<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1997
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from : to
Commission file number: 1-8133
XEROX CREDIT CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 06-1024525
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 First Stamford Place, Stamford, Connecticut 06904
(Address of principal executive offices) (Zip Code)
(203) 325-6600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
10% Notes due 1999 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes: X No:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the latest practicable date.
Class Outstanding as of April 30, 1997
Common Stock 2,000
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS J(1)(a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
THIS DOCUMENT CONSISTS OF 22 PAGES
(1)
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
XEROX CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions)
Three Months Ended
March 31,
1997 1996
Earned income:
Contracts and notes receivable $ 88 $ 88
Expenses:
Interest 53 52
Operating and administrative 3 _4
Total expenses 56 56
Income before income taxes 32 32
Provision for income taxes 13 13
Net income $ 19 $ 19
See accompanying notes.
(2)
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XEROX CREDIT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
ASSETS
March 31, December 31,
1997 1996
Cash and cash equivalents $ - $ -
Investments:
Contracts receivable 4,385 4,272
Notes receivable - Xerox and affiliates 130 130
Unearned income (562) (534)
Allowance for losses _(118) (123)
Total investments 3,835 3,745
Net assets of discontinued operations 125 152
Deferred income taxes and other assets 1 2
Total assets $ 3,961 $ 3,899
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Notes payable within one year:
Commercial paper $ 1,339 $ 1,126
Current portion of notes payable 621 886
Notes payable after one year 1,338 1,238
Notes payable after one year - Xerox and affiliates 75 75
Due to Xerox Corporation, net 36 36
Accounts payable and accrued liabilities 44 31
Deferred income taxes ___29 ___31
Total liabilities 3,482 3,423
Shareholder's Equity:
Common stock, no par value, 2,000 shares
authorized, issued, and outstanding 23 23
Additional paid-in capital 219 219
Retained earnings 237 234
Total shareholder's equity 479 476
Total liabilities and shareholder's equity $ 3,961 $ 3,899
See accompanying notes.
(3)
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XEROX CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
Three Months Ended
March 31,
1997 1996
Cash Flows from Operating Activities
Net income $ 19 $ 19
Adjustments to reconcile net income to net cash
provided by operating activities:
Net change in operating assets and liabilities 12 67
Net cash provided by operating activities 31 86
Cash Flows from Investing Activities
Purchases of investments (521) (544)
Proceeds from investments 431 484
Net collections from discontinued operations _ 27 _ 10
Net cash used in investing activities _ (63) _ (50)
Cash Flows from Financing Activities
Change in commercial paper, net 213 571
Proceeds from long-term debt 100 -
Principal payments on long-term debt (265) (585)
Dividends _ (16) (22)
Net cash provided by (used in) financing activities _ 32 _ (36)
Increase in cash and cash equivalents - -
Cash and cash equivalents, beginning of period - -
Cash and cash equivalents, end of period $ - $ -
See accompanying notes.
(4)
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XEROX CREDIT CORPORATION
Notes to Consolidated Financial Statements
(1) The consolidated financial statements presented herein have been
prepared by Xerox Credit Corporation (the "Company") in accordance with
the accounting policies described in its Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and should be read in
conjunction with the Notes to Consolidated Financial Statements which
appear in that report.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary for a fair statement of the
operating results for the interim periods presented have been made.
Interim financial data presented herein are unaudited.
Certain prior year balances have been reclassified to conform to the
current year presentation.
(2) During the first three months of 1997, the Company redeemed the
following notes at maturity:
(in millions)
5.69% Notes $ 25
5.76% Notes 31
5.79% Notes 25
5.81% Notes 25
5.82% Notes 25
Variable Rate Notes 130
Total debt redeemed at maturity 261
Note redeemed prior to maturity __4
Total Debt Redeemed $265
In addition, on April 4, 1997 the Company called, at par, $150 million
of variable rate notes due in 2000.
(3) During the first three months of 1997, the Company sold at various dates
a total of $100 million of fixed- and adjustable-rate notes which mature
at various dates in 2012 and are first callable in 1999 and 2001. The
interest rates on all of these notes have been swapped into Libor-based
rates.
(4) The terms of a Support Agreement with Xerox provide that the Company
will receive from Xerox income maintenance payments, to the extent
necessary, so that the Company's earnings shall not be less than 1.25
times its fixed charges. For purposes of this calculation, both
earnings and fixed charges are as defined in Section 1404 (formerly
Section 81(2)) of the New York Insurance Law. In addition, the
agreement requires that Xerox retain 100 percent ownership of the
Company's voting capital stock.
