What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-12 · 469 added, 222 removed, 1082 unchanged (39% of the section changed)

1 unchanged sentence

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

(in millions, except per-share data) 2025 2024 2025 2024

1 unchanged sentence

Services, maintenance, rentals and other (1)

911 967 1,811 1,946

Total Revenues 1,576 1,578 3,033 3,080

2 unchanged sentences

Cost of services, maintenance, rentals and other (1)

645 671 1,294 1,390

Research, development and engineering expenses 43 50 85 99

5 unchanged sentences

Total Costs and Expenses 1,636 1,553 3,160 3,205

Loss before Income Taxes ( 67 ) ( 150 )

(Loss) Income before Income Taxes ( 60 ) 25 ( 127 ) ( 125 )

Income tax expense (benefit) 46 7 69 ( 30 )

Net Loss ( 90 ) ( 113 )

Net (Loss) Income ( 106 ) 18 ( 196 ) ( 95 )

Preferred stock dividends, net ( 3 ) ( 3 ) ( 7 ) ( 7 )

Net Loss Attributable to Common Shareholders $ ( 94 ) $ ( 117 )

Basic Loss per Share $ ( 0.75 ) $ ( 0.94 )

Diluted Loss per Share $ ( 0.75 ) $ ( 0.94 )

Net (Loss) Income attributable to Common Shareholders $ ( 109 ) $ 15 $ ( 203 ) $ ( 102 )

Basic (Loss) Income per Share $ ( 0.87 ) $ 0.12 $ ( 1.62 ) $ ( 0.83 )

Diluted (Loss) Income per Share $ ( 0.87 ) $ 0.11 $ ( 1.62 ) $ ( 0.83 )

_____________

(1) On January 1, 2025, the Company updated its determination of reportable segments, and as a result, made certain reclassifications within the Condensed Consolidated Statement of Loss to the prior periods in order to conform to the current period reporting.

(1) In 2025, certain reclassifications were made within the Condensed Consolidated Statement of (Loss) Income to the prior periods in order to conform to the current period reporting.

Refer to the Segments section of Note 1 - Basis of Presentation for additional information.

2 unchanged sentences

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

Net Loss $ ( 90 ) $ ( 113 )

Net (Loss) Income $ ( 106 ) $ 18 $ ( 196 ) $ ( 95 )

Other Comprehensive Income (Loss), Net (1)

2 unchanged sentences

Changes in defined benefit plans, net ( 56 ) 6 ( 77 ) 42

Other Comprehensive Income, Net 82 3

Comprehensive Loss, Net $ ( 8 ) $ ( 110 )

Other Comprehensive Income (Loss), Net 169 ( 14 ) 251 ( 11 )

Comprehensive Income (Loss), Net $ 63 $ 4 $ 55 $ ( 106 )

_____________

(1) Refer to Note 18 - Other Comprehensive Income for gross components of Other comprehensive income, net, reclassification adjustments out of Accumulated other comprehensive loss and related tax effects.

(1) Refer to Note 18 - Other Comprehensive Income (Loss) for gross components of Other comprehensive income (loss), net, reclassification adjustments out of Accumulated other comprehensive loss and related tax effects.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data in thousands) March 31,

(in millions, except share data in thousands) June 30,

2025 December 31,

41 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended

Six Months Ended

(in millions) 2025 2024

1 unchanged sentence

Net Loss $ ( 196 ) $ ( 95 )

Adjustments to reconcile Net loss to Net cash used in operating activities

Adjustments to reconcile Net loss to Net cash (used in) provided by operating activities

Depreciation and amortization 117 118

11 unchanged sentences

Decrease in finance receivables 212 399

Increase in other current and long-term assets ( 16 ) ( 2 )

Increase in accounts payable 89 17

Decrease in other current and long-term assets 16 14

Increase (decrease) in accounts payable 25 ( 88 )

Decrease in accrued compensation ( 51 ) ( 93 )

3 unchanged sentences

Other operating, net 28 ( 7 )

Net cash used in operating activities ( 89 ) ( 79 )

Net cash (used in) provided by operating activities ( 100 ) 44

Cash Flows from Investing Activities

3 unchanged sentences

Other investing, net ( 4 ) ( 20 )

Net cash provided by (used in) investing activities 6 ( 17 )

Net cash used in investing activities ( 12 ) ( 19 )

Cash Flows from Financing Activities

5 unchanged sentences

Other financing, net ( 29 ) ( 13 )

Net cash (used in) provided by financing activities ( 159 ) 261

Net cash provided by (used in) financing activities 459 ( 75 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 7 ( 16 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 241 ) 155

Increase (decrease) in cash, cash equivalents and restricted cash 354 ( 66 )

Cash, cash equivalents and restricted cash at beginning of period 631 617

3 unchanged sentences

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

1 unchanged sentence

Services, maintenance, rentals and other (1)

911 967 1,811 1,946

Total Revenues 1,576 1,578 3,033 3,080

2 unchanged sentences

Cost of services, maintenance, rentals and other (1)

645 671 1,294 1,390

Research, development and engineering expenses 43 50 85 99

5 unchanged sentences

Total Costs and Expenses 1,634 1,552 3,155 3,204

Loss before Income Taxes ( 64 ) ( 150 )

(Loss) Income before Income Taxes ( 58 ) 26 ( 122 ) ( 124 )

Income tax expense (benefit) 46 7 69 ( 30 )

Net Loss $ ( 87 ) $ ( 113 )

Net (Loss) Income $ ( 104 ) $ 19 $ ( 191 ) $ ( 94 )

_____________

(1) In 2025, certain reclassifications were made within the Condensed Consolidated Statement of (Loss) Income to the prior periods in order to conform to the current period reporting.

Refer to the Segments section of Note 1 - Basis of Presentation for additional information.

2 unchanged sentences

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

(in millions) 2025 2024 2025 2024

Net Loss $ ( 87 ) $ ( 113 )

Net (Loss) Income $ ( 104 ) $ 19 $ ( 191 ) $ ( 94 )

Other Comprehensive Income (Loss), Net (1)

2 unchanged sentences

Changes in defined benefit plans, net ( 56 ) 6 ( 77 ) 42

Other Comprehensive Income, Net 82 3

Comprehensive Loss, Net $ ( 5 ) $ ( 110 )

Other Comprehensive Income (Loss), Net 169 ( 14 ) 251 ( 11 )

Comprehensive Income (Loss), Net $ 65 $ 5 $ 60 $ ( 105 )

_____________

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions) March 31,

(in millions) June 30,

2025 December 31,

40 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended

Six Months Ended

(in millions) 2025 2024

1 unchanged sentence

Net Loss $ ( 191 ) $ ( 94 )

Adjustments to reconcile Net loss to Net cash used in operating activities

Adjustments to reconcile Net loss to Net cash (used in) provided by operating activities

Depreciation and amortization 117 118

11 unchanged sentences

Decrease in finance receivables 212 399

Increase in other current and long-term assets ( 19 ) ( 2 )

Increase in accounts payable 89 17

Decrease in other current and long-term assets 11 13

Increase (decrease) in accounts payable 25 ( 88 )

Decrease in accrued compensation ( 51 ) ( 93 )

3 unchanged sentences

Other operating, net 28 ( 7 )

Net cash used in operating activities ( 89 ) ( 79 )

Net cash (used in) provided by operating activities ( 100 ) 44

Cash Flows from Investing Activities

3 unchanged sentences

Other investing, net — ( 11 )

Net cash provided by (used in) investing activities 8 ( 17 )

Net cash used in investing activities ( 8 ) ( 10 )

Cash Flows from Financing Activities

3 unchanged sentences

Other financing, net ( 23 ) ( 3 )

Net cash (used in) provided by financing activities ( 160 ) 258

Net cash provided by (used in) financing activities 452 ( 86 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 7 ( 16 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 240 ) 152

Increase (decrease) in cash, cash equivalents and restricted cash 351 ( 68 )

Cash, cash equivalents and restricted cash at beginning of period 630 617

19 unchanged sentences

Interim results of operations are not necessarily indicative of the results of the full year.

The condensed balance sheet at December 31, 2024, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

Certain reclassifications have been made to the amounts for prior years in order to conform to the current year's presentation.

Refer to the Segments section below, and Note 3 - Revenue, for additional information.

For convenience and ease of reference, we refer to the financial statement caption “Loss before Income Taxes” as “pre-tax loss”.

For convenience and ease of reference, we refer to the financial statement caption “(Loss) Income before Income Taxes” as “pre-tax (loss) income”.

Notes to the Condensed Consolidated Financial Statements reflect the activity for both Xerox Holdings and Xerox for all periods presented, unless otherwise noted.

4 unchanged sentences

Refer to Note 4 - Segment Reporting for additional information regarding this change.

