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Segment Reporting

Note 3 - Segment Reporting

Our reportable segments are aligned with how we manage the business and view the markets we serve. We report our financial performance based on the following two primary reportable segments – Technology and Services. Our Technology segment includes the sale and support of a broad range of document systems from entry level to high-end. Our Services segment operations involve delivery of a broad range of outsourcing services including document, business processing and IT outsourcing services.

Our Technology segment is centered on strategic product groups, which share common technology, manufacturing and product platforms. This segment includes the sale of document systems and supplies, technical services and products financing. Our products range from:

·	“Entry,” which includes A4 devices and desktop printers; to

·	“Mid-Range,” which includes A3 devices that generally serves workgroup environments in mid to large enterprises and includes products that fall into the following market categories: Color 41+ ppm priced at less than $100K and Light Production 91+ ppm priced at less than $100K; to

·	“High-end,” which includes production printing and publishing systems that generally serve the graphic communications marketplace and large enterprises.

Our Services segment is comprised of three outsourcing service offerings:

·	Document Outsourcing (which includes Managed Print Services)

·	Business Process Outsourcing

·	Information Technology Outsourcing

Document outsourcing services include service arrangements that allow customers to streamline, simplify and digitize their document-intensive business processes through automation and deployment of software applications and tools and the management of their printing needs. Document outsourcing also includes revenues from our partner print services offerings. Business process outsourcing services inclued service arrangements where we manage a customer’s business activity or process. Information technology outsourcing services includes service arrangements where we manage a customer’s IT-related activities, such as application management and application development, data center operations or testing and quality assurance.

The segment classified as Other includes several units, none of which meet the thresholds for separate segment reporting. This group primarily includes Xerox Supplies Business Group (predominantly paper sales), Wide Format Systems, licensing revenues, GIS network integration solutions and electronic presentation systems and non-allocated Corporate items including non-financing interest, as well as other items included in Other expenses, net.

Operating segment revenues and profitability for the three months ended March 31, 2011 and 2010 were as follows:

	Three Months Ended March 31,
	Segment Revenue		Segment Profit (Loss)
2011
Technology	$	2,495	$	266
Services		2,584		266
Other		386		(66	)
Total	$	5,465	$	466

2010
Technology	$	2,483	$	233
Services		1,843		203
Other		395		(104	)
Total	$	4,721	$	332

	Three Months Ended March 31,
Reconciliation to Pre-tax Income (Loss)	2011			2010
Segment profit	$	466		$	332
Reconciling items:
Restructuring and asset impairment charges		15			(195	)
Restructuring charges of Fuji Xerox		(11	)		(22	)
Acquisition-related costs		—			(48	)
Amortization of intangible assets		(85	)		(57	)
Venezuelan devaluation costs		—			(21	)
Equity in net (income) loss of unconsolidated affiliates		(34	)		2
Other		(1	)		(1	)
Pre-tax Income (Loss)	$	350		$	(10	)

Acquisitions

3 Months Ended

Mar. 31, 2011

Acquisitions

Note 4 – Acquisitions

In February 2011, we acquired Concept Group for $43 net of cash acquired. This acquisition expands our reach into the small and mid-size business market in the U.K. Concept Group has nine locations throughout the U.K. and provides document imaging solutions and technical services to more than 3,000 customers. The operating results of Concept Group are not material to our financial statements and are primarily included within our Technology segment from the date of acquisition. The purchase price was primarily allocated to intangible assets and goodwill based on management’s estimates.

In April 2011, we acquired Unamic/HCN B.V., the largest privately-owned customer care provider in the Benelux region, for approximately $61 in cash. Unamic/HCN’s focus on the Dutch-speaking market will expand ACS’s customer care capabilities in the Netherlands, Belgium, Turkey and Suriname. We are in the process of determining the purchase price allocation.

Affiliated Computer Services, Inc.

In February 2010, we acquired ACS in a cash-and-stock transaction valued at approximately $6.5 billion. In addition, we also repaid $1.7 billion of ACS’s debt at acquisition and assumed an additional $0.6 billion of debt. ACS provides business process outsourcing and information technology outsourcing services and solutions to commercial and governmental clients worldwide. The operating results of ACS are included in our Services segment from February 6, 2010.

The unaudited pro-forma results presented below include the effects of the ACS acquisition as if it had been consummated as of January 1, 2010. The pro-forma results include the amortization associated with the acquired intangible assets and interest expense associated with debt used to fund the acquisition, as well as fair value adjustments for unearned revenue, software and land, buildings and equipment. To better reflect the combined operating results, material non-recurring charges directly attributable to the transaction have been excluded. In addition, the pro-forma results do not include any synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro-forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2010.

	Three Months Ended March 31, 2010
	Pro-forma			As Reported
Revenue	$	5,340		$	4,721
Net loss – Xerox		(56	)		(42	)
Basic loss per-share		(0.05	)		(0.04	)
Diluted loss per-share		(0.05	)		(0.04	)

Receivables, Net

3 Months Ended

Mar. 31, 2011

Receivables, net

Note 5 – Receivables, Net

Accounts Receivable Sales Arrangements

We have facilities in the U.S., Canada and several countries in Europe that enable us to sell to third-parties, on an on-going basis, certain accounts receivable without recourse. The accounts receivables sold are generally short-term trade receivables with payment due dates of less than 60 days. The agreements involve the sale of entire groups of accounts receivable for cash. In certain instances, a portion of the sales proceeds is held back and deferred until collection of the related receivables by the purchaser. Such holdbacks are not considered legal securities nor are they certificated. We report collections on such receivables as operating cash flows in the Condensed Consolidated Statements of Cash Flows, because such receivables are the result of an operating activity and the associated interest rate risk is de minimis due to its short-term nature. These receivables are included in the caption “Other current assets” in the accompanying Condensed Consolidated Balance Sheets and were $97 and $90 at March 31, 2011 and December 31, 2010, respectively. Under most of the agreements, we continue to service the sold accounts receivable. When applicable, a servicing liability is recorded for the estimated fair value of the servicing. The amounts associated with the servicing liability were not material. Accounts receivables sales were as follows:

	Three Months Ended March 31,
	2011			2010
Accounts receivable sales	$	730		$	477
Deferred proceeds		94			41
Fees associated with sales		4			4
Estimated decrease to operating cash flows(1)		(24	)		(158	)

(1)	Represents the difference between current and prior quarter accounts receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and (iii) currency.

Finance Receivables – Allowance for Credit Losses and Credit Quality

Finance receivables include sales-type leases, direct financing leases and installment loans. Our finance receivable portfolios are primarily in the U.S., Canada and Europe. We generally establish customer credit limits and estimate the allowance for credit losses on a country or geographic basis. Our policy and methodology used to establish our allowance for doubtful accounts has been consistently applied over all periods presented.

The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment in finance receivables:

	United States			Canada			Europe			Other(3)		Total
Allowance for Credit Losses:
Balance December 31, 2010	$	91		$	37		$	81		$	3	$	212
Provision		7			4			11			—		22
Charge-offs		(10	)		(5	)		(8	)		—		(23	)
Recoveries and other(1)		(1	)		2			3			—		4
Balance March 31, 2011	$	87		$	38		$	87		$	3	$	215

Finance Receivables as of March 31, 2011 collectively evaluated for impairment(2)	$	3,074		$	874		$	2,865		$	76	$	6,889

Allowance for Credit Losses:
Balance December 31, 2009	$	99		$	33		$	87		$	3	$	222
Provision		10			6			17			—		33
Charge-offs		(22	)		(6	)		(11	)		—		(39	)
Recoveries and other(1)		1			2			(5	)		—		(2	)
Balance March 31, 2010	$	88		$	35		$	88		$	3	$	214

Finance Receivables as of March 31, 2010 collectively evaluated for impairment(2)	$	3,349		$	882		$	2,652		$	49	$	6,932

(1)	Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

(2)	Total Finance Receivables exclude residual values of $11 and $17, and the allowance for credit losses of $215 and $214 at March 31, 2011 and 2010, respectively.

(3)	Includes developing market countries and smaller units.

We evaluate our customers based on the following credit quality indicators:

Investment grade: This rating includes accounts with excellent to good business credit, asset quality and the capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance. The rating generally equates to a Standard & Poors (S&P) rating of BBB- or better. Loss rates in this category are normally minimal at less than 1%.

Non-investment grade: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. This rating generally equates to a BB S&P rating. Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the higher loss rates are largely offset by the higher rates of return we obtain with such leases. Loss rates in this category are generally in the range of 2% to 4%.

Substandard: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include customers who were downgraded during the term of the lease from investment and non-investment grade evaluation when the lease was originated. Accordingly there is a distinct possibility for a loss of principal and interest or customer default. The loss rates in this category are around 10%.

Credit quality indicators are updated at least annually and the credit quality of any given customer can change during the life of the portfolio. Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:

	As of March 31, 2011
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
United States:
Finance and Other Services	$	354	$	400	$	172	$	926
Government and Education		814		23		7		844
Graphic Arts		133		218		154		505
Industrial		200		87		33		320
Healthcare		133		47		27		207
Other		99		107		66		272
Total United States		1,733		882		459		3,074
Canada:
Finance and Other Services		158		127		56		341
Government and Education		132		11		3		146
Graphic Arts		37		38		44		119
Industrial		60		46		33		139
Other		75		41		13		129
Total Canada		462		263		149		874
Europe:
France		241		410		83		734
U.K./Ireland		224		148		54		426
Central(1)		316		590		55		961
Southern(2)		260		285		81		626
Nordics(3)		57		59		2		118
Total Europe		1,098		1,492		275		2,865
Other		57		16		3		76
Total	$	3,350	$	2,653	$	886	$	6,889

	As of December 31, 2010
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
United States:
Finance and Other Services	$	360	$	401	$	190	$	951
Government and Education		849		21		7		877
Graphic Arts		147		217		156		520
Industrial		206		91		38		335
Healthcare		134		48		32		214
Other		102		109		69		280
Total United States		1,798		887		492		3,177
Canada:
Finance and Other Services		150		127		56		333
Government and Education		127		12		3		142
Graphic Arts		32		35		48		115
Industrial		57		47		30		134
Other		88		47		13		148
Total Canada		454		268		150		872
Europe:
France		219		374		82		675
U.K./Ireland		206		164		51		421
Central(1)		297		551		65		913
Southern(2)		263		237		81		581
Nordics(3)		50		63		3		116
Total Europe		1,035		1,389		282		2,706
Other		33		33		—		66
Total	$	3,320	$	2,577	$	924	$	6,821

(1)	Switzerland, Germany, Austria, Belgium and Holland.

(2)	Italy, Greece, Spain and Portugal.

(3)	Sweden, Norway, Denmark and Finland.