(5)
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Continuing Operations
Contracts receivable income represents income earned under an agreement
with Xerox pursuant to which the Company purchases long-term accounts
receivable associated with Xerox' sold equipment. These receivables arise
primarily from Xerox equipment sold under installment sales and sales-type
leases.
Earned income from contracts and notes receivable was $88 million for
the first three months of 1997 and 1996. The effect of higher average
contract receivables was offset by a lower average interest rate.
Interest expense increased to $53 million in the first quarter of 1997
from $52 million in the same period in 1996. The increase is due to a larger
average portfolio of contracts receivable and a slight change to the
Company's internal leverage guideline (see page 8), which were largely
offset by a lower average interest rate and lower discontinued operations net
assets (see page 7).
Since substantially all of the Company's contracts receivable earn fixed
rates of interest, the Company "match funds" the contracts by swapping
variable-rate commercial paper and medium term notes into fixed rates of
interest for specified maturities. This practice is employed because it
effectively "locks in" a spread and eliminates the risk of shrinking interest
margins in a rising interest rate environment. Conversely, this practice
effectively eliminates the opportunity to increase margins when interest
rates are declining. The Company intends to continue to match its contracts
receivable and indebtedness to ensure an adequate spread between interest
income and interest expense.
Operating and administrative expenses were $3 million for the first
quarter of 1997 compared to $4 million for the first quarter of 1996. These
expenses are primarily the costs to administer the contracts receivable
purchased from Xerox.
The effective income tax rate for the first three months of 1997 and
1996 was 40.6 percent.
(6)
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Discontinued Operations
Since their discontinuance in 1990, the Company has made substantial
progress in disengaging from the real estate and third-party financing
businesses. Through March 31, 1997, the Company has received net cash
proceeds of $2,503 million from the sale of discontinued business units,
asset securitizations, sales, and runoff collection activities. The amounts
received have been consistent with the Company's estimates in its disposal
plan and were primarily used to reduce the Company's indebtedness.
During the first quarter of 1997, the Company reduced its net assets of
discontinued operations by $27 million, primarily through contractual
maturities and cash sales.
Since a significant portion of the remaining $125 million portfolio
represents passive lease receivables, some with long-duration contractual
maturities and unique tax attributes, the Company expects that the wind-down
of the portfolio will continue to be a gradual process. The Company believes
that the liquidation of the remaining assets will not result in a net loss.
CAPITAL RESOURCES AND LIQUIDITY
The Company's principal sources of funds are cash from the collection
of Xerox contracts receivable and borrowings.
Net cash provided by operating activities was $31 million in the first
three months of 1997 compared to $86 million during the same period in 1996.
The decrease was primarily due to lower intercompany receipts in the first
quarter of 1997.
Net cash used in investing activities was $63 million in the first
three months of 1997 compared to $50 million in the first three months of
1996. The increase is due to lower year over year cash collections on
contracts receivable, offset by lower purchases of contracts from Xerox and
higher cash collections from the sale of discontinued assets.
Net cash provided by financing activities was $32 million during the
first three months of 1997 compared to $36 million used in financing
activities during the same period in 1996. The change is primarily associated
with the proceeds from the sale of fixed- and adjustable-rate notes in the
first quarter of 1997.
(7)
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At March 31, 1997, the Company had domestic shelf capacity of $350
million. In addition, a $2 billion Euro-debt facility is available to the
Company, Xerox, and Rank Xerox Capital (Europe) plc, of which $1.367 billion
remained unused at March 31, 1997.
The Company and Xerox have joint access to a $5 billion revolving credit
agreement with various banks which expires in 2000. Any amounts borrowed
under this facility would be at rates based, at the borrower's option, on
spreads above certain reference rates such as LIBOR and Federal Funds.
The Company believes that cash provided by continuing operations, cash
available under its commercial paper program supported by its credit
facility, and its access to the capital markets are more than sufficient to
ensure its funding needs will be met. New borrowing associated with the
financing of customer purchases of Xerox equipment will continue in 1997 and
decisions regarding the size and timing of any new term debt financing will
be made based on cash flows, match funding needs, refinancing requirements
and capital market conditions.
The Company intends to continue to match fund its contracts receivable.
To assist in managing its interest rate exposure, the Company has entered
into a number of interest rate swap agreements. In general, the Company's
objective is to hedge its variable-rate debt by paying fixed rates under the
swap agreements while receiving variable-rate payments in return.
