Good morning, and welcome to the Xerox Corporation Second Quarter 2011 Earnings Release Conference Call, hosted by Ursula Burns, Chairman of the Board and Chief Executive Officer. She is joined by Luca Maestri, Executive Vice President and Chief Financial Officer. During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor. At the request of Xerox Corporation, today's conference call is being recorded. Other recording and/or rebroadcasting of this call are prohibited without expressed permission of Xerox. [Operator Instructions] During this conference call, Xerox executives will make comments that contain forward-looking statements, which by their nature, address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein. At this time, I would like to turn the meeting over to Ms. Burns. Ms. Burns, you may begin.

Good morning, and thanks for joining us today. We'll get started on Slide 3. This is a reminder of the strategy that we're executing on to transform our business. As I've said before, many people talk about transformation, and we're actually doing it. Through these 4 priorities, we mark our progress and measure our results. First, capturing the sizable opportunity from scaling our Services business. You'll see this quarter that we grew our Services revenue by 6% with very strong performance in both Document Outsourcing and Business Process Outsourcing. Our pipeline grew 21%, and we continue to benefit from revenue synergies through cross-selling with ACS. Second, maintaining our leadership in document technology. We continue to hold the #1 revenue market share position overall and in color, and we are launching new products that solidify our strong leadership. This quarter, revenue in installed were impacted by the supply constraints stemming from the earthquake in Japan. We're on track to reduce backlog while meeting new demand in the third quarter. Third, continue to improve the efficiency of our business operations, running a lean and flexible annuity base business. This served us particularly well in Q2. Our disciplined approach to expense management offset the incremental supply chain costs and helped drive strong bottom line results. By executing well on these first 3 priorities, we are delivering on the fourth: expanding earnings and returning cash to shareholders. Adjusted earnings per share were up 13% in Q2, so we're well positioned for a solid second half of 2011. We plan to invest more in acquisitions that further scale our services and expand our distribution. We'll resume our share repurchase program during the third quarter, and we're increasing our expectations for full year earnings. As with most businesses, we face headwinds or tailwinds during any 90-day…

Thank you, Ursula, and good morning, everyone. This was a challenging quarter in some respects, given the impact from Japan, but eventually we were successful in offsetting the constraint to revenues and deliver strong EPS. This is encouraging as we look forward to a Q3 where we should see recovering Technology and acceleration in Services. Revenue growth was 2% in Q2 at actual currency, with a 3-point benefit from currency. Services drove the growth and was up 6%, while Technology was flat. In the second half, we expect revenue to be within our 3% to 5% guidance range. Operating margin in the quarter was 10.4%, up 3x year-over-year and up over 1 point from Q1. We saw sequential improvement also in gross margin. However, year-over-year, gross margin was impacted by the mix of business, by the ramp of new service contracts and incremental supply chain cost related to Japan. This impact was more than offset by disciplined expense management. RD&E and SAG ratios improved significantly due to restructuring synergies and improved bad debt trend. We remain on track for our full year objectives of $270 million of restructuring savings and over $120 million of cost synergies. Equity income in the quarter was $34 million, which slightly exceeded our expectations and reflected restructuring benefits at Fuji Xerox, more than offsetting the disruption from the tsunami. The $34 million includes $4 million in Fuji Xerox restructuring costs, which we are not adjusting out this year. Adjusted EPS was $0.27 and grew 13% year-over-year. The only adjustment to reported EPS were the amortization of intangibles and the loss on early extinguishment of liability from the redemption of the trust preferred securities that we mentioned during the Q1 call. As a result, GAAP EPS was up 38% year-over-year. Let us now move to the…

Thanks, Luca. Let me quickly wrap up so that we can get to your questions. Xerox is now the world's largest enterprise for business process and document management. Our expanded offerings, our broad distribution channels, our global scale, renowned brand and innovation give us a differentiated advantage in the marketplace. We're leveraging this competitive position by taking a services-led, technology-driven approach to growing our business. And we continue to operate efficiently, maintaining steady margins and increasing earnings despite the recent Japan impact and -- on cost and revenue. Our capital strategy contributes to our bottom line result and positions us well to continue delivering shareholder value from dividends and, beginning in quarter 3, share repurchase. We're on track to deliver solid results in the second half, and we're increasing our full year guidance. Full year expectations for adjusted EPS have been raised to $1.07 to $1.12 per share. For the third quarter, we expect to deliver adjusted earnings of $0.24 to $0.26 per share. And with that, I thank you again for joining us today, and now let's open it up for questions.