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:

	As of March 31, 2011
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed Finance Receivables		Unbilled Finance Receivables		Total Finance Receivables		Finance Receivables >90 Days and Accruing
United States:
Finance and Other Services	$	21	$	4	$	2	$	27	$	899	$	926	$	24
Government and Education		23		5		4		32		812		844		48
Graphic Arts		20		2		1		23		482		505		12
Industrial		10		2		1		13		307		320		10
Healthcare		7		2		—		9		198		207		7
Other		7		2		—		9		263		272		6
Total United States		88		17		8		113		2,961		3,074		107
Total Canada		3		3		1		7		867		874		25
Europe:
France		1		2		1		4		730		734		9
U.K./Ireland		2		1		1		4		422		426		5
Central(1)		10		5		4		19		942		961		38
Southern(2)		33		9		15		57		569		626		100
Nordics(3)		—		1		—		1		117		118		2
Total Europe		46		18		21		85		2,780		2,865		154
Other		2		1		—		3		73		76		—
Total	$	139	$	39	$	30	$	208	$	6,681	$	6,889	$	286

	As of December 31, 2010
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed Finance Receivables		Unbilled Finance Receivables		Total Finance Receivables		Finance Receivables >90 Days and Accruing
United States:
Finance and Other Services	$	23	$	5	$	2	$	30	$	921	$	951	$	23
Government and Education		26		6		3		35		842		877		40
Graphic Arts		21		3		1		25		495		520		16
Industrial		11		2		1		14		321		335		10
Healthcare		6		2		1		9		205		214		9
Other		8		2		—		10		270		280		8
Total United States		95		20		8		123		3,054		3,177		106
Total Canada		3		3		1		7		865		872		28
Europe:
France		1		1		—		2		673		675		5
U.K./Ireland		4		1		1		6		415		421		7
Central(1)		9		2		4		15		898		913		39
Southern(2)		32		10		15		57		524		581		99
Nordics(3)		1		—		—		1		115		116		2
Total Europe		47		14		20		81		2,625		2,706		152
Other		2		—		—		2		64		66		—
Total	$	147	$	37	$	29	$	213	$	6,608	$	6,821	$	286

(1)	Switzerland, Germany, Austria, Belgium and Holland.

(2)	Italy, Greece, Spain and Portugal.

(3)	Sweden, Norway, Denmark and Finland.

Inventories

3 Months Ended

Mar. 31, 2011

Inventories

Note 6 - Inventories

The following is a summary of Inventories by major category:

	As of March 31, 2011		As of December 31, 2010
Finished goods	$	942	$	858
Work-in-process		58		46
Raw materials		100		87
Total Inventories	$	1,100	$	991

Restructuring Programs

3 Months Ended

Mar. 31, 2011

Restructuring Programs

Note 8 - Restructuring Programs

Information related to restructuring program activity during the three months ended March 31, 2011 is outlined below:

	Severance and Related Costs			Lease Cancellation and Other Costs			Total
Balance December 31, 2010	$	298		$	25		$	323
Restructuring provision		10			—			10
Reversals of prior accruals		(20	)		(5	)		(25	)
Net current period charges(1)		(10	)		(5	)		(15	)
Charges against reserve and currency		(49	)		(4	)		(53	)
Balance March 31, 2011	$	239		$	16		$	255

(1)	Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown.

Reconciliation to the Condensed Consolidated Statements of Cash Flows:

	Three Months Ended March 31,
	2011			2010
Charges against reserve	$	(53	)	$	(23	)
Asset impairment		—			4
Effects of foreign currency and other non-cash items		(4	)		(20	)
Cash Payments for Restructurings	$	(57	)	$	(39	)

The following table summarizes the total amount of costs incurred in connection with these restructuring programs by segment:

	Three Months Ended March 31,
	2011			2010
Technology	$	(12	)	$	129
Services		(1	)		43
Other		(2	)		23
Total Net Restructuring Charges	$	(15	)	$	195

Interest Expense and Income

3 Months Ended

Mar. 31, 2011

Interest Expense and Income

Note 9 - Interest Expense and Income

Interest expense and interest income were as follows:

	Three Months Ended March 31,
	2011		2010
Interest expense(1)	$	127	$	153
Interest income(2)		169		178

(1)	Includes Equipment financing interest, as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

(2)	Includes Finance income, as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

Financial Instruments

3 Months Ended

Mar. 31, 2011

Financial Instruments

Note 10 - Financial Instruments

Interest Rate Risk Management

We use interest rate swap agreements to manage our interest rate exposure and to achieve a desired proportion of variable and fixed rate debt. These derivatives may be designated as fair value hedges or cash flow hedges depending on the nature of the risk being hedged.

Fair Value Hedges

As of March 31, 2011 and December 31, 2010, pay variable/receive fixed interest rate swaps with notional amounts of $900 and $950 and net (liability)/asset fair values of $(2) and $11, respectively, were designated and accounted for as fair value hedges. The swaps were structured to hedge the fair value of related debt by converting the debt from fixed rate instruments to variable rate instruments. No ineffective portion was recorded to earnings during 2011 or 2010.

The following is a summary of our fair value hedges at March 31, 2011:

Debt Instrument	Year First Designated	Notional Amount		Net Fair Value			Weighted Average Interest Rate Paid			Interest Rate Received			Basis	Maturity
Senior Notes due 2013	2010	$	400	$	(1	)		4.71	%		5.65	%	Libor		2013
Senior Notes due 2015	2011		400		(1	)		2.36	%		4.25	%	Libor		2015
Senior Notes due 2016	2010		100		—			3.97	%		6.40	%	Libor		2016
Total		$	900	$	(2	)

Terminated Swaps

During the three months ended March 31, 2011, interest rate swaps that had been designated as fair value hedges of the 2014 Senior Notes were terminated. These terminated interest rate swaps had an aggregate notional value of $750. The fair value adjustment of $(12) to the 2014 Senior Notes is being amortized to interest expense over the remaining term of the related notes.

Foreign Exchange Risk Management

We are a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts and purchase option contracts, to hedge the following foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities:

·	Foreign currency – denominated assets and liabilities

·	Forecasted purchases and sales in foreign currency

Summary of Foreign Exchange Hedging Positions

At March 31, 2011, we had outstanding forward exchange and purchased option contracts with gross notional values of $3,159, which is reflective of the amounts that are normally outstanding at any point during the year. These contracts generally mature in 12 months or less.

The following is a summary of the primary hedging positions and corresponding fair values as of March 31, 2011:

Currency Hedged (Buy/Sell)	Gross Notional Value		Fair Value Asset (Liability)(1)
U.S. Dollar/Euro	$	661	$	(11	)
Japanese Yen/U.S. Dollar		413		—
Japanese Yen/Euro		384		(12	)
Euro/U.K. Pound Sterling		364		8
Euro/U.S. Dollar		242		4
Swiss Franc/Euro		208		(1	)
U.K. Pound Sterling/Euro		184		(2	)
Swedish Kronor/Euro		108		—
U.K. Pound Sterling/Swiss Franc		77		(7	)
U.S. Dollar/Japanese Yen		62		1
Danish Krone/Euro		58		—
Mexican Peso/U.S. Dollar		55		1
Euro/Japanese Yen		50		2
All Other		293		—
Total Foreign Exchange Hedging	$	3,159	$	(17	)

(1)	Represents the net receivable (payable) amount included in the Condensed Consolidated Balance Sheets at March 31, 2011.

Foreign Currency Cash Flow Hedges

We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases, sales and expenses. No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss was included in the assessment of hedge effectiveness. The net (liability)/asset fair value of these contracts was $(10) and $18 as of March 31, 2011 and December 31, 2010, respectively.

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:

Designation of Derivatives	Balance Sheet Location	March 31, 2011			December 31, 2010

Derivatives Designated as Hedging Instruments
Foreign exchange contracts - forwards	Other current assets	$	3		$	19
	Other current liabilities		(13	)		(1	)
Interest rate swaps	Other long-term assets		—			11
	Other long-term liabilities		(2	)		—
	Net Designated (Liability) Asset	$	(12	)	$	29

Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts - forwards	Other current assets	$	18		$	26
	Other current liabilities		(25	)		(18	)
	Net Undesignated (Liability) Asset	$	(7	)	$	8

Summary of Derivatives	Total Derivative Assets	$	21		$	56
	Total Derivative Liabilities		(40	)		(19	)
	Net Derivative (Liability) Asset	$	(19	)	$	37

Summary of Derivative Instruments Gains (Losses)

Derivative gains and losses affect the income statement based on whether such derivatives are designated as hedges of underlying exposures. The following is a summary of derivative gains and losses.

Designated Derivative Instruments Gains (Losses)

The following tables provide a summary of gains (losses) on derivative instruments:

		Derivative Gain (Loss) Recognized in Income Three Months Ended March 31,					Hedged Item Gain (Loss) Recognized in Income Three Months Ended March 31,
Derivatives in Fair Value Relationships	Location of Gain (Loss) Recognized In Income	2011			2010		2011		2010
Interest rate contracts	Interest expense	$	(1	)	$	22	$	1	$	(22	)

	Derivative Gain (Loss) Recognized in OCI (Effective Portion) Three Months Ended March 31,						Gain (Loss) Reclassified from AOCI to Income (Effective Portion) Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships	2011			2010		Location of Derivative Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	2011		2010
Foreign exchange contracts – forwards	$	(27	)	$	9	Cost of sales	$	3	$	4

No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss was included in the assessment of hedge effectiveness. In addition, no amount was recorded for an underlying exposure that did not occur or was not expected to occur.

At March 31, 2011, net losses of $9 (pre-tax) are recorded in accumulated other comprehensive loss associated with our cash flow hedging activity. The entire balance is expected to be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

Non-Designated Derivative Instruments Gains (Losses)

Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets and liabilities. They are not designated as hedges since there is a natural offset for the re-measurement of the underlying foreign currency-denominated asset or liability.

The following table provides a summary of gains (losses) on non-designated derivative instruments:

		Three Months Ended March 31,
Derivatives NOT Designated as Hedging Instruments	Location of Derivative Gain (Loss)	2011			2010
Foreign exchange contracts – forwards	Other expense - Currency losses, net	$	(31	)	$	22

During the three months ended March 31, 2011 and 2010, we recorded Currency losses, net of $1 and $22, respectively. Currency losses, net includes the mark-to-market adjustments of the derivatives not designated as hedging instruments and the related cost of those derivatives, as well as the re-measurement of foreign currency-denominated assets and liabilities.

Fair Value of Financial Assets and Liabilities

3 Months Ended

Mar. 31, 2011

Fair Value of Financial Assets and Liabilities

Note 11 - Fair Value of Financial Assets and Liabilities

The following table represents assets and liabilities measured at fair value on a recurring basis. The basis for the measurement of fair value in all cases is Level 2 – Significant Other Observable Inputs.

