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43Xerox 2010 Annual Report
Management’s Discussion
Net cash provided by operating activities was $2,208 million for the year
ended December 31, 2009. The $1,269 million increase in cash from
2008 was primarily due to the following:
$587 million increase due to the absence of payments for securities-
•
related litigation settlements.
$433 million increase as a result of lower inventory levels reflecting
•
aggressive supply chain actions in light of lower sales volume.
$410 million increase from accounts receivables reflecting the
•
benefits from sales of accounts receivables, lower revenue and strong
collection effectiveness.
$177 million increase due to lower contributions to our defined
•
pension benefit plans. The lower contributions are primarily in the U.S.,
as no contributions were required due to the availability of prior years’
credit balances.
$116 million increase due to lower net tax payments.
•
$84 million increase due to higher net run-off of finance receivables.
•
$64 million increase due to lower placements of equipment on
•
operating leases, reflecting lower install activity.
$440 million decrease in pre-tax income before litigation, restructuring
•
and acquisition costs.
$139 million decrease due to higher restructuring payments related to
•
prior years’ actions.
$54 million decrease due to lower accounts payable and accrued
•
compensation, primarily related to lower purchases and the timing of
payments to suppliers.
CashFlowsfromOperatingActivities
Net cash provided by operating activities was $2,726 million for the year
ended December 31, 2010 and includes $113 million of cash outflows
for acquisition-related expenditures. The $518 million increase in cash
from 2009 was primarily due to the following:
$1,173 million increase in pre-tax income before depreciation and
•
amortization, stock-based compensation, litigation, restructuring and
the Venezuelan currency devaluation.
$458 million increase due to higher accounts payable and accrued
•
compensation primarily related to higher inventory purchases and
the timing of accounts payable payments as well as increased
compensation, benefit and other accruals.
$141 million increase primarily from the early termination of certain
•
interest rate swaps.
$57 million increase due to lower restructuring payments.
•
$470 million decrease as a result of higher inventory levels reflecting
•
increased activity.
$367 million decrease due to an increase in accounts receivable, net of
•
collections of deferred proceeds from the sale of receivables, primarily
as a result of higher revenues and a lower impact from receivable sales.
$216 million decrease as a result of up-front costs and other customer
•
related spending associated with our services contracts.
$140 million decrease due to higher finance receivables of $119
•
million and equipment on operating leases of $21 million, both
reflective of increased equipment placements.
$115 million decrease primarily due to higher contributions to our U.S.
•
pension plans. No contributions were made in 2009 to our U.S. pension
plans due to the availability of prior years’ credit balances.
Capital Resources and Liquidity
Cash Flow Analysis
The following summarizes our cash flows for the three years ended
December 31, 2010, as reported in our Consolidated Statements of Cash
Flows in the accompanying Consolidated Financial Statements:
Year Ended December 31, Change
(in millions) 2010 2009 2008 2010 2009
Net cash provided by operating activities $ 2,726 $ 2,208 $ 939 $ 518 $ 1,269
Net cash used in investing activities (2,178) (343) (441) (1,835) 98
Net cash (used in) provided by financing activities (3,116) 692 (311) (3,808) 1,003
Effect of exchange rate changes on cash and cash equivalents (20) 13 (57) (33) 70
(Decrease) increase in cash and cash equivalents (2,588) 2,570 130 (5,158) 2,440
Cash and cash equivalents at beginning of year 3,799 1,229 1,099 2,570 130
Cash and Cash Equivalents at End of Year $ 1,211 $ 3,799 $ 1,229 $ (2,588) $ 2,570