[Operator Instructions] Our first question comes from the line of Benjamin Reitzes with Barclays Capital.

Can you talk about what gives you confidence that you can generate so much cash in the second half to still hit your lowered estimate? I mean, you got to do close to $2 billion in cash flow from operations in the back half of the year, the high billions, at least. How do you get there?

Yes, Ben. As you know, second half is seasonally strong. If you go back and look at the past years, you see that we generated very significant amount of cash during the second half. Look at the, for example, in 2010, cash generation. So that earnings are stronger. We expect working capital to be favorable, and those are going to be the primary drivers, so we are fairly confident that we're going to get to that range.

Okay. And then what is the savings from the interest expense, the lower interest expense? If you're going to buy, over the next year and a half, $1.7 billion in stock, what happens to the interest and other expense? Does it stay the same, or are there real savings there?

So interest expense are going to be significantly down this year because we're taking debt down, and we are refinancing at better rates. For example, with the refinancing of the trust preferreds, we'll be generating, on an annual basis, about $20 million savings. About $11 million of debt will have an impact during 2011. And so we will continue to see reduced interest cost as we go into 2012, as well. The share repurchase will come from available cash, and we do not expect any requirements to increase debt for that.

Yes, and you're not earning much on that, I'm sure. Okay, and then you still committed to buying back $1 billion next year even though you have lower cash flow than expected this year?

Our buying back for next year, we talked about having $2 billion of cash available, and we actually said 70%, so it's probably going to be a higher amount.

Yes, higher amount than the $1 billion, and we are still committed to the share repurchase starting this quarter, flowing through the fourth quarter all the way into 2012.

Okay. And my final question is just around changing metrics around the pages and machines in field, et cetera. So I think at your Analyst Day, you said, "Well, pages are going to decline, but we have higher-value pages, so we can still grow." So I guess I just want to ask, big-picture, is that still true? And then secondarily, I wanted to ask about just in terms of what metrics -- you want us to focus on MIF, and how are we going to use that to really understand the growth of the Technology?

Thanks for the question. On the changing metrics, I think I gave a little bit of color on what's happening. It's actually good news for our business. It's implementing a strategy that we laid out. We have a great channel in Global Imaging, and we're moving more and more accounts over to Global Imaging to -- for them to farm and grow. We have a growing reseller business where we acquire distribution and move them onto Xerox technology. We have growing business in DMO. You get the message that, literally, we're moving our distribution channels to more -- to a broader set of channels. The good news about that is that we get more activity. The bad news about that is that we don't get all of the visibility that we would have gotten if we sold them directly through our channels. And while I'm not trying to hide anything, we're just trying to not estimate on estimate or estimate and get ourselves into a level of inaccuracy. So what we're trying to do and what we will do on a go-forward basis is to tell you in detail the activity levels that we achieve, and the split of that activity level between black-and-white and color. And we can tell you that because we see that throughout our chain. And we'll talk about revenue. And revenue split by black-and-white and color will also give an indication of how we're performing in our metrics. So installed or activity and revenue are the places that we'll focus as much energy as we can to give as much visibility as we can. So this is not to try to hide anything. It's literally just that our business is actually growing in ways that we don't have deep visibility into the pages or to MIF. I hope I answered your...

