Xerox 2006 Annual Report Download - page 80

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
The following summarizes the principal amounts of those instruments as of December 31, 2006:
Senior Notes due 2009 .............................................................. $600
Euro Senior Notes due 2009 .......................................................... 296
Senior Notes due 2010 .............................................................. 700
Senior Notes due 2011 .............................................................. 750
Senior Notes due 2013 .............................................................. 550
Notes due 2016 .................................................................... 250
Senior Notes due 2016 .............................................................. 700
Senior Notes due 2017 .............................................................. 500
(2) Refer to Note 4 – Receivables, Net, for further discussion of borrowings secured by finance receivables, net.
Scheduled payments due on long-term debt for the next five years and thereafter are as follows (in millions):
2007 2008 2009 2010 2011 Thereafter Total
$1,465 $736 $1,169 $733 $806 $2,216 $7,125
2006 Credit Facility
In April 2006, we entered into a $1.25 billion
unsecured revolving credit facility including a $200 letter
of credit subfacility (the “2006 Credit Facility” or
“facility”). The facility allows us to increase from time to
time, with willing lenders, its overall size to $2 billion.
The facility is available, without sublimit, to certain of
our qualifying subsidiaries. The facility replaced our 2003
Credit Facility that was terminated upon effectiveness of
the 2006 Credit Facility. As of December 31, 2006, we
had outstanding letters of credit of $15 and no borrowings
under the 2006 Credit Facility. In conjunction with the
2006 Credit Facility, debt issuance costs of $5 were
deferred.
Our obligations under the facility are unsecured and
are not guaranteed by any of our subsidiaries. However, if
in the future any of our domestic subsidiaries guarantees
any debt for money borrowed by us of more than $100,
that subsidiary is required to guaranty our obligations
under the facility as well. In the event that any of our
subsidiaries borrows under the facility, its borrowings
thereunder would be guaranteed by us.
Borrowings under the 2006 Credit Facility bear
interest at LIBOR plus a spread that will vary between
0.32% and 1.20% depending on our current credit ratings.
The spread as of December 31, 2006 was 0.60%. In
addition, we are required to pay a facility fee on the
aggregate amount of the revolving credit facility. As of
December 31, 2006, there were no outstanding
borrowings under the 2006 Credit Facility and the facility
fee rate was 0.15%.
The 2006 Credit Facility matures in April 2011,
subject to our right to request a one-year extension on
each of the first and second anniversaries of the facility.
The facility contains various conditions to borrowing, and
affirmative, negative and financial maintenance
covenants. Certain of the more significant covenants are
summarized below:
(a) Maximum leverage ratio (a quarterly test that is
calculated as debt for borrowed money divided
by consolidated EBITDA) ranging from 4.25 to
3.25 over the life of the facility.
(b) Minimum interest coverage ratio (a quarterly
test that is calculated as consolidated EBITDA
divided by consolidated interest expense) may
not be less than 3.00:1.
(c) Limitations on (i) liens of Xerox and certain of
our subsidiaries securing debt, (ii) certain
fundamental changes to corporate structure,
(iii) changes in nature of business and
(iv) limitations on debt incurred by certain
subsidiaries.
The 2006 Credit Facility also contains various events
of default, the occurrence of which could result in a
termination by the lenders and the acceleration of all our
obligations under the facility. These events of default
include, without limitation: (i) payment defaults,
(ii) breaches of covenants under the facility (certain of
which breaches do not have any grace period), (iii) cross-
defaults and acceleration to certain of our other
obligations and (iv) a change of control of Xerox.
78