically appear to be a bit light, particularly after last quarter. Were they in line with your expectations or were they, in fact, light? And if they were light with the strength in ITO signings, does that maybe push out some of the ramp to margin expansion as you move through this year and maybe even in the '13? Ursula M. Burns: So Ananda, signings were a little -- BPO signings were a little bit light. But then, I mean, they were not significantly off, nothing to panic about. They were a little light. We had a huge signings quarter, as I said, up, and as Luca said, up 150%. And some huge number in ITO and Document Outsourcing remains a strong thing. I wouldn't -- I don't see any real issue with BPO signings. It's bumpy, it comes -- they come and they go, and we're focusing on them. So they should continue to come. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: Got it. And Ursula, would it tend to shift your thinking around the roadmap to operating margin expansion over the next year to 2 years given the mix of the Services signings? Ursula M. Burns: I don't think so, but...

So if I understand the question correctly, Ananda, we -- as we look at operating margins, we know that in the short term, we've got a number of pressures. Pension is one, currency is another one and obviously some weakness in Europe. At the same time, we have a number of tailwinds, and obviously, we want to capitalize on those positive factors. We got the very strong signings that we bring in from 2011. We got a Technology portfolio which is market-leading. We've gained share in every geography of the world. And obviously, in share repurchases, we'll have a bit on earnings. And we will continue to do tuck-in acquisitions. So as we think about it longer term, longer than 2012, of course, it's our aspiration to continue to grow operating margins. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: Last one for me. Just regarding the comments about the restructuring that you'll be doing as we move through the year, can you give us some sense of how we should layer those into our quarters in terms of earnings just so we get the linearity of earnings appropriately set?

Well, let me give you the Q1. I think we said $0.01 to $0.02. They are part -- it's part of our guidance. We said $0.21 to $0.24. You should model $0.01 to $0.02 of restructuring. As we go through the year, we'll see how much we're going to be doing. It really depends on the environment and many other factors. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: Could it top out at $0.02 or should we almost certainly expect something beyond that as we move through the year?

It may round up.

Your next question comes from the line of Keith Bachman with Bank of Montreal. Keith F. Bachman - BMO Capital Markets U.S.: Luca, I wanted to ask just on the -- for the guidance. For the sale of the IP that happened in Q4, did that get recognized in Q4 or is that more coming in calendar year '12? So that will be -- is that included in the guidance as well?

Yes, it's included in the guidance, Keith, and we've got it well laid out in the MD&A. The majority of the sale was recognized in Q4. I think the profit impact was about $16 million. But then we've got smaller amounts in '12 and '13 because of the way we set up the arrangement. Keith F. Bachman - BMO Capital Markets U.S.: Okay. So could I say that the amount in '12 and '13 is relatively -- I mean, it's not material to the guidance?

Yes, again, in the MD&A, it's $12 million and $8 million, respectively, to the guidance. Keith F. Bachman - BMO Capital Markets U.S.: Okay. Then let's go to -- well, let's go to -- then to -- in the EPS forecast. Could you give us your underlying assumption for operating tax rates, please?