Our next question comes from the line of Ananda Baruah with Brean Murray. Ananda Baruah - Brean Murray, Carret & Co., LLC: I guess the first question is, can you give us some sense of sort of the slope of sort of the return in business as you work through the Japanese supply constraints? And do you think -- I mean, is it your opinion that we'll exit this year, enter next year with the Japanese supply chain issues behind us?

The answer is, we have seen -- we've started to see improvement at the tail end of last quarter, and we're starting to see it in the beginning of this quarter. This is not an inexpensive way to do business. So what -- 2 things will happen in the rest of the year. One is we have a backlog that's buildup. We are staying in contact with those customers, obviously, making sure that we keep the orders on hold and as the supply chain loosens up, as Fuji Xerox production continues to ramp and we get them here, generally still in third quarter, by flying them here, so the cost will still be high. As we get them here, we'll be able to not only alleviate some of the backlog but we'll also be able to fulfill new demand, and that's the mix that we have to do. As we go into fourth quarter, the production should be at regular levels, and we should be tailing out of, still having some, but tailing out of shipping things here by air. Now there's a lot of ancillary costs around that, that we don't talk about. It's really complicated, as you said, to manage this. We have parts that we have to move around in an unusual way. We have people that we have to move around in an unusual way. I think that by fourth quarter we should be done with a lot of the big noise. We should be into a fairly normal operation in the first half of next year, for sure. We should be on a regular business-as-usual basis. Ananda Baruah - Brean Murray, Carret & Co., LLC: Okay, Ursula, that's helpful. I guess just a follow-up to that, is there any chance that if you don't see demand come back, and if you really -- you think it will, that there's some sort of counterbalance on the cost side that would kind of sort of serve as tailwind to top income dollar. So, for example, if you don't need -- demand doesn't materialize, you don't need to airfreight certain things out, so you get a bit of a counterbalance there. Is that not the right way to think about it?

Not the right way to think about it. Let me be clear. Demand is not the problem here. Demand is not the problem. I mean, we always have demand problems, as you know, that's what we do. We sell things. People can just call them up and get them from us. But this is not a demand issue. This is a supply issue. So we are -- we're responding to assuring that we don't keep customers hanging on for too long after they've already told us they're going to buy something and given us an order, and that's where the costs are coming in. If the orders don't come in, I mean, we don't incur the costs. But the orders are coming in, so we are incurring the costs.

Our next question comes from the line of Shannon Cross with Cross Research.

My first question is just about revenue expectations for the second half of the year. Historically, you see seasonal weakness in third quarter, but it sounds like maybe that won't necessarily be the case this year, given the backlog that you had in second quarter. So if you could just kind of talk about how we should think about revenue and the various segments as we look at second -- the second half, basically?

We expect revenue growth for the second half to be within our guidance range of 3% to 5%. And in terms of the dynamics of the 2 segments: Technology, 1% to 3%; Services, over 6%.

Okay. But I mean, is there -- when we think about the backlog, it should -- I mean, it seems as if you could have done better in terms of revenue in second quarter, clearly, because you weren't able to ship the products. So how should...

If you look -- Shannon, if I can just -- I'm sorry for interrupting you, but if you look on our normal business seasonality, we would have lower revenue in quarter 3 than we have in quarter 2. It's usually our lighter -- our lightest quarter. This year, because of some of the reasons that you've brought up exactly, we'll probably -- we will have higher revenue in quarter 3 than we had in quarter 2, so we will definitely see some of that recovery in quarter 3 from quarter 2. We'll see improvement in Technology revenue in quarter 3, for sure.

Okay, great. That's what I thought was probably the case. And then can you talk a bit about on the BPO signings? If we think of sort of net of the large contracts that you had in the prior year period, what was the growth there? Are there any large contracts pending? Just how you sort of see the pipeline for BPO.