	As of March 31, 2011		As of December 31, 2010
Assets:
Foreign exchange contracts-forwards	$	21	$	45
Interest rate swaps		—		11
Deferred compensation investments in cash surrender life insurance		72		70
Deferred compensation investments in mutual funds		24		22
Total	$	117	$	148

Liabilities:
Foreign exchange contracts-forwards	$	38	$	19
Interest rate swaps		2		—
Deferred compensation plan liabilities		99		98
Total	$	139	$	117

We utilize the income approach to measure the fair value for our derivative assets and liabilities. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices, and therefore are classified as Level 2.

Fair value for our deferred compensation plan investments in Company-owned life insurance is reflected at cash surrender value. Fair value for our deferred compensation plan investments in mutual funds is based on quoted market prices for actively traded investments similar to those held by the plan. Fair value for deferred compensation plan liabilities is based on the fair value of investments corresponding to employees’ investment selections, based on quoted prices for similar assets in actively traded markets.

Summary of Other Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

The estimated fair values of our other financial assets and liabilities not measured at fair value on a recurring basis were as follows:

	As of March 31, 2011				As of December 31, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	1,000	$	1,000	$	1,211	$	1,211
Accounts receivable, net		3,068		3,068		2,826		2,826
Short-term debt		1,382		1,398		1,370		1,396
Long-term debt		7,228		7,729		7,237		7,742
Liability to subsidiary trust issuing preferred securities		650		679		650		670

The fair value amounts for Cash and cash equivalents and Accounts receivable, net approximate carrying amounts due to the short maturities of these instruments. The fair value of Short- and Long-term debt, as well as our Liability to subsidiary trust issuing preferred securities, was estimated based on quoted market prices for publicly traded securities or on the current rates offered to us for debt of similar maturities. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at such date.

Employee Benefit Plans

3 Months Ended

Mar. 31, 2011

Employee Benefit Plans

Note 12 - Employee Benefit Plans

The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows:

	Pension Benefits						Retiree Health
	Three Months Ended March 31,						Three Months Ended March 31,
	2011			2010			2011			2010
Components of Net Periodic Benefit Costs:
Service cost	$	48		$	46		$	2		$	2
Interest cost		118			120			12			14
Expected return on plan assets		(127	)		(120	)		—			—
Recognized net actuarial loss		17			16			—			—
Amortization of prior service credit		(6	)		(5	)		(10	)		(6	)
Recognized settlement loss		30			31			—			—
Net Periodic Benefit Cost		80			88			4			10

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:
Amortization of net prior service credit		6			5			10			6
Amortization of net actuarial losses		(47	)		(47	)		—			—
Total Recognized in Other Comprehensive Income(1)		(41	)		(42	)		10			6

Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	$	39		$	46		$	14		$	16

(1)	Amount represents the pre-tax effect included within Other comprehensive income. The amount, net of tax, is included within Note 13 “Shareholders’ Equity”.

The following table provides a summary of the components of the Net change in benefit plans included within Other comprehensive income as reported in Note 13 - Shareholders’ Equity:

	Three Months Ended March 31,
(Expense)/Benefit	2011			2010
Other changes in plan assets and benefit obligations	$	31		$	36
Income tax		(11	)		(14	)
Fuji Xerox changes in defined benefit plans(1)		(18	)		36
Currency, net		(36	)		42
Other, net		(2	)		(1	)
Net Change in Benefit Plans	$	(36	)	$	99

(1)	Represents our share of Fuji Xerox’s plan changes.

Contributions: During the three months ended March 31, 2011, we made contributions of $44 and $20 to our defined benefit pension plans and our other post-retirement benefit plans, respectively. We presently anticipate contributing an additional $456 to our defined benefit pension plans and $67 to our other post-retirement benefit plans in 2011 for a total of $500 and $87, respectively.

Shareholders' Equity

3 Months Ended

Mar. 31, 2011

Shareholders' Equity

Note 13 – Shareholders’ Equity

	Common Stock		Additional Paid-in Capital		Retained Earnings			AOCL			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2010	$	1,398	$	6,580	$	6,016		$	(1,988	)	$	12,006		$	153		$	12,159
Net income		—		—		281			—			281			8			289
Translation adjustments		—		—		—			297			297			—			297
Changes in benefit plans(1)		—		—		—			(36	)		(36	)		—			(36	)
Other unrealized losses, net		—		—		—			(21	)		(21	)		—			(21	)
Comprehensive Income											$	521		$	8		$	529

Cash dividends declared-common stock(3)		—		—		(61	)		—			(61	)		—			(61	)
Cash dividends declared-preferred stock(4)		—		—		(6	)		—			(6	)		—			(6	)
Stock option and incentive plans		3		45		—			—			48			—			48
Tax benefit on stock option and incentive plans, net		—		1		—			—			1			—			1
Distributions to noncontrolling interests		—		—		—			—			—			(6	)		(6	)
Balance at March 31, 2011	$	1,401	$	6,626	$	6,230		$	(1,748	)	$	12,509		$	155		$	12,664

	Common Stock		Additional Paid-in Capital		Retained Earnings			AOCL			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2009	$	871	$	2,493	$	5,674		$	(1,988	)	$	7,050		$	141		$	7,191
Net (loss) income		—		—		(42	)		—			(42	)		8			(34	)
Translation adjustments		—		—		—			(308	)		(308	)		(1	)		(309	)
Changes in benefit plans(1)		—		—		—			99			99			—			99
Other unrealized gains		—		—		—			4			4			—			4
Comprehensive (Loss) Income											$	(247	)	$	7		$	(240	)

ACS acquisition(2)		490		3,825		—			—			4,315			—			4,315
Cash dividends declared-common stock(3)		—		—		(61	)		—			(61	)		—			(61	)
Cash dividends declared-preferred stock(4)		—		—		(3	)		—			(3	)		—			(3	)
Stock option and incentive plans		19		122		—			—			141			—			141
Tax benefit on stock option and incentive plans, net		—		3		—			—			3			—			3
Distributions to noncontrolling interests		—		—		—			—			—			(3	)		(3	)
Balance at March 31, 2010	$	1,380	$	6,443	$	5,568		$	(2,193	)	$	11,198		$	145		$	11,343

_______________

(1)	Refer to Note 12, Employee Benefit Plans for additional information.

(2)	See Note 4 – Acquisitions for further information.

(3)	Cash dividends declared on common stock of $0.0425 per share in the first quarter of 2011 and 2010.

(4)	Cash dividends declared on preferred stock of $20.00 per share in the first quarter of 2011 and $12.22 per share in the first quarter of 2010.

Accumulated Other Comprehensive Loss (“AOCL”)

AOCL is composed of the following:

	As of March 31, 2011			As of December 31, 2010
Cumulative translation adjustments	$	(538	)	$	(835	)
Benefit plans net actuarial losses and prior service credits (1)		(1,203	)		(1,167	)
Other unrealized (losses) gains, net		(7	)		14
Total Accumulated Other Comprehensive Loss	$	(1,748	)	$	(1,988	)

_______________

(1)	Includes our share of Fuji Xerox – See Note 12 for additional information.

Earnings per Share

3 Months Ended

Mar. 31, 2011

Earnings per Share

Note 14 - Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in thousands):

	Three Months Ended March 31,
	2011			2010
Basic Earnings (Loss) per Share:
Net income (loss) attributable to Xerox	$	281		$	(42	)
Accrued dividends on preferred stock		(6	)		(3	)
Adjusted Net Income (Loss) Available to Common Shareholders	$	275		$	(45	)

Weighted-average common shares outstanding		1,400,077			1,175,732
Basic Earnings (Loss) per Share	$	0.20		$	(0.04	)

Diluted Earnings (Loss) per Share:
Net income (loss) attributable to Xerox	$	281		$	(42	)
Accrued dividends on preferred stock		(6	)		(3	)
Adjusted Net Income (Loss) Available to Common Shareholders	$	275		$	(45	)

Weighted-average common shares outstanding		1,400,077			1,175,732
Common shares issuable with respect to:
Stock options		13,570			—
Restricted stock and performance shares		20,284			—
Convertible Securities		1,992			—
Adjusted Weighted Average Common Shares Outstanding		1,435,923			1,175,732
Diluted Earnings (Loss) per Share	$	0.19		$	(0.04	)

The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands):
Stock options		54,486			96,881
Restricted stock and performance shares		18,988			27,727
Convertible preferred stock		26,966			26,966
Convertible securities		—			1,992
		100,440			153,566
Dividends per common share	$	0.0425		$	0.0425

Contingencies

3 Months Ended

Mar. 31, 2011

Contingencies

Note 15 - Contingencies

Brazil Tax and Labor Contingencies

Our Brazilian operations are involved in various litigation matters and have received or been the subject of numerous governmental assessments related to indirect and other taxes, as well as disputes associated with former employees and contract labor. The tax matters, which comprise a significant portion of the total contingencies, principally relate to claims for taxes on the internal transfer of inventory, municipal service taxes on rentals and gross revenue taxes. We are disputing these tax matters and intend to vigorously defend our position. Based on the opinion of legal counsel and current reserves for those matters deemed probable of loss, we do not believe that the ultimate resolution of these matters will materially impact our results of operations, financial position or cash flows. The labor matters principally relate to claims made by former employees and contract labor for the equivalent payment of all social security and other related labor benefits, as well as consequential tax claims, as if they were regular employees. As of March 31, 2011, the total amounts related to the unreserved portion of the tax and labor contingencies, inclusive of any related interest, amounted to approximately $1,389, with the increase from the December 31, 2010 balance of approximately $1,274 primarily related to interest, currency and adjustments to existing cases. With respect to the unreserved balance of $1,389, the majority has been assessed by management as being remote as to the likelihood of ultimately resulting in a loss to the Company. In connection with the above proceedings, customary local regulations may require us to make escrow cash deposits or post other security of up to half of the total amount in dispute. As of March 31, 2011 we had $278 of escrow cash deposits for matters we are disputing, and there are liens on certain Brazilian assets with a net book value of $19 and additional letters of credit of approximately $164. Generally, any escrowed amounts would be refundable and any liens would be removed to the extent the matters are resolved in our favor. We routinely assess all these matters as to probability of ultimately incurring a liability against our Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable.

Legal Matters

As more fully discussed below, we are involved in a variety of claims, lawsuits, investigations and proceedings concerning securities law, intellectual property law, environmental law, employment law and the Employee Retirement Income Security Act (“ERISA”). We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing our litigation and regulatory matters using available information. We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs.

