Xerox 2006 Annual Report Download - page 77

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
Note 10 – Supplementary Financial Information
The components of other current assets and other
current liabilities at December 31, 2006 and 2005 were as
follows (in millions):
2006 2005
Other current assets
Deferred taxes .................... $ 271 $ 290
Restricted cash ................... 236 270
Prepaid expenses ................. 119 133
Financial derivative instruments ..... 9 28
Other ........................... 299 311
Total Other current assets ..... $ 934 $1,032
Other current liabilities
Income taxes payable .............. $ 63 $ 84
Other taxes payable ............... 157 199
Interest payable ................... 128 102
Restructuring reserves ............. 291 212
Unearned income ................. 194 191
Financial derivative instruments ..... 17 12
Product warranties ................ 21 20
Liability to Xerox Capital LLC ...... — 98
Other ........................... 546 625
Total Other current
liabilities ................. $1,417 $1,543
The components of other long-term assets and other
long-term liabilities at December 31, 2006 and 2005 were
as follows (in millions):
2006 2005
Other long-term assets
Prepaid pension costs .............. $ 19 $ 829
Net investment in discontinued
operations ..................... 295 420
Internal use software, net ........... 217 198
Restricted cash ................... 190 176
Debt issuance costs, net ............ 48 52
Other ........................... 282 246
Total Other long-term assets ... $1,051 $1,921
Other long-term liabilities
Deferred and other tax liabilities ..... $ 223 $ 771
Minorities’ interests in equity of
subsidiaries .................... 108 90
Financial derivative instruments ..... 42 45
Product warranties ................ 1 1
Other ........................... 447 388
Total Other long-term
liabilities ................. $ 821 $1,295
Net investment in discontinued operations: Our
net investment in discontinued operations primarily
consists of a performance-based instrument relating to the
1997 sale of The Resolution Group (“TRG”) of $325, as
well as remaining liabilities associated with our
discontinued operations of $32.
In connection with the 1997 sale of TRG, we
received a $462 performance-based instrument as partial
consideration. Cash distributions are paid on the
instrument, based on 72.5% of TRG’s available cash flow
as defined in the sale agreement. We received cash
distributions of $20 for each of the years ended
December 31, 2006 and 2005, respectively. The recovery
of this instrument is dependent upon the sufficiency of
TRG’s available cash flows. Such cash flows are
supported by TRG’s ultimate parent via a subscription
agreement whereby the parent has agreed to purchase
from TRG an established number of shares of this
instrument each year through 2017. Based on current cash
flow projections, we expect to fully recover the $325
remaining balance of this instrument.
In 2005, our net investment in discontinued
operations also included our net investment in Ridge
Reinsurance Limited which was liquidated in 2006 as part
of an agreement to transfer its remaining reinsurance
obligation together with related investments to another
insurance company. Refer to Note 21 – Divestitures and
Other Sales for further information.
Liability to Xerox Capital LLC: Liability was
settled in February 2006 as part of mandatory redemption
of preferred securities issued by Xerox Capital LLC. This
liability was settled for Cdn. $114 million ($100) and
Cdn. $24 million ($21) was remitted back to us upon
liquidation of Xerox Capital LLC.
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