Xerox 2006 Annual Report Download - page 74

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
In addition to the amounts described above, in 2006,
2005 and 2004, we paid Fuji Xerox $28, $28 and $27,
respectively, and Fuji Xerox paid us $3 in 2006 and $9
for 2005 and 2004, respectively, for unique research and
development. As of December 31, 2006 and 2005,
amounts due to Fuji Xerox were $169 and $157,
respectively.
Note 8 – Goodwill and Intangible Assets, Net
Goodwill:
The following table presents the changes in the carrying amount of goodwill, by operating segment, for the three
years ended December 31, 2006 (in millions):
Production Office DMO Other Total
Balance at January 1, 2004 ..................................... $ 771 $827 $— $124 $1,722
Foreign currency translation adjustment ........................ 77 54 — 1 132
Other .................................................... — — — (6) (6)
Balance at December 31, 2004 ................................... 848 881 — 119 1,848
Foreign currency translation adjustment ........................ (103) (74) — — (177)
Balance at December 31, 2005 ................................... 745 807 — 119 1,671
Foreign currency translation adjustment ........................ 99 69 — 1 169
Acquisition of Amici LLC ................................... — — — 136 136
Acquisition of XMPie, Inc. .................................. 48 — — — 48
Balance at December 31, 2006 ................................... $ 892 $876 $— $256 $2,024
Intangible Assets, Net:
Intangible assets primarily relate to the Office operating segment. Intangible assets were comprised of the
following as of December 31, 2006 and 2005 (in millions):
Weighted
Average
Amortization
Period
As of December 31, 2006: As of December 31, 2005:
Gross
Carrying
Amount
Accumulated
Amortization
Net
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Amount
Installed customer base ......... 16years $258 $ 89 $169 $226 $ 72 $154
Distribution network ........... 25years 123 35 88 123 30 93
Technology and trademarks ..... 7years 165 136 29 156 114 42
$546 $260 $286 $505 $216 $289
Amortization expense related to intangible assets
was $45, $42, and $38 for the years ended December 31,
2006, 2005 and 2004, respectively, and is expected to
approximate $27 in 2007 and approximate $25 annually
from 2008 through 2011. Amortization expense is
primarily recorded in Other expenses, net, with the
exception of amortization expense associated with
licensed technology, which is recorded in Cost of sales
and Cost of service, outsourcing and rentals, as
appropriate.
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