In line with these changes to our reportable segments, reclassifications have been made to the Condensed Consolidated Statement of Loss as follows:

Xerox 2025 Form 10-Q 11

In connection with these changes to our reportable segments, certain reclassifications were made to the Condensed Consolidated Statement of (Loss) Income as follows:

Three Months Ended

March 31, 2024

Previously Reported Reclassification As Reported

June 30, 2024 Six Months Ended

June 30, 2024

Previously Reported Reclassification As Reported Previously Reported Reclassification As Reported

Services, maintenance, rentals and other $ 929 $ 38 $ 967 $ 1,866 $ 80 $ 1,946

2 unchanged sentences

Cost of financing 29 ( 29 ) — 56 ( 56 ) —

Xerox 2025 Form 10-Q 11

Interim Impairment Evaluation

Our goodwill balance was $ 1,954 and $ 1,937 at March 31, 2025 and December 31, 2024, respectively.

Our goodwill balance was $ 1,984 and $ 1,937 at June 30, 2025 and December 31, 2024, respectively.

We assess goodwill for impairment at least annually during the fourth quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

7 unchanged sentences

Using a combination of both an Income Approach and a Market Approach, we assessed the relative fair values of our new reporting units, and we determined that approximately $ 1,567 of goodwill was allocable to the Print and Other segment, and approximately $ 370 of goodwill was allocable to the IT Solutions segment.

During the first quarter 2025, the Company's stock price and market capitalization experienced a decline.

During the second quarter 2025, the Company's stock price and market capitalization experienced a decline.

However, the decline was not considered to be sustained due to the ongoing uncertainty in the capital markets, as a result of the uncertain nature of the federal government's tariff policy and rate proposals, and the associated potential macroeconomic impacts.

Despite ongoing uncertainty surrounding tariffs, management has evaluated these factors individually and, in the aggregate, concluded that we have sufficient plans to manage the uncertainty.

Through the first quarter of 2025, the Company's forecasted results for the full year 2025 remain in line with expectations reviewed as part of our January 1, 2025 Goodwill quantitative assessment.

Accordingly, as of March 31, 2025, we determined that we did not have a “triggering event” requiring a quantitative assessment of Goodwill.

If the Company's future performance varies from current expectations, assumptions, and estimates, including assumptions related to current macro-economic uncertainties, interest rates, inflationary pressure on product and labor costs, execution of Reinvention, and geopolitical uncertainty, the impairment analysis could be impacted and result in a reduction of the underlying cash flows used to estimate fair values resulting in a decline in fair value that may trigger future impairment charges.

We have evaluated these factors individually and, in the aggregate, and we believe that despite the ongoing uncertainty surrounding tariffs, that we have sufficient plans to mitigate and manage the uncertainty.

Accordingly, based on our interim assessment as of June 30, 2025, we determined that it was more-likely-than-not that the fair value of the Print and Other and IT Solutions reporting units was still greater than their net book value and that we did not have a “triggering event” requiring a quantitative assessment of Goodwill.

The Company's future performance varies from current expectations, assumptions, and estimates, including assumptions related to current macro-economic uncertainties, interest rates, inflationary pressure on product and labor costs, execution of Reinvention, and geopolitical uncertainty, the impairment analysis could be impacted and result in a reduction of the underlying cash flows used to estimate fair values resulting in a decline in fair value that may trigger future impairment charges.

We will continue to monitor developments throughout the remainder of 2025 including updates to our forecasts as well as discount rates and our market capitalization, and as a result, an update of our assessment and related estimates may be required in the future.

Xerox 2025 Form 10-Q 12

Valuation Allowance

5 unchanged sentences

We have concluded that it is more-likely-than-not that those deferred tax assets will not be realized in the ordinary course of operations.

As of March 31, 2025, our total deferred tax asset balance was $ 607 , which is net of total valuation allowances of $ 579 .

The amount of the net deferred tax assets considered realizable, however, could change in the near term if additional objective information becomes available in the future including if income or income tax rates are higher or lower than currently estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences.

Xerox 2025 Form 10-Q 12

As of June 30, 2025, our total deferred tax asset balance was $ 551 , which is net of total valuation allowances of $ 567 .

The amount of the net deferred tax assets considered realizable, however, could change in the near term if additional objective information becomes available in the future, including the impacts of tax law changes, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences.

On July 4, 2025, H.R.

1, the One Big Beautiful Bill Act (the Act), was signed into law.

Refer to Note 21 - Subsequent Events for additional information regarding the Act.

Note 2 – Recent Accounting Pronouncements

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Accounting Standard Updates to be Adopted:

Financial Instruments - Credit Losses

In July 2025, the FASB issued ASU 2025‑05 , Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides new optional guidance relating to the estimation of expected credit losses on current accounts receivable and current contract assets under ASC 326.

This ASU permits entities to apply a practical expedient when estimating credit losses and is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted, and should be applied prospectively.

We are currently evaluating the adoption of this standard and its impact to the Company's consolidated financial statements and related disclosures.

Income Statement

7 unchanged sentences

We are currently evaluating the impact of the adoption of this standard to determine its impact on the Company's disclosures.

Xerox 2025 Form 10-Q 13

Income Tax Disclosures

5 unchanged sentences

In 2025, the FASB also issued the following ASUs, which could impact the Company in the future but currently did not have, nor are expected to have, a material impact on our financial condition, results of operations or cash flows upon adoption.

• Compensation — Stock Compensation and Revenue from Contracts with Customers:

ASU 2025-04 , Compensation (Topic 718) and Revenue (Topic 606) - Amendments to SEC Paragraphs Pursuant to Clarifications to Share-Based Consideration Payable to a Customer.

This update is effective for the annual period beginning after December 15, 2026, as well as interim periods within that period.

• Business Combinations and Consolidation:

ASU 2025-03 , Business Combinations (Topic 805) and Consolidation (Topic 810) - Amendments to SEC Paragraphs Pursuant to Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity.

This update is effective for the annual period beginning after December 15, 2026, as well as interim periods within that period.

• Liabilities:

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Primary geographical markets (1) :

7 unchanged sentences

Supplies, paper and other sales (2)

176 197 344 383

IT products (2)(3)

153 58 258 105

Maintenance agreements (4)

379 388 747 775

Service arrangements (5)

439 467 868 940

Rental and other 61 74 131 151

3 unchanged sentences

Direct equipment lease (6)

$ 108 $ 163 $ 220 $ 325

Distributors & resellers (7)

238 244 447 459

Customer direct 319 204 555 350

10 unchanged sentences

We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time.

Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advance billings for maintenance and other services to be performed and were approximately $ 152 and $ 130 at March 31, 2025 and December 31, 2024, respectively.

The majority of the balance at March 31, 2025 will be amortized to revenue over the next 30 months.

Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advance billings for maintenance and other services to be performed and were approximately $ 137 and $ 130 at June 30, 2025 and December 31, 2024, respectively.

The majority of the balance at June 30, 2025 will be amortized to revenue over the next 30 months.

Contract Costs:

1 unchanged sentence

• Incremental direct costs of obtaining a contract are primarily sales commissions paid to salespeople and agents in connection with the placement of equipment with associated post sale services arrangements.

These costs are deferred and amortized to Selling Expenses on a straight-line basis over the estimated contract term, which is currently estimated to be approximately four years .

These costs are deferred and amortized to Selling Expenses on a straight-line basis over the estimated contract term, which is currently estimated to be approximately five years .

• Contract fulfillment costs, which are costs incurred for resources and assets that will be used to satisfy our future performance obligations included in our service arrangements.

7 unchanged sentences

Balance at March 31st, $ 140 $ 134

Customer contract costs deferred 18 13

Amortization of customer contract costs ( 17 ) ( 16 )

Balance at June 30th, $ 143 $ 131

_____________

21 unchanged sentences

Our IT Solutions segment provides clients with global infrastructure technology solutions, with a focus on delivering business outcomes through a frictionless sales and service delivery experience.

IT Solutions’ offerings include the provision of hardware, software and associated services as well as product lifecycle, deployment and network monitoring services, and other managed IT services.

It is comprised of our recent acquisition of ITsavvy, as well as our Canadian IT Services provider Powerland, and our legacy XBS IT solutions.

IT Solutions’ offerings include the provision of hardware, software and associated services as well as product lifecycle, deployment and network

Xerox 2025 Form 10-Q 16

monitoring services, and other managed IT services.

It is comprised of our recent acquisition of ITsavvy, as well as our Canadian IT Services provider Powerland, and our legacy XBS IT solutions.

