Xerox 2009 Annual Report Download - page 39

37Xerox 2009 Annual Report
Management’s Discussion
FinancialInstruments
Refer to Note 13 – Financial Instruments in the Consolidated
Financial Statements for additional information regarding our
derivative financial instruments.
ShareRepurchasePrograms
Refer to Note 17 – Shareholders’ Equity – “Treasury Stock” in the
Consolidated Financial Statements for further information regarding
our share repurchase programs.
Dividends
The Board of Directors declared a 4.25 cent per-share dividend on
common stock in each quarter of 2009 and 2008.
CreditFacility
In October 2009, in connection with our anticipated acquisition of
ACS, we amended our $2.0 billion Credit Facility and entered into a
Bridge Loan Facility commitment as noted below. The Credit Facility
amendment extended the maximum permitted leverage ratio of
4.25x through September 30, 2010, which will change to 4.00x through
December 31, 2010 and to 3.75x thereafter. The amendment also
included the following changes:
•The definition of principal debt was changed such that principal
debt was calculated as of December 31, 2009 net of cash proceeds
from the Senior Notes issued in connection with the pre-funding of
the ACS acquisition.
•A portion of the Credit Facility that had a maturity date of April 30,
2012 was extended to a maturity date of April 30, 2013, consistent
with the majority of the facility. Accordingly, after this amendment,
approximately $1.6 billion, or approximately 80% of the Credit
Facility, has a maturity date of April 30, 2013.
CapitalMarketsOfferings
In 2009 we raised net proceeds of $745 million and $1,980 million
through the issuance of Senior Notes of $750 million in May and
$2.0 billion in December, respectively. The net proceeds from the
Senior Notes issued in December 2009 were used to fund the acquisition
of ACS.
Refer to Note 3 – Acquisitions in the Consolidated Financial Statements
for further information regarding the ACS acquisition, as well as Note
11 – Debt in the Consolidated Financial Statements for additional
information regarding the Debt activity.
The following represents Total finance assets associated with our
lease and finance operations as of December 31, 2009 and 2008:
(in millions) 2009 2008
Total finance receivables, net(1) $ 7,027 $ 7,278
Equipment on operating leases, net 551 594
Total Finance Assets, Net $ 7,578 $ 7,872
(1) Includes (i) billed portion of finance receivables, net, (ii) finance receivables, net
and (iii) finance receivables due after one year, net as included in the Consolidated
Balance Sheets as of December 31, 2009 and 2008.
The decrease of $294 million in Total finance assets, net includes
favorable currency of $224 million.
We maintain a certain level of debt, referred to as financing debt, in
order to support our investment in our lease contracts. We maintain an
assumed 7:1 leverage ratio of debt to equity as compared to our finance
assets for this financing aspect of our business. Based on this leverage,
the following represents the breakdown of Total debt between financing
debt and core debt as of December 31, 2009 and 2008:
(in millions) 2009 2008
Financing debt(1) $ 6,631 $ 6,888
Core debt(2) 2,633 1,496
Total Debt $ 9,264 $ 8,384
(1) Financing debt includes $6,149 million and $6,368 million as of December 2009
and 2008, respectively, of debt associated with Total finance receivables, net and
is the basis for our calculation of “equipment financing interest” expense. The
remainder of the financing debt is associated with Equipment on operating leases.
(2) Core debt at December 31, 2009 includes the $2.0 billion Senior Notes issuance
which was used to fund the acquisition of ACS.
The following summarizes our debt as of December 31, 2009 and 2008:
(in millions) 2009 2008
Principal debt balance(3) $ 9,122 $ 8,201
Net unamortized discount (11) (6)
Fair value adjustments 153 189
Total Debt(3) 9,264 8,384
Less: Current maturities and short-term debt (988) (1,610)
Total Long-term Debt(3) $ 8,276 $ 6,774
(3) Total debt at December 31, 2009 includes the $2.0 billion Senior Notes issuance
which was used to fund the acquisition of ACS.
Principal debt balance at December 31, 2008 includes short-term debt
of $61 million. Refer to Note 11 – Debt in the Consolidated Financial
Statements for additional information regarding the above balances.