Xerox 2011 Annual Report Download - page 72

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Note 4 – Receivables, Net
Accounts Receivable
Accounts receivable, net were as follows:
December 31,
2011 2010
Amounts billed or billable $ 2,307 $ 2,491
Unbilled amounts 395 447
Allowance for doubtful accounts (102) (112)
Accounts Receivable, Net $ 2,600 $ 2,826
The allowance for uncollectible accounts receivables is determined
principally on the basis of past collection experience, as well as
consideration of current economic conditions and changes in our
customer collection trends. Unbilled amounts include amounts associated
with percentage-of-completion accounting, and other earned revenues
not currently billable due to contractual provisions. Amounts to be invoiced
in the subsequent month for current services provided are included in
amounts billable, and at December 31, 2011 and 2010
were approximately $963 and $1,066, respectively.
Accounts Receivable Sales Arrangements
We have facilities in the U.S., Canada and several countries in Europe
that enable us to sell to third parties, on an ongoing basis, certain
accounts receivable without recourse. The accounts receivables sold
are generally short-term trade receivables with payment due dates of
less than 60 days. The agreements involve the sale of entire groups
of accounts receivable for cash. In certain instances a portion of the
sales proceeds are held back by the purchaser and payment is deferred
until collection of the related receivables sold. Such holdbacks are not
considered legal securities nor are they certificated. We report collections
on such receivables as operating cash flows in the Consolidated
Statements of Cash Flows, because such receivables are the result of an
operating activity and the associated interest rate risk is de minimis due
to their short-term nature. These receivables are included in the caption
“Other current assets” in the accompanying Consolidated Balance Sheets
and were $97 and $90 at December 31, 2011 and December 31, 2010,
respectively. Of the accounts receivables sold and derecognized from our
Balance Sheet, $815 and $684 remained uncollected as of December
31, 2011 and 2010, respectively.
The transaction was accounted for using the acquisition method of
accounting which requires, among other things, that most assets acquired
and liabilities assumed are recognized at their fair values as of the
acquisition date. The following table summarizes the assets acquired
and liabilities assumed as of the acquisition date:
February 5, 2010
Assets
Cash and cash equivalents $ 351
Accounts receivable 1,344
Other current assets 389
Land, buildings and equipment 416
Intangible assets 3,035
Goodwill 5,127
Other long-term assets 258
Liabilities
Other current liabilities 645
Deferred revenue 161
Deferred tax liability 990
Debt 2,310
Pension liabilities 39
Other long-term liabilities 263
Net Assets Acquired $ 6,512
The unaudited pro-forma results presented below include the effects
of the ACS acquisition as if it had been consummated as of January 1,
2010. The pro-forma results include the amortization associated with the
acquired intangible assets and interest expense associated with debt used
to fund the acquisition, as well as fair value adjustments for unearned
revenue, software and land, buildings and equipment. To better reflect
the combined operating results, material non-recurring charges directly
attributable to the transaction have been excluded. In addition, the
pro-forma results do not include any synergies or other 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, 2010.
Year Ended December 31, 2010
Pro-forma As Reported
Revenue $22,252 $21,633
Net income – Xerox 592 606
Basic earnings per share 0.41 0.44
Diluted earnings per share 0.41 0.43
Notes to the Consolidated
Financial Statements
(in millions, except per-share data and where otherwise noted)