Xerox 2002 Annual Report Download - page 68

66
Weighted
Average Interest
Rates at
International Operations 12/31/02 2002 2001
Xerox Capital (Europe) plc:
Euros due 2001-2008 5.25% $ 784 $ 661
Japanese yen
due 2001-2005 1.30 84 229
U.S. dollars
due 2001-2008 5.89 523 1,022
Revolving credit agreement
(U.S. dollars) – – 805
Subtotal $ 1,391 $ 2,717
Other International Operations:
Pounds Sterling secured
borrowings(3) due 2001-2003 6.24 $ 529 $ 521
Euro secured borrowings 7.78 206 –
Canadian dollars secured
borrowings due 2003-2005 5.63 319 –
Revolving credit agreement 6.45 50 500
Other debt
due 2001-2008 10.07 292 276
Subtotal 1,396 1,297
Total international
operations 2,787 4,014
Subtotal 13,774 16,691
Less current maturities (3,980) (6,584)
Total long-term debt $ 9,794 $10,107
1 This debt contains a put option that may be exercisable in 2003 (see below).
2 Includes debt of special purpose entities that are consolidated in our
financial statements.
3 Refer to Note 5 for further discussion of secured borrowings.
Consolidated Long-Term Debt Maturities: Scheduled
payments due on long-term debt for the next five years
and thereafter follow:
2003 2004 2005 2006 2007 Thereafter
$3,980 $3,909 $4,016 $56 $296 $1,517
Certain of our debt agreements allow us to redeem
outstanding debt prior to scheduled maturity,
although the New Credit Facility generally prohibits
early repayment of debt. The actual decision as to
early redemption, when and if possible, will be made
at the time the early redemption option becomes
exercisable and will be based on liquidity, prevailing
economic and business conditions, and the relative
costs of new borrowing.
Convertible Debt due 2018: In 1998, we issued
convertible subordinated debentures for net proceeds
of $575. The original scheduled amount due at maturi-
ty in April 2018 was $1,012 which corresponded to an
effective interest rate of 3.625 percent per annum,
including 1.003 percent payable in cash semiannually
beginning in October 1998. These debentures are con-
vertible at any time at the option of the holder into
7.808 shares of our common stock per 1,000 dollars
principal amount at maturity of the debentures. This
debt contains a put option which requires us to pur-
chase any debenture, at the option of the holder, on
April 21, 2003, for a price of 649 dollars per 1,000 dol-
lars principal amount at maturity of the debentures.
We may elect to settle the obligation in cash, shares
of common stock, or any combination thereof. During
2002, we retired $32 of this convertible debt through
the exchange of approximately 4 million shares of
common stock valued at $31. During 2001, we retired
$58 of this convertible debt through the exchange of
approximately 6 million shares of common stock val-
ued at $49. As a result of these retirements, the
amount due at December 31, 2002 is $556 and is pro-
jected to accrete to $863 upon maturity in April 2018.
Debt-for-Equity Exchanges: During 2002, we
exchanged an aggregate of $52 of debt through the
exchange of 6.4 million shares of common stock val-
ued at $51 using the fair market value at the date of
exchange. A gain of $1 was recorded in connection
with these transactions. During 2001, we retired $374
of long-term debt through the exchange of 41 million
shares of common stock valued at $311. A gain of $63
was recorded in connection with these transactions.
The gains were recorded in Other expenses, net in our
Consolidated Statements of Income. The shares were
valued using the daily volume-weighted average price
of our common stock over a specified number of days
prior to the exchange, based on contractual terms.
Lines of Credit: As of December 31, 2001, we had
$7 billion of loans outstanding under a fully-drawn
revolving credit agreement (Old Revolver) due
October 22, 2002, which we entered into in 1997 with
a group of lenders.
In June 2002, we entered into an Amended and
Restated Credit Agreement (the “New Credit Facility”)
with a group of lenders, replacing our prior $7 billion
facility (the “Old Revolver”). At that time, we perma-
nently repaid $2.8 billion of the Old Revolver and sub-
sequently paid $710 on the New Credit Facility. At
December 31, 2002, the New Credit Facility consisted
of two tranches of term loans totaling $2.0 billion and
a $1.5 billion revolving credit facility that includes a
$200 letter of credit subfacility. At December 31, 2002,
$3.5 billion was outstanding under the New Credit
Facility. At December 31, 2002 we had no additional
borrowing capacity under the New Credit Facility
since the entire revolving facility was outstanding,
including a $10 letter of credit under the subfacility.
Xerox, the parent company, is currently, and expects
to remain, the borrower of all the loans. The
Revolving Facility is available, without sub-limit, to
Xerox and to certain subsidiaries including Xerox
Canada Capital Limited, Xerox Capital Europe plc,
and other foreign subsidiaries as defined.