Xerox 2009 Annual Report Download - page 60

58 Xerox 2009 Annual Report
Notes to the Consolidated
Financial Statements
Dollars in millions, except per-share data and unless otherwise indicated.
We have an information management contract with Electronic Data
Systems Corp. (“EDS”) through March 2014. Services to be provided
under this contract include support for European and Brazilian
mainframe system processing and application maintenance through
mid-2010, as well as workplace and service desk and voice and data
network management through March 2014. There are no minimum
payments required under this contract. We can terminate the contract
for convenience with six months notice, as defined in the contract, with
no termination fee and with payment to EDS for costs incurred as of the
termination date. Should we terminate the contract for convenience,
we have an option to purchase the assets placed in service under the
EDS contract. Payments to EDS, which are primarily recorded in selling,
administrative and general expenses, were $198, $279 and $294 for
the years ended December 31, 2009, 2008 and 2007, respectively.
During 2009 we terminated several agreements with EDS for information
management services and entered into new agreements for similar
services with several providers. Services to be provided under these
contracts include support for data network transport; mainframe
application processing, development and support; and mid-range
applications processing and support. These contracts have various terms
through 2015. Some of the contracts require minimum payments and
include termination penalties. Payments for information management
services, which are primarily recorded in selling, administrative and
general expenses, were $26 for the year ended December 31, 2009.
Note 7 – Investments in Affiliates, at Equity
Investments in corporate joint ventures and other companies in which
we generally have a 20% to 50% ownership interest at December 31,
2009 and 2008 were as follows:
2009 2008
Fuji Xerox $ 998 $ 1,028
All other equity investments 58 52
Investments in Affiliates, at Equity $ 1,056 $ 1,080
Our equity in net income of our unconsolidated affiliates for the three
years ended December 31, 2009 was as follows:
2009 2008 2007
Fuji Xerox $ 30 $ 101 $ 89
Other investments 11 12 8
Total Equity in
Unconsolidated Affiliates $ 41 $ 113 $ 97
Note 6 – Land, Buildings and Equipment, Net
Land, buildings and equipment, net at December 31, 2009 and 2008
were as follows:
Estimated
Useful Lives
(Years) 2009 2008
Land — $ 45 $ 45
Buildings and building equipment 25 to 50 1,192 1,156
Leasehold improvements Varies 328 372
Plant machinery 5 to12 1,686 1,597
Office furniture and equipment 3 to 15 994 973
Other 4 to 20 100 100
Construction in progress — 33 95
Subtotal 4,378 4,338
Accumulated depreciation (3,069) (2,919)
Land, Buildings and Equipment, Net $ 1,309 $ 1,419
Depreciation expense and operating lease rent expense for the years
ended December 31, 2009, 2008 and 2007 were as follows:
2009 2008 2007
Depreciation expense $ 247 $ 257 $ 262
Operating lease rent expense(1) $ 267 $ 252 $ 286
(1) We lease certain land, buildings and equipment, substantially all of which are
accounted for as operating leases.
Future minimum operating lease commitments that have initial
or remaining non-cancelable lease terms in excess of one year at
December 31, 2009 were as follows:
2010 2011 2012 2013 2014 Thereafter
$224 $181 $128 $99 $70 $80