Xerox 2009 Annual Report Download - page 40

38 Xerox 2009 Annual Report
Management’s Discussion
•Over the past three years we have consistently delivered strong
cash flow from operations, driven by the strength of our annuity-
based revenue model. Cash flows from operations were $2,208
million, $939 million and $1,871 million for the years ended
December 31, 2009, 2008 and 2007, respectively. Cash flows
from operations in 2008 included $615 million in net payments
for our securities litigation.
•Our principal debt maturities are in line with historical and
projected cash flows and are spread over the next 10 years as
follows (in millions):
Year Amount
2010 $ 988
2011 802
2012 1,101
2013 961
2014 819
2015 1,000
2016 950
2017 500
2018 1,001
2019 and thereafter 1,000
Total $ 9,122
In February 2010, in connection with the closing of our acquisition of
ACS, we borrowed $649 million under our Credit Facility.
LoanCovenantsandCompliance
At December 31, 2009 we were in full compliance with the covenants
and other provisions of the Credit Facility, our Senior Notes and our
Bridge Loan Facility commitment (which was terminated on January
8, 2010). 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 for further information regarding debt
arrangements.
CreditRatings: We are currently rated investment grade by all major
rating agencies. As of February 8, 2010 the ratings were as follows:
Senior
Unsecured Debt Outlook
Moody’s Baa2 Stable
Standard & Poors BBB- Stable
Fitch BBB Negative
BridgeLoanFacilityCommitment
In connection with the agreement to acquire ACS, in September
2009 we entered into a commitment for a syndicated $3.0 billion
Bridge Loan Facility with several banks that was to be used for funding
the acquisition in the event the transaction closed prior to obtaining
permanent financing in the capital markets. Debt issuance costs for
the Bridge Loan Facility commitment were $58 million. On December
4, 2009, the debt commitment was reduced to $500 million following
our issuance of $2.0 billion of Senior Notes. On January 8, 2010, we
terminated the remaining commitment because we concluded we
had sufficient liquidity to complete the ACS acquisition without having
to borrow under the Bridge Loan Facility.
Liquidity and Financial Flexibility
We manage our worldwide liquidity using internal cash management
practices, which are subject to (1) the statutes, regulations and
practices of each of the local jurisdictions in which we operate,
(2) the legal requirements of the agreements to which we are a
party and (3) the policies and cooperation of the financial institutions
we utilize to maintain and provide cash management services.
Our liquidity is a function of our ability to successfully generate cash
flows from a combination of efficient operations and access to capital
markets. Our ability to maintain positive liquidity going forward depends
on our ability to continue to generate cash from operations and access
to financial markets, both of which are subject to general economic,
financial, competitive, legislative, regulatory and other market factors
that are beyond our control.
The following is a discussion of our liquidity position as of December
31, 2009:
•As of December 31, 2009, total cash and cash equivalents was
$3.8 billion and our borrowing capacity under our Credit Facility was
$2.0 billion, reflecting no outstanding borrowings or letters of credit.
Cash and cash equivalents at December 31, 2009 included the net
proceeds from the $2.0 billion Senior Notes issued in December
2009, which were used to fund the acquisition of ACS.