Litigation Against the Company

In re Xerox Corporation Securities Litigation: A consolidated securities law action (consisting of 17 cases) is pending in the United States District Court for the District of Connecticut. Defendants are the Company, Barry Romeril, Paul Allaire and G. Richard Thoman. The consolidated action is a class action on behalf of all persons and entities who purchased Xerox Corporation common stock during the period October 22, 1998 through October 7, 1999 inclusive (“Class Period”) and who suffered a loss as a result of misrepresentations or omissions by Defendants as alleged by Plaintiffs (the “Class”). The Class alleges that in violation of Section 10(b) and/or 20(a) of the Securities Exchange Act of 1934, as amended (“1934 Act”), and SEC Rule 10b-5 thereunder, each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of the Company’s common stock during the Class Period by disseminating materially false and misleading statements and/or concealing material facts relating to the defendants’ alleged failure to disclose the material negative impact that the April 1998 restructuring had on the Company’s operations and revenues. The complaint further alleges that the alleged scheme: (i) deceived the investing public regarding the economic capabilities, sales proficiencies, growth, operations and the intrinsic value of the Company’s common stock; (ii) allowed several corporate insiders, such as the named individual defendants, to sell shares of privately held common stock of the Company while in possession of materially adverse, non-public information; and (iii) caused the individual plaintiffs and the other members of the purported class to purchase common stock of the Company at inflated prices. The complaint seeks unspecified compensatory damages in favor of the plaintiffs and the other members of the purported class against all defendants, jointly and severally, for all damages sustained as a result of defendants’ alleged wrongdoing, including interest thereon, together with reasonable costs and expenses incurred in the action, including counsel fees and expert fees. In 2001, the Court denied the defendants’ motion for dismissal of the complaint. The plaintiffs’ motion for class certification was denied by the Court in 2006, without prejudice to refiling. In February 2007, the Court granted the motion of the International Brotherhood of Electrical Workers Welfare Fund of Local Union No. 164, Robert W. Roten, Robert Agius (“Agius”) and Georgia Stanley to appoint them as additional lead plaintiffs. In July 2007, the Court denied plaintiffs’ renewed motion for class certification, without prejudice to renewal after the Court holds a pre-filing conference to identify factual disputes the Court will be required to resolve in ruling on the motion. After that conference and Agius’s withdrawal as lead plaintiff and proposed class representative, in February 2008 plaintiffs filed a second renewed motion for class certification. In April 2008, defendants filed their response and motion to disqualify Milberg LLP as a lead counsel. On September 30, 2008, the Court entered an order certifying the class and denying the appointment of Milberg LLP as class counsel. Subsequently, on April 9, 2009, the Court denied defendants’ motion to disqualify Milberg LLP. On November 6, 2008, the defendants filed a motion for summary judgment. Briefing with respect to the motion is complete. The Court has not yet rendered a decision. The parties also filed motions to exclude the testimony of certain expert witnesses. On April 22, 2009, the Court denied plaintiffs’ motions to exclude the testimony of two of defendants’ expert witnesses. On September 30, 2010, the Court denied plaintiffs’ motion to exclude the testimony of another of defendants’ expert witnesses. The Court also granted defendants’ motion to exclude the testimony of one of plaintiffs’ expert witnesses, and granted in part and denied in part defendants’ motion to exclude the testimony of plaintiffs’ two remaining expert witnesses. The individual defendants and we deny any wrongdoing and are vigorously defending the action. In the course of litigation, we periodically engage in discussions with plaintiffs’ counsel for possible resolution of this matter. Should developments cause a change in our determination as to an unfavorable outcome, or result in a final adverse judgment or a settlement for a significant amount, there could be a material adverse effect on our results of operations, cash flows and financial position in the period in which such change in determination, judgment or settlement occurs.

Other Contingencies

We have issued or provided the following guarantees as of March 31, 2011:

·	$251 for letters of credit issued to i) guarantee our performance under certain services contracts; ii) support certain insurance programs; and iii) support our obligations related to the Brazil tax and labor contingencies.

·	$683 for outstanding surety bonds. Certain contracts, primarily those involving public sector customers, require us to provide a surety bond as a guarantee of our performance of contractual obligations.

In general, we would only be liable for the amount of these guarantees in the event of default in our performance of our obligations under each contract, the probability of which we believe is remote. We believe that our capacity in the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support.

We have service arrangements where we service third party student loans in the Federal Family Education Loan program (“FFEL”) on behalf of various financial institutions. We service these loans for investors under outsourcing arrangements and do not acquire any servicing rights that are transferable by us to a third party. At March 31, 2011, we serviced a FFEL portfolio of approximately 4.7 million loans with an outstanding principal balance of approximately $58.1 billion. Some servicing agreements contain provisions that, under certain circumstances, require us to purchase the loans from the investor if the loan guaranty has been permanently terminated as a result of a loan default caused by our servicing error. If defaults caused by us are cured during an initial period, any obligation we may have to purchase these loans expires. Loans that we purchase may be subsequently cured, the guaranty reinstated and the loans repackaged for sale to third parties. We evaluate our exposure under our purchase obligations on defaulted loans and establish a reserve for potential losses, or default liability reserve, through a charge to the provision for loss on defaulted loans purchased. The reserve is evaluated periodically and adjusted based upon management’s analysis of the historical performance of the defaulted loans. As of March 31, 2011, other current liabilities include reserves which we believe to be adequate.

Subsequent Events	3 Months Ended
Subsequent Events	Mar. 31, 2011
Notes to Financial Statements [Abstract]
Subsequent Events	Note 16 – Subsequent Event In April 2011, Xerox Capital Trust I (“Trust I”), our wholly-owned subsidiary trust, provided notice of its intention to call in May the 8% Preferred Securities due in 2027 of $650. We expect to incur a pre-tax loss on extinguishment of debt of approximately $34 ($21 after-tax), representing the call premium of approximately $10 as well as the write-off of unamortized debt costs and other liability carrying value adjustments of approximately $24.

Investment in Affiliates, at Equity

3 Months Ended

Mar. 31, 2011

Investment in Affiliate, at Equity

Note 7 - Investment in Affiliates, at Equity

Our equity in net income (loss) of our unconsolidated affiliates was as follows:

	Three Months Ended March 31,
	2011		2010
Fuji Xerox	$	31	$	(5	)
Other investments		3		3
Total Equity in Net Income (Loss) of Unconsolidated Affiliates	$	34	$	(2	)

Fuji Xerox

Equity in net income (loss) of Fuji Xerox is affected by certain adjustments to reflect the deferral of profit associated with intercompany sales. These adjustments may result in recorded equity income that is different from that implied by our 25% ownership interest. Equity income (loss) for the first quarter of 2011 and 2010 includes after-tax restructuring charges of $11 and $22, respectively, primarily reflecting Fuji Xerox’s continued cost-reduction initiatives.

Condensed financial data of Fuji Xerox were as follows:

	Three Months Ended March 31,
	2011		2010
Summary of Operations:
Revenues	$	3,092	$	2,857
Cost and expenses		2,897		2,823
Income before income taxes		195		34
Income tax expense		60		29
Net Income	$	135	$	5
Less: Net income – noncontrolling interests		1		—
Net Income – Fuji Xerox	$	134	$	5
Weighted Average Exchange Rate(1)		82.12		90.67

(1) Represents Yen/U.S. Dollar exchange rate used to translate.

Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2011

Operating segment revenues and profitability

Operating segment revenues and profitability for the three months ended March 31, 2011 and 2010 were as follows:

	Three Months Ended March 31,
	Segment Revenue		Segment Profit (Loss)
2011
Technology	$	2,495	$	266
Services		2,584		266
Other		386		(66	)
Total	$	5,465	$	466

2010
Technology	$	2,483	$	233
Services		1,843		203
Other		395		(104	)
Total	$	4,721	$	332

Reconciliation to pre-tax income (loss)

	Three Months Ended March 31,
Reconciliation to Pre-tax Income (Loss)	2011			2010
Segment profit	$	466		$	332
Reconciling items:
Restructuring and asset impairment charges		15			(195	)
Restructuring charges of Fuji Xerox		(11	)		(22	)
Acquisition-related costs		—			(48	)
Amortization of intangible assets		(85	)		(57	)
Venezuelan devaluation costs		—			(21	)
Equity in net (income) loss of unconsolidated affiliates		(34	)		2
Other		(1	)		(1	)
Pre-tax Income (Loss)	$	350		$	(10	)

Acquisitions (Tables)

3 Months Ended

Mar. 31, 2011

Pro-forma Financial Data

	Three Months Ended March 31, 2010
	Pro-forma			As Reported
Revenue	$	5,340		$	4,721
Net loss – Xerox		(56	)		(42	)
Basic loss per-share		(0.05	)		(0.04	)
Diluted loss per-share		(0.05	)		(0.04	)

Receivables, Net (Tables)

3 Months Ended

Mar. 31, 2011

Schedule of accounts receivables sales

Accounts receivables sales were as follows:

	Three Months Ended March 31,
	2011			2010
Accounts receivable sales	$	730		$	477
Deferred proceeds		94			41
Fees associated with sales		4			4
Estimated decrease to operating cash flows(1)		(24	)		(158	)

(1)	Represents the difference between current and prior quarter accounts receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and (iii) currency.

Allowance for credit losses rollforward, and the investment in finance receivables

The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment in finance receivables:

	United States			Canada			Europe			Other(3)		Total
Allowance for Credit Losses:
Balance December 31, 2010	$	91		$	37		$	81		$	3	$	212
Provision		7			4			11			—		22
Charge-offs		(10	)		(5	)		(8	)		—		(23	)
Recoveries and other(1)		(1	)		2			3			—		4
Balance March 31, 2011	$	87		$	38		$	87		$	3	$	215

Finance Receivables as of March 31, 2011 collectively evaluated for impairment(2)	$	3,074		$	874		$	2,865		$	76	$	6,889

Allowance for Credit Losses:
Balance December 31, 2009	$	99		$	33		$	87		$	3	$	222
Provision		10			6			17			—		33
Charge-offs		(22	)		(6	)		(11	)		—		(39	)
Recoveries and other(1)		1			2			(5	)		—		(2	)
Balance March 31, 2010	$	88		$	35		$	88		$	3	$	214

Finance Receivables as of March 31, 2010 collectively evaluated for impairment(2)	$	3,349		$	882		$	2,652		$	49	$	6,932

(1)	Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

(2)	Total Finance Receivables exclude residual values of $11 and $17, and the allowance for credit losses of $215 and $214 at March 31, 2011 and 2010, respectively.

(3)	Includes developing market countries and smaller units.