Additionally, in order to match the duration of its assets, the Company
opportunistically issues variable- and fixed-rate medium-term notes which are
swapped to attractive commercial paper or LIBOR- based rates.
During the first three months of 1997, the Company entered into interest
rate swap agreements which effectively converted $339 million of variable-
rate debt into fixed-rate debt. These agreements mature at various dates
through 2002 and resulted in a weighted average fixed-rate of interest of
6.25 percent. The Company also entered into interest rate swap agreements
during the first quarter 1997 which effectively converted $100 million of
fixed- and adjustable-rate debt into variable-rate debt indexed to LIBOR
rates. These agreements mature at various dates in 2012 and all are
cancelable by the respective counterparties on interest payment dates
beginning in 1999 and 2001 These swaps were entered into to ensure that the
Company is match funded.
As of March 31, 1997, the Company's overall debt-to-equity ratio was 7.0
to 1. The Company's internal practice is to maintain a debt-to-equity ratio
of approximately 7.0 to 1. Prior to December 31, 1996, the Company's
practice was to maintain a debt-to-equity ratio of approximately 6.5 to 1.
(8)
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3 (a) Articles of Incorporation of Registrant filed
with the Secretary of State of Delaware on
June 23, 1980.
Incorporated by reference to Exhibit 3(a)
to Registration Statement No. 2-71503.
(b) By-Laws of Registrant, as amended through
September 1, 1992.
Exhibit 12 (a) Computation of the Company's Ratio of Earnings
to Fixed Charges.
(b) Computation of Xerox' Ratio of Earnings
to Fixed Charges.
Exhibit 27 Financial Data Schedule (Electronic Form Only)
(b) Reports on Form 8-K.
None
(9)
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
XEROX CREDIT CORPORATION
BY______________________
George R. Roth, Vice President,
Treasurer and Chief Financial Officer
May 12, 1997
(10)
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Exhibit 3 (b)
As Amended and Restated
Through September 1, 1992
XEROX CREDIT CORPORATION
BY-LAWS
ARTICLE I
OFFICES
Section 1. The office of the Corporation shall be located in the City
of Dover, State of Delaware (the "State").
Section 2. The Corporation may also have offices at such other places
both within and without the State as the board of directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
ANNUAL MEETINGS OF STOCKHOLDERS
Section 1. All annual meetings of stockholders shall be held on such
date and time and place as shall be designated from time to time by the board
of directors, at which they shall elect by a plurality vote, a board of
directors, and transact such other business as may properly be brought before
the meeting.
Section 2. Written or printed notice of the annual meeting stating the
place, date and hour of the meeting shall be delivered not less than ten nor
more than sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, secretary or the officer or
persons calling the meeting, to each stockholder of record entitled to vote
at such meeting.
ARTICLE III
SPECIAL MEETINGS OF STOCKHOLDERS
Section 1. Special meetings of stockholders may be held at such time
and place within or without the State as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman, president, a majority of the
board of directors or the holders of not less than ten percent of all the
shares entitled to vote at the meeting.
(11)
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Section 3. Written or printed notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty
days before the date of the meeting, either personally or by mail, by, or at
the direction of, the chairman, president, secretary or the officer or
persons calling the meeting, to each stockholder of record entitled to vote
at such meeting. The notice shall also indicate that it is being issued by,
or at the direction of, the person calling the meeting.
Section 4. Notice of a meeting need not be given to any stockholder
who signs a waiver of such notice before or after the meeting.
Section 5. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction
of business except as otherwise provided by statute.
Section 2. If a quorum is present, the affirmative vote of a majority
of the shares of stock represented at the meeting shall be the act of the
stockholders, unless the vote of a greater or lesser number of shares of
stock is required by law.
Section 3. Each outstanding share of stock having voting power shall
be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders. A stockholder may vote either in person or by proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. No
proxy shall be valid after eleven months from its date unless the proxy
provides for a longer period.
Section 4. Whenever stockholders are required or permitted to take any
action by vote, such action may be taken without a meeting on written
consent, setting forth the action so taken, signed by the holders of all
outstanding shares entitled to vote thereon.
(12)
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ARTICLE V
DIRECTORS
Section 1. The number of directors shall be not less than one nor more
than twenty. The number of directors shall be determined from time to time
by a resolution of the stockholders or the board of directors. The
directors, other than the first board of directors, shall be elected at the
annual meeting of the stockholders, except as hereinafter provided, and each
director elected shall serve until the next succeeding annual meeting and
until his successor shall have been elected and qualified. Each director
shall be a United States citizen. The first board of directors shall hold
office until the first annual meeting of stockholders.
