Xerox 2007 Annual Report Download - page 101

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
Condensed financial data of Fuji Xerox for the three calendar years ended December 31, 2007 was as follows (in
millions):
2007 2006 2005
Summary of Operations:
Revenues ......................................................................... $10,218 $9,859 $10,009
Costs and expenses ................................................................ 9,565 9,119 9,406
Income before income taxes ........................................................ 653 740 603
Income taxes ..................................................................... 252 281 215
Minorities’ interests ................................................................ 6 5 8
Net income ....................................................................... $ 395 $ 454 $ 380
Balance Sheet Data:
Assets:
Current assets ..................................................................... $ 4,242 $3,731 $ 3,454
Long-term assets .................................................................. 4,639 4,184 4,168
Total Assets ...................................................................... $ 8,881 $7,915 $ 7,622
Liabilities and Shareholders’ Equity:
Current liabilities .................................................................. $ 3,322 $2,954 $ 2,991
Long-term debt .................................................................... 900 685 434
Other long-term liabilities .......................................................... 746 590 936
Minorities’ interests in equity of subsidiaries ......................................... 25 21 17
Shareholders’ equity ............................................................... 3,888 3,665 3,244
Total Liabilities and Shareholders’ Equity .......................................... $ 8,881 $7,915 $ 7,622
In 2007, 2006 and 2005, we received dividends of
$37, $41 and $38, respectively, which were reflected as a
reduction in our investment. Additionally, we have a
technology agreement with Fuji Xerox whereby we receive
royalty payments for their use of our Xerox brand
trademark, as well as, rights to access their patent
portfolio in exchange for access to our patent portfolio. In
2006, we renewed our technology agreement with Fuji
Xerox (the “2006 Technology Agreement”). The 2006
Technology Agreement provides that Fuji Xerox pays us
royalties based on Fuji Xerox’s revenue. The 2006
Technology Agreement did not result in a material change
to the royalty revenues we receive from Fuji Xerox. In
general, all other existing agreements with respect to
intellectual property between the parties will remain in full
force and effect. Therefore, all technology licenses
previously granted between the parties will not be subject
to the 2006 Technology Agreement but will generally
remain subject to the terms of any such prior
arrangements. The only exception is that the licenses
previously granted under the 1999 Technology Agreement
were converted into fully paid-up and royalty free licenses.
In 2007, 2006 and 2005, we earned royalty revenues
under this agreement of $108, $117 and $123,
respectively, which are included in Service, outsourcing
and rental revenues in the Consolidated Statements of
Income. We also have arrangements with Fuji Xerox
whereby we purchase inventory from and sell inventory to
Fuji Xerox. Pricing of the transactions under these
arrangements is based upon negotiations conducted at
arm’s length. Our purchase commitments with Fuji Xerox
are in the normal course of business and typically have a
lead time of three months. Purchases from and sales to
Fuji Xerox for the three years ended December 31, 2007
were as follows (in millions):
2007 2006 2005
Sales ...................... $ 186 $ 168 $ 163
Purchases .................. $1,946 $1,677 $1,517
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