Xerox 2003 Annual Report Download - page 55

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During 2003, we entered into similar long-term
lease funding arrangements with GE in both the U.K.
and Canada. These agreements contain similar terms
and conditions as those contained in the U.S. Loan
Agreement with respect to funding conditions and
covenants. The final funding date for all facilities is
currently December 2010. The following is a summary
of the facility amounts for the arrangements with GE
in these countries.
Facility Amount Maximum Facility Amount(1)
U.S. $5 billion $8 billion
U.K. £400 million £600 million
(U.S. $711) (U.S. $1.1 billion)
Canada Cdn. $850 million Cdn. $2 billion
(U.S. $657) (U.S. $1.5 billion)
(1) subject to mutual agreement by the parties
France Secured Borrowings: In July 2003, we securi-
tized receivables of $443, previously funded under a
364-day warehouse financing facility established in
December 2002 with subsidiaries of Merrill Lynch,
with a three-year public secured financing arrange-
ment. In addition, we established a new warehouse
financing facility to fund future lease originations in
France. This facility can provide funding for new lease
originations up to €350 million (U.S. $439), outstand-
ing at any time, and balances may be securitized
through a similar public offering within two years.
The Netherlands Secured Borrowings: Beginning in
the second half of 2002, we received a series of fund-
ings through our consolidated joint venture with De
Lage Landen International BV (DLL) from DLL’s parent,
De Lage Landen Ireland Company. The fundings are
secured by our lease receivables in The Netherlands
which were transferred to DLL. In addition, DLL also
became our primary equipment financing provider in
the Netherlands for all new lease originations. In the
fourth quarter of 2003, DLL expanded its operations
to include Spain and Belgium. As more fully discussed
in Note 1, our joint venture with DLL has been
consolidated.
Germany Secured Borrowings: In May 2002, we
entered into an agreement to transfer part of our
financing operations in Germany to GE. In conjunction
with this transaction, we received loans from GE
secured by lease receivables in Germany. As part of
the transaction we transferred leasing employees to a
GE entity which will also finance certain new leasing
business in the future. We currently consolidate this
joint venture since we retain substantive rights related
to the borrowings.
The following table shows finance receivables and
related secured debt as of December 31, 2003 and 2002:
December 31, 2003 December 31,2002
Finance Finance
Receiv- Receiv-
ables, Secured ables, Secured
Net Debt Net Debt
GE secured loans:
United States $2,939 $2,598 $2,430 $2,323
Canada 528 440 347 319
United Kingdom 719 570 691 529
Germany 114 84 95 95
Total GE encumbered
finance
receivables, net 4,300 3,692 3,563 3,266
Merrill Lynch Loan –
France 138 92 413 377
Asset-backed notes –
France 429 364 – –
DLL – Netherlands,
Spain, and Belgium(1) 335 277 113 111
U.S. asset-backed notes – – 247 139
Other U.S. securitizations – – 101 7
Total encumbered
finance
receivables, net 5,202 $4,425 4,437 $3,900
Unencumbered finance
receivables, net 3,611 4,568
Total finance
receivables, net $8,813 $9,005
(1) These represent the loans received by our consolidated joint venture with
DLL. De Lage Landen Ireland Company is the lender of record.
As of December 31, 2003, $5,202 of Finance receiv-
ables, net are held as collateral in various trusts as secu-
rity for the borrowings noted above. Total outstanding
debt secured by these receivables at December 31, 2003
was $4,425. The trusts are consolidated in our financial
statements. Although the transferred assets are included
in our total assets, the assets of the trusts are not avail-
able to satisfy any of our other obligations.
Sales of Accounts Receivable: In 2000, we established
two revolving accounts receivable securitization facili-
ties in the U.S. and Canada aggregating $330. The
facilities enabled us to sell, on an ongoing basis, undi-
vided interests in a portion of our accounts receivable
in exchange for cash. The undivided interest sold
under the U.S. trade receivable securitization facility
amounted to $290 at December 31, 2001. In May 2002,
a credit rating agency downgrade caused a termina-
tion event under our U.S. trade receivable securitiza-
tion facility. We continued to sell receivables into the
U.S trade receivable securitization facility pending
renegotiation of the facility as a result of this termina-
tion event. In October 2002, the facility was terminated
and no additional receivables were sold to the facility.
As a result, in October, the counter-party received $231
of collections from the pool of the then-existing receiv-