Yes. We are guiding at 29%. Keith F. Bachman - BMO Capital Markets U.S.: Okay. You've been consistently coming in below that. Okay. Well, we'll go with 29% then. Then on -- perhaps this is for you, Ursula, if I could. The operating margins, just confidence that, that works its way through. I think it's understandable that as you ramp new contracts, it's a bit tougher for the new contract versus the maturing contracts. But just confidence that you're going to be able to manage that margin sequence, particularly in ITO where those renewals, I think, has been a bit tougher than you anticipated. Ursula M. Burns: So, I mean, it is the operative question and the place that we spend a significant amount of our focus, Keith. We are confident. I mean, we're confident, as confident as you can be before you do it. We have mapped it, we know the customers in ITO. It's all around renewals here, right? Because the signings are coming, we know the ramps, we don't have any really egregious contracts, large contracts that are outside of California, in which we already are comprehending for sure, that will take up a significant amount of investment before we get revenue so that we have a normal kind of layout of contracts. And so our focus is going to be on renewals. Our renewal rate overall is a little bit lighter than normal. BPO is a little bit lighter, but fine, Document Outsourcing not really that relevant. The big place that we have to spend a lot of our attention is in ITO, and we are doing that. So we're getting the business, and now we're managing the customers to assure that we stay intimate with them. And if there is a nonrenewal, it's because the customer no longer needs the service versus they are not pleased with our service delivery. Keith F. Bachman - BMO Capital Markets U.S.: Okay. Yes, you just hit my -- my follow-up on that one would be, to say it a different way, you're not losing those ITO renewals on price? It's just the customers, say, insourcing? Ursula M. Burns: Yes. Price is generally not the issue here. There are 2 -- there are 3 reasons why you can move. Obviously, one is that the customer doesn't need the service anymore, they in-source or their contract is just done. The second one is price, meaning -- or some other competitive type thing, price or terms of conditions, which will end up in price. And the third is the outright loss. I mean, you compete with somebody and they say, "I like Joe better than Peter. And I like Xerox better than someone else." The place that we have to make sure we continue to focus, price is not going to be our issue. We will manage price. If we want to win it, we will win it. If it looks good in the long term, that's not the issue. It's all around assuring that we continue an even level of contact and service with the clients and making sure that they understand that we are in their camp. It's basic customer care. We will -- we are -- we've taken a really big focus on this in the ITO business, and we'll continue to do that, which will drive up the business. Clearly, price has something to do with everything, Keith, everything. Keith F. Bachman - BMO Capital Markets U.S.: Okay, fair enough. I'm going to ask one more philosophical question, particularly for you, Ursula. If I look at your layout on Page 13 -- Slide 13, excuse me, about 25% of your available cash for 2012 is targeted to acquisitions, with the balance towards share repurchase. And I just wanted to know, kind of an IBM type of question. Is that how you think about the model over the next number of years? Or is there any kind of comments or color you could give that we should be thinking longer term? Ursula M. Burns: Yes, I think the way that we should think of it, for '12, clearly, the plan, as laid out in Slide 13, and the philosophy, pretty much the same as happened in '11. The way that you should think about '13 and beyond is along the same bucket. So clearly, we are going to use our available cash to buy back shares, think about the dividend, so that type of shareholder return, acquisitions and dividend. But the mix may change, depends on a lot on the price of the shares, what's available in the marketplace. Right now, we're using a disproportionate amount of our cash towards share repurchase, and it'll -- it may change. But it will not be so far different. So we'll not walk away from share repurchases, still a very valuable tool for us and very lucrative for the shareholders. So we'll continue to do that. And the whole question is around the edges, [indiscernible] one way or the other. Keith F. Bachman - BMO Capital Markets U.S.: Okay. Okay. Well, I'd encourage you to think about mix more.

Your next question comes from the line of Richard Gardner with Citigroup. Richard Gardner - Citigroup Inc, Research Division: I wanted to, I guess, not to beat a dead horse but go back to the Services margin decline a little bit more and maybe try to ask the question differently. You've always said that 5% to 10% was sort of the right -- well, I think it's fair to say that you said 5% to 10% was the right growth rate to think about for the Services business, and yet the margins are coming in a little lower year-over-year. So I just wanted to see if you could help us parse out how much of that is new contract ramps, how much is contract run-off and how much is price pressure. And then I have a follow-up.

I'll give it a try, Richard. We have been -- when you think about the dynamics of gross margins, clearly, they came in on the Services side slightly below what we were expecting. And I think the issue has been around the combination of contract ramps, which were pretty much included in our projections, and renewal rates, which were below the historical ranges. So we've always talked about renewing at about 85%, ideally, aspiration into 90%. Our renewal rates have come in, in the low 80s for the year. So that's where you really see that level of gross margin compression that we want to avoid going forward. Richard Gardner - Citigroup Inc, Research Division: Okay. And in light of that, Luca and Ursula, could you talk about the right way to think about operating margins for Services for this year and, I don't know, maybe even philosophically for 2013?

