Xerox 2008 Annual Report Download - page 72

Notes to the Consolidated
Financial Statements
(in millions, except per share data and
unless otherwise indicated)
Scheduled payments due on long-term debt for the next five years
and thereafter are as follows:
2009 2010 2011 2012 2013 Thereafter Total
$1,549(1) $962 $802 $1,169 $1,138 $2,520 $8,140
(1) Quarterly total debt maturities for 2009 are $937, $12, $442 and $158 for the first,
second, third and fourth quarters, respectively.
The zero coupon notes of $433 due 2022 and $253 due 2023 are
included in the above maturity schedule based on the year of their
first potential put date of 2009 and 2010, respectively.
Credit Facility
The borrowing capacity under our $2 billion Credit Facility was $1.7
billion at December 31, 2008, reflecting $246 outstanding
borrowings and no outstanding letters of credit.
In February 2008, we exercised our right to request a one-year
extension of the maturity date of the Credit Facility. Lenders
representing approximately $1.4 billion (or approximately 70%)
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.
The Credit Facility is available, without sublimit, to certain of our
qualifying subsidiaries and includes provisions that would allow us
to increase the overall size of the Credit Facility up to an aggregate
amount of $2.5 billion. Our obligations under the Credit Facility are
unsecured and are not currently guaranteed by any of our
subsidiaries. In the event that any of our subsidiaries borrows
under the Credit Facility, its borrowings thereunder would be
guaranteed by us.
In October 2008, we amended our Credit Facility to increase the
permitted leverage ratio (debt/consolidated EBITDA) and modify
the pricing on borrowings. The following description of the key
terms and conditions of the Credit Facility reflect the changes from
the amendment.
Borrowings under the Credit Facility bear interest at LIBOR plus an
all-in spread that will vary between 1.25% and 4.00% subject to
our credit rating and our percentage utilization of the facility, in
each case, at the time of borrowing. Based upon our current credit
rating and utilization, the all-in spread was 1.75% as of
December 31, 2008.
The Credit 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 (debt divided by consolidated
EBITDA) calculated quarterly and at the date of each borrowing of
3.75.
(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 securing debt of Xerox and certain of our
subsidiaries, (ii) certain fundamental changes to corporate
structure, (iii) changes in nature of business and (iv) limitations on
debt incurred by certain subsidiaries.
The 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 Credit Facility.
These events of default include, without limitation: (i) payment
defaults, (ii) breaches of covenants under the Credit 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.
Private Placement Transaction
In September 2008, we issued $250 of zero coupon notes in a
private placement transaction. The bonds mature in 2023 and the
final amount due at maturity is $709. The bonds are putable
annually at the option of the bond holder beginning in September
2010.
Senior Notes Offerings
In April 2008, we issued $400 of 5.65% senior notes due 2013 (the
“2013 Senior Notes”) at 99.996 percent of par and $1.0 billion of
6.35% senior notes due 2018 (the “2018 Senior Notes”) at 99.856
percent of par, resulting in net proceeds of approximately $1,390.
The 2013 Senior Notes accrue interest at the rate of 5.65% per
annum, payable semiannually, and as a result of the discount, have
a weighted average effective interest rate of 5.65%. The 2018
Senior Notes accrue interest at the rate of 6.35% per annum,
payable semiannually, and as a result of the discount, have a
weighted average effective interest rate of 6.37%. Debt issuance
costs of approximately $10 were deferred. The 2013 Senior Notes
and 2018 Senior Notes are subordinated to our secured
70 Xerox 2008 Annual Report