Segment Policy

10 unchanged sentences

Selected financial information for our reportable segments was as follows:

Three months ended March 31,

Three months ended June 30, 2025

Print and Other IT Solutions Corporate (1)

3 unchanged sentences

— 3 — 3 — — — —

Revenue $ 1,294 $ 164 $ — $ 1,458 $ 1,428 $ 74 $ — $ 1,502

Segment Revenue $ 1,366 $ 213 $ — $ 1,579 $ 1,494 $ 84 $ — $ 1,578

Reconciliation to Segment Profit

14 unchanged sentences

23 — — 23 29 — — 29

Xerox 2025 Form 10-Q 17

Six months ended June 30,

Print and Other IT Solutions Corporate (1)

Total Print and Other IT Solutions Corporate (1)

External revenue $ 2,660 $ 373 $ — $ 3,033 $ 2,922 $ 158 $ — $ 3,080

Intersegment revenue (2)

— 4 — 4 — — — —

Segment Revenue $ 2,660 $ 377 $ — $ 3,037 $ 2,922 $ 158 $ — $ 3,080

Reconciliation to Segment Profit

Cost of sales (3)

$ 639 $ 212 $ — $ 851 $ 636 $ 89 $ — $ 725

Cost of services, maintenance, rentals and other (4)

1,190 98 — 1,288 1,303 45 — 1,348

Research, development and engineering expenses 85 — — 85 99 — — 99

Selling, administrative and general expenses (5)(6)

640 48 40 728 719 24 47 790

Intersegment expense (7)

— 4 — 4 — — — —

Segment profit $ 106 $ 15 $ ( 40 ) $ 81 $ 165 $ — $ ( 47 ) $ 118

Depreciation $ 97 $ — $ — $ 97 $ 98 $ — $ — $ 98

Interest income (8)

65 — — 65 80 — — 80

Interest expense (4)

45 — — 45 56 — — 56

_____________

(1) Certain administrative and general expenses, which primarily relate to corporate functions, are not allocated to either of our operating/reportable segments.

(2) Intersegment revenue is primarily revenue from IT hardware, software solutions and services, sold by the IT Solutions segment to the Print and Other segment.

(3) As a result of the exit of certain production print manufacturing operations, for the three months ended March 31, 2025 and 2024, Cost of sales and Cost of services, maintenance, rentals and other for the Print and Other Segment excludes $ 7 and $ 32 , respectively, of inventory-related charges, and $ 0 and $ 4 , respectively, from the cancellation of related purchase contracts.

(3) As a result of the exit of certain production print manufacturing operations, Cost of sales and Cost of services, maintenance, rentals and other for the Print and Other Segment excludes inventory-related charges of $ 9 and $ 6 for the three months ended June 30, 2025 and 2024, respectively, and $ 16 and $ 38 , for the six months ended June 30, 2025 and 2024, respectively, as well as the cancellation of related purchase contracts $ 1 and $ 2 for the three months ended June 30, 2025 and 2024, respectively, and $ 1 and $ 6 for the six months ended June 30, 2025 and 2024, respectively.

(4) Includes equipment financing interest expense associated with financing debt of the Company, which is fully allocated to the Print and Other segment in support of its Finance assets.

No interest expense is allocated to the IT Solutions segment, as the segment has no financing debt.

(5) For the three months ended March 31, 2025 and 2024, Selling, administrative and general expenses include bad debt expense related to the Print and Other segment of $ 9 and $ 15 , respectively.

(6) For the three months ended March 31, 2025 and 2024, the Print and Other segment excludes Reinvention costs of $ 6 and $ 0 , respectively, and Transaction and related costs, net of $ 3 and $ 0 , respectively.

(7) Intersegment expense is primarily costs related to the sale of IT hardware, software solutions and services by the IT Solutions segment, to the Print and Other segment.

(5) Selling, administrative and general expenses include bad debt expense related to the Print and Other segment of $ 15 and $ 10 for the three months ended June 30, 2025 and 2024, respectively, and $ 24 and $ 25 for the six months ended June 30, 2025 and 2024, respectively.

(6) The Print and Other segment excludes Reinvention costs of $ 3 and $ 0 for the three months ended June 30, 2025 and 2024, respectively, and $ 9 and $ 0 for the six months ended June 30, 2025 and 2024, respectively, as well as Transaction and related costs, net of $ 6 and $ 0 for the three months ended June 30, 2025 and 2024, respectively, and $ 9 and $ 0 for the six months ended June 30, 2025 and 2024, respectively.

(7) Intersegment expense primarily consists of costs related to the sale of IT hardware, software solutions and services by the IT Solutions segment, to the Print and Other segment.

(8) Reflects financing income, which is included in Services, maintenance, rentals and other in the Condensed Consolidated Statements of Loss.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Pre-tax (Loss)

5 unchanged sentences

Inventory-related impact - exit of certain production print manufacturing operations (1)

( 10 ) ( 8 ) ( 17 ) ( 44 )

Divestiture — 3 4 ( 51 )

14 unchanged sentences

_____________

(1) As a result of the exit of certain production print manufacturing operations, for the three months ended March 31, 2025 and 2024, reflects the inventory-related charges of approximately $ 7 and $ 32 , respectively, and the cancellation of related purchase contracts of approximately $ 0 and $ 4 , respectively.

(1) Includes certain charges resulting from the exit of certain production print manufacturing operations, including inventory-related charges of approximately $ 9 and $ 6 for the three months ended June 30, 2025 and 2024, respectively, and $ 16 and $ 38 for the six months ended June 30, 2025 and 2024 respectively, as well as charges for the cancellation of related purchase contracts of $ 1 and $ 2 for the three months ended June 30, 2025 and 2024, respectively, and $ 1 and $ 6 for the six months ended June 30, 2025 and 2024, respectively.

Xerox 2025 Form 10-Q 19

Note 5 – Lessor

Revenue from sales-type leases is presented on a gross basis when the Company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business, whereas in transactions where the Company enters into a lease for the purpose of generating revenue by providing financing, the profit or loss, if any, is presented on a net basis.

In addition, we have elected to account for sales tax and other similar taxes collected from a lessee as lessee costs and therefore we exclude these costs from contract consideration and variable consideration and present revenue net of these costs.

The components of lease income are as follows:

Three Months Ended

Location in Statements of Income (Loss) 2025 2024

June 30, Six Months Ended

Location in Statements of (Loss) Income 2025 2024 2025 2024

Revenue from sales type leases Sales $ 108 $ 163 $ 220 $ 325

3 unchanged sentences

Total Lease income $ 189 $ 255 $ 384 $ 513

Profit at lease commencement on sales-type leases was estimated to be $ 31 and $ 50 for the three months ended March 31, 2025 and 2024, respectively .

Xerox 2025 Form 10-Q 17

Profit at lease commencement on sales-type leases was estimated to be $ 26 and $ 57 for the three months ended June 30, 2025 and 2024, respectively, and $ 57 and $ 107 for the six months ended June 30, 2025 and 2024,

respectively.

Note 6 – Accounts Receivable, Net

12 unchanged sentences

Balance at March 31 st

Provision 8 5

Charge-offs ( 7 ) ( 3 )

Recoveries and other (1)

Balance at June 30 th

_____________

2 unchanged sentences

The allowance for doubtful accounts receivable is determined based on an assessment of past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends.

Based on that assessment the allowance for doubtful accounts as a percent of gross accounts receivable was 7.7 % at March 31, 2025 and 8.0 % at December 31, 2024.

Based on that assessment the allowance for doubtful accounts as a percent of gross accounts receivable was 7.7 % at June 30, 2025 and 8.0 % at December 31, 2024.

Xerox 2025 Form 10-Q 20

Accounts Receivable Sales Arrangements

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Accounts receivable sales (1)

$ 111 $ 106 $ 196 $ 197

(1) Losses on sales were not material.

Xerox 2025 Form 10-Q 18

Note 7 – Finance Receivables, Net

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Since EMEA is comprised of various countries and regional economies, the risk profile within that portfolio segment is somewhat more diversified due to the varying economic conditions among and within those countries.

Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.1 % at March 31, 2025 and 3.2 % at December 31, 2024.

Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.3 % at June 30, 2025 and 3.2 % at December 31, 2024.

In determining the level of reserve required we critically assessed current and forecasted economic conditions and trends to ensure we objectively considered those expected impacts in the determination of our reserve.

