The following Management's Discussion and Analysis ("MD&A") is intended to help the reader understand the financial condition and results of operations of Xerox Corporation. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes.

Throughout this document, references to "we," "our," the "Company" and "Xerox" refer to Xerox Corporation and its subsidiaries. References to "Xerox Corporation" refer to the stand-alone parent company and do not include its subsidiaries.

To understand the trends in the business, we believe that it is helpful to analyze the impact of changes in the translation of foreign currencies into U.S. dollars on revenue and expenses. We refer to this analysis as "currency impact" or "the impact from currency." This includes translating the most recent financial results of operations using foreign currency of the earliest period presented. Currencies for our developing market countries (Latin America, Brazil, the Middle East, India, Eurasia and Central-Eastern Europe) are reflected at actual exchange rates for all periods presented, because these countries generally have changeable currency and inflationary environments, and our operations in these countries have historically implemented pricing actions to recover the impact of inflation and devaluation. We do not hedge the translation effect of revenues or expenses denominated in currencies where the local currency is the functional currency.

Summary Results

Revenue



                                        Three Months                               Nine Months
                                     Ended September 30,                       Ended September 30,
(in millions)                         2008          2007        Change         2008            2007        Change
Equipment sales                   $    1,125      $ 1,156        (3)%      $     3,383      $  3,228         5%
Post sale revenue(1)                   3,245        3,146         3%             9,855         9,118         8%

Total Revenue                     $    4,370      $ 4,302         2%       $    13,238      $ 12,346         7%