Credit quality indicators for finance receivables

Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:

	As of March 31, 2011
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
United States:
Finance and Other Services	$	354	$	400	$	172	$	926
Government and Education		814		23		7		844
Graphic Arts		133		218		154		505
Industrial		200		87		33		320
Healthcare		133		47		27		207
Other		99		107		66		272
Total United States		1,733		882		459		3,074
Canada:
Finance and Other Services		158		127		56		341
Government and Education		132		11		3		146
Graphic Arts		37		38		44		119
Industrial		60		46		33		139
Other		75		41		13		129
Total Canada		462		263		149		874
Europe:
France		241		410		83		734
U.K./Ireland		224		148		54		426
Central(1)		316		590		55		961
Southern(2)		260		285		81		626
Nordics(3)		57		59		2		118
Total Europe		1,058		1,492		275		2,865
Other		57		16		3		76
Total	$	3,350	$	2,653	$	886	$	6,889

	As of December 31, 2010
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
United States:
Finance and Other Services	$	360	$	401	$	190	$	951
Government and Education		849		21		7		877
Graphic Arts		147		217		156		520
Industrial		206		91		38		335
Healthcare		134		48		32		214
Other		102		109		69		280
Total United States		1,798		887		492		3,177
Canada:
Finance and Other Services		150		127		56		333
Government and Education		127		12		3		142
Graphic Arts		32		35		48		115
Industrial		57		47		30		134
Other		88		47		13		148
Total Canada		454		268		150		872
Europe:
France		219		374		82		675
U.K./Ireland		206		164		51		421
Central(1)		297		551		65		913
Southern(2)		263		237		81		581
Nordics(3)		50		63		3		116
Total Europe		1,035		1,389		282		2,706
Other		33		33		—		66
Total	$	3,320	$	2,577	$	924	$	6,821

(1)	Switzerland, Germany, Austria, Belgium and Holland.

(2)	Italy, Greece, Spain and Portugal.

(3)	Sweden, Norway, Denmark and Finland.

Aging of billed finance receivables

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:

	As of March 31, 2011
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed Finance Receivables		Unbilled Finance Receivables		Total Finance Receivables		Finance Receivables >90 Days and Accruing
United States:
Finance and Other Services	$	21	$	4	$	2	$	27	$	899	$	926	$	24
Government and Education		23		5		4		32		812		844		48
Graphic Arts		20		2		1		23		482		505		12
Industrial		10		2		1		13		307		320		10
Healthcare		7		2		—		9		198		207		7
Other		7		2		—		9		263		272		6
Total United States		88		17		8		113		2,961		3,074		107
Total Canada		3		3		1		7		867		874		25
Europe:
France		1		2		1		4		730		734		9
U.K./Ireland		2		1		1		4		422		426		5
Central(1)		10		5		4		19		942		961		38
Southern(2)		33		9		15		57		569		626		100
Nordics(3)		—		1		—		1		117		118		2
Total Europe		46		18		21		85		2,780		2,865		154
Other		2		1		—		3		73		76		—
Total	$	139	$	39	$	30	$	208	$	6,681	$	6,889	$	286

	As of December 31, 2010
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed Finance Receivables		Unbilled Finance Receivables		Total Finance Receivables		Finance Receivables >90 Days and Accruing
United States:
Finance and Other Services	$	23	$	5	$	2	$	30	$	921	$	951	$	23
Government and Education		26		6		3		35		842		877		40
Graphic Arts		21		3		1		25		495		520		16
Industrial		11		2		1		14		321		335		10
Healthcare		6		2		1		9		205		214		9
Other		8		2		—		10		270		280		8
Total United States		95		20		8		123		3,054		3,177		106
Total Canada		3		3		1		7		865		872		28
Europe:
France		1		1		—		2		673		675		5
U.K./Ireland		4		1		1		6		415		421		7
Central(1)		9		2		4		15		898		913		39
Southern(2)		32		10		15		57		524		581		99
Nordics(3)		1		—		—		1		115		116		2
Total Europe		47		14		20		81		2,625		2,706		152
Other		2		—		—		2		64		66		—
Total	$	147	$	37	$	29	$	213	$	6,608	$	6,821	$	286

(1)	Switzerland, Germany, Austria, Belgium and Holland.

(2)	Italy, Greece, Spain and Portugal.

(3)	Sweden, Norway, Denmark and Finland.

Inventories (Tables)

3 Months Ended

Mar. 31, 2011

Inventories

The following is a summary of Inventories by major category:

	As of March 31, 2011		As of December 31, 2010
Finished goods	$	942	$	858
Work-in-process		58		46
Raw materials		100		87
Total Inventories	$	1,100	$	991

Restructuring Programs (Tables)

3 Months Ended

Mar. 31, 2011

Restructuring Program Activity

Information related to restructuring program activity during the three months ended March 31, 2011 is outlined below:

	Severance and Related Costs			Lease Cancellation and Other Costs			Total
Balance December 31, 2010	$	298		$	25		$	323
Restructuring provision		10			—			10
Reversals of prior accruals		(20	)		(5	)		(25	)
Net current period charges(1)		(10	)		(5	)		(15	)
Charges against reserve and currency		(49	)		(4	)		(53	)
Balance March 31, 2011	$	239		$	16		$	255

(1)	Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown.

Reconciliation to the Condensed Consolidated Statements of Cash Flows

Reconciliation to the Condensed Consolidated Statements of Cash Flows:

	Three Months Ended March 31,
	2011			2010
Charges against reserve	$	(53	)	$	(23	)
Asset impairment		—			4
Effects of foreign currency and other non-cash items		(4	)		(20	)
Cash Payments for Restructurings	$	(57	)	$	(39	)

Total Costs incurred with Restructuring programs, by segment

The following table summarizes the total amount of costs incurred in connection with these restructuring programs by segment:

	Three Months Ended March 31,
	2011			2010
Technology	$	(12	)	$	129
Services		(1	)		43
Other		(2	)		23
Total Net Restructuring Charges	$	(15	)	$	195

Interest Expense and Income (Tables)

3 Months Ended

Mar. 31, 2011

Interest Expense and Interest Income

Interest expense and interest income were as follows:

	Three Months Ended March 31,
	2011		2010
Interest expense(1)	$	127	$	153
Interest income(2)		169		178

(1)	Includes Equipment financing interest, as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

(2)	Includes Finance income, as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2011

Forward Foreign Exchange Contracts

Fair Value Hedges

The following is a summary of our fair value hedges at March 31, 2011:

Debt Instrument	Year First Designated	Notional Amount		Net Fair Value			Weighted Average Interest Rate Paid			Interest Rate Received			Basis	Maturity
Senior Notes due 2013	2010	$	400	$	(1	)		4.71	%		5.65	%	Libor		2013
Senior Notes due 2015	2011		400		(1	)		2.36	%		4.25	%	Libor		2015
Senior Notes due 2016	2010		100		—			3.97	%		6.40	%	Libor		2016
Total		$	900	$	(2	)

The following is a summary of the primary hedging positions and corresponding fair values as of March 31, 2011:

Currency Hedged (Buy/Sell)	Gross Notional Value		Fair Value Asset (Liability)(1)
U.S. Dollar/Euro	$	661	$	(11	)
Japanese Yen/U.S. Dollar		413		—
Japanese Yen/Euro		384		(12	)
Euro/U.K. Pound Sterling		364		8
Euro/U.S. Dollar		242		4
Swiss Franc/Euro		208		(1	)
U.K. Pound Sterling/Euro		184		(2	)
Swedish Kronor/Euro		108		—
U.K. Pound Sterling/Swiss Franc		77		(7	)
U.S. Dollar/Japanese Yen		62		1
Danish Krone/Euro		58		—
Mexican Peso/U.S. Dollar		55		1
Euro/Japanese Yen		50		2
All Other		293		—
Total Foreign Exchange Hedging	$	3,159	$	(17	)

(1)	Represents the net receivable (payable) amount included in the Condensed Consolidated Balance Sheets at March 31, 2011.

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:

Designation of Derivatives	Balance Sheet Location	March 31, 2011			December 31, 2010

Derivatives Designated as Hedging Instruments
Foreign exchange contracts - forwards	Other current assets	$	3		$	19
	Other current liabilities		(13	)		(1	)
Interest rate swaps	Other long-term assets		—			11
	Other long-term liabilities		(2	)		—
	Net Designated (Liability) Asset	$	(12	)	$	29

Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts - forwards	Other current assets	$	18		$	26
	Other current liabilities		(25	)		(18	)
	Net Undesignated (Liability) Asset	$	(7	)	$	8

Summary of Derivatives	Total Derivative Assets	$	21		$	56
	Total Derivative Liabilities		(40	)		(19	)
	Net Derivative (Liability) Asset	$	(19	)	$	37

Summary of Fair Value Hedges Gains (Losses)

		Derivative Gain (Loss) Recognized in Income Three Months Ended March 31,					Hedged Item Gain (Loss) Recognized in Income Three Months Ended March 31,
Derivatives in Fair Value Relationships	Location of Gain (Loss) Recognized In Income	2011			2010		2011		2010
Interest rate contracts	Interest expense	$	(1	)	$	22	$	1	$	(22	)

Summary of Cash Flow Hedges Gains (Losses)

	Derivative Gain (Loss) Recognized in OCI (Effective Portion) Three Months Ended March 31,						Gain (Loss) Reclassified from AOCI to Income (Effective Portion) Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships	2011			2010		Location of Derivative Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	2011		2010
Foreign exchange contracts – forwards	$	(27	)	$	9	Cost of sales	$	3	$	4

Summary of Derivatives Not Designated as Hedging Instruments Gains (Losses)

The following table provides a summary of gains (losses) on non-designated derivative instruments:

		Three Months Ended March 31,
Derivatives NOT Designated as Hedging Instruments	Location of Derivative Gain (Loss)	2011			2010
Foreign exchange contracts – forwards	Other expense - Currency losses, net	$	(31	)	$	22

Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2011

Fair value of financial assets and liabilities

	As of March 31, 2011		As of December 31, 2010
Assets:
Foreign exchange contracts-forwards	$	21	$	45
Interest rate swaps		—		11
Deferred compensation investments in cash surrender life insurance		72		70
Deferred compensation investments in mutual funds		24		22
Total	$	117	$	148

Liabilities:
Foreign exchange contracts-forwards	$	38	$	19
Interest rate swaps		2		—
Deferred compensation plan liabilities		99		98
Total	$	139	$	117

Estimated fair values of financial assets and liabilities not measured at fair value on a recurring basis

The estimated fair values of our other financial assets and liabilities not measured at fair value on a recurring basis were as follows:

	As of March 31, 2011				As of December 31, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	1,000	$	1,000	$	1,211	$	1,211
Accounts receivable, net		3,068		3,068		2,826		2,826
Short-term debt		1,382		1,398		1,370		1,396
Long-term debt		7,228		7,729		7,237		7,742
Liability to subsidiary trust issuing preferred securities		650		679		650		670

Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2011

Components of net periodic benefit cost and other changes in plan assets and benefit obligations

The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows:

	Pension Benefits						Retiree Health
	Three Months Ended March 31,						Three Months Ended March 31,
	2011			2010			2011			2010
Components of Net Periodic Benefit Costs:
Service cost	$	48		$	46		$	2		$	2
Interest cost		118			120			12			14
Expected return on plan assets		(127	)		(120	)		—			—
Recognized net actuarial loss		17			16			—			—
Amortization of prior service credit		(6	)		(5	)		(10	)		(6	)
Recognized settlement loss		30			31			—			—
Net Periodic Benefit Cost		80			88			4			10

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:
Amortization of net prior service credit		6			5			10			6
Amortization of net actuarial losses		(47	)		(47	)		—			—
Total Recognized in Other Comprehensive Income(1)		(41	)		(42	)		10			6

Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	$	39		$	46		$	14		$	16

(1)	Amount represents the pre-tax effect included within Other comprehensive income. The amount, net of tax, is included within Note 13 “Shareholders’ Equity”.

