Xerox 2008 Annual Report Download - page 45

• Our debt maturities are in line with historical and projected cash
On January 15, 2009, we repaid in-full at maturity, our outstanding
U.S. Dollar and Euro-denominated 9.75% Senior Notes. The total
$2.0 billion Credit Facility to request a one-year extension of the
approximately 70%) of the commitments under the Credit Facility
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
the all-in spread is 1.75%.
proceeds of $1.4 billion through the issuance of Senior Notes and
the Credit Facility, our Senior Notes and the Loan Agreement. We
Refer to Note 11 – Debt and Note 4 – Receivables, Net in the
The Board of Directors has authorized share repurchase programs
additional authorizations of $1.0 billion in both January and July of
2008. Since launching this program in October 2005, we have
billion. Refer to Note 17 – Shareholders’ Equity – “Treasury Stock”
The Board of Directors declared a 4.25 cent per share dividend on
common stock in each quarter of 2008.
Refer to Note 13 – Financial Instruments in the Consolidated
42 Xerox 2008 Annual Report
Credit Ratings
We are currently rated investment grade by all major rating agencies. As of January 31, 2009 the ratings were as follows:
Senior Unsecured Debt Outlook
Moody’s Baa2 Positive
Standard & Poors (“S&P”) BBB Stable
Fitch BBB Stable
Contractual Cash Obligations and Other Commercial Commitments and Contingencies
At December 31, 2008, we had the following contractual cash obligations and other commercial commitments and contingencies:
(in millions) 2009 2010 2011 2012 2013 Thereafter
Long-term debt, including capital lease obligations(1) $ 1,610 $ 962 $ 802 $1,169 $ 1,138 $2,520
Minimum operating lease commitments(2) 223 188 151 100 84 123
Liability to subsidiary trust issuing preferred securities(3) —————648
Retiree Health Payments 105 99 99 98 97 445
Purchase Commitments
Flextronics(4) 700———— —
EDS Contracts(5) 239 137 77 77 77 16
Other(6) 17 12 11 — — —
Total contractual cash obligations $2,894 $1,398 $1,140 $1,444 $1,396 $3,752
(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 second year of the Master Supply Agreement. The term of this agreement is three years, with
two additional one year extension periods at our option. The amounts discussed in the table reflect our estimate of purchases over the next year and are not contractual commitments.
(5) EDS Contract: We have an information management contract with Electronic Data Systems Corp. (“EDS”) through June 30, 2009. Services to be provided under this contract include support for
global mainframe system processing, application maintenance, workplace and service desk, voice and data network management and server management. In 2008, the contracts for global
mainframe system processing and workplace and service desk were extended through December 2013 and March 2014, respectively. In January 2009, the contract for voice and data network
management services was revised and extended through March 2014. There are no minimum payments required under this contract. The amounts disclosed in the table reflect our estimate of
probable minimum payments for the periods shown. We can terminate the contract for convenience with six months notice, as defined in the contract, with no termination fee and with
payment to EDS for costs incurred as of the termination date. Should we terminate the contract for convenience, we have an option to purchase the assets placed in service under the EDS
contract.
(6) Other Purchase Commitments: We enter into other purchase commitments with vendors in the ordinary course of business. Our policy with respect to all purchase commitments is to record
losses, if any, when they are probable and reasonably estimable. We currently do not have, nor do we anticipate, material loss contracts.
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