Okay, let me start with the signings, and then we'll talk about pipeline. You're right, we had 2 what we call megadeals that affect the metrics. It's the California Medicaid and -- which was a new signing last year, and Texas Medicaid, which is a renewal from last year. If you exclude from the calculation -- we don't want to exclude it because, of course, it's a good business for us. But if you exclude the 2 megadeals in the metric, then we would show signings growth of 9%. The pipeline in BPO right now, it is very strong. We talked about a total Services pipeline of over 20% growth, and BPO is in the same range. And we've got a lot of good prospects, particularly in the commercial area, particularly on the Commercial segment.

Okay, great. And then my last question is just with regard to sort of end demand, what you're hearing from your customers, thoughts about Europe? Just any color you can give, given some of the questions that are out there with regard to the macro events that are going on. And it seems as if enterprise is holding in there, but I'm curious as to what you're hearing.

We are seeing enterprise -- I'm going to end -- start with your last comment. We are seeing enterprise hold up. We're not -- it's interesting. Europe is not -- we're not impacted by some of the situations in Europe yet, but we are very cautious about this. The trends here are not -- and the noise from this part of the world's not getting better. I don't -- so we are operating really tight to the cuff to make sure that we don't get ahead of ourselves, meaning that we know that we're not going to be oblivious to the continued weakness, economic weakness in Europe. So we're not seeing it yet, but we'll see how it goes. U.S. enterprise is good. It's -- no fundamental change. We are seeing slowing of decisions particularly in the government sector, which doesn't surprise anyone, and volume's down in some parts of our government business. Luca referred to unemployment benefits, which are down primarily because people are rolling off the rolls, not necessarily because they're getting jobs. So government, we see -- it's still a great business for us, still strong local, state and federal, but it goes up and down depending on the contracts that we see. Technology business, it's kind of going along as normal. We don't see a lot of changes anywhere in the world. We do see weakness, which we saw last quarter, in the Middle East, but we're just dealing with that as a normal outcome of a business. And strength in Russia, normal flows there.

And I know you don't sell into China but through Fuji Xerox and what you've done there, as well as India. Any comments on sort of what you're seeing there?

We do sell into India, and we are particularly pleased with some of our Services success in India. That's where we're focusing a lot of our energy, particularly Document Outsourcing services where we've engaged with a significantly deeper and more pointed focus since the beginning of this year, and we're seeing some success there. And Luca, why don't you talk about China?

So China, in general, Asia Pacific, was a good region for Fuji Xerox during Q2. Of course, they got significant issues in Japan. And the issues in Japan will continue into Q3, particularly they're going to have power shortages during the summer. So yes, I mean, there, Asia-Pacific and China business helped offset some of the domestic situation.

Our next question comes from the line of Keith Bachman with Bank of Montreal.

Ursula, is there any way to normalize what revenues would've been if you could've gotten normal fulfillment? Just what would revenue growth have been in either in total or however you want to answer it?

Yes. We think that we -- at a minimum, we were impacted by about 3 percentage points, at a minimum, in Technology. It didn't really affect anywhere else, in Technology, at a minimum. Now the reason why we haven't gotten into this and trying to do a big mathematical thing is because, when something like this happens, you do a lot of things. One of them is to redirect your sales force. And you make them, because we have a supply shortage, significantly less effective than they would have been normally. So we don't spend a lot of time actually trying to figure that out. What we are preparing to do is to assure that we have, which is what we're doing, the supply that's needed to back-fill -- to fulfill all of the backlog and to take on new demand. But yes, we definitely suffered to the -- at least 3%. That's what we know, the orders that we know that we couldn't...

Okay. And then, Luca, when you gave the revenue targets for September, just to be clear, were those in constant currency or as you think they'll be reported with the help of FX?

Yes, good question. Sorry, I didn't mention it before. 3% to 5% we're saying right now for the second half of the year. We say constant currency. And of course, if the rates stay where they are right now, there could be an uplift of another point or so from currency.

Okay, then, fair enough. And then on -- ITO was a little, certainly, a little lower than we were thinking. How does that track as we get into the second half of the year?

