Xerox 2002 Annual Report Download - page 62

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$215, $132 and $86 for the years ended December 31,
2002, 2001 and 2000, respectively.
In 2001, we extended our information technology
contract with Electronic Data Systems Corp. (“EDS”)
for five years through June 30, 2009. Services to be
provided under this contract include support of
global mainframe system processing, application
maintenance, desktop and helpdesk support, voice
and data network management and server manage-
ment. There are no minimum payments due EDS
under the contract. Payments to EDS, which are
recorded in SAG, were $357, $445 and $555 for the
years ended December 31, 2002, 2001 and 2000,
respectively.
Note 8 — Investments in Affiliates,
at Equity
Investments in corporate joint ventures and other
companies in which we generally have a 20 to 50 per-
cent ownership interest at December 31, 2002 and
2001 were as follows:
2002 2001
Fuji Xerox(1) $563 $532
Other investments 65 100
Investments in affiliates at equity $628 $632
1 Our investment in Fuji Xerox of $563 at December 31, 2002 differs from
our implied 25 percent interest in the underlying net assets, or $627, due
primarily to our deferral of gains resulting from sales of assets by us to Fuji
Xerox, partially offset by goodwill we allocated to the Fuji Xerox investment
at the time we acquired our remaining 20 percent of Xerox Limited from
The Rank Group (plc). We cannot recognize such gains related to our por-
tion of ownership interest in Fuji Xerox.
Fuji Xerox is headquartered in Tokyo and operates
in Japan and other areas of the Pacific Rim, Australia
and New Zealand. As discussed in Note 4, we sold half
our interest in Fuji Xerox to Fuji Film in March 2001.
Condensed financial data of Fuji Xerox for its last
three years follow:
2002(1) 2001(1) 2000
Summary of Operations:
Revenues $7,539 $7,684 $8,398
Costs and expenses 7,181 7,316 8,076
Income before income taxes 358 368 322
Income taxes 134 167 146
Minorities’ interests 36 35 36
Net income $ 188 $ 166 $ 140
Balance Sheet:
Assets:
Current assets $2,976 $2,783
Long-term assets 3,862 3,455
Total Assets $6,838 $6,238
Liabilities and Shareholders'
Equity:
Current Liabilities $2,152 $2,242
Long-term debt 868 796
Other long-term liabilities 1,084 632
Minorities’ interests in equity
of subsidiaries 227 201
Shareholders’ equity 2,507 2,367
Total Liabilities and
Shareholders’ Equity $6,838 $6,238
1 Fuji Xerox changed its fiscal year end in 2001 from December 31 to March
31. The 2002 and 2001 condensed financial data consists of the last three
months of Fuji Xerox’s fiscal year 2002 and 2001 and the first nine months
in fiscal year 2003 and 2002, respectively.
We have a technology agreement with Fuji Xerox
whereby we receive royalty payments and rights to
access their patent portfolio in exchange for access to
our patent portfolio. We have arrangements with Fuji
Xerox whereby we purchase inventory from and sell
inventory to Fuji Xerox. Pricing of the transactions
under these arrangements is based upon negotiations
conducted at arm’s length. Certain of these inventory
purchases and sales are the result of mutual research
and development arrangements. Our purchase com-
mitments with Fuji Xerox are in the normal course of
business and typically have a lead time of three
months. Purchases from and sales to Fuji Xerox for the
three years ended December 31, 2002 were as follows:
2002 2001 2000
Sales $113 $132 $178
Purchases 727 598 812