Xerox 2008 Annual Report Download - page 63

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Notes to the Consolidated
Financial Statements
(in millions, except per share data and
unless otherwise indicated)
Accordingly, the unaudited pro forma financial information below
is not necessarily indicative of either future results of operations or
results that might have been achieved had the acquisition been
consummated as of January 1, 2006.
Year Ended December 31,
2007 2006
Revenue $17,619 $16,992
Net income 1,139 1,222
Basic earnings per share 1.22 1.26
Diluted earnings per share 1.20 1.23
GIS Acquisitions
In May 2008, GIS acquired Saxon Business Systems, an office
equipment supplier in Florida, for approximately $69 in cash,
including transaction costs. GIS acquired three other similar
businesses in 2008 for a total of $17 in cash. In 2007, GIS acquired
four businesses that provide office-imaging solutions and related
services for $39 in cash. These acquisitions continue GIS’s
development of a national network of office technology suppliers
to serve its expanding base of small and mid-size businesses. The
operating results of these acquired entities are not material to our
financial statements and are included within our Office segment
from the date of acquisition. The purchase prices were primarily
allocated to intangible assets and goodwill based on third-party
valuations and management’s estimates.
Advectis, Inc.
In 2007, we acquired Advectis, Inc. (“Advectis”), a privately-owned
provider of a web-based solution to electronically manage the
process needed to underwrite, audit, collaborate, deliver and
archive mortgage loan documents, for $30 in cash. The operating
results of Advectis are not material to our financial statements, and
are included within our Other segment from the date of
acquisition. The purchase price was primarily allocated to
intangible assets and goodwill based on management’s estimates.
XMPie, Inc.
In 2006, we acquired the stock of XMPie, Inc. (“XMPie”), a provider
of variable information software, for $54 in cash, including
transaction costs. XMPie’s software enables printers and marketers
to create and print personalized and customized marketing
materials to help improve response rates. We had an existing
relationship with XMPie, as its largest reseller, and its software is
primarily sold together with our Production systems including the
iGen3.
The operating results of XMPie are not material to our financial
statements, and are included within our Production segment from
the date of acquisition. The purchase price was primarily allocated
to intangible assets and goodwill based on third-party valuations
and management’s estimates.
Amici LLC
In 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 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,
2008 and 2007 were as follows:
2008 2007
Gross receivables $ 8,718 $ 9,643
Unearned income (1,273) (1,461)
Residual values 31 69
Allowance for doubtful accounts (198) (203)
Finance receivables, net 7,278 8,048
Less: Billed portion of finance receivables,
net (254) (304)
Current portion of finance receivables not
billed, net (2,461) (2,693)
Amounts due after one year, net $ 4,563 $ 5,051
Contractual maturities of our gross finance receivables as of
December 31, 2008 were as follows (including those already billed
of $254:
2009 2010 2011 2012 2013 Thereafter Total
$3,288 $2,414 $1,690 $953 $335 $38 $8,718
Xerox 2008 Annual Report 61