Yes, better. So ITO was not a strong point for us in the quarter. Interestingly enough, we had some really good -- very good signings in ITO in the quarter, but we had a little bit higher-than-normal set of losses, and some of those we knew. We knew that we would be coming down in some of the ITO bids because they were ramping down, not because we lost them but because they were not going to be there anymore. What we see in signings, as I said, is a projection. Signing projections are good, and the contract ramp for some of the things that we won look good. In quarter 3, we must, we will include -- improve our ITO business. As you know, we talked about MGM and Allscripts, 2 very, very, very large ITO bids that we won, which is very encouraging. BPO still stays like an engine and Document Outsourcing, as well, and ITO should improve in the second -- third quarter and fourth quarter.

Okay. And then my last one is, very strong expense management, very nice job. How does that -- how does SAG and R&D track as we look at Q3 specifically? Because it looked like headcount stayed about the same, and yet your expenses were down materially from the March quarter or from last year, however you want to look at it.

So I think, what we did in Q2, we really wanted to protect the quarter, and we took a lot of actions, and it came out right. At the same time, we want to balance this for the rest of the year with the idea we want to continue to invest in the business, brand investment, people investment, and we want to grow the business. So I would say that probably some of the performance that you've seen in Q2 will not repeat in the second half on the expense side.

Right, so I would assume that translates to OpEx goes up sequentially from Q2?

Not necessarily, not necessarily. I...

Slightly.

Right, slightly. So yes, I think we have a really good pulse on our cost and expense in the businesses, as you know and if you've been following us. The balance here is, as Luca said, it's really important. We have an anomaly in quarter 2 that will carry on some to quarter 3. What we have to balance, we have to do this -- in a sense, we have to do this in cash. We want to actually make a quarter and rob the business for the future, so we had to invest in people. We continue to invest in people. We continue to invest in our brand. We're continuing to invest in the BPO and ITO business to make sure that we can grow that. And to make sure that we could do that, we took some extraordinary actions on cost, but not so much that they would actually -- they're not so wild that we can't keep some of them going.

Our next question comes from the line of Deepak Sitaraman with Crédit Suisse. Deepak Sitaraman - Crédit Suisse AG: Ursula, on Services, your 6%-plus growth outlook appears to be at the higher end of the 4% to 7% guidance range you've talked about in the past. So assuming that the deal and the ITO pieces of it grow in the mid-single digits on a full year basis, that obviously implies very strong double-digit full year growth for BPO. First of all, I guess, can you just clarify how much of that is coming from acquisition? And secondly, I think you mentioned commercial has been strong, but any other color you can share on verticals or even geographies that are driving strength when you look out would be very helpful.

Yes, I'll have Luca start on this one, so -- and then I'll dive in after...

Yes, so in BPO, clearly we are expecting to continue to grow very robustly. A good chunk of the increase comes from acquisition, you were asking the question. Out of the 9%, I would say 5 points this quarter were from recent acquisitions, so obviously, this is part of our model, right? We continue to make acquisitions in the BPO space to fuel this growth. It is the growth engine really for us and also on the Services side, so you should expect to see growth rates that are above the range that we've given for the Services segment overall.

Right. And then as far as color on the mix, you were right. Commercial was stronger than government. The mix of commercial is in our sweet spots, the spots that we participate in and participate well -- in all of the customer care, some of the healthcare sides of the business, in transportation, for sure. We had strong signings across the board, and we were able to have some of those signings, over 15 of them, in Europe -- outside of the United States. So we're starting to see the expansion that the strategy calls for, which is to have every line of business contribute to growth and to accelerate that growth by going outside of the United States, and we're doing both of those. The notable difference is in certain segments of the government where we're seeing 2 dynamics. One is volumes being a little bit lower. We talked about unemployment as one. Clearly, that's obvious, people can understand that, but -- transactions like that. But also in, for our new business that we're seeing coming, that we're pursuing, longer times to get to closure of a deal, meaning we're participating very well. And we are often down- selected, but we have to do a lot of work with state and federal governments to get the thing actually signed. Not perfect, but very, very good that we are in the throes of the last deals, and they'll eventually come. It's just taking a little bit longer. So commercial, good; healthcare, good; transportation, customer care, good; federal, okay but a little bit slower than I would like it to be. And then ITO, as we said, we had a weakness in the second quarter that will definitely be remediated in the third, given the ramp that we're going to see from the signings that we already have. Deepak Sitaraman - Crédit Suisse AG: Okay, that's really helpful. I guess, if I could just ask one more, Ursula. You've noted a couple of times today just expectations for a very solid second half, yet when we look at your revised EPS guidance for the year, you've taken the full year guidance up roughly by the amount of the second quarter beat. I guess, should we read into that as conservatism? Or is there anything else you're trying to signal in terms of visibility or some other uncertainty that's being factored into that guidance?

