Xerox 2012 Annual Report Download - page 87

85Xerox 2012 Annual Report
Scheduled principal payments due on our long-term debt for the next
five years and thereafter are as follows:
2013(1) 2014 2015 2016 2017 Thereafter Total
$ 1,039 $ 1,093 $ 1,259 $ 954 $ 1,002 $ 3,063 $ 8,410
(1) Quarterly total debt maturities for 2013 are $12, $410, $609 and $8 for the first, second,
third and fourth quarters, respectively.
Commercial Paper
We have a private placement commercial paper (“CP”) program in
the U.S. under which we may issue CP up to a maximum amount of
$2.0 billion outstanding at any time. Aggregate CP and Credit Facility
borrowings may not exceed $2.0 billion outstanding at any time. The
maturities of the CP Notes will vary, but may not exceed 390 days
from the date of issue. The CP Notes are sold at a discount from par or,
alternatively, sold at par and bear interest at market rates. At December
31, 2012, we did not have any CP Notes outstanding.
Credit Facility
We have a $2.0 billion unsecured revolving Credit Facility with a group
of lenders which matures in 2016. The Credit Facility contains a $300
letter of credit sub-facility, and also includes an accordion feature that
would allow us to increase (from time to time, with willing lenders) the
overall size of the facility up to an aggregate amount not to exceed
$2.75 billion. We entered into the facility in December 2011 and we
have the right to request a one year extension on each of the first and
second anniversary dates of this facility. No extension was requested at
the first anniversary date in 2012.
The Credit Facility provides a backstop to our $2.0 billion CP program.
Proceeds from any borrowings under the Credit Facility can be used to
provide working capital for the Company and its subsidiaries and for
general corporate purposes.
At December 31, 2012 we had no outstanding borrowings or letters of
credit under the Credit Facility.
The Credit Facility is available, without sublimit, to certain of our
qualifying subsidiaries. Our obligations under the Credit Facility are
unsecured and are not currently guaranteed by any of our subsidiaries.
Any domestic subsidiary that guarantees more than $100 of Xerox
Corporation debt must also guaranty our obligations under the Credit
Facility. In the event that any of our subsidiaries borrows under the
Credit Facility, its borrowings thereunder would be guaranteed by us.
Borrowings under the Credit Facility bear interest at our choice, at
either (a) a Base Rate as defined in our Credit Facility agreement, plus
a spread that varies between 0.00% and 0.45% depending on our
credit rating at the time of borrowing, or (b) LIBOR plus an all-in spread
that varies between 0.90% and 1.45% depending on our credit rating
at the time of borrowing. Based on our credit rating as of December
31, 2012, the applicable all-in spreads for the Base Rate and LIBOR
borrowing were 0.175% and 1.175%, respectively.
An annual facility fee is payable to each participator in the Credit
Facility at a rate that varies between 0.10% and 0.30% depending on
our credit rating. Based on our credit rating as of December 31, 2012,
the applicable rate is 0.20%.
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 (a quarterly test that is calculated as
principal debt divided by consolidated EBITDA, as defined) of 3.75x.
(b) Minimum interest coverage ratio (a quarterly test that is calculated
as consolidated EBITDA divided by consolidated interest expense) may
not be less than 3.00x.
(c) Limitations on (i) liens of Xerox and certain of our subsidiaries
securing debt, (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 termination of the lenders’
commitments to lend 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.
Capital Market Activity
Refer to the “Capital Market Activity” section in our Capital Resources
and Liquidity section of the MDA for a discussion of 2012 Capital
Market activity.
Interest
Interest paid on our short-term and long-term debt amounted to $462,
$538 and $586 for the years ended December 31, 2012, 2011 and
2010, respectively.
Interest expense and interest income was as follows:
Year Ended December 31,
2012 2011 2010
Interest expense (1) $ 428 $ 478 $ 592
Interest income (2) 610 653 679
(1) Includes Equipment financing interest expense, as well as non-financing interest expense
included in Other expenses, net in the Consolidated Statements of Income.
(2) Includes Finance income, as well as other interest income that is included in Other
expenses, net in the Consolidated Statements of Income.