Xerox 2004 Annual Report Download - page 39

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37
Interest Rate Risk Management: The consolidated
weighted-average interest rates related to our debt and
liabilities to subsidiary trusts issuing preferred securities
for 2004, 2003 and 2002 approximated 5.8 percent, 6.0
percent, and 5.0 percent, respectively. Interest expense
includes the impact of our interest rate derivatives.
Virtually all customer-financing assets earn fixed
rates of interest. As discussed above, a significant
portion of those assets has been pledged to secure
financing loan arrangements and the interest rates
on a significant portion of those loans are fixed. If we
implement additional financing arrangements, the
proportion of our financing assets which is match-
funded against related secured debt may increase.
As of December 31, 2004, approximately $3.2 billion
of our debt bears interest at variable rates, including the
effect of pay-variable interest rate swaps we are utiliz-
ing to reduce the effective interest rate on our debt.
The fair market values of our fixed-rate financial
instruments are sensitiveto changes in interest rates.
At December 31, 2004, a 10 percent change in market
interest rates would change the fair values of such
financial instruments by approximately $378 million.
Forward-Looking Cautionary
Statements
This Annual Report contains forward-looking
statements and information relating to Xerox that are
based on our beliefs, as well as assumptions made by
and information currently available to us. The words
“anticipate,” “believe,” “estimate,” “expect,” “intend,”
“will,” “should” and similar expressions, as they relate
to us, are intended to identify forward-looking state-
ments. Actual results could differ materially from
those projected in such forward-looking statements.
Information concerning certain factors that could
cause actual results to differ materially is included
in our 2004 Annual Report on Form 10-K filed with
the SEC. We do not intend to update these forward-
looking statements.