Xerox 2006 Annual Report Download - page 49

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Contractual Cash Obligations and Other Commercial Commitments and Contingencies: At December 31, 2006,
we had the following contractual cash obligations and other commercial commitments and contingencies (in millions):
Year 1 Years 2-3 Years 4-5
2007 2008 2009 2010 2011 Thereafter
Long-term debt, including capital lease obligations(1) ........ $1,485 $ 736 $1,169 $733 $ 806 $2,216
Minimum operating lease commitments(2) ................. 189 161 124 102 84 158
Liabilities to subsidiary trusts issuing preferred securities(3) ...————— 624
Retiree Health Payments .............................. 102 115 123 127 128 665
Purchase Commitments
Flextronics(4) .................................... 644 — — — — —
EDS Contracts(5) ................................. 277 270 132 — — —
Other(6) ........................................ 39 30 30 — — —
Total Contractual Cash Obligations ................... $2,736 $1,312 $1,578 $962 $1,018 $3,663
(1) Refer to Note 11 – Debt to our Consolidated Financial Statements for interest payments by us as well as for
additional information related to long-term debt (amounts above include principal portion only).
(2) Refer to Note 6 – Land, Buildings and Equipment, net to our Consolidated Financial Statements for additional
information related to minimum operating lease commitments.
(3) Refer to Note 12 – Liability to Subsidiary Trusts Issuing Preferred Securities to our Consolidated Financial
Statements for interest payments by us as well as for additional information related to liabilities to subsidiary
trusts issuing preferred securities (amounts above include principal portion only).
(4) Flextronics: We outsource certain manufacturing activities to Flextronics and are currently operating under a
one-year automatically renewed agreement which may expire on November 30, 2007, but is subject to automatic
renewal for an additional one year period. We expect to enter into a negotiated renewal agreement in 2007 which
has a term of at least three years.
(5) EDS Contracts: We have an information management contract with Electronic Data Systems Corp. (“EDS”) to
provide services to us for global mainframe system processing, application maintenance and support, desktop
services and helpdesk support, voice and data network management, and server management through June 30,
2009. There are no minimum payments required under the contract. We can terminate the current contract for
convenience with six months notice, as defined in the contract, with no termination fee and with payment to EDS
for costs incurred as of the termination date. Should we terminate the contract for convenience, we have an option
to purchase the assets placed in service under the EDS contract.
(6) Other Purchase Commitments: We enter into other purchase commitments with vendors in the ordinary course of
business. Our policy with respect to all purchase commitments is to record losses, if any, when they are probable
and reasonably estimable. We currently do not have, nor do we anticipate, material loss contracts.
Other Commercial Commitments and Contingencies
Pension and Other Post-Retirement Benefit Plans:
We sponsor pension and other post-retirement benefit
plans that may require periodic cash contributions. Our
2006 cash fundings for these plans were $355 million for
pensions and $98 million for other post-retirement plans.
Our anticipated cash fundings for 2007 are approximately
$130 million for defined benefit pensions and
approximately $100 million for other post-retirement
plans. Cash contribution requirements for our domestic
tax qualified pension plans are governed by the
Employment Retirement Income Security Act (“ERISA”)
and the Internal Revenue Code. Cash contribution
requirements for our international plans are subject to the
applicable regulations in each country. The expected 2007
pension contributions do not include contributions to the
domestic tax-qualified plans because these plans currently
exceed the ERISA minimum funding requirements for the
plans’ 2006 plan year. However, once the January 1, 2007
actuarial valuations and projected results as of the end of
the 2007 measurement year are available, the desirability
of additional contributions will be assessed. Based on
these results, we may voluntarily decide to contribute to
these plans, even though no contribution is required. In
prior years, after making this assessment, we decided to
contribute $228 million and $230 million in 2006 and
2005, respectively, to our domestic tax qualified plans in
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