Xerox 2007 Annual Report Download - page 75

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Credit Ratings: Our credit ratings, which are periodically reviewed by major rating agencies, have substantially
improved and we are currently rated investment grade by all major rating agencies. As of January 31, 2008 the ratings
were as follows:
Senior Unsecured
Debt Outlook Comments
Moody’s(1) ................... Baa2 Positive The Moody’s rating was upgraded from Baa3 in November
2007, with a positive outlook.
Standard & Poors (“S&P”)(2) .... BBB- Stable The S&P rating was upgraded from BB+ to investment grade,
BBB-, in May 2007. Outlook is stable.
Fitch(3) ....................... BBB Stable The Fitch rating was upgraded from BBB- and a stable
outlook was affirmed in December 2007.
(1) On November 15, 2007, Moody’s raised its long term rating of Xerox to Baa2 from Baa3, with a positive outlook. The
following ratings were impacted: Senior Unsecured Debt to Baa2 from Baa3; Trust Preferred Securities to Baa3 from
Ba1; Xerox Credit Corp Senior Unsecured Debt to Baa2 from Baa3.
(2) In May 2007, S&P upgraded the Senior Unsecured and Corporate Credit ratings from BB+ to BBB-, investment grade,
with a stable outlook. At the same time, S&P upgraded the ratings on Subordinated Debt from BB- to BB+ and
Preferred Stock from B+ to BB. The ratings upgrade followed our announcement that we completed our tender offer
for GIS.
(3) On December 10, 2007, Fitch upgraded Xerox’s Issuer Default Rating to BBB from BBB-, with a stable outlook. The
following ratings were also impacted: Senior Unsecured Debt to BBB from BBB-; Senior Unsecured Credit Facility to
BBB from BBB- and Trust Preferred Securities to BBB- from BB.
Contractual Cash Obligations and Other Commercial Commitments and Contingencies:
At December 31, 2007, we had the following contractual cash obligations and other commercial commitments and
contingencies (in millions):
2008 2009 2010 2011 2012 Thereafter
Long-term debt, including capital lease obligations(1) ....... $ 525 $1,552 $ 707 $ 808 $1,721 $2,151
Minimum operating lease commitments(2) ................ 266 212 169 129 90 158
Liability to subsidiary trust issuing preferred securities(3) .... –––––632
Retiree Health Payments ................................ 105 114 119 123 127 635
Purchase Commitments
Flextronics(4) ....................................... 716 –––– –
EDS Contracts(5) .................................... 290 150 17 16 16 15
Other(6) ............................................ 4 3 1 – – –
Total contractual cash obligations ...................... $1,906 $2,031 $1,013 $1,076 $1,954 $3,591
(1) Refer to Note 11 – Debt in our Consolidated Financial Statements for additional information and interest payments
related to long-term debt (amounts above include principal portion only).
(2) Refer to Note 6 – Land, Buildings and Equipment, Net in our Consolidated Financial Statements for additional
information related to minimum operating lease commitments.
(3) Refer to Note 12 – Liability to Subsidiary Trust Issuing Preferred Securities in our Consolidated Financial Statements
for additional information and interest payments (amounts above include principal portion only).
(4) Flextronics: We outsource certain manufacturing activities to Flextronics and are currently in the first year of the 2007
master supply agreement. This agreement is for three years with two additional one year extension periods at our
option.
Xerox Annual Report 2007 73