Xerox 2012 Annual Report Download - page 86

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Notes to Consolidated Financial Statements
(in millions, except per-share data and where otherwise noted)
84
Long-term debt was as follows:
Weighted Average December 31,
Interest Rates at
December 31, 2012 (2) 2012 2011
Xerox Corporation
Senior Notes due 2012 – $ – $ 1,100
Senior Notes due 2013 5.65% 400 400
Floating Rate Notes due 2013 1.71% 600 –
Convertible Notes due 2014 9.00% 19 19
Senior Notes due 2014 8.25% 750 750
Floating Rate Notes due 2014 1.13% 300 300
Senior Notes due 2015 4.29% 1,000 1,000
Notes due 2016 7.20% 250 250
Senior Notes due 2016 6.48% 700 700
Senior Notes due 2017 6.83% 500 500
Senior Notes due 2017 2.98% 500 –
Notes due 2018 0.57% 1 1
Senior Notes due 2018 6.37% 1,000 1,000
Senior Notes due 2019 5.66% 650 650
Senior Notes due 2021 5.39% 1,062 700
Zero Coupon Notes due 2023 – – 301
Senior Notes due 2039 6.78% 350 350
Subtotal – Xerox Corporation $ 8,082 $ 8,021
Subsidiary Companies
Senior Notes due 2015 4.25% 250 250
Borrowings secured by other assets 4.31% 77 76
Other 1.23% 1 3
Subtotal-Subsidiary Companies $ 328 $ 329
Principal Debt Balance 8,410 8,350
Unamortized discount (63) (7)
Fair value adjustments (1) 142 190
Less: current maturities (1,042) (1,445)
Total Long-term Debt $ 7,447 $ 7,088
(1)
Fair value adjustments represent changes in the fair value of hedged debt obligations
attributable to movements in benchmark interest rates. Hedge accounting requires
hedged debt instruments to be reported at an amount equal to the sum of their carrying
value (principal value plus/minus premiums/discounts) and any fair value adjustment.
(2) Represents weighted average effective interest rate which includes the effect of discounts
and premiums on issued debt.
Restricted Cash and Investments
As more fully discussed in Note 17 – Contingencies and Litigation,
various litigation matters in Brazil require us to make cash deposits
to escrow as a condition of continuing the litigation. In addition, as
more fully discussed in Note 4 – Accounts Receivable, Net and Note
5 – Finance Receivables, Net, we continue to service the receivables
sold under most of our receivable sale agreements. As servicer, we may
collect cash related to sold receivables prior to month-end that will be
remitted to the purchaser the following month. Since we are acting on
behalf of the purchaser in our capacity as servicer, such cash collected
is reported as restricted cash. Restricted cash amounts are classified
in our Consolidated Balance Sheets based on when the cash will be
contractually or judicially released.
Restricted cash amounts were as follows:
December 31,
2012 2011
Tax and labor litigation deposits in Brazil $ 211 $ 240
Escrow and cash collections related to receivable sales 146 88
Other restricted cash 8 15
Total Restricted Cash and Investments $ 365 $ 343
Net Investment in Discontinued Operations
At December 31, 2012, our net investment in discontinued operations
primarily consisted of a $208 performance-based instrument relating
to the 1997 sale of The Resolution Group (“TRG”) net of remaining
net liabilities associated with our discontinued operations of $18.
The recovery of the performance-based instrument is dependent
on the sufficiency of TRG’s available cash flows, as guaranteed by
TRG’s ultimate parent, which are expected to be recovered in annual
cash distributions through 2017. The performance-based instrument
is pledged as security for our future funding obligations to our U.K.
Pension Plan for salaried employees.
Note 12 – Debt
Short-term borrowings were as follows:
December 31,
2012 2011
Commercial paper $ – $ 100
Current maturities of long-term debt 1,042 1,445
Total Short-term Debt $ 1,042 $ 1,545
We classify our debt based on the contractual maturity dates of the
underlying debt instruments or as of the earliest put date available to
the debt holders. We defer costs associated with debt issuance over
the applicable term, or to the first put date in the case of convertible
debt or debt with a put feature. These costs are amortized as interest
expense in our Consolidated Statements of Income.