Xerox 2007 Annual Report Download - page 84

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
The following table summarizes certain significant charges that require management estimates:
Year Ended December 31,
(in millions) 2007 2006 2005
Restructuring provisions and asset impairments ..................................... $ (6) $385 $366
Amortization of intangible assets .................................................. 46 45 42
Provisions for receivables ......................................................... 131 76 51
Provisions for obsolete and excess inventory ........................................ 66 69 56
Provisions for litigation and regulatory matters ..................................... (6) 89 115
Depreciation and obsolescence of equipment on operating leases .................... 269 230 205
Depreciation of buildings and equipment ........................................... 262 277 280
Amortization of internal use and product software .................................. 79 84 114
Pension benefits – net periodic benefit cost ......................................... 235 355 343
Other post-retirement benefits – net periodic benefit cost ............................ 102 117 117
Deferred tax asset valuation allowance provisions ................................... 14 12 (38)
Changes in Estimates: In the ordinary course of
accounting for items discussed above, we make changes in
estimates as appropriate, and as we become aware of
circumstances surrounding those estimates. Such changes
and refinements in estimation methodologies are
reflected in reported results of operations in the period in
which the changes are made and, if material, their effects
are disclosed in the Notes to the Consolidated Financial
Statements.
New Accounting Standards and Accounting Changes:
Business Combinations and Noncontrolling
Interests: In December 2007, the FASB issued SFAS
No. 141 (revised 2007), “Business Combinations” (“FAS
141(R)”), and SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of
ARB No. 51” (“FAS 160”).
FAS 141(R) significantly changes the accounting for
business combinations. Under FAS 141(R), an acquiring
entity will be required to recognize all the assets acquired
and liabilities assumed in a transaction at the acquisition-
date at fair value with limited exceptions. FAS 141(R)
further changes the accounting treatment for certain
specific items, including:
• Acquisition costs will be generally expensed as
incurred;
• Noncontrolling interests (formerly known as “minority
interests” – see FAS 160 discussion below) will be
valued at fair value at the acquisition date;
• Acquired contingent liabilities will be recorded at fair
value at the acquisition date and subsequently
measured at either the higher of such amount or the
amount determined under existing guidance for
non-acquired contingencies;
• In-process research and development (IPRD) will be
recorded at fair value as an indefinite-lived intangible
asset at the acquisition date;
• Restructuring costs associated with a business
combination will be generally expensed subsequent to
the acquisition date; and
• Changes in deferred tax asset valuation allowances
and income tax uncertainties after the acquisition
date generally will affect income tax expense.
FAS 141(R) includes a substantial number of new
disclosure requirements. FAS 141(R) applies prospectively
to our business combinations for which the acquisition
date is on or after January 1, 2009.
FAS 160 establishes new accounting and reporting
standards for the noncontrolling interest in a subsidiary
and for the deconsolidation of a subsidiary. Specifically,
this statement requires the recognition of noncontrolling
interests (minority interests) as equity in the consolidated
financial statements and separate from the parent’s
equity. The amount of net income attributable to
noncontrolling interests will be included in consolidated
net income on the face of the income statement. FAS 160
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