10 unchanged sentences

Balance at March 31, 2025 $ 25 $ 5 $ 23 $ 53

Provision 5 — 3 8

Charge-offs ( 3 ) — ( 4 ) ( 7 )

( 1 ) 1 $ 1 1

Balance at June 30, 2025 $ 26 $ 6 $ 23 $ 55

Balance at December 31, 2023

3 unchanged sentences

Balance at March 31, 2024 $ 49 $ 11 $ 28 $ 88

Provision — 1 4 5

Charge-offs ( 6 ) ( 5 ) ( 3 ) ( 14 )

Balance at June 30, 2024 $ 43 $ 7 $ 29 $ 79

Finance receivables collectively evaluated for impairment

March 31, 2025 (2)

June 30, 2025 (2)

$ 640 $ 142 $ 893 $ 1,675

March 31, 2024 (2)

June 30, 2024 (2)

$ 898 $ 233 $ 1,008 $ 2,139

1 unchanged sentence

(1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

(2) Total Finance receivables exclude the allowance for credit losses of $ 53 and $ 88 at March 31, 2025 and 2024, respectively.

(2) Total Finance receivables exclude the allowance for credit losses of $ 55 and $ 79 at June 30, 2025 and 2024, respectively.

Customers are further evaluated by class based on the type of lease origination.

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Details about our finance receivables portfolio based on geography, origination year and credit quality indicators are as follows:

March 31, 2025

June 30, 2025

2025 2024 2023 2022 2021 Prior Total

66 unchanged sentences

The aging of our billed finance receivables is as follows:

March 31, 2025

June 30, 2025

Current 31-90

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(DLL France), pursuant to which the Company can offer for sale, and DLL France may purchase on a non-recourse basis, certain eligible pools of finance receivables structured as “true sales at law” and bankruptcy remote transfers and we have received an opinion to that effect from outside counsel.

During the first quarter of 2025, the Company received proceeds of approximately $ 15 (EUR 13 million) related to the sales of lease receivables under this finance receivables funding arrangement.

Xerox 2025 Form 10-Q 25

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Finance receivable sales - net proceeds (1)

$ 36 $ 192 $ 111 $ 377

Gain on sale/Commissions (2)

1 unchanged sentence

$ 1 $ 5 $ 3 $ 7

_____________

(1) Cash proceeds are reported in Net cash provided by operating activities.

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Equipment on operating leases, net $ 249 $ 245

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 9 and $ 13 for the three months ended March 31, 2025 and 2024, respectively .

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 10 and $ 10 for the three months ended June 30, 2025 and 2024, respectively, and $ 19 and $ 23 for the six months ended June 30, 2025 and 2024

Xerox 2025 Form 10-Q 26

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Operating lease expense $ 25 $ 17 $ 43 $ 35

5 unchanged sentences

(1) Variable lease expense is related to our leased real estate for offices and warehouses and primarily includes labor and operational costs, as well as taxes and insurance.

As of March 31, 2025, we had no material operating leases that had not yet commenced.

As of June 30, 2025, we had no material operating leases that had not yet commenced.

Operating lease ROU assets, net and operating lease liabilities were reported in the Condensed Consolidated Balance Sheets as follows:

10 unchanged sentences

and Europe, as well as for vehicles and related infrastructure, within outsourced warehouse supply arrangements, in the U.S.

These leases have remaining maturities up to seven years .

These leases have remaining maturities up to six years .

Finance lease ROU assets, net and operating lease liabilities were reported in the Condensed Consolidated Balance Sheets as follows:

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Restructuring charges, net $ 9 $ 5 $ 14 $ 10

3 unchanged sentences

Restructuring Charges, Net

Restructuring charges, net primarily relate to the Print and Other segment as amounts related to the IT Solutions segment were immaterial for all periods presented.

Restructuring charges, net primarily relate to the Print and Other segment.

A summary of our restructuring program activity is as follows:

8 unchanged sentences

Balance at March 31, 2025 $ 93 $ 5 $ 98

Restructuring provision 11 — 11

Reversals of prior charges ( 2 ) — ( 2 )

Net current period charges (1)

Charges against reserve and currency ( 11 ) — ( 11 )

Balance at June 30, 2025 $ 91 $ 5 $ 96

_____________ _

(1) Represents net amount recognized within the Condensed Consolidated Statements of Loss for the period shown for restructuring charges.

(1) Represents net amount recognized within the Condensed Consolidated Statements of (Loss) Income for the period shown for restructuring charges.

Reversals of prior charges primarily include net changes in estimated reserves from initiatives accrued for in prior periods, including Reinvention.

1 unchanged sentence

We expect that the majority of these costs will be paid upon the exercise of an early termination clause in 2027.

At March 31, 2025, we expect to pay $ 70 of the restructuring reserve over the next twelve months.

At June 30, 2025, we expect to pay $ 64 of the restructuring reserve over the next twelve months.

The following table summarizes the reconciliation to the Condensed Consolidated Statements of Cash Flows:

Three Months Ended

Six Months Ended

Restructuring cash payments $ ( 33 ) $ ( 47 )

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Lease right of use assets (1)

$ — $ — $ 4 $ —

Owned assets (1)

Asset impairments 2 — 15 26

Adjustments/Reversals — ( 2 ) — ( 2 )

Proceeds from the sale of owned assets (2)

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Retention related severance/bonuses (1)

$ — $ — $ — $ ( 2 )

Contractual severance costs ( 1 ) — ( 1 ) —

Consulting and other costs (2)

3 unchanged sentences

(2) Represents professional support services associated with our business transformation initiatives.

Cash paid for restructuring related costs were $ 0 and $ 10 for the three months ended March 31, 2025 and 2024, respectively.

The restructuring related costs reserve was $ 4 and $ 4 at March 31, 2025 and December 31, 2024, respectively.

The balance at March 31, 2025 is expected to be paid over the next twelve months.

Cash paid for restructuring related costs were $ 0 and $ 19 for the six months ended June 30, 2025 and 2024, respectively.

The restructuring related costs reserve was $ 4 and $ 4 at June 30, 2025 and December 31, 2024, respectively.

The balance at June 30, 2025 is expected to be paid over the next twelve months.

Xerox 2025 Form 10-Q 29

1 unchanged sentence

Cash, Cash Equivalents and Restricted Cash

Restricted cash primarily relates to escrow cash deposits made in Brazil associated with ongoing litigation as well as cash collections on finance receivables that were pledged for secured borrowings.

Restricted cash primarily relates to proceeds from Second Lien Notes deposited into an escrow account for the benefit of the holders of the Second Lien Notes and escrow cash deposits made in Brazil associated with ongoing litigation.

As more fully discussed in Note 20 - Contingencies and Litigation, various litigation matters in Brazil require us to make cash deposits to escrow as a condition of the continuing litigation.

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Restricted cash

Debt proceeds held in escrow 492 —

Litigation deposits in Brazil 23 20

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Cash, cash equivalents and restricted cash $ 985 $ 631

_____________

(1) Includes collections on finance receivables pledged for secured borrowings or receivables sold that will be remitted to lenders in the following month.

Restricted cash is reported in the Condensed Consolidated Balance Sheets as follows:

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Summarized cash flow information is as follows:

Location in Statement of Cash Flows Three Months Ended

Location in Statement of Cash Flows Six Months Ended

Source/(Use) 2025 2024

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Preferred stock dividends - Xerox Holdings Financing ( 7 ) ( 7 )

Payments to noncontrolling interests Financing ( 1 ) ( 1 )

Repurchases related to stock-based compensation - Xerox Holdings Financing ( 6 ) ( 10 )

Commitment fees Financing ( 15 ) —

Finance lease obligations Financing ( 7 ) ( 2 )

_____________

(1) Provision for receivables includes adjustments for customer accommodations and contract terminations of $ 1 and $( 1 ) for the three months ended March 31, 2025 and 2024, respectively.

(2) Amortization of patents is reported in Increase in other current and long-term assets in the Condensed Consolidated Statements of Cash Flows.

(3) Amortization of customer contract costs is reported in Increase in other current and long-term assets in the Condensed Consolidated Statements of Cash Flows.

(1) Provision for receivables includes adjustments for customer accommodations and contract terminations of $ 2 and $ 0 for the three months ended June 30, 2025 and 2024, respectively and $ 3 and ( 1 ) for the six months ended June 30, 2025 and 2024, respectively.

(2) Amortization of patents is reported in Decrease in other current and long-term assets in the Condensed Consolidated Statements of Cash Flows.

(3) Amortization of customer contract costs is reported in Decrease in other current and long-term assets in the Condensed Consolidated Statements of Cash Flows.

Refer to Note 3 - Revenue - Contract Costs for additional information.

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Balance at March 31st $ 19 $ 30

Amounts invoiced 22 30

Invoices paid ( 21 ) ( 35 )

Balance at June 30th $ 20 $ 25

Note 12 – Debt

On April 11, 2025, Xerox Corporation and Xerox Issuer Corporation, a wholly-owned subsidiary of Xerox Corporation (Escrow Issuer), completed their previously announced private offering of (i) $ 400 aggregate principal amount of 10.250 % Senior Secured First Lien Notes due 2030 (the First Lien Notes) issued by Xerox Corporation at 99 % of par, and (ii) $ 400 aggregate principal amount of 13.500 % Senior Secured Second Lien Notes due 2031 at 98 % of par (the Second Lien Notes issued and together with the First Lien Notes, the Notes) issued by the Escrow Issuer.

