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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
Note 6 – Land, Buildings and Equipment, Net
Land, buildings and equipment, net at December 31, 2007 and 2006 were as follows (in millions):
Estimated
Useful Lives
(Years) 2007 2006
Land ........................................................................... $ 48 $ 46
Buildings and building equipment ................................................. 25to50 1,208 1,120
Leasehold improvements ......................................................... Varies 371 338
Plant machinery ................................................................. 5to12 1,710 1,613
Office furniture and equipment ................................................... 3to15 998 949
Other ........................................................................... 4to20 86 73
Construction in progress .......................................................... 88 125
Subtotal ........................................................................ 4,509 4,264
Less: Accumulated depreciation ................................................... (2,922) (2,737)
Land, buildings and equipment, net .............................................. $ 1,587 $ 1,527
Depreciation expense was $262, $277 and $280 for the years ended December 31, 2007, 2006 and 2005,
respectively. We lease certain land, buildings and equipment, substantially all of which are accounted for as operating
leases. Total rent expense under operating leases for the years ended December 31, 2007, 2006 and 2005 amounted to
$286, $269 and $267, respectively. Future minimum operating lease commitments that have initial or remaining
non-cancelable lease terms in excess of one year at December 31, 2007 were as follows:
2008 2009 2010 2011 2012 Thereafter
$266 $212 $169 $129 $90 $158
We have an information management contract with
Electronic Data Systems Corp. (“EDS”) through June 30,
2009. Services to be provided under this contract include
support of global mainframe system processing,
application maintenance, desktop and helpdesk support,
voice and data network management and server
management. There are no minimum payments due EDS
under the contract. In January 2008, the portion of the
contract for global mainframe processing was extended
through December 2013. Payments to EDS, which are
primarily recorded in selling, administrative and general
expenses, were $294, $288 and $305 for the years ended
December 31, 2007, 2006 and 2005, respectively.
In December 2006, we sold our Corporate
headquarters facility for $55 and recognized a gain of
$15. In connection with the sale, the secured mortgage on
the facility of $34 was defeased through the purchase of
treasury securities totaling $36. The difference of $2 was
recorded as a loss on extinguishment of debt. The gain on
the sale as well as the loss on extinguishment are included
in Other expenses, net within the Consolidated Statements
of Income. In October 2007, we relocated our Corporate
headquarters to a leased facility in Norwalk, Connecticut.
Xerox Annual Report 2007 97