Xerox 2013 Annual Report Download - page 131

In each of these circumstances, our payment is conditioned on the other party making a claim pursuant to the
procedures specified in the particular contract and such procedures also typically allow us to challenge the other
party's claims. In the case of lease guarantees, we may contest the liabilities asserted under the lease. Further, our
obligations under these agreements and guarantees may be limited in terms of time and/or amount, and in some
instances, we may have recourse against third parties for certain payments we made.
Patent Indemnifications
In most sales transactions to resellers of our products, we indemnify against possible claims of patent infringement
caused by our products or solutions. In addition, we indemnify certain software providers against claims that may
arise as a result of our use or our subsidiaries', customers' or resellers' use of their software in our products and
solutions. These indemnities usually do not include limits on the claims, provided the claim is made pursuant to the
procedures required in the sales contract.
Indemnification of Officers and Directors
Our corporate by-laws require that, except to the extent expressly prohibited by law, we must indemnify Xerox
Corporation's officers and directors against judgments, fines, penalties and amounts paid in settlement, including
legal fees and all appeals, incurred in connection with civil or criminal action or proceedings, as it relates to their
services to Xerox Corporation and our subsidiaries. Although the by-laws provide no limit on the amount of
indemnification, we may have recourse against our insurance carriers for certain payments made by us. However,
certain indemnification payments (such as those related to "clawback" provisions in certain compensation
arrangements) may not be covered under our directors' and officers' insurance coverage. We also indemnify certain
fiduciaries of our employee benefit plans for liabilities incurred in their service as fiduciary whether or not they are
officers of the Company. Finally, in connection with our acquisition of businesses, we may become contractually
obligated to indemnify certain former and current directors, officers and employees of those businesses in
accordance with pre-acquisition by-laws and/or indemnification agreements and/or applicable state law.
Product Warranty Liabilities
In connection with our normal sales of equipment, including those under sales-type leases, we generally do not
issue product warranties. Our arrangements typically involve a separate full service maintenance agreement with
the customer. The agreements generally extend over a period equivalent to the lease term or the expected useful
life of the equipment under a cash sale. The service agreements involve the payment of fees in return for our
performance of repairs and maintenance. As a consequence, we do not have any significant product warranty
obligations, including any obligations under customer satisfaction programs. In a few circumstances, particularly in
certain cash sales, we may issue a limited product warranty if negotiated by the customer. We also issue warranties
for certain of our entry level products, where full service maintenance agreements are not available. In these
instances, we record warranty obligations at the time of the sale. Aggregate product warranty liability expenses for
the three years ended December 31, 2013 were $28, $29 and $30, respectively. Total product warranty liabilities as
of December 31, 2013 and 2012 were $14 and $14, respectively.
Other Contingencies
We have issued or provided the following guarantees as of December 31, 2013:
• $457 for letters of credit issued to i) guarantee our performance under certain services contracts; ii) support
certain insurance programs; and iii) support our obligations related to the Brazil tax and labor contingencies.
• $736 for outstanding surety bonds. Certain contracts, primarily those involving public sector customers, require
us to provide a surety bond as a guarantee of our performance of contractual obligations.
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