Xerox 2006 Annual Report Download - page 91

Download and view the complete annual report

Please find page 91 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)
Pension Benefits Retiree Health
2007 2006 2005 2004 2007 2006 2005 2004
Weighted-average assumptions used to determine net
periodic benefit cost for years ended December 31
Discount rate ........................................ 5.3% 5.2% 5.6% 5.8% 5.8% 5.6% 5.8% 6.0%
Expected return on plan assets .......................... 7.6 7.8 8.0 8.1 — (1) —(1) —(1) —(1)
Rate of compensation increase .......................... 4.1 3.9 4.0 3.9 — (2) —(2) —(2) —(2)
(1) Expected return on plan assets is not applicable to our other benefits as these plans are unfunded.
(2) Rate of compensation increase is not applicable to our other benefits as compensation levels do not impact earned
benefits.
Assumed health care cost trend rates at December 31
2006 2005
Health care cost trend rate assumed for next year ........................................... 9.9% 10.9%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) ................... 5.2% 5.2%
Year that the rate reaches the ultimate trend rate ............................................ 2011 2011
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A
one-percentage-point change in assumed health care cost trend rates would have the following effects (in millions):
One-percentage-point
increase
One-percentage-point
decrease
Effect on total service and interest cost components .................... $ 5 $ (4)
Effect on post-retirement benefit obligation ........................... 77 (68)
Note 15 – Income and Other Taxes
Income before income taxes for the three years ended December 31, 2006 were as follows (in millions):
2006 2005 2004
Domestic income ............................................................. $429 $386 $426
Foreign income ............................................................... 379 444 539
Income before income taxes .................................................... $808 $830 $965
(Benefits) provisions for income taxes for the three years ended December 31, 2006 were as follows (in millions):
2006 2005 2004
Federal income taxes
Current ................................................................. $(448) $(94) $ 26
Deferred ................................................................ 94 (59) 114
Foreign income taxes
Current ................................................................. 50 95 178
Deferred ................................................................ (9) 37 21
State income taxes
Current ................................................................. 11 9 (19)
Deferred ................................................................ 14 7 20
Total ................................................................... $(288) $ (5) $340
89