Summary of the components of the Net change in benefit plans included within Other comprehensive income

The following table provides a summary of the components of the Net change in benefit plans included within Other comprehensive income as reported in Note 13 - Shareholders’ Equity:

	Three Months Ended March 31,
(Expense)/Benefit	2011			2010
Other changes in plan assets and benefit obligations	$	31		$	36
Income tax		(11	)		(14	)
Fuji Xerox changes in defined benefit plans(1)		(18	)		36
Currency, net		(36	)		42
Other, net		(2	)		(1	)
Net Change in Benefit Plans	$	(36	)	$	99

(1)	Represents our share of Fuji Xerox’s plan changes.

Shareholders' Equity (Tables)

3 Months Ended

Mar. 31, 2011

Accumulated Other Comprehensive Loss

Shareholders' Equity

	Common Stock		Additional Paid-in Capital		Retained Earnings			AOCL			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2010	$	1,398	$	6,580	$	6,016		$	(1,988	)	$	12,006		$	153		$	12,159
Net income		—		—		281			—			281			8			289
Translation adjustments		—		—		—			297			297			—			297
Changes in benefit plans(1)		—		—		—			(36	)		(36	)		—			(36	)
Other unrealized losses, net		—		—		—			(21	)		(21	)		—			(21	)
Comprehensive Income											$	521		$	8		$	529

Cash dividends declared-common stock(3)		—		—		(61	)		—			(61	)		—			(61	)
Cash dividends declared-preferred stock(4)		—		—		(6	)		—			(6	)		—			(6	)
Stock option and incentive plans		3		45		—			—			48			—			48
Tax benefit on stock option and incentive plans, net		—		1		—			—			1			—			1
Distributions to noncontrolling interests		—		—		—			—			—			(6	)		(6	)
Balance at March 31, 2011	$	1,401	$	6,626	$	6,230		$	(1,748	)	$	12,509		$	155		$	12,664

	Common Stock		Additional Paid-in Capital		Retained Earnings			AOCL			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2009	$	871	$	2,493	$	5,674		$	(1,988	)	$	7,050		$	141		$	7,191
Net (loss) income		—		—		(42	)		—			(42	)		8			(34	)
Translation adjustments		—		—		—			(308	)		(308	)		(1	)		(309	)
Changes in benefit plans(1)		—		—		—			99			99			—			99
Other unrealized gains		—		—		—			4			4			—			4
Comprehensive (Loss) Income											$	(247	)	$	7		$	(240	)

ACS acquisition(2)		490		3,825		—			—			4,315			—			4,315
Cash dividends declared-common stock(3)		—		—		(61	)		—			(61	)		—			(61	)
Cash dividends declared-preferred stock(4)		—		—		(3	)		—			(3	)		—			(3	)
Stock option and incentive plans		19		122		—			—			141			—			141
Tax benefit on stock option and incentive plans, net		—		3		—			—			3			—			3
Distributions to noncontrolling interests		—		—		—			—			—			(3	)		(3	)
Balance at March 31, 2010	$	1,380	$	6,443	$	5,568		$	(2,193	)	$	11,198		$	145		$	11,343

_______________

(1)	Refer to Note 12, Employee Benefit Plans for additional information.

(2)	See Note 4 – Acquisitions for further information.

(3)	Cash dividends declared on common stock of $0.0425 per share in the first quarter of 2011 and 2010.

(4)	Cash dividends declared on preferred stock of $20.00 per share in the first quarter of 2011 and $12.22 per share in the first quarter of 2010.

Accumulated Other Comprehensive Loss (“AOCL”)

AOCL is composed of the following:

	As of March 31, 2011			As of December 31, 2010
Cumulative translation adjustments	$	(538	)	$	(835	)
Benefit plans net actuarial losses and prior service credits (1)		(1,203	)		(1,167	)
Other unrealized (losses) gains, net		(7	)		14
Total Accumulated Other Comprehensive Loss	$	(1,748	)	$	(1,988	)

_______________

(1)	Includes our share of Fuji Xerox – See Note 12 for additional information.

Earnings per Share (Tables)

3 Months Ended

Mar. 31, 2011

Basic and Diluted Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in thousands):

	Three Months Ended March 31,
	2011			2010
Basic Earnings (Loss) per Share:
Net income (loss) attributable to Xerox	$	281		$	(42	)
Accrued dividends on preferred stock		(6	)		(3	)
Adjusted Net Income (Loss) Available to Common Shareholders	$	275		$	(45	)

Weighted-average common shares outstanding		1,400,077			1,175,732
Basic Earnings (Loss) per Share	$	0.20		$	(0.04	)

Diluted Earnings (Loss) per Share:
Net income (loss) attributable to Xerox	$	281		$	(42	)
Accrued dividends on preferred stock		(6	)		(3	)
Adjusted Net Income (Loss) Available to Common Shareholders	$	275		$	(45	)

Weighted-average common shares outstanding		1,400,077			1,175,732
Common shares issuable with respect to:
Stock options		13,570			—
Restricted stock and performance shares		20,284			—
Convertible Securities		1,992			—
Adjusted Weighted Average Common Shares Outstanding		1,435,923			1,175,732
Diluted Earnings (Loss) per Share	$	0.19		$	(0.04	)

Anti-dilutive shares

	Three Months Ended March 31,
	2011		2010
The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands):
Stock options		54,486		96,881
Restricted stock and performance shares		18,988		27,727
Convertible preferred stock		26,966		26,966
Convertible securities		—		1,992
		100,440		153,566

Investment in Affiliates, at Equity (Tables)

3 Months Ended

Mar. 31, 2011

Equity in net income (loss) of unconsolidated affiliates

Our equity in net income (loss) of our unconsolidated affiliates was as follows:

	Three Months Ended March 31,
	2011		2010
Fuji Xerox	$	31	$	(5	)
Other investments		3		3
Total Equity in Net Income (Loss) of Unconsolidated Affiliates	$	34	$	(2	)

Condensed financial data of Fuji Xerox

Condensed financial data of Fuji Xerox were as follows:

	Three Months Ended March 31,
	2011		2010
Summary of Operations:
Revenues	$	3,092	$	2,857
Cost and expenses		2,897		2,823
Income before income taxes		195		34
Income tax expense		60		29
Net Income	$	135	$	5
Less: Net income – noncontrolling interests		1		—
Net Income – Fuji Xerox	$	134	$	5
Weighted Average Exchange Rate(1)		82.12		90.67

(1) Represents Yen/U.S. Dollar exchange rate used to translate.

Segment Reporting (Details) - USD ($) $ in Millions	3 Months Ended
Segment Reporting (Details) - USD ($) $ in Millions	Mar. 31, 2011	Mar. 31, 2010
Schedule of Segment Reporting Information, by Segment [Line Items]
Segment revenues	$ 5,465	$ 4,721
Segment profit (loss)	466	332
Reconciliation to Pre-tax Income (Loss) [Abstract]
Total Reconciling Items	(116)	(342)
Pre-tax Income (Loss)	350	(10)
Segment Reporting Reconciling Items Restructuring And Asset Impairment Charges [Member]
Reconciliation to Pre-tax Income (Loss) [Abstract]
Total Reconciling Items	15	(195)
Segment Reporting Reconciling Items Restructuring Charges Of Fuji Xerox [Member]
Reconciliation to Pre-tax Income (Loss) [Abstract]
Total Reconciling Items	(11)	(22)
Segment Reporting Reconciling Items Amortization Of Intangible Assets [Member]
Reconciliation to Pre-tax Income (Loss) [Abstract]
Total Reconciling Items	(85)	(57)
Segment Reporting Reconciling Items Venezuelan Devaluation [Member]
Reconciliation to Pre-tax Income (Loss) [Abstract]
Total Reconciling Items	0	(21)
Segment Reporting Reconciling Items Equity In Net (Income) Loss Of Unconsolidated Affiliates [Member]
Reconciliation to Pre-tax Income (Loss) [Abstract]
Total Reconciling Items	(34)	2
Segment Reporting Reconciling Items Other [Member]
Reconciliation to Pre-tax Income (Loss) [Abstract]
Total Reconciling Items	(1)	(1)
Segment Reporting Reconciling Items Acquisition Related Costs [Member]
Reconciliation to Pre-tax Income (Loss) [Abstract]
Total Reconciling Items	0	(48)
Segment Reporting Information Technology [Member]
Schedule of Segment Reporting Information, by Segment [Line Items]
Segment revenues	2,495	2,483
Segment profit (loss)	266	233
Segment Reporting Information Services [Member]
Schedule of Segment Reporting Information, by Segment [Line Items]
Segment revenues	2,584	1,843
Segment profit (loss)	266	203
Segment Reporting Information Other [Member]
Schedule of Segment Reporting Information, by Segment [Line Items]
Segment revenues	386	395
Segment profit (loss)	$ (66)	$ (104)

Acquisitions (Details) - USD ($)	3 Months Ended
Acquisitions (Details) - USD ($)	Mar. 31, 2011	Mar. 31, 2010	Apr. 30, 2011	Feb. 28, 2011	Feb. 28, 2010
Pro-forma Financial Data [Abstract]
Revenue		$ 5,340,000,000
Net (loss) - Xerox		$ (56,000,000)
Basic earnings per-share (in dollars per share)		$ (0.05)
Diluted earnings per-share (in dollars per share)		$ (0.05)
As Reported [Abstract]
Revenue	$ 5,465,000,000	$ 4,721,000,000
Net (loss) - Xerox	$ 281,000,000	$ (42,000,000)
Basic earnings (loss) per-share (in dollars per share)	$ 0.20	$ (0.04)
Diluted earnings (loss) per-share (in dollars per share)	$ 0.19	$ (0.04)
ACS [Member]
Schedule of Business Acquisitions, by Acquisition [Line Items]
Date of acquisition		February 2010
Aggregate acquisition cost					$ 6,500,000,000.0
Debt assumed and repaid					1,700,000,000.0
Debt assumed and not repaid					$ 600,000,000.0
Concept Group [Member]
Schedule of Business Acquisitions, by Acquisition [Line Items]
Date of acquisition	February 2011
Cash paid, net of cash acquired				$ 43,000,000
Unamic/HCN [Member]
Schedule of Business Acquisitions, by Acquisition [Line Items]
Date of acquisition	April 2011
Cash paid, net of cash acquired			$ 61,000,000