Section 2. Any or all of the directors may be removed, with or without
cause, at any time by the stockholders by the affirmative vote of the
majority of the votes cast by the holders of shares entitled to vote for the
election of directors.
Section 3. Directors shall not be elected by cumulative voting unless
otherwise required by law.
Section 4. Newly created directorships resulting from an increase in
the board of directors and all vacancies occurring in the board may be filled
by a majority of the directors then in office, though less than a quorum, or
by the stockholders at an annual meeting or at a special meeting of
stockholders called for that purpose. A director elected to fill a vacancy
shall be elected for the unexpired portion of the term of his predecessor in
office. A director elected to fill a newly created directorship shall serve
until the next succeeding annual meeting of stockholders and until his
successor shall have been elected and qualified.
Section 5. The business affairs of the Corporation shall be managed by
its board of directors which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the
certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
Section 6. The directors may keep the books of the Corporation, except
such as are required by law to be kept within the State, outside the State,
at such place or places as they may from time to time determine.
Section 7. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the Corporation as directors,
officers or otherwise.
(13)
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ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may
be held either within or without the State.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present, or it may convene at such place
and time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by
the chairman, president, any two directors, the secretary or the holders of
all the outstanding shares of stock of the Corporation on three days' notice
to each director, delivered by mail, or on twenty-four hours' notice given in
person or by telephone or telegram.
Section 5. Notice of a meeting need not be given to any director who
submits a signed waiver of notice, before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business. The vote of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the board of
directors, unless the vote of a greater number is required by law. If a
quorum shall not be present at any meeting of directors, the directors
present may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 7. Members of the board of directors, or any committee
designated by the board of directors, may participate in a meeting of the
board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 8. Any action required or permitted to be taken at a meeting
of the directors or a committee thereof may be taken without a meeting if a
consent in writing to the adoption of a resolution authorizing the action so
taken, shall be signed by all of the directors entitled to vote with respect
to the subject matter thereof and the writing or writings are filed with the
minutes of proceedings of the board or committee.
(14)
<PAGE>
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a majority
of the entire board, may designate, from among its members, an executive
committee and other committees, each consisting of two or more directors, and
each of which, to the extent provided in the resolution, shall have all the
authority of the board, except as otherwise required by law. The executive
committee shall have the power to declare dividends. The board may designate
one or more directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee. Vacancies
in the membership of a committee shall be filled by the board of directors at
a regular or special meeting of the board of directors. Each committee shall
keep regular minutes of its proceedings and report the same to the board when
required.
Section 2. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the Corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given in person or by telephone
or telegram.
Section 2. Whenever any notice of a meeting is required to be given
under the provisions of the statutes or under the provisions of the
certificate of incorporation or these by-laws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the giving of
such notice. All waivers of notice shall be made a part of the minutes of
the meeting.
(15)
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ARTICLE IX
OFFICERS
Section 1. The officers of the Corporation shall be a chairman,
president, a treasurer and a secretary, all of whom shall be elected by the
board of directors and who shall hold office until their successors are
elected and qualified. In addition, the board of directors may elect one or
more vice presidents, a controller and such assistant secretaries, assistant
treasurers and assistant controllers as it may deem proper. The officers
shall be elected at the first meeting of the board of directors and
thereafter at each succeeding annual meeting of directors. All vacancies
occurring among any of the officers shall be filled by the board of
directors. Any two or more offices may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law or these by-laws to be
executed, acknowledged or verified by two or more officers.
Section 2. The board of directors may appoint such other officers and
agents as it may deem advisable, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 3. Any officer elected or appointed by the board of directors
may be removed at any time by the board of directors with or without cause.
THE CHAIRMAN
Section 4. The Chairman shall preside at all meetings of the
stockholders and directors at which he is present. He shall also perform
such other duties as may be assigned to him from time to time by the board of
directors. The Chairman shall be a United States citizen.
THE PRESIDENT
Section 5. The president shall be chief executive officer of the
Corporation, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall, in the absence of
the Chairman, preside at all meetings of stockholders and directors at which
he is present. The president shall be a United States citizen.
Section 6. The president shall execute bonds, mortgages and other
contracts requiring a seal under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the Corporation.
THE VICE PRESIDENT
Section 7. In the absence of the president or in the event of his
inability or refusal to act, the vice president (or in the event there be
more than one vice president, the vice presidents in the order designated by
the directors, or in the absence of any designation, then in the order of
their election) shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the president. The vice presidents shall perform such other duties and
have such other powers as the president or the board of directors may from
time to time prescribe.
