Xerox 2013 Annual Report Download - page 69

In December 2013, our Canadian subsidiary transferred its entire interest in a group of lease finance receivables to
a third-party trust. The transfer was accounted for as a sale and resulted in the derecognition of lease receivables
with a net carrying value of $257 million, the receipt of cash proceeds of $248 million and a beneficial interest of
$26 million. A pre-tax gain of $15 million was recognized on this transaction and is net of additional fees and
expenses of approximately $1 million.
2012 Transactions
In 2012, we completed similar sale transactions on two separate portfolios of U.S. lease finance receivables with a
combined net carrying value of $682 million to a third-party financial institution for cash proceeds of $630 million
and beneficial interests of $101 million. A pre-tax gain of $44 million was recognized on these transactions and is
net of additional fees and expenses of approximately $5 million.
The gains on these transactions are reported in Finance income in Document Technology segment revenues, as
the sold receivables are from this segment. We will continue to service the sold receivables and expect to a record
servicing fee income over the expected life of the associated receivables. These transactions enable us to lower the
cost associated with our financing portfolio.
Refer to Note 5 - Finance Receivables, Net in the Consolidated Financial Statements for additional information.
The net impact on operating cash flows from the sales of finance receivables is summarized below:
Year Ended December 31,
(in millions) 2013 2012 2011
Net cash received for sales of finance receivables(1) $631 $625 $—
Impact from prior sales of finance receivables(2) (392)(45)—
Collections on beneficial interest 58 — —
Estimated Increase to Operating Cash Flows $297 $580 $—
______________
(1) Net of beneficial interest, fees and expenses
(2) Represents cash that would have been collected if we had not sold finance receivables.
Capital Market Activity
Senior Notes
In December 2013, we issued $500 million of 2.75% Senior Notes due 2019 (the “2019 Senior Notes”). The 2019
Senior Notes accrue interest at a rate of 2.75% per annum and are payable semi-annually. The 2019 Senior Notes
were issued at 99.915% of par, resulting in aggregate net proceeds essentially at par. In connection with the
issuance of these Senior Notes, debt issuance costs of $4 million were deferred.
The December 2013 Senior Note issuance was approximately $200 million higher than originally planned and we
expect to use that excess to partially fund the $1.1 billion in Senior Notes maturing in May 2014. The remainder of
the proceeds from this offering were used for general corporate purposes.
Refer to Note 12- Debt in the Consolidated Financial Statements for additional information regarding our debt.
Financial Instruments
Refer to Note 13 - Financial Instruments in the Consolidated Financial Statements for additional information
regarding our derivative financial instruments.
Share Repurchase Programs - Treasury Stock
During 2013, we repurchased 65.2 million shares of our common stock for an aggregate cost of $696 million,
including fees. In November 2013, the Board of Directors authorized an additional $500 million in share
repurchases bringing the total cumulative authorization to $6.5 billion.
Through February 18, 2014, we repurchased an additional 15.8 million shares at an aggregate cost of $175.1
million, including fees, for total program repurchases of 509.3 million shares at a cost of $5.6 billion, including fees.
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