Xerox 2002 Annual Report Download - page 67

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Performance-Based Instrument: In connection with
the sale of TRG in 1997, we received a $462 perform-
ance-based instrument as partial consideration. Cash
distributions are paid on the instrument, based on
72.5 percent of TRG’s available cash flow as defined in
the sale agreement. For the years ended December 31,
2002 and 2001, we have received cash distributions of
$24 and $28, respectively. The recovery of this instru-
ment is dependent upon the sufficiency of TRG’s
available cash flows. Based on current cash flow pro-
jections, we expect to fully recover the $410 remaining
balance of this instrument.
During 2002, the ultimate parent of TRG sought
approval from us to affect a change in business struc-
ture of the entities it holds by combining an insurance
subsidiary of TRG with one of its other insurers. In
order to obtain our approval and enhance the cash
flow capabilities of TRG, the ultimate parent of TRG
has entered into a subscription agreement with TRG
to purchase an established number of shares of this
instrument each year from TRG beginning in 2003
and continuing through 2017.
Note 11 — Debt
Short-Term Debt: Short-term borrowings at December
31, 2002 and 2001 were as follows:
Weighted Weighted
Average Average
Interest Rates at Interest Rates at
December 31, December 31,
2002 2001 2002 2001
Notes payable 6.22% 11.07% $ 20 $ 53
Euro secured
borrowing 3.27% –% 377 –
Total short-term
debt 397 53
Current maturities
of long-term
debt 3,980 6,584
Total $4,377 $6,637
Debt Classification: At December 31, 2002, our debt
has been classified in the Consolidated Balance
Sheets based on the contractual maturity dates of the
underlying debt instruments or as of the earliest put
date available to the debt holders. At December 31,
2001, our debt was classified in the same manner,
except that $3.5 billion of the aggregate $7.0 billion
Revolving credit agreement, which was due in 2002,
was classified as long-term because subsequent to
December 31, 2001, but prior to the issuance of the
financial statements, we refinanced that debt on a
long-term basis under the New Credit Facility.
We defer costs associated with debt issuance over
the applicable term or to the first redemption date, in
the case of convertible debt or debt with a put feature.
Total deferred debt issuance costs included in Other
long-term assets were $133 and $33 as of December
31, 2002 and 2001, respectively. These costs are amor-
tized as interest expense in our Consolidated
Statements of Income.
Long-Term Debt: Long-term debt by final contractual
maturity date at December 31, 2002 and 2001 was as
follows:
Weighted
Average Interest
Rates at
U.S. Operations 12/31/02 2002 2001
Xerox Corporation
(parent company)
Guaranteed ESOP
notes due 2001-2003 –% $ – $ 135
Notes due 2002 – –300
Notes due 2003 5.62 883 896
Notes due 2004 7.15 196 197
Euro notes due 2004 3.50 315 266
Notes due 2006 7.25 15 15
Notes due 2007 7.38 25 25
Notes due 2008 1.41 25 25
Senior Notes due 2009 9.75 626 –
Euro Senior Notes due 2009 9.75 226 –
Notes due 2011 7.01 50 50
Notes due 2014 9.00 19 –
Notes due 2016 7.20 255 255
Convertible notes due 2018(1) 3.63 556 579
New Credit Facility 6.15 3,440 4,675
Other debt due 2001-2018 6.97 40 93
Subtotal $ 6,671 $ 7,511
Xerox Credit Corporation
Notes due 2002 – $ – $ 229
Yen notes due 2002 – –381
Notes due 2003 6.61 463 465
Yen notes due 2005 1.50 845 762
Yen notes due 2007 2.00 255 231
Notes due 2008 6.45 25 25
Notes due 2012 7.11 125 125
Notes due 2013 6.50 59 60
Notes due 2014 6.06 50 50
Notes due 2018 7.00 25 25
Revolving credit agreement – –1,020
Subtotal $ 1,847 $ 3,373
Other U.S. operations(2)(3)
Secured borrowings due 2002-2006 5.03 $ 2,462 $ 1,639
Secured borrowings due 2001-2003 3.25 7154
Subtotal $ 2,469 $ 1,793
Total U.S. operations $10,987 $12,677