(16)
<PAGE>
THE SECRETARY AND ASSISTANT SECRETARY
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings
of the meetings of the Corporation and of the board of directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors,
and shall perform such other duties as may be prescribed by the board of
directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the Corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring
it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the Corporation
and to attest the affixing by his signature.
Section 9. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties as the president or the board of
directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURER
Section 10. The treasurer shall be the chief financial officer of the
Corporation unless the board of directors shall designate another person as
such; he shall have custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories
as may be designated by the board of directors.
Section 11. The treasurer shall disburse the funds of the Corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors,
at its regular meetings, or when the president or the board of directors so
requires, an account of all his transactions as treasurer and of the
financial condition of the Corporation.
Section 12. If required by the board of directors, the treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance
of the duties of his office and for the restoration to the Corporation, in
case of his death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Corporation.
Section 13. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of
the treasurer and shall perform such other duties and have such other powers
as the president or the board of directors may from time to time prescribe.
(17)
<PAGE>
THE CONTROLLER AND ASSISTANT CONTROLLER
Section 14. The controller shall keep the books of account for internal
and external reporting purposes. He shall perform all other duties
customarily incident to the office of controller and shall perform other such
duties and exercise such other powers as the chairman, president or the board
of directors may from time to time prescribe.
Section 15. The assistant controller, or if there shall be more than
one, the assistant controllers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the controller or in the event of his
inability or refusal to act, perform the duties and exercise the powers of
the controller and shall perform such other duties and have such other powers
as the president or the board of directors may from time to time prescribe.
ARTICLE X
CERTIFICATE FOR SHARES
Section 1. The shares of the Corporation shall be represented by
certificates signed by the chairman or the president or a vice president and
the secretary or an assistant secretary or the treasurer or an assistant
treasurer of the Corporation and may be sealed with the seal of the
Corporation or a facsimile thereof.
LOST CERTIFICATES
Section 2. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed.
TRANSFERS OF SHARES
Section 3. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto,
and the old certificate canceled and the transaction recorded upon the books
of the Corporation.
REGISTERED STOCKHOLDERS
Section 4. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State.
(18)
<PAGE>
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the certificate of
incorporation relating thereto, if any, dividends may be declared by the
board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in shares of the capital stock or in the
Corporation's bonds or its property, including the shares or bonds of other
corporations subject to any provisions of law and of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper
as a reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person
or persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the Corporation, the year and jurisdiction of its organization and the words
"Corporate Seal." The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any manner reproduced.
ANNUAL STATEMENT
Section 6. The board of directors shall be required to present at each
annual meeting of stockholders a complete financial statement for the
Corporation only if requested by a stockholder.
VOTING OF SHARES HELD IN THE NAME OF THE CORPORATION
Section 7. Each of the chairman, president, secretary or any assistant
secretary is authorized to vote, represent and exercise on behalf of the
Corporation all rights incident to any and all shares of any other
corporation(s) standing in the name of the Corporation. This authority may
be exercised either in person or by any other person authorized to do so by
proxy or power of attorney duly executed by the chairman, president,
secretary or any assistant secretary.
(19)
<PAGE>
ASSIGNMENT AND TRANSFER OF STOCKS, BONDS,
AND OTHER SECURITIES
Section 8. The chairman, president, the treasurer, the secretary, any
assistant secretary, any assistant treasurer, and each of them, shall have
power to assign, or to endorse for transfer, under the corporate seal, and to
deliver, any stock, bonds, subscription rights, or other securities, or any
beneficial interest therein, held or owned by the Corporation.
ARTICLE XII
INDEMNIFICATION
Section 1. To the full extent authorized by law, the Corporation shall
indemnify any person, made or threatened to be made, a party in any civil or
criminal action or proceeding by reason of the fact that he, his testator or
intestate is or was a director or officer of the Corporation or served any
other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
in any capacity at the request of the Corporation.
ARTICLE XIII
AMENDMENTS
Section 1. These by-laws may be amended, repealed or new by-laws
adopted (a) at any regular or special meeting of stockholders by the
affirmative vote of a majority of shares entitled to vote, or (b) by the
affirmative vote of a majority of the board of directors unless the power of
the board to amend, repeal or adopt by-laws must be conferred in the
certificate of incorporation and such power has not been so conferred. In
any event, the board may not take any action with respect to the by-laws
which is reserved by statute to the stockholders, nor does any power of the
board to amend, repeal or adopt by-laws divest, limit, or diminish the power
of the stockholders to amend, repeal or adopt by-laws, including the power of
stockholders to amend, repeal or adopt a by-law contrary to any action with
respect thereto previously taken by the board.
