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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 issuance of common stock under our incentive stock
plans.
•$326 million increase from net debt activity. 2013 reflects payments of $1 billion of 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.
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 directly to our customers, on a non-
recourse basis to Xerox. 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) 2014 2013
Total Finance receivables, net(1) $4,254 $4,530
Equipment on operating leases, net 525 559
Total Finance Assets, Net (2) $4,779 $5,089
_________
(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.
(2) The change from December 31, 2013 includes a decrease of $282 million due to currency across all Finance Assets.
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, 2014 and 2013 between financing debt and core
debt:
December 31,
(in millions) 2014 2013
Financing debt(1) $4,182 $4,453
Core debt 3,559 3,568
Total Debt $7,741 $8,021
_________
(1) Financing debt includes $3,722 million and $3,964 million as of December 31, 2014 and December 31, 2013, respectively, of debt associated
with Total finance receivables, net and is the basis for our calculation of “Equipment financing interest” expense. The remainder of the
financing debt is associated with Equipment on operating leases.
Xerox 2014 Annual Report 50