Xerox 2007 Annual Report Download - page 98

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
Note 5 – Inventories and Equipment on Operating Leases, Net
Inventories at December 31, 2007 and 2006 were as
follows (in millions):
2007 2006
Finished goods ...................... $1,099 $ 967
Work-in-process ..................... 70 67
Raw materials ....................... 136 129
Total Inventories ................... $1,305 $1,163
Equipment on operating leases and similar
arrangements consists of our equipment rented to
customers and depreciated to estimated residual value at
the end of the lease term. The transfer of equipment from
our inventories to equipment subject to an operating lease
is presented in our Consolidated Statements of Cash Flows
in the operating activities section as a non-cash
adjustment. We recorded $66, $69 and $56 in inventory
write-down charges for the years ended December 31,
2007, 2006 and 2005, respectively. Equipment on
operating leases and the related accumulated
depreciation at December 31, 2007 and 2006 were as
follows (in millions):
2007 2006
Equipment on operating leases ....... $1,435 $1,246
Less: Accumulated depreciation ....... (848) (765)
Equipment on operating leases,
net .............................. $ 587 $ 481
Depreciable lives generally vary from three to four
years consistent with our planned and historical usage of
the equipment subject to operating leases. Depreciation
and obsolescence expense for equipment on operating
leases was $269, $230 and $205 for the years ended
December 31, 2007, 2006 and 2005, respectively. Our
equipment operating lease terms vary, generally from 12
to 36 months. Scheduled minimum future rental revenues
on operating leases with original terms of one year or
longer are (in millions):
2008 2009 2010 2011 2012 Thereafter
$361 $252 $170 $81 $38 $10
Total contingent rentals on operating leases,
consisting principally of usage charges in excess of
minimum contracted amounts, for the years ended
December 31, 2007, 2006 and 2005 amounted to $117,
$112 and $136, respectively.
96