Yes, I'm definitely not trying to signal conservatism. That's -- I probably shouldn't be chuckling about it. It's hard to get through these quarters, as you probably know. What we -- we have headwinds, for sure, that we're working our way through, from a slowdown in the economy. There's no doubt that, that's -- we're navigating well, but we don't see a big tailwind from the economic forces around the world anywhere. We still see headwinds from Japan. We are balancing that headwind with all of the things that we're doing to run the business. And I think that the guidance that we've given for the second half is prudent, very prudent, given all that we're trying to do and all that we're trying to balance.

I think you're right. I think we are quite bullish on revenue. We definitely see some pressure on margins, Japan being a case in point because, of course, the old incremental costs that come with that. But in general, because of the uncertainty that you see around the world, in Europe, in government, the supply chain, where we see -- we sense some pressure on margin, and therefore we balance these things, and that's the way we ended up with the revised guidance.

Our next question comes from the line of Richard Gardner with Citigroup.

I wanted to go back to Japan and the cost side of the equation there. I know that most of your product coming out of Japan typically goes on a boat. And you probably had sufficient product to handle demand during the first half of Q2. I guess the question is, should we expect airfreight and other logistics-related costs to actually go up in the third quarter as you try to work down the backlog? Or do you expect those costs to go down sequentially?

No, airfreight will definitely go up in quarter 3. There's -- it will definitely go up in quarter 3. And I think you understand why. You produce -- we could put everything on a boat, but then we'd -- customers would definitely not be pleased with us because they've been waiting for a while. So what we're doing is balancing towards the heavy side, particularly in quarter 3, the first portion of quarter 3, a large amount of our supply coming by air. Because now they've made it, and in order to get it here in a reasonable time, it'll come by air. As we get to quarter 4, tail end of quarter 3 and quarter 4, we start to put more and more things on the boat, and the timing should be able to work to have a normal supply gap, order-to-install gap for clients. And if it turns out the way that we are predicting and the way that -- we have people all over the place in Japan, including our guys there, we should be able to be into normal airship in the fourth quarter. But the third quarter will definitely be heavy -- heavier into airship than even we were in the second quarter.

Okay. And then I guess the logical follow-up, Ursula, is how much of the incremental cost is associated with airfreight? And if we take a look at total cost associated with the tragedy there, will they be up or down sequentially in Q3?

They'll be up in Q3. They'll be up in Q3, no doubt about it. And total costs, we just haven't really -- we haven't really given it out. Part of the reason is we haven't really stepped back yet and added it all up. I mean, we're adding it up as it goes. And we will work that with our partners around the world, et cetera, et cetera, but it's -- quarter 3 is going to be a little bit more intensive [ph]. It's comprehended in the numbers that we've given you, for sure. But yes, not much more to say.

The freight is an important element of the incremental costs, but we set up alternative supply as we prepurchase materials, so there's many different costs that come into the equation. Clearly, airfreight is an expensive proposition, though.

Actually, could I ask one more question?

No -- yes.