We received net proceeds (after discount, fees and expenses) on the issuance of the First Lien Notes of $ 366 .

Additionally, $ 392 of net proceeds (after discount) was deposited into an escrow account upon the issuance of the Second Lien Notes.

On May 9, 2025, the Escrow Issuer issued an additional $ 100 of the 13.500 % Second Lien Notes at 95 % of par.

Net proceeds (after discounts, fees and expenses) were approximately $ 93 .

Also on May 9, 2025, $ 95 of the net proceeds (after discount) were deposited into the escrow account, as well as $ 1 of accrued and unpaid interest, and a deposit of $ 2 by Xerox Corporation.

On July 1, 2025, approximately $ 494 was released from escrow (including accrued interest) to fund a portion of the Lexmark Acquisition (defined below).

An additional $ 15 of commitment and underwriting fees were paid upon the release of the proceeds from escrow.

Net proceeds from the offering of the First Lien Notes, together with cash on hand, will be used to redeem Xerox Holdings Corporation’s 5.000 % Senior Notes due 2025 (2025 Notes) and to pay fees and expenses, including redemption premiums and accrued interest, in connection with the First Lien Notes offering, the Lexmark Acquisition and the related transactions.

Xerox Corporation redeemed an aggregate principal amount of $ 90 of the 2025 Notes on April 11, 2025, with the balance to be redeemed on or prior to maturity.

On April 11, 2025, Xerox Corporation also repaid $ 95 aggregate principal amount of borrowings under Xerox Corporation’s first lien senior secured term loan credit facility (the TLB Facility) with a portion of the proceeds of the First Lien Notes.

Xerox Corporation used the net proceeds from the offering of the Second Lien Notes to (i) fund a portion of the purchase price for the Lexmark Acquisition and the repayment of a portion of Lexmark’s outstanding debt (together with accrued interest and any applicable expenses, fees or premiums) and (ii) pay fees and expenses in connection with the Second Lien Notes offering, the Lexmark Acquisition and the related transactions.

The First Lien Notes are governed by an indenture, dated as of April 11, 2025 (the First Lien Indenture), among Xerox Corporation, Xerox Holdings Corporation (Xerox Holdings Corporation and, together with Xerox Corporation, the Company), certain of Xerox Corporation’s domestic and foreign subsidiaries and U.S.

Bank Trust Company,

Xerox 2025 Form 10-Q 31

National Association, as trustee and collateral agent.

The Second Lien Notes are governed by an indenture, dated as of April 11, 2025 (the Second Lien Indenture and, together with the First Lien Indenture, the Indentures), between the Escrow Issuer and U.S.

Bank Trust Company, National Association, as trustee and collateral agent.

The First Lien Notes bear interest at a rate of 10.250 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2025.

The First Lien Notes are unconditionally guaranteed on a senior secured basis by Xerox Holdings Corporation and certain of Xerox Corporation’s domestic and foreign subsidiaries and, subject to certain exceptions and permitted liens, secured by security interests in substantially all of the assets of Xerox Corporation and such subsidiaries (the Xerox Collateral) on a first-priority basis by the Xerox Collateral that is Fixed Asset Collateral (as defined in the First Lien Indenture) and on a second-priority basis by the Xerox Collateral that is Current Asset Collateral (as defined in the First Lien Indenture).

The Second Lien Notes bear interest at a rate of 13.500 % per annum, payable semi-annually in arrears on April 15 and October 15, beginning on October 15, 2025.

The gross proceeds of the Second Lien Notes were initially deposited into an escrow account for the benefit of the holders of the Second Lien Notes.

As of June 30, 2025, we classified the Second Lien Notes as Long-term debt on the balance sheet.

Proceeds from the Second Lien Notes were held in escrow and the Notes were subject to a special mandatory redemption provision in the event the Lexmark Acquisition did not close by December 22, 2025.

The Company had the option to extend the special mandatory redemption date to September 22, 2026, in accordance with the terms of the indenture.

The Lexmark Acquisition closed on July 1, 2025, and as a result, the Notes are no longer subject to the special mandatory redemption provision.

Upon the consummation of the Lexmark Acquisition, the escrowed proceeds were released (the Escrow Release) from the escrow account and the Escrow Issuer was merged with and into Xerox Corporation.

Upon the Escrow Release, Xerox Corporation, Xerox Holdings Corporation and certain of Xerox Corporation’s domestic and foreign subsidiaries that guarantee the First Lien Notes entered into a supplemental indenture to the Second Lien Indenture to provide for the assumption by Xerox Corporation of the obligations of the Escrow Issuer as issuer of the Second Lien Notes and for the guarantees of the Second Lien Notes by Xerox Holdings Corporation and such subsidiaries (the Assumption).

Following the Escrow Release and the Assumption, the Second Lien Notes, subject to certain exceptions and permitted liens, are secured on a second-priority basis by the Xerox Collateral that is Fixed Asset Collateral and on a third-priority basis by the Xerox Collateral that is Current Asset Collateral.

Within 90 business days following the completion of the Lexmark Acquisition, subject to certain agreed security principles, the Notes will be jointly and severally guaranteed on a senior secured basis by Lexmark and certain of its subsidiaries that become guarantors under the TLB Facility.

Subject to certain exceptions and permitted liens, the Notes will be further secured by security interests in substantially all of the assets of Lexmark and certain of its subsidiaries that will secure the TLB Facility (the Lexmark Collateral) on a first-priority basis, in respect of the First Lien Notes, and on a second-priority basis, in respect of the Second Lien Notes, by the Lexmark Collateral that is Fixed Asset Collateral and on a second-priority basis, in respect of the First Lien Notes, and on a third-priority basis, in respect of the Second Lien Notes by the Lexmark Collateral that is Current Asset Collateral.

At any time and from time to time prior to October 15, 2027, some or all of the First Lien Notes are redeemable for cash at a redemption price equal to 100 % of their principal amount, plus the applicable “make-whole” premium described in the First Lien Indenture and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

Beginning on October 15, 2027, some or all of the First Lien Notes are redeemable at any time and from time to time at the applicable redemption prices listed in the First Lien Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, at any time and from time to time prior to October 15, 2027, up to 40 % of the aggregate principal amount of the First Lien Notes are redeemable with funds from one or more equity offerings at a redemption price equal to 110.250 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, prior to October 15, 2027, during each 12-month period commencing with the issue date of the First Lien Notes, up to 10 % of the aggregate principal amount of the First Lien Notes outstanding are redeemable at a redemption price equal to 103 % of the principal amount of the First Lien Notes redeemed plus accrued and unpaid interest.

At any time and from time to time prior to April 15, 2028, some or all of the Second Lien Notes are redeemable for cash at a redemption price equal to 100 % of their principal amount, plus the applicable “make-whole” premium described in the Second Lien Indenture and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

Beginning on April 15, 2028, some or all of the Second Lien Notes are redeemable at any time and from time to time at the applicable redemption prices listed in the Second Lien Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, at any time and from time to

Xerox 2025 Form 10-Q 32

time prior to April 15, 2028, up to 40 % of the aggregate principal amount of the Second Lien Notes are redeemable with funds from one or more equity offerings at a redemption price equal to 113.500 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, prior to April 15, 2028, during each 12-month period commencing with the issue date of the Second Lien Notes, up to 10 % of the aggregate principal amount of the Second Lien Notes outstanding are redeemable at a redemption price equal to 103 % of the principal amount of the Second Lien Notes redeemed plus accrued and unpaid interest.

If Xerox Corporation experiences a Change of Control Triggering Event (as defined in the Indentures), Xerox Corporation will be required to offer to repurchase the First Lien Notes and the Second Lien Notes, at 101 % of the principal amount of such Notes, respectively, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Indentures contain covenants that, following the issue date for the First Lien Notes and the Escrow Release for the Second Lien Notes, among other things, limit the ability of Xerox Holdings Corporation, Xerox Corporation and Xerox Corporation’s restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, prepay, redeem or repurchase certain subordinated debt, issue certain preferred stock or similar equity securities, make loans and investments, sell or otherwise dispose of assets, incur liens, enter into transactions with affiliates, enter into agreements restricting its subsidiaries’ ability to pay dividends, and consolidate, merge or sell all or substantially all assets.

In addition, the notes include restrictions which limit the use of proceeds under certain sales of finance receivables.

The restrictions would require proceeds from certain sales to be used to repay existing first lien debt.

The Indentures provide for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in respect of the Notes, failure to pay certain other indebtedness, failure to pay certain final judgments, failure of certain guarantees to be enforceable and certain events of bankruptcy or insolvency.