Receivables, Net (Details) - USD ($)
$ in Millions

3 Months Ended

Mar. 31, 2011

Mar. 31, 2010

Dec. 31, 2010

Accounts Receivable Sales Arrangements [Abstract]

Deferred proceeds receivables from sales of accounts receivables

$ 97

$ 90

Schedule of accounts receivables sales [Abstract]

Accounts receivable sales

730

$ 477

Deferred proceeds

Fees associated with sales

Estimated decrease to operating cash flows

^[1]

(24)

(158)

212

222

(23)

(39)

^[2]

(2)

Finance Receivables collectively evaluated for impairment

215

214

6,889

^[3]

6,932

^[3]

6,821

Residual values not included in the impairment evaluation

Allowance for credit losses not included in the impairment evaluation

$ 215

214

Credit quality indicators [Abstract]

Loss rates of customers with investment grade credit quality (in hundredths)

1.00%

Loss rates of customers with non investment grade credit quality, low range (in hundredths)

2.00%

Loss rates of customers with non investment grade credit quality, high range (in hundredths)

4.00%

Loss rates of customers with substandard/doubtful credit quality (in hundredths)

10.00%

Credit quality indicators for Finance receivables:

$ 3,350

3,320

2,653

2,577

886

924

6,889

^[3]

6,932

^[3]

6,821

139

147

208

213

6,681

6,608

Finance Receivables Greater Than 90 Days and Accruing

6,889

^[3]

6,932

^[3]

6,821

286

United States finance receivables [Member]

(10)

(22)

^[2]

(1)

Finance Receivables collectively evaluated for impairment

3,074

^[3]

3,349

^[3]

3,177

Credit quality indicators for Finance receivables:

1,733

1,798

882

887

459

492

3,074

^[3]

3,349

^[3]

3,177

113

123

2,961

3,054

Finance Receivables Greater Than 90 Days and Accruing

3,074

^[3]

3,349

^[3]

3,177

107

106

United States finance receivables [Member] | Finance and Other Services [Member]

Finance Receivables collectively evaluated for impairment

926

951

Credit quality indicators for Finance receivables:

354

360

400

401

172

190

926

951

899

921

Finance Receivables Greater Than 90 Days and Accruing

926

951

United States finance receivables [Member] | Government and Education [Member]

Finance Receivables collectively evaluated for impairment

844

877

Credit quality indicators for Finance receivables:

814

849

844

877

812

842

Finance Receivables Greater Than 90 Days and Accruing

844

877

United States finance receivables [Member] | Graphic Arts [Member]

Finance Receivables collectively evaluated for impairment

505

520

Credit quality indicators for Finance receivables:

133

147

218

217

154

156

505

520

482

495

Finance Receivables Greater Than 90 Days and Accruing

505

520

United States finance receivables [Member] | Industrial [Member]

Finance Receivables collectively evaluated for impairment

320

335

Credit quality indicators for Finance receivables:

200

206

320

335

307

321

Finance Receivables Greater Than 90 Days and Accruing

320

335

United States finance receivables [Member] | Healthcare [Member]

Finance Receivables collectively evaluated for impairment

207

214

Credit quality indicators for Finance receivables:

133

134

207

214

198

205

Finance Receivables Greater Than 90 Days and Accruing

207

214

United States finance receivables [Member] | Other services [Member]

Finance Receivables collectively evaluated for impairment

272

280

Credit quality indicators for Finance receivables:

102

107

109

272

280

263

270

Finance Receivables Greater Than 90 Days and Accruing

272

280

Canada finance receivables [Member]

(5)

(6)

^[2]

Finance Receivables collectively evaluated for impairment

874

^[3]

882

^[3]

872

Credit quality indicators for Finance receivables:

462

454

263

268

149

150

874

^[3]

882

^[3]

872

867

865

Finance Receivables Greater Than 90 Days and Accruing

874

^[3]

882

^[3]

872

Canada finance receivables [Member] | Finance and Other Services [Member]

Finance Receivables collectively evaluated for impairment

341

333

Credit quality indicators for Finance receivables:

158

150

127

341

333

Canada finance receivables [Member] | Government and Education [Member]

341

333

Finance Receivables collectively evaluated for impairment

146

142

Credit quality indicators for Finance receivables:

132

127

146

142

Canada finance receivables [Member] | Graphic Arts [Member]

146

142

Finance Receivables collectively evaluated for impairment

119

115

Credit quality indicators for Finance receivables:

119

115

Canada finance receivables [Member] | Industrial [Member]

119

115

Finance Receivables collectively evaluated for impairment

139

134

Credit quality indicators for Finance receivables:

139

134

Canada finance receivables [Member] | Other services [Member]

139

134

Finance Receivables collectively evaluated for impairment

129

148

Credit quality indicators for Finance receivables:

129

148

Europe finance receivables [Member]

129

148

(8)

(11)

^[2]

(5)

Finance Receivables collectively evaluated for impairment

2,865

^[3]

2,652

^[3]

2,706

Credit quality indicators for Finance receivables:

1,098

1,035

1,492

1,389

275

282

2,865

^[3]

2,652

^[3]

2,706

2,780

2,625

Finance Receivables Greater Than 90 Days and Accruing

2,865

^[3]

2,652

^[3]

2,706

154

152

Europe finance receivables - France [Member]

Finance Receivables collectively evaluated for impairment

734

675

Credit quality indicators for Finance receivables:

241

219

410

374

734

675

730

673

Finance Receivables Greater Than 90 Days and Accruing

734

675

Europe finance receivables - UK/Ireland [Member]

Finance Receivables collectively evaluated for impairment

426

421

Credit quality indicators for Finance receivables:

224

206

148

164

426

421

422

415

Finance Receivables Greater Than 90 Days and Accruing

426

421

Europe finance receivables - Central [Member]

Finance Receivables collectively evaluated for impairment

^[4]

961

913

Credit quality indicators for Finance receivables:

^[4]

316

297

^[4]

590

551

^[4]

^[4]

961

913

^[4]

^[4]

^[4]

^[4]

^[4]

942

898

Finance Receivables Greater Than 90 Days and Accruing

^[4]

961

913

^[4]

Europe finance receivables - Southern [Member]

Finance Receivables collectively evaluated for impairment

^[5]

626

581

Credit quality indicators for Finance receivables:

^[5]

260

263

^[5]

285

237

^[5]

^[5]

626

581

^[5]

^[5]

^[5]

^[5]

^[5]

569

524

Finance Receivables Greater Than 90 Days and Accruing

^[5]

626

581

^[5]

100

Europe finance receivables - Nordics [Member]

Finance Receivables collectively evaluated for impairment

^[6]

118

116

Credit quality indicators for Finance receivables:

^[6]

^[6]

^[6]

^[6]

118

116

^[6]

^[6]

^[6]

^[6]

^[6]

117

115

Finance Receivables Greater Than 90 Days and Accruing

^[6]

118

116

^[6]

Other countries finance receivables [Member]

Finance Receivables collectively evaluated for impairment

^[7]

^[7]

^[7]

^[8]

^[7]

^[9]

Credit quality indicators for Finance receivables:

^[9]

Finance Receivables Greater Than 90 Days and Accruing

^[9]

$ 49

^[9]

$ 0

[1]	(1) Represents the difference between current and prior quarter accounts receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and (iii) currency.
[2]	(1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.
[3]	(2) Total Finance Receivables exclude residual values of $11 and $17 and the allowance for credit losses of $215 and $214 at March 31, 2011 and 2010, respectively.
[4]	(1) Switzerland, Germany, Austria, Belgium and Holland.
[5]	(2) Italy, Greece, Spain and Portugal.
[6]	(3) Sweden, Norway, Denmark and Finland.
[7]	(3) Includes developing market countries and smaller units.
[8]	(1) (3) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations. Includes developing market countries and smaller units.
[9]	(2) (3) Total Finance Receivables exclude residual values of $11 and $17 and the allowance for credit losses of $215 and $214 at March 31, 2011 and 2010. Includes developing market countries and smaller units.

Inventories (Details) - USD ($) $ in Millions	Mar. 31, 2011	Dec. 31, 2010
Inventories, net [Abstract]
Finished goods	$ 942	$ 858
Work-in-process	58	46
Raw materials	100	87
Total Inventories	$ 1,100	$ 991

Restructuring Programs (Details) - USD ($)
$ in Millions

3 Months Ended

Mar. 31, 2011

Mar. 31, 2010

Dec. 31, 2010

Net restructuring and asset impairment charges

$ (15)

$ 195

Net restructuring reversals

Restructuring reserve [Roll Forward]

Reversals of prior accruals

255

$ 323

Restructuring provision

(25)

Net current period charges

(15)

195

(53)

(23)

Reconciliation to the Condensed Consolidated Statements of Cash Flows [Abstract]

255

323

Effects of foreign currency and other non-cash items

(53)

(23)

Asset impairment

(4)

(20)

Cash Payments for Restructurings

(57)

(39)

Segment Reporting Information Technology [Member]

Schedule of Restructuring and Related Costs [Line Items]

Total Net Restructuring Charges

(12)

129

Segment Reporting Information Services [Member]

Schedule of Restructuring and Related Costs [Line Items]

Total Net Restructuring Charges

(1)

Segment Reporting Information Other [Member]

Schedule of Restructuring and Related Costs [Line Items]

Total Net Restructuring Charges

(2)

$ 23

Severance and Related Costs [Member]

Net restructuring and asset impairment charges

^[1]

(10)

Net restructuring reversals

Restructuring reserve [Roll Forward]

Reversals of prior accruals

239

298

Restructuring provision

(20)

Net current period charges

^[1]

(10)

(49)

Reconciliation to the Condensed Consolidated Statements of Cash Flows [Abstract]

239

298

Lease Cancellation and Other Costs [Member]

(49)

Net restructuring and asset impairment charges

^[1]

(5)

Net restructuring reversals

Restructuring reserve [Roll Forward]

Reversals of prior accruals

Restructuring provision

(5)

Net current period charges

^[1]

(5)

(4)

Reconciliation to the Condensed Consolidated Statements of Cash Flows [Abstract]

$ 25

Interest expense and interest income [Abstract]

$ (4)

[1]	(1) Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown.

