Xerox 2006 Annual Report Download - page 67

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
The following is a reconciliation of segment profit to pre-tax income (in millions):
Years ended December 31,
2006 2005 2004
Total Segment profit ..................................................... $1,390 $1,461 $1,200
Reconciling items:
Restructuring and asset impairment charges ............................... (385) (366) (86)
Provisions for litigation matters(1) ....................................... (68) (114) —
Initial provision for WEEE Directive ..................................... — (26) —
Hurricane Katrina adjustments (losses) ................................... 8 (15) —
Other expenses, net ................................................... (23) (12) 2
Equity in net income of unconsolidated affiliates ........................... (114) (98) (151)
Pre-tax income ......................................................... $ 808 $ 830 $ 965
(1) 2006 provision for litigation includes $68 related to probable losses on Brazilian labor-related contingencies. 2005
provision for litigation primarily includes $102 related to MPI arbitration panel ruling. Refer to Note 16 –
Contingencies for further discussion relating to the 2006 and 2005 annual periods.
Geographic area data was as follows:
Revenues Long-Lived Assets(1)
(in millions) 2006 2005 2004 2006 2005 2004
United States ..................................... $ 8,406 $ 8,388 $ 8,346 $1,309 $1,386 $1,427
Europe .......................................... 5,378 5,226 5,281 572 500 585
Other Areas ...................................... 2,111 2,087 2,095 356 386 434
Total ........................................... $15,895 $15,701 $15,722 $2,237 $2,272 $2,446
(1) Long-lived assets are comprised of (i) land, buildings and equipment, net, (ii) equipment on operating leases, net,
(iii) internal use software, net and (iv) capitalized software costs, net.
Note 3 – Short-Term Investments
As of December 31, 2006 and 2005, respectively, we
held $137 and $244 in marketable securities that are
classified within Short-term investments in our
Consolidated Balance Sheets. These securities are
considered available-for-sale and are carried at fair value
based on quoted market prices. Unrealized gains and
losses, net of taxes, are less than $1 and are recorded
within Accumulated other comprehensive loss, a
component of Common shareholders’ equity. The cost of
securities sold is based on the specific identification
method. Gains or losses of less than $1 million were
realized on these sales for the years ended December 31,
2006 and 2005, respectively.
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