For additional information regarding the Debt and the Lexmark Acquisition, please refer to Note 21 - Subsequent Events.

In connection with the issuance of the 2030 3.75 % Convertible Senior Notes in 2024 (the 2030 Convertible Notes), the Company entered into privately negotiated capped call transactions (the Capped Calls) with certain of the initial purchasers of the 2030 Convertible Notes or their respective affiliates (the option counterparties) at a cost of approximately $ 23 .

The Capped Calls cover, subject to anti-dilution adjustments, the number of shares of the Company's common stock initially underlying the 2030 Convertible Notes.

By entering into the Capped Calls, we expect to reduce the potential dilution to the Company's common stock (or, in the event a conversion of the 2030 Convertible Notes is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion of the 2030 Convertible Notes the trading price of our common stock price exceeds the conversion price of the 2030 Convertible Notes.

The initial cap sale price of the Capped Calls was approximately $ 28.34 per share, which represents a premium of 70 % over the last reported sale price of our common stock of $ 16.67 on the NASDAQ Stock Exchange on March 6, 2024, and is subject to certain adjustments under the terms of the Capped Calls.

Under the terms of the Capped Call, a dividend payment below the Company’s $ 1.00 annual dividend at the time of the purchase of the Capped Call could result in an adjustment to the cap price.

This adjustment is intended to preserve the original economics of the Capped Call and is permissible under ASC 815-40, and therefore, the Capped Call continues to meet the conditions for equity classification.

The current Capped Call Price was reduced to $ 27.51 per share as a result of the reduction of our annual dividend from $ 1.00 to $ .50 in the first quarter of 2025.

In the second quarter of 2025, the annual dividend was reduced to $ .10 per share, and we are in discussions with the Capped Call counterparties to finalize the adjustment.

Revolving Credit Facility

2 unchanged sentences

The ABL Facility has commitments from the lenders of $ 425 .

At March 31, 2025, there were no borrowings under the ABL Facility, and approximately $ 41 of letters of credit were issued under the facility.

During the three months ended March 31, 2025, the maximum borrowings under the ABL Facility were $ 25 .

At June 30, 2025, the available borrowing base was approximately $ 260 , reflecting no borrowings under the ABL

Xerox 2025 Form 10-Q 33

Facility, and approximately $ 63 of letters of credit that were issued under the facility.

During the six months ended June 30, 2025, the maximum amount outstanding under the ABL Facility was $ 53 .

Xerox Holdings Corporation/Xerox Corporation Intercompany Loan

At March 31, 2025 and December 31, 2024, the balance of the Xerox Holdings Corporation Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 2,023 and $ 2,022 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 23 and $ 31 , respectively.

At June 30, 2025 and December 31, 2024, the balance of the Xerox Holdings Corporation Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 1,934 and $ 2,022 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 29 and $ 31 , respectively.

Secured Borrowings and Collateral

At December 31, 2024, we had secured borrowings of $ 70 with an interest rate of 4.62 %.

The borrowings were secured by $ 58 of Finance receivables, net, and were expected to mature in 2026.

During the first quarter 2025, the outstanding balance of $ 70 was repaid and there are no secured borrowings outstanding as of March 31, 2025.

Xerox 2025 Form 10-Q 29

At December 31, 2024, we had borrowings of $ 70 , which were secured by finance receivables of $ 58 .

These borrowings had an interest rate of 4.62 %, and were expected to mature in 2026.

During the first quarter 2025, the outstanding balance of $ 70 was repaid.

Accordingly, there are no borrowings secured by finance receivables that are outstanding as of June 30, 2025.

Interest Expense and Income

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Equipment financing interest (1)

$ 23 $ 29 $ 45 $ 56

Non-financing interest expense (1)(2)

1 unchanged sentence

Financing income (3)

$ 32 $ 38 $ 65 $ 80

Other interest income (3)

1 unchanged sentence

(1) Equipment financing interest, which is included in Cost of services, maintenance, rentals and other, and non-financing interest expense, which is included in Other expenses, net, in the Condensed Consolidated Statements of Loss.

(2) Interest expense of Xerox Corporation included intercompany interest expense associated with the Xerox Holdings Corporation / Xerox Corporation Intercompany Loan of $ 30 and $ 22 for the three months ended March 31, 2025 and 2024, respectively.

(2) Interest expense of Xerox Corporation included intercompany interest expense associated with the Xerox Holdings Corporation / Xerox Corporation Intercompany Loan of $ 29 and $ 29 for the three months ended June 30, 2025 and 2024, respectively and $ 59 and $ 51 for the

six months ended June 30, 2025 and 2024, respectively.

(3) Financing income, which is included in Services, maintenance, rentals and other, and other interest income, which is included in Other expenses, net, in the Condensed Consolidated Statements of Loss.

3 unchanged sentences

These derivatives may be designated as fair value hedges or cash flow hedges or non-designated hedges depending on the nature of the risk being hedged.

We had no fair value hedges for the three months ended March 31, 2025 and 2024, respectively.

We had no fair value hedges for the three and six months ended June 30, 2025 and 2024, respectively.

Cash Flow Hedges

1 unchanged sentence

The interest rate swaps convert the interest paid on certain loans to a fixed amount while the caps limit the maximum amount of interest paid.

In September 2024, we entered into two floating-to-fixed interest rate swaps to hedge against interest rate volatility associated with our Term Loan B Credit Agreement (TLB), which had an outstanding principal balance of $ 516 as of March 31, 2025.

The following is a summary of our swaps at March 31, 2025:

The following is a summary of our swaps at June 30, 2025:

Counterparty Derivative Type Principal Debt

7 unchanged sentences

The remaining portion of the TLB of $ 121 is not hedged, and is subject to interest rate fluctuations.

The impact of these interest rate swaps on interest expense was a net reduction of $ 1 for the three months ended March 31, 2025.

The impact of these interest rate swaps on interest expense was a net reduction of $ 1 for the three months ended June 30, 2025.

Xerox 2025 Form 10-Q 34

Foreign Exchange Risk Management

3 unchanged sentences

• Forecasted purchases and sales in foreign currency

At March 31, 2025 and December 31, 2024, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 1,200 and $ 1,410 respectively, with terms of less than 12 months.

At June 30, 2025 and December 31, 2024, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 1,116 and $ 1,410 respectively, with terms of less than 12 months.

The decrease in the notional value is due to a reduction in foreign currency denominated intercompany balances.

At March 31, 2025, approximately 94 % of the contracts mature within three months, 3 % mature in three to six months and 3 % in six to twelve months.

Xerox 2025 Form 10-Q 30

At June 30, 2025, approximately 94 % of the contracts mature within three months, 3 % mature in three to six months and 3 % in six to twelve months.

Foreign Currency Cash Flow Hedges

1 unchanged sentence

All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

The amount of ineffectiveness recorded in the Condensed Consolidated Statements of Loss for these designated cash flow hedges was not material for the three months ended March 31, 2025 and 2024, respectively.

The net liability fair value of these contracts was $ 1 and $ 1 as of March 31, 2025 and December 31, 2024, respectively.

The amount of ineffectiveness recorded in the Condensed Consolidated Statements of Loss for these designated cash flow hedges was not material for the six months ended June 30, 2025 and 2024, respectively.

The net liability fair value of these contracts was $ 5 and $ 1 as of June 30, 2025 and December 31, 2024, respectively.

Summary of Derivative Instruments Gains (Losses)

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Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Derivative Loss Recognized in OCI (Effective Portion)

2 unchanged sentences

Total $ ( 6 ) $ ( 5 ) $ ( 9 ) $ ( 8 )

Location of Derivative Losses (Gains) Reclassified from AOCL to Income (Effective Portion)

Location of Derivative (Gains) Losses Reclassified from AOCL to Income (Effective Portion)

Cost of sales $ ( 1 ) $ ( 4 ) $ ( 1 ) $ ( 8 )

1 unchanged sentence

Total $ ( 1 ) $ ( 4 ) $ ( 1 ) $ ( 7 )

As of March 31, 2025, a net after-tax gain of $ 4 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.

The entire balance is expected to be reclassified into Net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

At June 30, 2025, there was no net after-tax gain recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.

Credit Support Annex

The Company may enter into derivative contracts with derivative counterparties that contain a provision to post collateral to the counterparties when these contracts are in a net liability position.

At March 31, 2025, the Company had no collateral posted due to this provision.

At June 30, 2025, the Company had no collateral posted due to this provision.

Non-Designated Derivative Instruments Gains (Losses)

1 unchanged sentence

They are not designated as hedges since there is a natural offset for the remeasurement of the underlying foreign currency-denominated asset or liability.

The net liability fair value of these contracts was $ 1 and $ 2 as of March 31, 2025 and December 31, 2024, respectively.

