Xerox 2008 Annual Report Download - page 60

Notes to the Consolidated
Financial Statements
(in millions, except per share data and
unless otherwise indicated)
Each year, the difference between the actual return on plan assets
and the expected return on plan assets as well as increases or
decreases in the benefit obligation as a result of changes in the
discount rate are added to, or subtracted from, any cumulative
actuarial gain or loss that arose in prior years. This resultant
amount is the net actuarial gain or loss recognized in Accumulated
other comprehensive loss and is subject to subsequent
amortization to net periodic pension cost in future periods over the
remaining service lives of the employees participating in the
pension plan.
Foreign Currency Translation
The functional currency for most foreign operations is the local
currency. Net assets are translated at current rates of exchange,
and income, expense and cash flow items are translated at
average exchange rates for the applicable period. The translation
adjustments are recorded in Accumulated other comprehensive
loss. The U.S. Dollar is used as the functional currency for certain
subsidiaries that conduct their business in U.S. Dollars or operate in
hyperinflationary economies. A combination of current and
historical exchange rates is used in remeasuring the local currency
transactions of these subsidiaries and the resulting exchange
adjustments are included in income. Aggregate foreign currency
losses were $34, $8 and $39 in 2008, 2007 and 2006, respectively,
and are included in Other expenses, net in the accompanying
Consolidated Statements of Income.
Accumulated Other Comprehensive Loss (“AOCL”)
AOCL is composed of the following for the three years ending
December 31, 2008:
December 31,
2008 2007 2006
Income (loss):
Cumulative translation
adjustments $(1,395) $ (31) $ (532)
Benefit plans net actuarial losses
and prior service credits
(includes our share of Fuji Xerox) (1,021) (735) (1,097)
Minimum pension liabilities —— (20)
Other unrealized gains —12
Total Accumulated Other
Comprehensive Loss $(2,416) $(765) $(1,647)
Note 2 – Segment Reporting
Our reportable segments are consistent with how we manage the
business and view the markets we serve. Our reportable segments
are Production, Office and Other. The Production and Office
segments are centered around strategic product groups which
share common technology, manufacturing and product platforms,
as well as classes of customers.
The Production segment includes black-and-white products which
operate at speeds over 90 pages per minute (“ppm”) excluding 95
ppm with an embedded controller and color products which operate
at speeds over 40 ppm excluding 50, 60 and 70 ppm products with
an embedded controller. Products include the Xerox iGen3 and
iGen4 digital color production press, Xerox Nuvera®, DocuTech®,
DocuPrint®and DocuColor families, as well as older technology
light-lens products. These products are sold predominantly through
direct sales channels to Fortune 1000, graphic arts, government,
education and other public sector customers.
The Office segment includes black-and-white products which
operate at speeds up to 90 ppm as well as 95 ppm with an
embedded controller and color products up to 40 ppm as well as
50, 60 and 70 ppm products with an embedded controller.
Products include the suite of CopyCentre®, WorkCentre®,
WorkCentre Pro and Phaser®digital multifunction systems,
DocuColor color multifunction products, color laser, solid ink color
printers and multifunction devices, monochrome laser desktop
printers, digital and light-lens copiers and facsimile products and
non-Xerox branded products with similar specifications. These
products are sold through direct and indirect sales channels to
global, national and mid-size commercial customers as well as
government, education and other public sector customers.
Approximately 75% of Global Imaging Systems’ (“GIS”) revenue is
included in our Office segment representing those sales and
services that align to our Office segment.
The segment classified as Other includes several units, none of
which met the thresholds for separate segment reporting. This
group primarily includes Xerox Supplies Business Group
(predominantly paper sales), value-added services, Wide Format
Systems, Xerox Technology Enterprises, royalty and licensing
revenues, GIS network integration solutions and electronic
presentation systems, equity net income and non-allocated
Corporate items. Other segment profit (loss) includes the operating
results from these entities, other less significant businesses, our
equity income from Fuji Xerox, and certain costs which have not
been allocated to the Production and Office segments, including
non-financing interest as well as other items included in Other
expenses, net.
58 Xerox 2008 Annual Report