Xerox 2006 Annual Report Download - page 44

Cash, cash equivalents and Short-term investments reported in our Consolidated Financial Statements were as
follows:
2006 2005
Cash and cash equivalents ........................................................... $1,399 $1,322
Short-term investments .............................................................. 137 244
Total Cash, cash equivalents and Short-term investments ................................ $1,536 $1,566
For the year ended December 31, 2006, net cash
provided by operating activities, increased $197 million
from 2005 primarily as a result of the increased net
income of $232 million, as well as the following
additional items:
• $173 million increase due to lower inventories.
• $87 million increase due to lower net tax payments
including a $34 million refund associated with the
settlement of the 1999 to 2003 IRS tax audit.
• $62 million decrease due to a lower net run-off of
finance receivables.
• $51 million decrease due to higher restructuring
payments related to previously reported actions.
• $96 million decrease due to a lower year-over-year
reduction in other current and long-term assets.
• $77 million decrease due to a reduction in other
current and long-term liabilities, primarily
reflecting the $106 million payment relating to the
previously disclosed MPI legal matter.
For the year ended December 31, 2005, net cash
provided by operating activities, decreased $330 million
from 2004 primarily as a result of the following:
• $258 million decrease due to modest growth in
accounts receivable in 2005 compared to a decline
in 2004.
• $83 million decrease due to lower finance
receivable run-off.
• $124 million decrease due to higher inventory
growth in 2005 compared to 2004 reflecting an
increase in the number of new products.
• Partially offsetting these items were lower tax
payments of $96 million due to refunds from audit
and other tax settlements, as well as, the timing of
payments associated with restructuring.
• Partially offsetting lower pension contributions of
$21 million.
We expect 2007 operating cash flows in the range of
$1.2 billion to $1.5 billion, as compared to $1.6 billion in
2006.
For the year ended December 31, 2006, net cash
from investing activities increased $152 million from
2005 primarily as a result of the following:
• $354 million due to an increase in proceeds from
the net sale of short-term investments in 2006 of
$107 million, as compared to the net purchases of
$247 million in 2005, as 2005 represented the
initial year we purchased short-term investments to
supplement our investment income.
• $77 million due to higher proceeds from the sale of
our Corporate headquarters and other excess land
and buildings.
• $48 million due to higher proceeds from
divestitures and investments, reflecting:
• $122 million related to the sale of investments
held by Ridge Re* in 2006.
• $21 million distribution from the liquidation of
our investment in Xerox Capital LLC in 2006.
• $96 million of proceeds from the sale of Integic
in 2005.
• Partially offsetting these items were the following:
• $229 million due to payments related to the
acquisition of Amici, LLC and XMPie, Inc.
• $57 million increase in capital expenditures and
internal use software.
• Lower cash generation of $42 million due to a
lower net reduction of escrow and other
restricted investments.
* In March 2006 Ridge Re, a wholly owned
subsidiary included in discontinued operations,
executed an agreement to complete its exit from
the insurance business. As a result of this
agreement and pursuant to a liquidation plan,
excess cash held by Ridge Re was distributed
back to the Company (Refer to Note 21 –
Divestitures and Other Sales in the
Consolidated Financial Statements for further
information).
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