Xerox 2006 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2006 Xerox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
Note 5 – Inventories and Equipment on Operating Leases, Net
Inventories at December 31, 2006 and 2005 were as
follows (in millions):
2006 2005
Finished goods ................... $ 967 $ 956
Work-in-process .................. 67 99
Raw materials .................... 129 146
Total Inventories ................. $1,163 $1,201
Equipment on operating leases and similar
arrangements consists of our equipment rented to
customers and depreciated to estimated residual value at
the end of the lease term. The transfer of equipment from
our inventories to equipment subject to an operating lease
is presented in our Consolidated Statements of Cash
Flows in the operating activities section as a non-cash
adjustment. We recorded $69, $56 and $73 in inventory
write-down charges for the years ended December 31,
2006, 2005 and 2004, respectively. Equipment on
operating leases and the related accumulated depreciation
at December 31, 2006 and 2005 were as follows (in
millions):
2006 2005
Equipment on operating leases ....... $1,246 $1,262
Less: Accumulated depreciation ..... (765) (831)
Equipment on operating leases,
net ........................... $ 481 $ 431
Depreciable lives generally vary from three to four
years consistent with our planned and historical usage of
the equipment subject to operating leases. Depreciation
and obsolescence expense was $230, $205 and $210 for
the years ended December 31, 2006, 2005 and 2004,
respectively. Our equipment operating lease terms vary,
generally from 12 to 36 months. Scheduled minimum
future rental revenues on operating leases with original
terms of one year or longer are (in millions):
2007 2008 2009 2010 2011 Thereafter
$ 332 $ 205 $ 125 $ 58 $ 22 $ 2
Total contingent rentals on operating leases,
consisting principally of usage charges in excess of
minimum contracted amounts, for the years ended
December 31, 2006, 2005 and 2004 amounted to $112,
$136 and $137, respectively.
Note 6 – Land, Buildings and Equipment, Net
Land, buildings and equipment, net at December 31, 2006 and 2005 were as follows (in millions):
Estimated
Useful Lives
(Years) 2006 2005
Land ................................................................. $ 46 $ 51
Buildings and building equipment ......................................... 25to50 1,120 1,163
Leasehold improvements ................................................. Varies 338 326
Plant machinery ........................................................ 5to12 1,613 1,637
Office furniture and equipment ............................................ 3to15 949 967
Other ................................................................ 4to20 73 76
Construction in progress ................................................. 125 83
Subtotal .............................................................. 4,264 4,303
Less: Accumulated depreciation ........................................... (2,737) (2,676)
Land, buildings and equipment, net ...................................... $ 1,527 $ 1,627
69