Xerox 2014 Annual Report Download - page 71

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Unrecognized Tax Benefits
As of December 31, 2014, we had $240 million of unrecognized tax benefits. This represents the tax benefits
associated with various tax positions taken, or expected to be taken, on domestic and foreign tax returns that have
not been recognized in our financial statements due to uncertainty regarding their resolution. The resolution or
settlement of these tax positions with the taxing authorities is at various stages and therefore we are unable to make
a reliable estimate of the eventual cash flows by period that may be required to settle these matters. In addition,
certain of these matters may not require cash settlement due to the existence of credit and net operating loss
carryforwards, as well as other offsets, including the indirect benefit from other taxing jurisdictions that may be
available.
Refer to Note 17 - Income and Other Taxes in the Consolidated Financial Statements for additional information
regarding unrecognized tax benefits.
Off-Balance Sheet Arrangements
We may occasionally utilize off-balance sheet arrangements in our operations (as defined by the SEC Financial
Reporting Release 67 (FRR-67), “Disclosure in Management’s Discussion and Analysis about Off-Balance Sheet
Arrangements and Aggregate Contractual Obligations”). We enter into the following arrangements that have off-
balance sheet elements:
• Operating leases in the normal course of business. The nature of these lease arrangements is discussed in Note
8 - Land, Buildings, Equipment and Software, Net in the Consolidated Financial Statements.
• We have facilities, primarily in the U.S., Canada and several countries in Europe that enable us to sell to third-
parties certain accounts receivable without recourse. In most instances, a portion of the sales proceeds are held
back by the purchaser and payment is deferred until collection of the related sold receivables. Refer to Note 5 -
Accounts Receivables, Net in the Consolidated Financial Statements for further information regarding these
facilities.
• During 2013 and 2012, we entered into arrangements to transfer and sell our entire interest in certain groups of
finance receivables where we received cash and beneficial interests from the third-party purchaser. Refer to
Note 6 - Finance Receivables, Net in the Consolidated Financial Statements for further information regarding
these sales. There were no sales of Finance Receivables in 2014.
At December 31, 2014, we do not believe we have any off-balance sheet arrangements that have, or are reasonably
likely to have, a material current or future effect on financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital resources.
In addition, see the table above for the Company's contractual cash obligations and other commercial commitments
and Note 18 - Contingencies and Litigation in the Consolidated Financial Statements for additional information
regarding contingencies, guarantees, indemnifications and warranty liabilities.
Non-GAAP Financial Measures
We have reported our financial results in accordance with generally accepted accounting principles (GAAP). In
addition, we have discussed our results using non-GAAP measures.
Management believes that these non-GAAP financial measures provide an additional means of analyzing the current
periods’ results against the corresponding prior periods’ results. However, these non-GAAP financial measures
should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance
with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for
comparable GAAP measures and should be read only in conjunction with our consolidated financial statements
prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial
measures internally to understand, manage and evaluate our business and make operating decisions. These non-
GAAP measures are among the primary factors management uses in planning for and forecasting future periods.
Compensation of our executives is based in part on the performance of our business based on these non-GAAP
measures.
Xerox 2014 Annual Report 56