I would say, for 2012, we -- probably during the first half, we're going to be seeing a continuation of what you're seeing during 2011. But we believe that we're going to be improving margins in the second half because there's going to be an acceleration also in the revenue growth for Services. And then as we go into 2013, of course, again, our aspiration is to grow margins all the time. But we need to recognize that if growth accelerates and we end up winning very large deals like we've done in the past, for example, with California, this is something that in the short term, because they're so sizable, will have an impact on margins. But as you look longer term, they become profitable contracts, and they expand our position in the marketplace. Richard Gardner - Citigroup Inc, Research Division: Okay. And then one other question for me, and that is, was there any meaningful benefits from Japan expedite expenses going away in the fourth quarter? I think that had been a meaningful drag for you earlier in the year. Could you talk about whether that was a benefit in Q4 and whether there's any residue left there or we're back to 0?

We've had very minor expenses related to the disruption in Japan in Q4. It wasn't a big issue. So quarter-on-quarter was obviously a slight positive. I like to step back for a second and talk about operating margins for Technology for the year. We were up in Technology 60 basis points in operating margins in spite of all the disaster from Japan, in spite of currency. I mean, the yen is more than 30% higher against the dollar over the last 3 years, in spite of the weakness in Europe. So I think if you step back and you look at our performance in Technology in terms of preserving margins, I think it's been admirable. Richard Gardner - Citigroup Inc, Research Division: Okay, great. If I can sneak one more in, Ursula, have you seen any movements on supplies pricing in the marketplace? We've heard from some contacts out there that there are general price increases going through on the supply side here in January and February, and I'm wondering if you're seeing that and whether you think that, that could potentially benefit Xerox here in Q1. Ursula M. Burns: Through to Q4, just earnings period, we didn't see any. And we've heard the same things that you've heard. And we'll look around and see how we're positioned competitively. And if we have space, we'll take it. If we're positioned in a place that allows us to take price up, we'll do that. We want to stay competitive to the marketplace, we want to make sure that we continue to gain share. And so we'll look at the marketplace out there. And if we can fit it in, we'll do it.

Your next question comes from the line of Bill Shope with Goldman Sachs. Bill C. Shope - Goldman Sachs Group Inc., Research Division: So I have a question on the Services division as well. Specifically, drilling down on some of the challenges you're having with renewals, can you help us understand exactly how you address those challenges, particularly this year? And from your prior experience, how much control do you really feel you have over this dynamic? And I guess, really, what we're trying -- what I'm trying to get to is, can you give us some assurance that this isn't a sign of an emerging problem with competitive positioning or anything?

So we have -- Bill, we got a long history around renewing contracts and particularly ACS, but also on the Document Outsourcing side. And we've always been in a range of 80% to 90%. And clearly, our target is to be 85% to 90%. What we've seen during 2011 has been a specific issue around renewal rates exclusively in our ITO business. And it's been related to 3 or 4 meaningful contracts. It hasn't been a widespread loss on renewals. It's been specific -- 3 or 4 specific situations, different reasons. At the same time, we have signed up significantly more than what we've lost. So the net-net of the 2 things, the growth in signings versus the loss of renewal is clearly a positive that we'll translate into revenue growth, we believe, starting from the second half of 2012. So there isn't anything systemic that we're concerned about. And I would say that having grown signings by 15% year-over-year actually tells us that we are quite competitive in the marketplace. If you exclude the California and Texas contracts that we signed in 2010, mega deals, very specific events, actually, our signings are up 40%. So we feel very, very good where we are in the marketplace. We've had specific circumstances in ITO. It's about customer engagement, and that's what we need to work on. Bill C. Shope - Goldman Sachs Group Inc., Research Division: Yes, that makes sense. And then a final question, I know we're getting towards the end here. On cash flow, if there are any further downward surprises, whether it's macro or whatever it may be, or mix, at what point, just trying to gauge the risk here, what point do you have to be more constrained with your cash usage in terms of the share repurchase plans in particular? Is there a line in the sand that you're looking at where you'd have to step back a bit or where it would make sense to step back a bit? Or do you feel fairly comfortable at this point that you've really factored in all the risk to this cash flow outlook?

