Xerox 2012 Annual Report Download - page 39

37Xerox 2012 Annual Report
The above charges were partially offset by $71 million of net reversals
for changes in estimated reserves from prior period initiatives.
Restructuring Summary
The restructuring reserve balance as of December 31, 2012 for all
programs was $130 million, of which approximately $122 million is
expected to be spent over the next twelve months. Refer to
Note 10 – Restructuring and Asset Impairment Charges, in the
Consolidated Financial Statements for additional information
regarding our restructuring programs.
Acquisition Related Costs
Costs of $77 million were incurred during 2010 in connection with
our acquisition of ACS. These costs include $53 million of transaction
costs, which represent external costs directly related to completing
the acquisition of ACS. The remainder of the acquisition-related costs
represents external incremental costs directly related to the integration
of ACS and Xerox.
Amortization of Intangible Assets
During the year ended December 31, 2012, we recorded $328 million
of expense related to the amortization of intangible assets, which is
$70 million lower than the prior year. The prior year expense included
$52 million related to the accelerated amortization of the ACS trade
name intangible asset which was fully written off in 2011 as a result of
the decision to discontinue its use and transition the services business
to the “Xerox Business Services” trade name. The impact from the write
off of the ACS trade name was partially offset by the amortization of
intangible assets associated with current and prior-year acquisitions.
During the year ended December 31, 2011, we recorded $398 million
of expense related to the amortization of intangible assets, which
was $86 million higher than the prior year primarily as a result of the
accelerated write-off of the ACS trade name.
Curtailment Gain
In December 2011, we amended all of our primary non-union U.S.
defined benefit pension plans for salaried employees. Our primary
qualified plans had previously been amended to freeze the final
average pay formulas within the plans as of December 31, 2012,
but the cash balance service credit was expected to continue post
December 31, 2012. The 2011 amendments now fully freeze benefit
and service accruals after December 31, 2012 for these plans, including
the related non-qualified plans. As a result of these plan amendments,
we recognized a pre-tax curtailment gain of $107 million ($66 million
after-tax), which represents the recognition of deferred gains from
other prior year amendments (“prior service credits”) as a result of the
discontinuation (“freeze”) of any future benefit or service accrual period.
The amendments did not materially impact 2012 pension expense.
Worldwide Employment
Worldwide employment of 147,600 at December 31, 2012 increased
approximately 8,000 from December 31, 2011, primarily due to the
impact of acquisitions, partially offset by restructuring related actions.
Worldwide employment was approximately 139,650 and 136,500 at
December 2011 and 2010, respectively.
Other Expenses, Net
Year Ended December 31,
(in millions) 2012 2011 2010
Non-financing interest expense $ 230 $ 247 $ 346
Interest income (13) (21) (19)
Loss (gains) on sales of businesses and assets 2 (9) (18)
Currency losses, net 3 12 11
ACS shareholders litigation settlement – – 36
Litigation matters (1) 11 (4)
Loss on sales of accounts receivables 21 20 15
Loss on early extinguishment of liability – 33 15
Deferred compensation investment gains (10) – (12)
All other expenses, net 24 29 19
Total Other Expenses, Net $ 256 $ 322 $ 389
Non-Financing Interest Expense: Non-financing interest expense for
the year ended December 31, 2012 of $230 million was $17 million
lower than prior year. The decrease in interest expense is primarily
due to the benefit of lower borrowing costs achieved as a result of
refinancing existing debt.
Non-financing interest expense for the year ended December 31, 2011
of $247 million was $99 million lower than the prior year. The decrease
in interest expense reflects a lower average debt balance due to the
repayments of Senior Notes, as well as the benefit of lower borrowing
costs achieved as a result of refinancing existing debt and utilizing the
commercial paper program.
Loss (Gains) on Sales of Businesses and Assets: The gains in 2011
and 2010 were primarily related to the sales of certain surplus facilities
in Latin America.
Currency Losses, Net: Currency losses primarily result from the re-
measurement of foreign currency-denominated assets and liabilities,
the cost of hedging foreign currency-denominated assets and liabilities
and the mark-to-market of foreign exchange contracts utilized to
hedge those foreign currency-denominated assets and liabilities.
The 2011 net currency losses were primarily due to the significant
movement in exchange rates during the third quarter of 2011 among
the U.S. Dollar, Euro, Yen and several developing market currencies.