Interest Expense and Income (Details) - USD ($)
$ in Millions

3 Months Ended

Mar. 31, 2011

Mar. 31, 2010

Interest expense

^[1]

$ 127

$ 153

Interest income

^[2]

$ 169

$ 178

[1]	(1) Includes Equipment financing interest, as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income.
[2]	(2) Includes Finance income, as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

Financial Instruments (Details) - USD ($)
$ in Millions

3 Months Ended

Mar. 31, 2011

Mar. 31, 2010

Dec. 31, 2010

$ 900

$ 950

Notional value of terminated interest rate swaps

(2)

Terminated Swaps [Abstract]

750

Net fair value adjustment

(12)

Summary of Foreign Exchange Hedging Positions [Abstract]

3,159

Foreign Currency Cash Flow Hedges [Abstract]

^[1]

(17)

Net asset (Liability) fair value

(10)

Summary Of Derivative Instruments By Hedge Designation [Abstract]

Net Undesignated (Liability) Assets

(12)

(7)

Total Derivative Assets

Total Derivative Liabilities

(40)

(19)

Net Derivative (Liability) Asset

(19)

Summary of Derivative Instruments Gains (Losses) [Abstract]

Net losses recorded in AOCL expected to be reclassified to net income in the future

Currency losses [Abstract]

Currency losses, net

$ 22

Interest Rate Contracts [Member] | Other long-term assets [Member]

Summary Of Derivative Instruments By Hedge Designation [Abstract]

Interest Rate Contracts [Member] | Other long-term liabilities [Member]

Summary Of Derivative Instruments By Hedge Designation [Abstract]

Foreign Exchange Contracts Forwards [Member] | Other current assets [Member]

(2)

Summary Of Derivative Instruments By Hedge Designation [Abstract]

Net Undesignated (Liability) Assets

Foreign Exchange Contracts Forwards [Member] | Other current liabilities [Member]

Summary Of Derivative Instruments By Hedge Designation [Abstract]

Net Undesignated (Liability) Assets

(13)

(1)

(25)

$ (18)

Senior Notes Due 2013 designated in 2010 [Member]

400

Weighted Average Interest Rate Paid (in hundredths)

$ (1)

4.71%

Interest Rate Received (in hundredths)

5.65%

Basis

Libor

Senior Notes Due 2016 designated in 2010 [Member]

$ 100

Weighted Average Interest Rate Paid (in hundredths)

$ 0

3.97%

Interest Rate Received (in hundredths)

6.40%

Basis

Libor

Senior Notes Due 2015 designated in 2011 [Member]

$ 400

Weighted Average Interest Rate Paid (in hundredths)

$ (1)

2.36%

Interest Rate Received (in hundredths)

4.25%

Basis

Libor

U.K. Pound Sterling/Euro [Member]

Summary of Foreign Exchange Hedging Positions [Abstract]

$ 184

Euro/U.S. Dollar [Member]

^[1]

(2)

Summary of Foreign Exchange Hedging Positions [Abstract]

242

Swedish Kronor/Euro [Member]

^[1]

Summary of Foreign Exchange Hedging Positions [Abstract]

108

Japanese Yen/U.S. Dollar [Member]

^[1]

Summary of Foreign Exchange Hedging Positions [Abstract]

413

Japanese Yen/Euro [Member]

^[1]

Summary of Foreign Exchange Hedging Positions [Abstract]

384

Euro/U.K. Pound Sterling [Member]

^[1]

(12)

Summary of Foreign Exchange Hedging Positions [Abstract]

364

U.S. Dollar/Euro [Member]

^[1]

Summary of Foreign Exchange Hedging Positions [Abstract]

661

U.K. Pound Sterling/Swiss Franc [Member]

^[1]

(11)

Summary of Foreign Exchange Hedging Positions [Abstract]

Swiss Franc/Euro [Member]

^[1]

(7)

Summary of Foreign Exchange Hedging Positions [Abstract]

208

Danish Krone/Euro [Member]

^[1]

(1)

Summary of Foreign Exchange Hedging Positions [Abstract]

Mexican Peso/U.S. Dollar [Member]

^[1]

Summary of Foreign Exchange Hedging Positions [Abstract]

U.S. Dollar/Japanese Yen [Member]

^[1]

Summary of Foreign Exchange Hedging Positions [Abstract]

Euro/Japanese Yen [Member]

^[1]

Summary of Foreign Exchange Hedging Positions [Abstract]

All Other Currency [Member]

^[1]

Summary of Foreign Exchange Hedging Positions [Abstract]

293

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:

^[1]

$ 0

[1]	(1) Represents the net receivable (payable) amount included in the Condensed Consolidated Balance Sheets at March 31, 2011.

Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Millions	Mar. 31, 2011	Dec. 31, 2010	Mar. 31, 2010	Dec. 31, 2009
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 1,000	$ 1,211	$ 1,010	$ 3,799
Short-term debt	1,382	1,370
Long-term debt	7,228	7,237
Liability to subsidiary trust issuing preferred securities	650	650
Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Cash and cash equivalents	1,000	1,211
Accounts receivable, net	3,068	2,826
Short-term debt	1,382	1,370
Long-term debt	7,228	7,237
Liability to subsidiary trust issuing preferred securities	650	650
Estimated Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Cash and cash equivalents	1,000	1,211
Accounts receivable, net	3,068	2,826
Short-term debt	1,398	1,396
Long-term debt	7,729	7,742
Liability to subsidiary trust issuing preferred securities	679	670
Total Fair Value Measurement - Significant Other Observable Inputs (Level 2) [Member]
Assets:
Foreign exchange contracts-forwards	21	45
Interest rate swaps	0	11
Deferred compensation investments in cash surrender life insurance	72	70
Deferred compensation investments in mutual funds	24	22
Total	117	148
Liabilities:
Foreign exchange contracts-forwards	38	19
Interest rate swaps	2	0
Deferred compensation plan liabilities	99	98
Total	$ 139	$ 117

Employee Benefit Plans (Details) - USD ($)
$ in Millions

3 Months Ended

Mar. 31, 2011

Mar. 31, 2010

Total Recognized in Other Comprehensive Income

$ 31

$ 36

Components of the Net change in benefit plans included within Other comprehensive income [Abstract]

Other changes in plan assets and benefit obligations

Income tax

(11)

(14)

Fuji Xerox changes in defined benefit plans

^[1]

(18)

Currency, net

(36)

Other, net

(2)

(1)

Net Change in Benefit Plans

^[2]

(36)

Pension Benefits [Member]

Components of Net Periodic Benefit Costs:

Service cost

Interest cost

118

120

Expected return on plan assets

(127)

(120)

Recognized net actuarial loss

Amortization of prior service credit

(6)

(5)

Recognized settlement loss

Total Net Periodic Benefit Cost

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:

Amortization of net prior service credit

Amortization of net actuarial losses

(47)

Total Recognized in Other Comprehensive Income

^[3]

(41)

(42)

Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income

Contributions [Abstract]

Contributions by employer

Anticipated additional contributions

456

Anticipated total contributions

500

Components of the Net change in benefit plans included within Other comprehensive income [Abstract]

Other changes in plan assets and benefit obligations

^[3]

(41)

(42)

Retiree Health [Member]

Components of Net Periodic Benefit Costs:

Service cost

Interest cost

Expected return on plan assets

Recognized net actuarial loss

Amortization of prior service credit

(10)

(6)

Recognized settlement loss

Total Net Periodic Benefit Cost

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:

Amortization of net prior service credit

Amortization of net actuarial losses

Total Recognized in Other Comprehensive Income

^[3]

Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income

Contributions [Abstract]

Contributions by employer

Anticipated additional contributions

Anticipated total contributions

Components of the Net change in benefit plans included within Other comprehensive income [Abstract]

Other changes in plan assets and benefit obligations

^[3]

$ 10

$ 6

[1]	(1) Represents our share of Fuji Xerox's plan changes.
[2]	(1) Refer to Note 12, Employee Benefit Plans for additional information.
[3]	(1) Amount represents the pre-tax effect included within Other comprehensive income. The amount, net of tax, is included within Note 13 "Shareholders' Equity".

Shareholders' Equity (Details) - USD ($)
$ / shares in Units, $ in Millions

3 Months Ended

Mar. 31, 2011

Mar. 31, 2010

Dec. 31, 2010

Dec. 31, 2009

$ 12,664

$ 11,343

$ 12,159

$ 7,191

289

(34)

297

(309)

^[1]

(36)

Comprehensive Income (Loss)

(21)

529

(240)

^[2]

4,315

^[3]

(61)

^[4]

(6)

(3)

Tax benefit on stock option and incentive plans, net

141

(6)

(3)

Cash dividends declared on common stock (in dollars per share)

$ 12,664

$ 11,343

12,159

7,191

$ 0.0425

Cash dividends declared on preferred stock (in dollars per share)

$ 20.00

$ 12.22

Accumulated Other Comprehensive Loss (AOCL) [Abstract]

Cumulative translation adjustments

$ (538)

(835)

Benefit plans net actuarial losses and prior service credits

(1,203)

(1,167)

Other unrealized (losses) gains, net

(7)

Total Accumulated Other Comprehensive Loss

(1,748)

(1,988)

Xerox Shareholders Equity [Member]

12,509

$ 11,198

12,006

7,050

281

(42)

297

(308)

^[1]

(36)

Comprehensive Income (Loss)

(21)

521

(247)

^[2]

4,315

^[3]

(61)

^[4]

(6)

(3)

Tax benefit on stock option and incentive plans, net

141

12,509

11,198

12,006

7,050

Common Stock [Member]

1,401

1,380

1,398

871

^[1]

^[2]

490

^[3]

^[4]

Tax benefit on stock option and incentive plans, net

Additional Paid-in Capital [Member]

1,401

1,380

1,398

871

6,626

6,443

6,580

2,493

^[1]

^[2]

3,825

^[3]

^[4]

Tax benefit on stock option and incentive plans, net

122

Retained Earnings [Member]

6,626

6,443

6,580

2,493

6,230

5,568

6,016

5,674

281

(42)

^[1]

^[2]

^[3]

(61)

^[4]

(6)

(3)

Tax benefit on stock option and incentive plans, net

Accumulated Other Comprehensive Income [Member]

6,230

5,568

6,016

5,674

(1,748)

(2,193)

(1,988)

297

(308)

^[1]

(36)

(21)

^[2]

^[3]

^[4]

Tax benefit on stock option and incentive plans, net

Non-controlling interests [Member]

(1,748)

(2,193)

(1,988)

155

145

153

141

(1)

^[1]

Comprehensive Income (Loss)

^[2]

^[3]

^[4]

Tax benefit on stock option and incentive plans, net

(6)

(3)