Xerox 2007 Annual Report Download - page 96

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
of synergies between the entities, which do not qualify as
an amortizable intangible asset. The allocations were
based on third-party valuations and management’s
estimates.
Amici LLC: In July 2006, we acquired all of the net
assets of Amici LLC (“Amici”), a provider of electronic-
discovery (e-discovery), services for $175 in cash, including
transaction costs. Amici provides comprehensive litigation
discovery management services, including the conversion,
hosting and production of electronic and hardcopy
documents. Amici also provides consulting and
professional services to assist attorneys in the discovery
process. The purchase agreement requires us to pay the
sellers an additional $20 if certain performance targets
are achieved in 2008, which would be an addition to the
acquired cost of the entity. The operating results of Amici
were not material to our financial statements and are
included within our Other segment from the date of
acquisition.
The purchase price was allocated to Net assets $2,
Intangible assets $37 (consisting of customer relationships
of $29 and software of $8), and Goodwill of $136. The
primary elements that generated the Goodwill are the
value of synergies and the acquired assembled workforce,
neither of which qualify as a separate intangible asset. The
allocations were based on third-party valuations and
management’s estimates.
Note 4 – Receivables, Net
Finance Receivables: Finance receivables result from installment arrangements and sales-type leases arising from
the marketing of our equipment. These receivables are typically collateralized by a security interest in the underlying
assets. Finance receivables, net at December 31, 2007 and 2006 were as follows (in millions):
2007 2006
Gross receivables ........................................................................... $9,643 $ 9,389
Unearned income .......................................................................... (1,461) (1,437)
Unguaranteed residual values ............................................................... 69 90
Allowance for doubtful accounts ............................................................. (203) (198)
Finance receivables, net ..................................................................... 8,048 7,844
Less: Billed portion of finance receivables, net ................................................. (304) (273)
Current portion of finance receivables not billed, net ........................................... (2,693) (2,649)
Amounts due after one year, net ............................................................. $5,051 $ 4,922
Contractual maturities of our gross finance receivables as of December 31, 2007 were as follows (including those
already billed of $304 (in millions):
2008 2009 2010 2011 2012 Thereafter Total
$3,652 $2,665 $1,863 $1,054 $371 $38 $9,643
Secured Funding Arrangements
GE Secured Borrowings: We have an agreement in
the U.S. (the “Loan Agreement”) under which General
Electric Capital Corporation, a subsidiary of GE, provides
secured funding for our customer leasing activities in the
U.S. The maximum potential level of borrowing under
this agreement is a function of the size of the portfolio of
finance receivables generated by us that meet GE’s
funding requirements and cannot exceed $5 billion.
Under this agreement, new lease originations funded
by GE, were transferred to a wholly-owned consolidated
subsidiary. The funds received under this agreement are
recorded as secured borrowings and together with the
associated lease receivables are included in our
Consolidated Balance Sheet. We and GE intended for the
transfers of the lease contracts to be “true sales at law”
and that the wholly-owned consolidated subsidiary
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