A little bit of a longer-term question. On ACS, you're taking down your cash flow guidance this year, in part due to the fact that you've got more new business this year than you had expected and less renewal. You've also talked about a big opportunity for ACS longer term being expanding that business into Europe. And a question that I get a lot from investors is whether there's going to be another surprise in terms of cash flow or expense guidance next year as you ramp up investments in infrastructure to handle that expansion of ACS into Europe, leveraging Xerox's presence there. I'd love to get your thoughts on that.

So clearly, expanding into new market require some use of capital. At the same time, we are present in Europe. We're going to try to go to market with a model that really leverages the existing Xerox infrastructure that already is present in Europe. There's going to be some use of capital, but we are comprehending that into our numbers. As we look at 2012 cash, really there are some drivers that are outside of the ongoing operations that will provide us some positive factors. I mean, we're going to be spending less on pensions. We're going to be spending less on restructuring. So we feel that we certainly are going to generate more cash next year. ACS, already today, even though most of their business is U.S.-based today, they already have a global delivery model. So it's not that we need to go and invest on the delivery model. It's more like the sales force end of the business.

Our next question comes from the line of Bill Shope with Goldman Sachs.

I have a question, I guess, digging a bit more into the cash flow, which I know you've had a lot of questions on already. But I recognize that you guys are pretty confident in the second half and that lends to confidence in a new target. But on the off chance or the low-probability event that you do have some incremental unexpected pressure on cash flow in the second half, how should we think about the risk to the buyback program? How much buffer room do you have in terms of that cash flow target coming down and in terms of maybe pulling from other areas of capital management to maintain the current share buyback target if unexpected events occur on the cash flow line?

We consider the share buyback a key priority for the second half. So obviously, we're going to be very focused on getting to an available cash of $1 billion. The $300 million on acquisitions, I would say, is a number that is on the low end of the range that we've given previously, and we feel that it is part of our model -- of our growth model, so we need to continue to spend on acquisitions. But there's a number of items on the profit and loss and in the cash flow that we're going to be working very hard. And as we think about priorities, we know that we need to deliver on the buyback.

Okay, great. And then one final question. You had mentioned earlier that you had longer lead times on signing in multiyear Services contracts. Can you give us a little more color on how you're thinking about this as a near-term dynamic or a longer-term dynamic? And if it is a longer-term dynamic, what do you think is driving that? Is this an industry-wide phenomenon? Or is this something that's sort of endemic to Xerox specifically?

Yes, I don't think it's endemic to Xerox at all. I think the bigger the contract, and this is what would -- when I talk about longer cycles for signing, generally in government and generally big things. I mean, these are not fall-off-the-lot contracts. So it's definitely associated -- it's an industry-wide phenomenon. It's associated with some of the uncertainty in government, just changes. You get new people sitting in different chairs, that kind of stuff, and the fact that they're big. I would not -- this is not -- should not be considered like a problem. It clearly is -- fix is the word. It gives you some ups and downs in quarters, but they do sign. They do sign. They have to sign because the work has to get done. And generally, if they sign, we win. So I am confident in this part of the business just getting back to normal. I don't think it's something, I think you said, endemic or systematic.

Our next question comes from the line of Chris Whitmore with Deutsche Bank.

I also had a cash flow question or 2. Of the $350 million of cash flow reduction in the guidance for the year, how much is related to the supply chain? And how much is related to the Services business?

I would say it's 60-40. 60, Services; 40, Japan.

And does that upfront capital commitment -- I guess I'm trying to understand why that wouldn't continue as you try and grow that business going forward. Have you changed any of the terms and conditions you're willing to take on in trying to close some of these contracts? And to sustain growth, why wouldn't you continue to need to deploy that capital?

Some of the increased cash requirements are coming from the fact that our renewals are maybe slightly less than we would like, right? And hopefully, that trend will not continue, going forward. Secondly, we have a number of investments going on right now for Services platforms. Think of this Medicaid platform, which we call enterprise, and then we've got another platform called eligibility, again related to government services. These are investments that, once they're made, we're going to leverage throughout a number of business lines, and so we do not feel that they're going to be a recurring drain on cash. But clearly, we've always said it all along, if you want to grow working capital, probably it's not going to be the source of cash that it has been for Xerox in 2009, 2010.