(20)
<PAGE>
Exhibit 12 (a)
XEROX CREDIT CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Millions)
Three Months Ended
March 31, Year Ended December 31,
1997 1996 1996 1995 1994 1993 1992
Income before income taxes $ 32 $ 32 $ 123 $ 119 $ 147 $ 154 $ 158
Fixed Charges:
Interest expense (2)
Xerox debt 2 1 5 6 5 4 2
Other debt 51 51 199 213 197 205 210
Total fixed charges 53 52 204 219 202 209 212
Earnings available for
fixed charges $ 85 $ 84 $ 327 $ 338 $ 349 $ 363 $ 370
Ratio of earnings to
fixed charges (1) 1.60 1.62 1.60 1.54 1.73 1.74 1.75
(1) The ratio of earnings to fixed charges has been computed based on the
Company's continuing operations by dividing total earnings available
for fixed charges by total fixed charges.
(2) Debt had been assigned to discontinued operations based on the net
assets of the discontinued operations and the debt to equity ratios that
existed at the time the assets were acquired. Beginning in 1995, the
amount of interest expense that would have been allocated to
discontinued operations is insignificant and is now being reported
within continuing operations and therefore included in the fixed
charges. Discontinued operations consist of the Company's real estate
development and related financing operations and its third-party
financing and leasing businesses.
(21)
<PAGE>
Exhibit 12(b)
XEROX CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Millions)
Three Months ended
March 31, Year ended December 31,
1997 1996 1996 1995 1994 1993* 1992
Fixed charges:
Interest expense $ 135 $ 148 $ 592 $ 603 $ 520 $ 540 $ 627
Rental expense 34 35 140 142 170 180 187
Preferred stock dividend
of subsidiary 6 - - - - - -
Total fixed charges
before capitalized
interest 175 183 732 745 690 720 814
Capitalized interest - - - - 2 5 17
Total fixed charges $ 175 $ 183 $ 732 $ 745 $ 692 $ 725 $ 831
Earnings available for fixed
charges:
Earnings ** $ 450 $ 404 $2,067 $1,980 $1,602 $(193) $1,183
Less undistributed
income in minority
owned companies (23) (20) (84) (90) (54) (51) (52)
Add fixed charges before
capitalized interest 175 183 __732 __745 __690 720 __814
Total earnings available
for fixed charges $ 602 $ 567 $2,715 $2,635 $2,238 $ 476 $1,945
Ratio of earnings to
fixed charges (1)(2) 3.44 3.10 3.71 3.54 3.23 0.66 2.34
(1) The ratio of earnings to fixed charges has been computed based on
Xerox' continuing operations by dividing total earnings available for
fixed charges, excluding capitalized interest, by total fixed charges.
Fixed charges consist of interest, including capitalized interest, and
one-third of rent expense as representative of the interest portion of
rentals. Debt has been assigned to discontinued operations based on
historical levels assigned to the businesses when they were continuing
operations adjusted for subsequent paydowns. Discontinued
operations consist of Xerox' Insurance and Other Financial Services
businesses and its real-estate development and third-party financing
businesses.
(2) Xerox' ratio of earnings to fixed charges includes the effect of,
Xerox' finance subsidiaries which primarily finance Xerox equipment.
Financing businesses are more highly leveraged and, therefore, tend to
operate at lower earnings to fixed charges ratio levels than do non-
financial businesses.
* 1993 earnings were inadequate to cover fixed charges. The coverage
deficiency was $249 million.
** Sum of "Income (Loss) before Income Taxes, Equity Income and Minorities'
Interests" and "Equity in Net Income of Unconsolidated Affiliates."
(22)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM XEROX
CREDIT CORPORATION'S MARCH 31, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,953
<ALLOWANCES> 118
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,961
<CURRENT-LIABILITIES> 1,960
<BONDS> 3,373
<COMMON> 23
0
0
<OTHER-SE> 456
<TOTAL-LIABILITY-AND-EQUITY> 3,961
<SALES> 0
<TOTAL-REVENUES> 88
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53
<INCOME-PRETAX> 32
<INCOME-TAX> 13
<INCOME-CONTINUING> 19
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19
<EPS-PRIMARY> 0
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</TABLE>
