Xerox 2008 Annual Report Download - page 44

Management’s Discussion
million, $1,871 million and $1,617 million for the years ended
December 31, 2008, 2007 and 2006, respectively. Cash flows
from operations in 2008 included $615 million in net payments
for our securities litigation.
• Our debt maturities are in line with historical and projected cash
flows and are spread over the next ten years as follows (in
millions):
Year Amount
2009 $1,610
2010 962
2011 802
2012 1,169
2013 1,138
2014 69
2015 —
2016 950
2017 501
2018 and thereafter 1,000
Total $8,201
On January 15, 2009, we repaid in-full at maturity, our outstanding
U.S. Dollar and Euro-denominated 9.75% Senior Notes. The total
repayment of approximately $900 million was made using cash on
hand and the proceeds of a $400 million borrowing under our
Credit Facility.
Debt Activity
Credit facility: In February 2008, we exercised our right under our
$2.0 billion Credit Facility to request a one-year extension of the
maturity date. Lenders representing approximately $1.4 billion (or
approximately 70%) of the commitments under the Credit Facility
agreed to the extension and the portion represented by these
Lenders now has a maturity date of April 30, 2013, with the
remaining portion of the Credit Facility to mature on April 30, 2012.
In October 2008, we amended our Credit Facility to increase the
permitted leverage ratio (debt/consolidated EBITDA) to a fixed
ratio of 3.75x. The amendment also included a re-pricing of the
Credit Facility such that borrowings will bear interest at LIBOR plus
an all-in spread that will vary between 1.25% and 4.00% subject
to our credit rating and percent of Credit Facility utilization at the
time of borrowing. Based upon our current rating and utilization,
the all-in spread is 1.75%.
Capital markets offerings and other: In 2008, we raised net
proceeds of $1.4 billion through the issuance of Senior Notes and
$250 million from a private placement transaction.
Loan covenants and compliance: At December 31, 2008, we
were in full compliance with the covenants and other provisions of
the Credit Facility, our Senior Notes and the Loan Agreement. We
have the right to prepay any outstanding loans or to terminate the
Credit Facility without penalty. Failure to be in compliance with any
material provision or covenant of these agreements could have a
material adverse effect on our liquidity and operations and our
ability to continue to fund our customers’ purchase of Xerox
equipment.
Refer to Note 11 – Debt and Note 4 – Receivables, Net in the
Consolidated Financial Statements for additional information
regarding the above noted transactions and Loan Agreement,
respectively.
Share Repurchase Programs
The Board of Directors has authorized share repurchase programs
totaling $4.5 billion through December 31, 2008, which included
additional authorizations of $1.0 billion in both January and July of
2008. Since launching this program in October 2005, we have
repurchased 194.1 million shares, totaling approximately $2.9
billion. Refer to Note 17 – Shareholders’ Equity – “Treasury Stock”
in the Consolidated Financial Statements for further information
regarding our share repurchase programs.
Although we have $1.6 billion of remaining authorization, at the
current time, we have no immediate plans for further share
repurchases.
Dividends
The Board of Directors declared a 4.25 cent per share dividend on
common stock in each quarter of 2008.
Financial Instruments
Refer to Note 13 – Financial Instruments in the Consolidated
Financial Statements for additional information regarding our
derivative financial instruments.
42 Xerox 2008 Annual Report