Xerox 2014 Annual Report Download - page 26

Our brand is a valuable resource and continues to be ranked in the top percentile of the most valuable global
brands. In Europe, Africa, the Middle East and parts of Asia, we distribute our products through Xerox Limited, a
company established under the laws of England, as well as through related non-U.S. companies. Xerox Limited
enters into distribution agreements with unaffiliated third parties to distribute our products in many of the countries
located in these regions, and previously entered into agreements with unaffiliated third parties who distribute our
products in Sudan. Sudan, among others, has been designated as a state sponsor of terrorism by the U.S.
Department of State and is subject to U.S. economic sanctions. We maintain an export and sanctions compliance
program, and believe that we have been and are in compliance with U.S. laws and government regulations for
Sudan. We have no assets, liabilities or operations in Sudan other than liabilities under the distribution
agreements. After observing required prior notice periods, Xerox Limited terminated its distribution agreements with
distributors servicing Sudan in August 2006. Now, Xerox has only legacy obligations to third parties, such as
providing spare parts and supplies to these third parties. In 2014, total Xerox revenues of $19.5 billion included less
than $10 thousand attributable to Sudan.
Competition
Although we encounter competition in all areas of our business, we are the leader -- or among the leaders -- in each
of our principal business segments. We compete on the basis of technology, performance, price, quality, reliability,
brand, distribution and customer service and support.
In the Services business, our larger competitors include Accenture, Aon, Computer Sciences Corporation,
Convergys, Genpact, Hewlett-Packard, IBM and Teletech. In addition, we compete with in-house departments that
perform the functions that could be outsourced to us.
In the Document Technology business, our larger competitors include Canon, Hewlett-Packard, Konica Minolta,
Lexmark and Ricoh.
Our brand recognition, positive reputation for business process and document management expertise, innovative
technology and service delivery excellence are our competitive advantages. These advantages, combined with our
breadth of product offerings, global distribution channels and customer relationships, position us as a strong
competitor going forward.
Global Employment
Globally, we have approximately 147,500 direct employees, including approximately 5,300 sales professionals,
approximately 10,200 technical service employees and approximately 102,300 employees serving our customers
through on-site operations or off-site delivery centers. Approximately 9,800 of these employees are associated with
the ITO business and are expected to transition to Atos upon closure of the sale of the ITO business.
Customer Financing
We finance a large portion of our direct channel customer purchases of Xerox equipment through bundled lease
agreements. Financing facilitates customer acquisition of Xerox technology and enhances our value proposition,
while providing Xerox an attractive gross margin and a reasonable return on our investment in this business.
Additionally, because we primarily finance our own products and have a long history of providing financing to our
customers, we are able to minimize much of the risk normally associated with a finance business.
Because our lease contracts permit customers to pay for equipment over time rather than at the date of installation,
we maintain a certain level of debt to support our investment in these lease contracts. We fund our customer
financing activity through a combination of cash generated from operations, cash on hand, proceeds from capital
market offerings and on occasion the sale of selected finance receivables. There were no finance receivable sales
in 2014. At December 31, 2014, we had $4.3 billion of finance receivables and $0.5 billion of equipment on
operating leases, or Total Finance assets of $4.8 billion. We maintain an assumed 7:1 leverage ratio of debt to
equity as compared to our Finance assets, which results in the majority of our $7.7 billion of debt being allocated to
our financing business.
Refer to "Customer Financing Activities" in the Capital Resources and Liquidity section of Management's Discussion
and Analysis included in Item 7 of this 2014 Form 10-K, which is incorporated here by reference, for additional
information.
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