Xerox 2015 Annual Report Download - page 73

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Loan Covenants and Compliance
At December 31, 2015, we were in full compliance with the covenants and other provisions of our Credit Facility and
Senior Notes. We have the right to terminate the Credit Facility without penalty. Failure to comply with material
provisions or covenants of the Credit Facility and Senior Notes 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 13 - Debt in the Consolidated Financial Statements for additional information regarding debt
arrangements.
Contractual Cash Obligations and Other Commercial Commitments and Contingencies
At December 31, 2015, we had the following contractual cash obligations and other commercial commitments and
contingencies:
(in millions) 2016 2017 2018 2019 2020 Thereafter
Total debt, including capital lease obligations(1) $ 983 $ 1,027 $1,020 $1,161 $1,207 $ 1,967
Interest on debt(1) 307 251 205 169 116 675
Minimum operating lease commitments(2) 378 271 178 122 78 139
Defined benefit pension plans 140 —————
Retiree health payments 70 68 67 66 64 296
Estimated Purchase Commitments:
Fuji Xerox(3) 1,728 —————
Flextronics(4) 413—————
Other(5) 226 163 125 102 29 153
Total $4,245 $1,780 $1,595 $1,620 $1,494 $ 3,230
_______________
(1) Total debt for 2016 includes $3 million of Notes Payable. Refer to Note 13 - Debt in the Consolidated Financial Statements for additional
information regarding debt and interest on debt.
(2) Refer to Note 8 - Land, Buildings, Equipment and Software, Net in the Consolidated Financial Statements for additional information related to
minimum operating lease commitments.
(3) Fuji Xerox: The amount included in the table reflects our estimate of purchases over the next year and is not a contractual commitment. Refer
to 9 - Investments in Affiliates, at Equity in the Consolidated Financial Statements for additional information related to transactions with Fuji-
Xerox.
(4) Flextronics: We outsource certain manufacturing activities to Flextronics. The amount included in the table reflects our estimate of purchases
over the next year and is not a contractual commitment. In the past two years, actual purchases from Flextronics averaged approximately
$465 million per year.
(5) Other purchase commitments: We enter into other purchase commitments with vendors in the ordinary course of business. Our policy with
respect to all purchase commitments is to record losses, if any, when they are probable and reasonably estimable. We currently do not have,
nor do we anticipate, material loss contracts.
Pension and Other Post-retirement Benefit Plans
We sponsor defined benefit pension plans and retiree health plans that require periodic cash contributions. Our 2015
cash contributions for these plans were $309 million for our defined benefit pension plans and $63 million for our
retiree health plans. In 2016, based on current actuarial calculations, we expect to make contributions of
approximately $140 million to our worldwide defined benefit pension plans and approximately $70 million to our
retiree health benefit plans.
Contributions to our defined benefit pension plans in subsequent years will depend on a number of factors, including
the investment performance of plan assets and discount rates as well as potential legislative and plan changes. At
December 31, 2015, the unfunded and underfunded balances of our U.S. and Non-U.S. defined benefit pension
plans were $1,347 million and $962 million, respectively, or $2,309 million in the aggregate.
Our retiree health benefit plans are non-funded and are almost entirely related to domestic operations. The unfunded
balance of our retiree health plans was $855 million at December 31, 2015. Cash contributions are made each year
to cover medical claims costs incurred during the year. The amounts reported in the above table as retiree health
payments represent our estimate of future benefit payments.
Refer to Note 16 - Employee Benefit Plans in the Consolidated Financial Statements for additional information
regarding contributions to our defined benefit pension and post-retirement plans.
Xerox 2015 Annual Report 56