The net liability fair value of these contracts was $ 0 and $ 2 as of June 30, 2025 and December 31, 2024, respectively.

Xerox 2025 Form 10-Q 35

The following table provides a summary of gains and (losses) on non-designated derivative instruments:

Derivatives NOT Designated as Hedging Instruments Location of Derivative Gain (Loss) Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Foreign exchange contracts – forwards Other expenses, net – Currency gains (losses), net $ 3 $ ( 6 ) $ 9 $ ( 14 )

Currency losses, net were $ 0 and $ 11 for the three months ended March 31, 2025 and 2024, respectively.

Currency losses, net were $ 1 and $ 2 for the three months ended June 30, 2025 and 2024, respectively, and $ 1 and $ 13 for six months ended June 30, 2025 and 2024, respectively.

Net currency gains and losses include the mark-to-market adjustments of the derivatives not designated as hedging instruments and the related cost of those derivatives as well as the remeasurement of foreign currency-denominated assets and liabilities and are included in Other expenses, net.

Xerox 2025 Form 10-Q 31

Note 14 – Fair Value of Financial Assets and Liabilities

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The estimated fair values of our other financial assets and liabilities were as follows:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Cash and cash equivalents $ 449 $ 449 $ 576 $ 576

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The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Pension Benefits

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Net Periodic Benefit Cost (Credit) 8 20 18 22 ( 4 ) ( 4 )

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:

Net actuarial gain (1)

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):

Net actuarial (loss) gain (1)

( 1 ) 14 — — — ( 1 )

Prior service cost — — — — — —

Amortization of net actuarial (loss) gain ( 4 ) ( 10 ) ( 14 ) ( 15 ) 3 3

Amortization of net prior service (cost) credit — — ( 2 ) ( 3 ) 3 3

Total Recognized in Other Comprehensive Income (Loss) (2)

( 5 ) 4 ( 16 ) ( 18 ) 6 5

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive Income (Loss) $ 3 $ 24 $ 2 $ 4 $ 2 $ 1

Six Months Ended June 30,

Pension Benefits

Plans Non-U.S.

Plans Retiree Health

Components of Net Periodic Benefit Costs:

2025 2024 2025 2024 2025 2024

Service cost $ — $ — $ 2 $ 2 $ — $ —

Interest cost 57 55 95 90 4 4

Expected return on plan assets ( 44 ) ( 46 ) ( 102 ) ( 96 ) — —

Recognized net actuarial loss (gain) 9 10 27 31 ( 6 ) ( 6 )

Amortization of prior service cost (credit) — — 4 4 ( 6 ) ( 7 )

Total Recognized in Other Comprehensive Income (2)

Recognized settlement loss — 10 — — — —

Defined benefit plans 22 29 26 31 ( 8 ) ( 9 )

Defined contribution plans — 8 10 11 n/a n/a

Net Periodic Benefit Cost (Credit) 22 37 36 42 ( 8 ) ( 9 )

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):

Net actuarial (loss) gain (1)

( 1 ) 6 — — — ( 1 )

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive Income $ 9 $ ( 1 ) $ 3 $ 3 $ 2 $ 2

Amortization of net actuarial (loss) gain ( 9 ) ( 20 ) ( 27 ) ( 31 ) 6 6

Amortization of prior service (cost) credit — — ( 4 ) ( 4 ) 6 7

Total Recognized in Other Comprehensive Income (Loss) (2)

( 10 ) ( 14 ) ( 31 ) ( 35 ) 12 12

(1) The net actuarial gain for U.S.

Pension Plans primarily reflects the remeasurement of our primary U.S.

pension plans as a result of the payment of periodic settlements.

(2) Amounts represent the pre-tax effect included within Other Comprehensive Income.

Refer to Note 18 - Other Comprehensive Income for related tax effects and the after-tax amounts.

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive Income (Loss) $ 12 $ 23 $ 5 $ 7 $ 4 $ 3

_____________

(1) The net actuarial (loss) gain for U.S.

Pension Plans primarily reflects (i) the remeasurement of our primary U.S.

pension plans as a result of the payment of periodic settlements and (ii) adjustments for the actuarial valuation results based on the January 1st plan census data.

The Retiree Health plan's net actuarial gain reflects adjustments for the actuarial valuation results based on the January 1st plan census data.

(2) Amounts represent the pre-tax effect included within Other Comprehensive Income (Loss).

Refer to Note 18 - Other Comprehensive Income (Loss) for related tax effects and the after-tax amounts.

Xerox 2025 Form 10-Q 37

Contributions

The following table summarizes cash contributions to our defined benefit pension plans and retiree health benefit plans:

Three Months Ended

March 31, Year Ended

Six Months Ended

June 30, Year Ended

2025 2024 Estimated 2025

6 unchanged sentences

plans are for our tax-qualified defined benefit plans.

Xerox 2025 Form 10-Q 33

Note 16 – Shareholders’ Equity of Xerox Holdings

4 unchanged sentences

Non-controlling

Balance at December 31, 2024 $ 124 $ 1,137 $ 3,514 $ ( 3,699 ) $ 1,076 $ 4 $ 1,080

Balance at March 31, 2025 $ 126 $ 1,141 $ 3,403 $ ( 3,617 ) $ 1,053 $ 4 $ 1,057

Comprehensive (loss) income, net — — ( 106 ) 169 63 — 63

5 unchanged sentences

Transactions with noncontrolling interests — — — — — 1 1

Distributions to noncontrolling interests — — — — — ( 1 ) ( 1 )

Balance at March 31, 2025

$ 126 $ 1,141 $ 3,403 $ ( 3,617 ) $ 1,053 $ 4 $ 1,057

Balance at June 30, 2025 $ 126 $ 1,154 $ 3,290 $ ( 3,448 ) $ 1,122 $ 5 $ 1,127

Xerox Holdings

Shareholders’

Balance at March 31, 2024 $ 124 $ 1,099 $ 4,828 $ ( 3,673 ) $ 2,378 $ 3 $ 2,381

Comprehensive income (loss) , net — — 18 ( 14 ) 4 — 4

Cash dividends declared - common (3)

— — ( 33 ) — ( 33 ) — ( 33 )

Cash dividends declared - preferred (4)

— — ( 3 ) — ( 3 ) — ( 3 )

Stock option and incentive plans, net — 15 — — 15 — 15

Transactions with noncontrolling interests — — — — — 1 1

Balance at June 30, 2024 $ 124 $ 1,114 $ 4,810 $ ( 3,687 ) $ 2,361 $ 4 $ 2,365

Xerox 2025 Form 10-Q 38

Additional Paid-in Capital Retained Earnings AOCL (2)

Xerox Holdings Shareholders’ Equity Non-controlling Interests Total

Balance at December 31, 2024 $ 124 $ 1,137 $ 3,514 $ ( 3,699 ) $ 1,076 $ 4 $ 1,080

4 unchanged sentences

— — ( 7 ) — ( 7 ) — ( 7 )

Purchases of capped calls — ( 17 ) — — ( 17 ) — ( 17 )

Stock option and incentive plans, net 2 17 — — 19 — 19

1 unchanged sentence

Distributions to noncontrolling interests — — — — — ( 1 ) ( 1 )

Balance at March 31, 2024

Balance at June 30, 2025 $ 126 $ 1,154 $ 3,290 $ ( 3,448 ) $ 1,122 $ 5 $ 1,127

Additional Paid-in Capital Retained Earnings AOCL (2)

Xerox Holdings Shareholders’ Equity Non- controlling Interests Total

Balance at December 31, 2023 $ 123 $ 1,114 $ 4,977 $ ( 3,676 ) $ 2,538 $ 10 $ 2,548

Comprehensive loss, net — — ( 95 ) ( 11 ) ( 106 ) — ( 106 )

Cash dividends declared - common (3)

— — ( 65 ) — ( 65 ) — ( 65 )

Cash dividends declared - preferred (4)

— — ( 7 ) — ( 7 ) — ( 7 )

Purchases of capped calls — ( 17 ) — — ( 17 ) — ( 17 )

Stock option and incentive plans, net 1 17 — — 18 — 18

Transactions with noncontrolling interests — — — — — ( 5 ) ( 5 )

Distributions to noncontrolling interests — — — — — ( 1 ) ( 1 )

Balance at June 30, 2024 $ 124 $ 1,114 $ 4,810 $ ( 3,687 ) $ 2,361 $ 4 $ 2,365

_____________

(1) Common Stock has a par value of $ 1 per share.

(2) Refer to Note 18 - Other Comprehensive Income for the components of AOCL.

(3) Cash dividends declared on common stock for the three months ended March 31, 2025 and 2024 were $ 0.125 per share and $ 0.25 per share, respectively.

