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70 Xerox 2009 Annual Report
Notes to the Consolidated
Financial Statements
Dollars in millions, except per-share data and unless otherwise indicated.
Fair Value of Financial Assets and Liabilities
The following table represents our assets and liabilities measured at fair
value on a recurring basis as of December 31, 2009 and 2008 and the
basis for that measurement:
Total Quoted Prices in Significant Other Significant
Fair Value Active Markets for Observable Unobservable
Measurement Identical Asset Inputs Inputs
December 31, 2009 (Level 1) (Level 2) (Level 3)
Derivative Assets:
Foreign exchange contracts – forwards $ 16 $ — $ 16 $ —
Interest rate swaps 10 — 10 —
Total $ 26 $ — $ 26 $ —
Derivative Liabilities:
Foreign exchange contracts – forwards $ 15 $ — $ 15 $ —
Interest rate swaps 9 — 9 —
Total $ 24 $ — $ 24 $ —
Total Quoted Prices in Significant Other Significant
Fair Value Active Markets for Observable Unobservable
Measurement Identical Asset Inputs Inputs
December 31, 2008 (Level 1) (Level 2) (Level 3)
Derivative Assets:
Foreign exchange contracts – forwards $ 39 $ — $ 39 $ —
Interest rate swaps 53 — 53 —
Total $ 92 $ — $ 92 $ —
Derivative Liabilities:
Foreign exchange contracts – forwards $ 132 $ — $ 132 $ —
Interest rate swaps 2 — 2 —
Total $ 134 $ — $ 134 $ —
Summary of Other Financial Assets and Liabilities
Not Measured at Fair Value on a Recurring Basis
The estimated fair values of our other financial assets and liabilities
not measured at fair value on a recurring basis at December 31, 2009
and 2008 were as follows:
2009 2008
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash and cash
equivalents $ 3,799 $ 3,799 $ 1,229 $ 1,229
Accounts receivable,
net 1,702 1,702 2,184 2,184
Short-term debt 988 1,004 1,610 1,593
Long-term debt 8,276 8,569 6,774 5,918
Liability to subsidiary
trust issuing
preferred securities 649 814 648 555
In 2009 and 2008, we utilized the income approach to measure fair
value for our derivative assets and liabilities. The income approach
uses pricing models that rely on market-observable inputs such as
yield curves, currency exchange rates and forward prices, and therefore
are classified as Level 2.