Xerox 2009 Annual Report Download - page 58

56 Xerox 2009 Annual Report
Notes to the Consolidated
Financial Statements
Dollars in millions, except per-share data and unless otherwise indicated.
The total cost of the acquisition was allocated to the assets acquired
and the liabilities assumed based on their respective estimated fair
values. Goodwill of $1,335 and intangible assets of $363 were recorded
in connection with the acquisition based on third-party valuations
and management’s estimates for those acquired intangible assets.
The majority of the goodwill is not deductible for tax purposes and
the primary elements that generated goodwill are the value of the
acquired assembled workforce, specialized processes and procedures
and operating synergies, none of which qualify as a separate intangible
asset. Intangible assets included customer relationships of $189 with
a 12-year weighted average useful life and trade names of $174 with
a 20-year weighted average useful life.
The unaudited pro forma results presented below include the
effects of the GIS acquisition as if it had been consummated as of
January 1, 2007.
Year Ended
December 31, 2007
Revenue $ 17,619
Net income attributable to Xerox 1,139
Basic earnings per share 1.22
Diluted earnings per share 1.20
GIS Acquisitions
In February 2009, GIS acquired ComDoc, Inc. (“ComDoc”) for approxi-
mately $145 in cash. ComDoc is one of the larger independent office
technology dealers in the U.S. and expands GIS’s coverage in Ohio,
Pennsylvania, New York and West Virginia. GIS also acquired another
business in 2009 for $18 in cash. In 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 the development of GIS’s 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 dates 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.
The unaudited pro forma results presented below include the effects
of the ACS acquisition as if it had been consummated as of January 1,
2008. The pro forma results include the amortization associated with
a preliminary estimate for the acquired intangible assets and interest
expense associated with debt used to fund the acquisition. However,
pro forma results do not include any anticipated synergies or other
expected benefits of the acquisition. 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, 2008:
Year Ended December 31,
2009 2008
Revenue $ 21,802 $ 23,941
Net income attributable to Xerox 700 359
Basic earnings per share 0.50 0.24
Diluted earnings per share 0.49 0.24
We are still evaluating and assessing the impact of the ACS acquisition
on our internal organizational and reporting structure, as well as its
related impact on our reportable segment disclosures. Accordingly,
in the first quarter 2010, we currently expect to report ACS as a
separate reportable segment, pending completion of that evaluation
and assessment.
Veenman B.V.
In 2008, we acquired Veenman B.V. (“Veenman”), expanding our
reach into the small and mid-size business market in Europe, for
approximately $69 (€ 44 million) in cash, including transaction costs.
Veenman is the Netherlands’ leading independent distributor of office
printers, copiers and multifunction devices serving small and mid-size
businesses. The operating results of Veenman are not material to our
financial statements, and are included within our Office 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.
Global Imaging Systems, Inc.
In 2007, we acquired GIS, a provider of office technology for small
and mid-size businesses in the United States. The acquisition of GIS
expanded our access to the U.S. small and mid-size business market.
The aggregate purchase price was approximately $1.5 billion. In
addition, in connection with the closing, we also repaid $200 of GIS’s
then-outstanding bank debt. The results of operations for GIS are
included in our Consolidated Statements of Income as of May 9, 2007.