Just to be practical, and we've included this in our, of course, in our earnings range, we will be doing most of our repurchase activity during the second half of the year. So we're going to have much better visibility. If something happens, any collapse somewhere else around the world, we would be dealing with it. We don't need to make a decision right now. We feel, at this point, given all the puts and takes, we feel very confident that we can deliver on this capital allocation strategy. Of course, at any point in time, we can revisit. It's very difficult for us to get ahead of ourselves because most of the activity will happen towards the end of the year.

Your next question comes from the line of Mark Moskowitz with JPMorgan. Mark A Moskowitz - JP Morgan Chase & Co, Research Division: Two questions, if I could. I want to get a sense, if you can kind of give us some context, you've been kind of a perennial cost container or restructuring type company and very diligent in that process. But are we getting close here to starting to cut into too much muscle with this next round of restructuring and probably more restructuring down the road if the macro worsens?

I can assure you that we got plenty of opportunities, plenty of opportunities in our product costs. We have really a gold mine there in terms of removing complexity, reminding [ph] the portfolio, rationalizing components. And again, we have a significant infrastructure. It's a legacy infrastructure. We're not near the end. I mean, we'll continue every day that we come to the office to look for efficiency in our operations. If we can get revenue growth, that efficiency will go into the revenue growth. If we cannot get revenue growth, that efficiency will go towards cost reductions. Ursula M. Burns: And this muscle or things like research, our selling resources, our customer engagement, that's muscle. And I think what Luca is saying that while everything is needed -- a lot of things are needed to run the company. There are certain things that are really hard to rebuild if you take them away. We are not focusing on those areas. Those areas, for as long as we've done restructuring, that, to the 2000 time, have been protected and exalted because we know it's difficult to get them back. But we have a lot of cost in this company. And as the world changes, we're going to have to actually morph the cost to actually be more appropriate to where growth is coming or just remove it from the company. And that's the path that we're on. Mark A Moskowitz - JP Morgan Chase & Co, Research Division: Okay. Then my second question is around cash flow. Clearly, it's been a hot topic for investors over the past year, and I kind of share Keith Bachman's sentiment here. I'm trying to figure out if your cash usage is being applied appropriately here. And what I mean by that is we've been hearing now for almost 2 years about all these signings, and eventually, we're going to get the revenue and thereby the cash flow. But I hear more about BAND-AIDs and I do really about return on the cash flow here. And I'm just wondering if you need to maybe jump-start the acquisition machine to really get that cash flow and the return on the cash flow work in the right direction over the next 12 to 24 months.

I don't know where to start. I think we are making the investments that we believe are appropriate. We're looking at acquisitions in a very disciplined manner. ACS has done it consistently. We keep doing it even now. And so we look at attractive returns on our acquisition investments. And so we're going to be looking at the opportunities. We bought 16 companies during the course of 2011. It is very important for us that our cash flows are sustainable for the long term. And so sometimes we get asked why our cash flow has come down a bit versus past expectations. And one of the reasons is because we put a lot of investments into the business, and sometimes they don't come through acquisitions. Sometimes they come through a new large contract, like California, for example. So maybe there's been a bit of a shift between investing acquisitions versus investing in the organic business. But again, I think we look at it from a return on capital perspective, and that's the way we actually assess our investment.

