Xerox 2011 Annual Report Download - page 79

77Xerox 2011 Annual Report
Year Ended December 31,
(continued) 2011 2010 2009
Balance Sheet
Assets:
Current assets $ 5,056 $ 4,884 $ 4,111
Long-term assets 6,064 5,978 5,457
Total Assets $ 11,120 $ 10,862 $ 9,568
Liabilities and Equity:
Current liabilities $ 3,772 $ 3,534 $ 2,643
Long-term debt 817 1,260 1,368
Other long-term liabilities 700 707 1,104
Noncontrolling interests 25 22 19
Fuji Xerox shareholders’ equity 5,806 5,339 4,434
Total Liabilities and Equity $ 11,120 $ 10,862 $ 9,568
Yen/U.S. Dollar exchange rates used to translate are as follows:
Financial Statement Exchange Basis 2011 2010 2009
Summary of Weighted 79.61 87.64 93.51
Operations Average Rate
Balance Sheet Year-End Rate 77.62 81.66 92.46
Transactions with Fuji Xerox
We receive dividends from Fuji Xerox, which are reflected as a reduction
in our investment. Additionally, we have a Technology Agreement with
Fuji Xerox whereby we receive royalty payments for their use of our
Xerox brand trademark, as well as rights to access our patent portfolio in
exchange for access to their patent portfolio. These payments are included
in Service, outsourcing and rental revenues in the Consolidated Statements
of Income. We also have arrangements with Fuji Xerox whereby we
purchase inventory from and sell inventory to Fuji Xerox. Pricing of the
transactions under these arrangements is based upon terms the Company
believes to be negotiated at arm’s length. Our purchase commitments
with Fuji Xerox are in the normal course of business and typically have a
lead time of three months. In addition, we pay Fuji Xerox and they pay us
for unique research and development costs.
Transactions with Fuji Xerox were as follows:
Year Ended December 31,
2011 2010 2009
Dividends received from
Fuji Xerox $ 58 $ 36 $ 10
Royalty revenue earned 128 116 106
Inventory purchases from
Fuji Xerox 2,180 2,098 1,590
Inventory sales to Fuji Xerox 151 147 133
R&D payments received from
Fuji Xerox 2 1 3
R&D payments paid to
Fuji Xerox 21 30 33
As of December 31, 2011 and 2010, net amounts due to Fuji Xerox were
$105 and $109, respectively.
Note 7 – Investment in Affiliates, at Equity
Investments in corporate joint ventures and other companies in which we
generally have a 20% to 50% ownership interest were as follows:
December 31,
2011 2010
Fuji Xerox $ 1,334 $ 1,217
All other equity investments 61 74
Investments in Affiliates, at Equity $ 1,395 $ 1,291
Our equity in net income of our unconsolidated affiliates was as follows:
Year Ended December 31,
2011 2010 2009
Fuji Xerox $ 137 $ 63 $ 30
Other investments 12 15 11
Total Equity in Net Income of
Unconsolidated Affiliates $ 149 $ 78 $ 41
Fuji Xerox
Fuji Xerox is headquartered in Tokyo and operates in Japan, China,
Australia, New Zealand and other areas of the Pacific Rim. Our investment
in Fuji Xerox of $1,334 at December 31, 2011 differs from our implied
25% interest in the underlying net assets, or $1,451, due primarily to our
deferral of gains resulting from sales of assets by us to Fuji Xerox, partially
offset by goodwill related to the Fuji Xerox investment established at the
time we acquired our remaining 20% of Xerox Limited from The Rank
Group plc.
Equity in net income of Fuji Xerox is affected by certain adjustments to
reflect the deferral of profit associated with intercompany sales. These
adjustments may result in recorded equity income that is different from
that implied by our 25% ownership interest. Equity income for the three
years ended December 31, 2011 include after-tax restructuring charges of
$19, $38 and $46, respectively, primarily reflecting Fuji Xerox’s continued
cost-reduction initiatives.
Condensed financial data of Fuji Xerox were as follows:
Year Ended December 31,
2011 2010 2009
Summary of Operations
Revenues $ 12,367 $ 11,276 $ 9,998
Costs and expenses 11,464 10,659 9,781
Income before income taxes 903 617 217
Income tax expense 312 291 67
Net Income 591 326 150
Less: Net income – noncontrolling
interests 5 5 1
Net Income – Fuji Xerox $ 586 $ 321 $ 149
Notes to the Consolidated
Financial Statements
(in millions, except per-share data and where otherwise noted)