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47Xerox 2012 Annual Report
these Senior Notes, debt issuance costs of $6 million were deferred.
This debt issuance partially funded the May 2012 maturity of our
$1,100 million of 5.59% Senior Notes.
Refer to Note 12 – Debt in the Consolidated Financial Statements for
additional information regarding our debt.
Financial Instruments
Refer to Note 13 – Financial Instruments in the Consolidated Financial
Statements for additional information regarding our derivative
financial instruments.
Share Repurchase Programs – Treasury Stock
During 2012, we repurchased 146.3 million shares for an aggregate
cost of $1.1 billion, including fees. Through February 20, 2013, we
repurchased an additional 1.4 million shares at an aggregate cost of
$10.1 million, including fees, for a cumulative program total of
429.7 million shares at a cost of $4.7 billion, including fees. We expect
total share repurchases of at least $400 million in 2013.
In October 2012, the Board of Directors authorized an additional
$1.0 billion in share repurchase, bringing the total remaining
authorization for share repurchases to $1.3 billion as of
February 20, 2013.
Refer to Note 19 – Shareholders’ Equity – Treasury Stock in the
Consolidated Financial Statements for additional information
regarding our share repurchase programs.
Dividends
The Board of Directors declared aggregate dividends of $226 million,
$241 million and $243 million on common stock in 2012, 2011 and
2010, respectively. The decrease in 2012 as compared to prior years is
primarily due to a lower level of outstanding shares in 2012 as a result
of the repurchase of shares under our share repurchase programs.
The Board of Directors declared aggregate dividends of $24 million,
$24 million and $21 million on the Series A Convertible Preferred Stock
in 2012, 2011 and 2010, respectively. The preferred shares were issued
in connection with the acquisition of ACS.
In addition, the company increased its dividend from 4.25 cents per
share to 5.75 cents per share per quarter, beginning with the dividend
payable on April 30, 2013. Accordingly, we expect approximately
$300 million in dividend payments for the full year 2013.
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 principal 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
2013 $ 1,039
2014 1,093
2015 1,259
2016 954
2017 1,002
2018 1,001
2019 650
2020 –
2021 1,062
2022 and thereafter 350
Total $ 8,410
Foreign Cash
At December 31, 2012, we had $1,246 million of cash and cash
equivalents on a consolidated basis. Of that amount, approximately
$400 million was held outside the U.S. by our foreign subsidiaries to
fund future working capital, investment and financing needs of our
foreign subsidiaries. Accordingly, we have asserted that such funds are
indefinitely reinvested outside the U.S.
We believe we have sufficient levels of cash and cash flows to support
our domestic requirements. However, if the cash held by our foreign
subsidiaries was needed to fund our U.S. requirements, there would not
be a significant tax liability associated with the repatriation, as any U.S.
liability would be reduced by the foreign tax credits associated with the
repatriated earnings.
However, our determination above is based on the assumption that
only the cash held outside the U.S. would be repatriated as a result
of an unanticipated or unique domestic need. It does not assume
repatriation of the entire amount of indefinitely reinvested earnings of
our foreign subsidiaries. As disclosed in Note 16 – Income and Other
Taxes in our Consolidated Financial Statements, we have not estimated
the potential tax consequences associated with the repatriation of the
entire amount of our foreign earnings indefinitely reinvested outside
the U.S. We do not believe it is practical to calculate the potential tax
impact, as there is a significant amount of uncertainty with respect to
determining the amount of foreign tax credits as well as any additional
local withholding tax and other indirect tax consequences that may
arise from the distribution of these earnings. In addition, because such
earnings have been indefinitely reinvested in our foreign operations,
repatriation would require liquidation of those investments or a
recapitalization of our foreign subsidiaries, the impacts and effects of
which are not readily determinable.