Xerox 2013 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2013 Xerox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

Cash Flows from Financing Activities
Net cash used in financing activities was $1,402 million for the year ended December 31, 2013. The $70 million
decrease in the use of cash from 2012 was primarily due to the following:
• $356 million decrease from lower share repurchases.
• $80 million decrease due to higher proceeds from the issuances of common stock.
• $326 million increase from net debt activity. 2013 reflects payments of $1 billion on Senior Notes offset by net
proceeds of $500 million from the issuance of Senior Notes and $39 million from the sale and capital leaseback
of a building in the U.S. 2012 reflects net proceeds of $1.1 billion from the issuance of Senior Notes offset by
net payments on Senior Notes of $1.1 billion and a decrease of $100 million in Commercial Paper.
• $41 million increase due to higher common stock dividends.
Net cash used in financing activities was $1,472 million for the year ended December 31, 2012. The $114 million
decrease in the use of cash from 2011 was primarily due to the following:
• $670 million decrease reflecting the absence of payment of our liability to Xerox Capital Trust I in connection
with their redemption of preferred securities.
• $351 million increase from higher share repurchases in 2012.
• $157 million increase from net debt activity. 2012 reflects net proceeds of $1.1 billion from the issuance of
Senior Notes offset by net payments on Senior Notes of $1.1 billion and a decrease of $100 million in
Commercial Paper. 2011 includes proceeds of $1.0 billion from the issuance of Senior Notes offset by the
repayment of $750 million on Senior Notes and a decrease of $200 million in Commercial Paper.
• $47 million increase due to higher distributions to noncontrolling interests.
Customer Financing Activities
We provide lease equipment financing to our customers, primarily in our Document Technology segment. Our lease
contracts permit customers to pay for equipment over time rather than at the date of installation. Our investment in
these contracts is reflected in Total finance assets, net. We primarily fund our customer financing activity through
cash generated from operations, cash on hand, commercial paper borrowings, sales and securitizations of finance
receivables and proceeds from capital markets offerings.
We have arrangements in certain international countries and domestically with our small and mid-sized customers,
where third-party financial institutions independently provide lease financing, on a non-recourse basis to Xerox,
directly to our customers. In these arrangements, we sell and transfer title of the equipment to these financial
institutions. Generally, we have no continuing ownership rights in the equipment subsequent to its sale; therefore,
the unrelated third-party finance receivable and debt are not included in our Consolidated Financial Statements.
The following represents our Total finance assets, net associated with our lease and finance operations:
December 31,
(in millions) 2013 2012
Total Finance receivables, net(1) $4,530 $5,313
Equipment on operating leases, net 559 535
Total Finance Assets, Net $5,089 $5,848
______________
(1) Includes (i) billed portion of finance receivables, net, (ii) finance receivables, net and (iii) finance receivables due after one year, net as included
in our Consolidated Balance Sheets.
The decrease of $759 million in Total finance assets, net primarily reflects the sale of finance receivables (discussed
further below) and the decrease in equipment sales over the past several years as well as equipment sales growth in
regions or operations where we don't offer direct leasing. These impacts were partially offset by an increase of $35
million due to currency.
We maintain a certain level of debt, referred to as financing debt, to support our investment in these lease contracts
or Total finance assets, net. We maintain this financing debt at an assumed 7:1 leverage ratio of debt to equity as
compared to our Total finance assets, net for this financing aspect of our business. Based on this leverage, the
following represents the allocation of our total debt at December 31, 2013 and 2012 between financing debt and
core debt:
Xerox 2013 Annual Report 50