Your next question comes from the line of Chris Whitmore with Deutsche Bank. Chris Whitmore - Deutsche Bank AG, Research Division: I wanted to ask about the sustainability of Technology margins. Specifically, I'm interested on what you're seeing from a pricing standpoint on equipment. It sounds like you've turned a bit more aggressive on equipment to drive some unit placements. How does that flow through to margins over the next couple of quarters, number one? And number two, is it fair to say that you have gotten more aggressive in order to drive those unit placements? Ursula M. Burns: I think that you can look at the unit placements from 2 different perspectives. Price, we're still in the range of 5% to 10%, price erosion on a year-to-year basis, maybe a little bit higher this quarter, at the higher end of the range than in the past but not anything outside of that range. Big driver here is mix. Mix is -- mix in all of the categories, entry, mid and high. If you look at the product sets that we've been very successful on and the products that we've launched, these 27 products, they're skewed towards the lower end of the mix range, the price range. So we get lots of activity, we'll get good post sale, but the revenue doesn't necessarily map to it in the short term because the prices are lower. I think that the margins for the Technology business, connecting it to the previous conversation that we just had, the previous question, are -- I mean, we're in a range where they are sustainable, they take work, take work to get there. This is where we manage cost and expense continuously, simplification, et cetera, et cetera. But I do believe that they are sustainable, and I think that we're showing good results from that.

Yes. Just to add to that. So as we get into 2012, I just said 2011 was very good for margins in the Technology business. We actually expanded margins despite of all the pressures. We continue to have currency issues, and we continue to have pension expense issues for 2012. And so that will put some pressure on Technology margins, and that is the reason why we're talking about efficiencies and we're talking about restructuring and we keep managing it. But I would say, net-net, when you look at Technology, we are industry leader, gaining market share, expanding margins. I would say that it's a testament to the quality of our products.

Your next question comes from the line of Deepak Sitaraman with Crédit Suisse. Deepak Sitaraman - Crédit Suisse AG, Research Division: First, just a clarification, if I could. I just want to confirm that your revenue guidance for the year does include the impact of acquisitions, which I expect would probably add a couple of points of growth in itself.

That includes acquisitions, Deepak. Deepak Sitaraman - Crédit Suisse AG, Research Division: Okay. And then, Luca, if I can just follow up on Europe. Can you remind us of your revenue exposure to Europe in the Technology segment? And x Europe, can you give us a sense of growth in the Technology segment in the fourth quarter? And maybe just talk us through your expectations for the year, both for Europe versus x Europe.

So Europe in total is about -- we're exposed about 20% of our revenue base. In Technology, just to give you a sense, Deepak, equipment revenue for the company was down 2% in Q4. It would have been up 2%, excluding Europe. So both the U.S. and DMO were solid in Q4, and we definitely saw the weakness in Europe. Deepak Sitaraman - Crédit Suisse AG, Research Division: Okay, that's really helpful. And then maybe lastly for Ursula, in the Technology segment, can you give us an update on where you are in terms of just expanding distribution, particularly to reach SMB-type customers? And any metrics that you can share around contribution to the overall Tech segment revenue and perhaps growth that you saw in your SMB revenue last year would be very helpful. Ursula M. Burns: Yes, expanding distribution is just something that has been very successful for us. I think it's showing up, by the way, in the U.S. revenue dynamics and the activity dynamics that we just talked through. The performance of the Tech business, without Europe, would have been up, which is a change for us, which [ph] has been on and off. We have, I think, a solid footing now, primarily focused on the products and the expansion of distribution. So it's worked out fairly well. We have everything that comes available that is good for us to tuck in, we tuck in. My -- I don't think I've said this publicly before, but after a while, you ran out of things to buy. I don't know if we're quite there, but we may be getting there in the Tech side. So a lot more of our acquisitions will be focused on Services as we go forward. We'll pick up the odd SMB distribution capacity in United States. So good news across-the-board, I think that we've done as much as we can do with a little bit around the edges to expand it, and we'll be focusing on Services in a go-forward basis. So all of you, thank you very much for your time and for your interest, and have a good first quarter.

This concludes today's conference call. You may now disconnect.