For my last question, I wanted to come back to the question around page growth. Last year, for all of last year, equipment sales grew around 9%. And now that's continuing to translate into, what, about 4%, 5% declines in page volume? What does it take to get that page volume to turn up?

Yes, so part of the reason why we're actually thinking about this is because we absolutely do see activity and activity install -- activity growth, color growth, et cetera, all of the things that we spoke about. There's a lot of stuff going through different methodologies that don't -- we don't naturally capture. As I said, Global Imaging, growing like a weed. The pages that are captured -- the equipment that goes into Global Imaging and the pages that come from there, the best that we can do is estimate them. DMO continuing to grow. The best we can do from that is estimate them. So I -- and then competitive devices that we have when we win Document Outsourcing deals, we don't count them at all. So we just can't be as accurate as we once were in this area. I think that we are seeing in this bad time sequential flatness, so we're seeing no change, which if you think about it, based on what happened in the second quarter of this year, is actually a good sign, a good indicator. Bigger mix towards color. From the things that we can even count, a stability in pages. And then the places that we don't count, a significant growth in activity. So I actually -- particularly in Global Imaging and in DMO. So I actually am feeling better about pages than I have in the past. And so what does it take to turn them? I think we're doing all it takes, which is selling more, installing the right types of devices, et cetera, protecting the base that -- like we can, et cetera.

Our next question comes from the line of Mark Moskowitz with JPMorgan. Mark Moskowitz - JP Morgan Chase & Co: A couple of questions here real quickly. Luca, could you talk a little more about how investors should think about the contribution to earnings from revenue growth and mix longer term? Obviously, share buybacks can help out here in the near- to mid-term, and you guys have some incremental OpEx activities. But when do we really get the benefit from revenue growth and mix?

For which year? Mark Moskowitz - JP Morgan Chase & Co: Well, let's do 2012, to start.

So we talked about revenue growth next year of, say, 4% to 6%. We think that, that growth should translate into earnings. Mix is going to be primarily towards Services, which carry slightly better margins than Technology, so that should be a positive as well. Mark Moskowitz - JP Morgan Chase & Co: And then the...

So the business -- I'm sorry, go ahead, go ahead. Please continue, and then I'll kind of bring it all together at the end. Go for it. Mark Moskowitz - JP Morgan Chase & Co: Well, I was going to ask just in terms of -- your confidence today seems a little less than usual, Ursula, regarding the color business. Can you guys just talk a little more about -- maybe clarify on what happened in color in terms of the high-end deterioration? How much was tougher compares versus the supply constraints, versus other?

Yes, I am actually just the opposite on the color business. I -- we have unbelievable activity levels, given the supplied constraint that we had in mid-range color. So in the office color space, we are "growing like a weed." We're doing very, very well. At the very high end of color, the iGen space, very big page compares [ph]. iGen space and the 8000/100 (sic) [800/1000], the Color Press series, very, very strong performance. We had, I talked about this last quarter as well, we have a gap in the high end of the Entry Production Space. We have a gap that we are filling. We launched a product -- just launched a product called the 8080, and we have more offerings to come that will help us regain our position in this space. I actually feel extremely confident about color. And interestingly enough, I am very confident about black-and-white. The only problem with black-and-white is this is not growing, but our share position is very strong. If a deal comes up, we win more than 3/4 of the time, so I'm strong there, confident there. It's just that, that portion is not growing. I spend a lot of time on color, we spend a lot of time on color, and we are all over it. We're #1 color shareholder, we're #1 revenue shareholder, et cetera. So I don't want you to walk away from this call with a statement that we're not confident -- that I'm not confident about it. It's just the opposite. I'm actually very confident about it. And as supply comes, I think we'll be fine here, totally fine here. Thank you, all, for joining us today, and I will see you in the field, myself and Luca. Thank you very much.

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