Xerox 2012 Annual Report Download - page 80

Notes to Consolidated Financial Statements
(in millions, except per-share data and where otherwise noted)
78
Note 7 – Land, Buildings, Equipment
and Software, Net
Land, buildings and equipment, net were as follows:
Estimated December 31,
Useful Lives (Years) 2012 2011
Land $ 61 $ 60
Buildings and building equipment 25 to 50 1,135 1,121
Leasehold improvements Varies 506 461
Plant machinery 5 to 12 1,571 1,557
Office furniture and equipment 3 to 15 1,681 1,470
Other 4 to 20 83 99
Construction in progress 74 93
Subtotal 5,111 4,861
Accumulated depreciation (3,555) (3,249)
Land, Buildings and Equipment, Net $ 1,556 $ 1,612
Depreciation expense and operating lease rent expense were as
follows:
Year Ended December 31,
2012 2011 2010
Depreciation expense $ 452 $ 405 $ 379
Operating lease rent expense (1) 646 681 632
(1) We lease certain land, buildings and equipment, substantially all of which are accounted
for as operating leases. Capital leased assets were less than $80 at December 31, 2012
and 2011, respectively.
Future minimum operating lease commitments that have initial or
remaining non-cancelable lease terms in excess of one year at
December 31, 2012 were as follows:
2013 2014 2015 2016 2017 Thereafter
$636 $425 $265 $157 $74 $83
Internal Use and Product Software
Year Ended December 31,
Additions to: 2012 2011 2010
Internal use software $ 125 $ 163 $ 164
Product software 107 108 70
December 31,
Capitalized costs, net: 2012 2011
Internal use software $ 577 $ 545
Product software 344 256
Note 6 – Inventories and Equipment
on Operating Leases, Net
The following is a summary of Inventories by major category:
December 31,
2012 2011
Finished goods $ 844 $ 866
Work-in-process 61 58
Raw materials 106 97
Total Inventories $ 1,011 $ 1,021
The transfer of equipment from our inventories to equipment subject
to an operating lease is presented in our Consolidated Statements of
Cash Flows in the operating activities section. Equipment on operating
leases and similar arrangements consists of our equipment rented to
customers and depreciated to estimated salvage value at the end of
the lease term. We recorded $30, $39 and $31 in inventory write-down
charges for the years ended December 31, 2012, 2011 and 2010,
respectively.
Equipment on operating leases and the related accumulated
depreciation were as follows:
December 31,
2012 2011
Equipment on operating leases $ 1,533 $ 1,556
Accumulated depreciation (998) (1,023)
Equipment on Operating Leases, Net $ 535 $ 533
Depreciable lives generally vary from three to four years consistent
with our planned and historical usage of the equipment subject
to operating leases. Depreciation and obsolescence expense for
equipment on operating leases was $279, $294 and $313 for the
years ended December 31, 2012, 2011 and 2010, respectively. Our
equipment operating lease terms vary, generally from one to three
years. Scheduled minimum future rental revenues on operating leases
with original terms of one year or longer are:
2013 2014 2015 2016 2017 Thereafter
$397 $285 $177 $103 $46 $15
Total contingent rentals on operating leases, consisting principally of
usage charges in excess of minimum contracted amounts, for the years
ended December 31, 2012, 2011 and 2010 amounted to $158, $154
and $133, respectively.