(4) Cash dividends declared on preferred stock for the three months ended March 31, 2025 and 2024 were $ 20.00 per share and $ 20.00 per share, respectively.

Common Stock and Treasury Stock

The following is a summary of the changes in Common and Treasury stock shares:

Common Stock Shares Treasury Stock Shares

(2) Refer to Note 18 - Other Comprehensive Income (Loss) for the components of AOCL.

(3) During the first quarter of 2025, the annual dividend on Common Shares was reduced to $ 0.50 per share from $ 1.00 per share.

In the second quarter of 2025, the annual dividend on Common Shares was further reduced to $ 0.10 per share from $ 0.50 per share.

Cash dividends declared on common stock for the three months ended June 30, 2025 and 2024 were $ 0.025 per share and $ 0.25 per share, respectively, and $ 0.15 per share and $ 0.50 per share for the six months ended June 30, 2025 and 2024, respectively.

(4) Cash dividends declared on preferred stock for the three and six months ended June 30, 2025 and 2024 were $ 20.00 per share, respectively, and $ 40.00 per share, respectively.

The following is a summary of the changes in Common stock shares:

Common Stock Shares

Balance at December 31, 2024 124,435

1 unchanged sentence

Balance at March 31, 2025 125,780

Stock based compensation plans, net 26

Balance at June 30, 2025 125,806

Xerox 2025 Form 10-Q 39

3 unchanged sentences

Xerox Shareholder's Equity Non- controlling Interests Total

Balance at December 31, 2024 $ 3,487 $ 1,504 $ ( 3,699 ) $ 1,292 $ 4 $ 1,296

Balance at March 31, 2025 $ 3,474 $ 1,397 $ ( 3,617 ) $ 1,254 $ 4 $ 1,258

Comprehensive (loss) income, net — ( 104 ) 169 65 — 65

2 unchanged sentences

Transactions with noncontrolling interests — — — — 1 1

Distributions to noncontrolling interests — — — — ( 1 ) ( 1 )

Balance at June 30, 2025

$ 3,468 $ 1,287 $ ( 3,448 ) $ 1,307 $ 5 $ 1,312

Additional Paid-in Capital Retained Earnings AOCL (1)

Xerox Shareholder's Equity Non- controlling Interests Total

Balance at March 31, 2024 $ 3,465 $ 2,811 $ ( 3,673 ) $ 2,603 $ 3 $ 2,606

Comprehensive income (loss), net — 19 ( 14 ) 5 — 5

Dividends declared to parent — ( 34 ) — ( 34 ) — ( 34 )

Transfers from parent 8 — — 8 — 8

Transactions with noncontrolling interests — — — — 1 1

Balance at June 30, 2024

$ 3,473 $ 2,796 $ ( 3,687 ) $ 2,582 $ 4 $ 2,586

7 unchanged sentences

Distributions to noncontrolling interests — — — — ( 1 ) ( 1 )

Balance at March 31, 2024

Balance at June 30, 2025 $ 3,468 $ 1,287 $ ( 3,448 ) $ 1,307 $ 5 $ 1,312

Additional Paid-in Capital Retained Earnings AOCL (1)

Xerox Shareholder's Equity Non-

Balance at December 31, 2023 $ 3,485 $ 2,959 $ ( 3,676 ) $ 2,768 $ 10 $ 2,778

Comprehensive loss, net — ( 94 ) ( 11 ) ( 105 ) — ( 105 )

Dividends declared to parent — ( 69 ) — ( 69 ) — ( 69 )

Transfers to parent ( 12 ) — — ( 12 ) — ( 12 )

Transactions with noncontrolling interests — — — — ( 5 ) ( 5 )

Distributions to noncontrolling interests — — — — ( 1 ) ( 1 )

Balance at June 30, 2024

$ 3,473 $ 2,796 $ ( 3,687 ) $ 2,582 $ 4 $ 2,586

_____________

(1) Refer to Note 18 - Other Comprehensive Income for the components of AOCL.

(1) Refer to Note 18 - Other Comprehensive Income (Loss) for the components of AOCL.

Xerox 2025 Form 10-Q 40

Note 18 – Other Comprehensive Income

Other Comprehensive Income is comprised of the following:

Note 18 – Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss) is comprised of the following:

Three Months Ended

Pre-tax Net of Tax Pre-tax Net of Tax

June 30, Six Months Ended

2025 2024 2025 2024

Pre-tax Net of Tax Pre-tax Net of Tax Pre-tax Net of Tax Pre-tax Net of Tax

Translation Adjustments Gains (Losses) $ 229 $ 229 $ ( 20 ) $ ( 20 ) $ 334 $ 334 $ ( 52 ) $ ( 52 )

2 unchanged sentences

Changes in cash flow hedges reclassed to earnings (1)

1 1 4 3 1 1 7 5

Net Unrealized Losses ( 5 ) ( 4 ) ( 1 ) — ( 8 ) ( 6 ) ( 1 ) ( 1 )

Defined Benefit Plans (Losses) Gains

Net actuarial/prior service (losses) gains — ( 1 ) 8 6

Defined Benefit Plans Gains (Losses)

Net actuarial/prior service gains (losses) 1 1 ( 13 ) ( 10 ) 1 — ( 5 ) ( 4 )

Prior service amortization (2)

1 unchanged sentence

Actuarial loss amortization/settlement (2)

15 13 22 17 30 27 45 34

Other (losses) gains (3)

1 unchanged sentence

Changes in Defined Benefit Plans (Losses) Gains ( 55 ) ( 56 ) 8 6 ( 75 ) ( 77 ) 51 42

Other Comprehensive Income $ 82 $ 82 $ 11 $ 3

Other Comprehensive Income (Loss) 169 169 ( 13 ) ( 14 ) $ 251 $ 251 $ ( 2 ) $ ( 11 )

(1) Reclassified to Cost of sales and interest expense - refer to Note 13 - Financial Instruments for additional information regarding our cash flow hedges.

9 unchanged sentences

Xerox 2025 Form 10-Q 41

Note 19 – Loss per Share

Note 19 – ( Loss) Earnings per Share

(shares in thousands)

The following table sets forth the computation of basic and diluted loss per share of Xerox Holdings Corporation's common stock:

The following table sets forth the computation of basic and diluted (loss) earnings per share of Xerox Holdings Corporation's common stock:

Three Months Ended

Loss per Share

Net Loss $ ( 90 ) $ ( 113 )

June 30, Six Months Ended

2025 2024 2025 2024

(Loss) Earnings per Share

Net (Loss) income $ ( 106 ) $ 18 $ ( 196 ) $ ( 95 )

Accrued dividends on preferred stock ( 3 ) ( 3 ) ( 7 ) ( 7 )

Adjusted Net loss available to common shareholders $ ( 94 ) $ ( 117 )

Adjusted Net (loss) income available to common shareholders $ ( 109 ) $ 15 $ ( 203 ) $ ( 102 )

Weighted average common shares outstanding 125,791 124,230 125,452 124,062

Basic Loss per Share $ ( 0.75 ) $ ( 0.94 )

Diluted Loss per Share

Net Loss $ ( 90 ) $ ( 113 )

Basic (Loss) Earnings per Share $ ( 0.87 ) $ 0.12 $ ( 1.62 ) $ ( 0.83 )

Diluted (Loss) Earnings per Share:

Net (Loss) income $ ( 106 ) $ 18 $ ( 196 ) $ ( 95 )

Accrued dividends on preferred stock ( 3 ) ( 3 ) ( 7 ) ( 7 )

Adjusted Net loss available to common shareholders $ ( 94 ) $ ( 117 )

Adjusted Net (loss) income available to common shareholders $ ( 109 ) $ 15 $ ( 203 ) $ ( 102 )

Weighted average common shares outstanding 125,791 124,230 125,452 124,062

4 unchanged sentences

Adjusted weighted average common shares outstanding 125,791 125,555 125,452 124,062

Diluted Loss per Share $ ( 0.75 ) $ ( 0.94 )

Diluted (Loss) Earnings per Share $ ( 0.87 ) $ 0.11 $ ( 1.62 ) $ ( 0.83 )

The following securities were not included in the computation of diluted earnings per share as they were either contingently issuable shares or shares that if included would have been anti-dilutive:

5 unchanged sentences

Dividends per Common Share (1)

$ 0.025 $ 0.25 $ 0.150 $ 0.50

_____________

(1) During the first quarter of 2025, the annual dividend on Common Shares was reduced to $ 0.50 per share from $ 1.00 per share.

In the second quarter of 2025, the annual dividend on Common Shares was further reduced to $ 0.10 per share from $ 0.50 per share.

Xerox 2025 Form 10-Q 42

26 unchanged sentences

Liens on Brazilian assets — —

The increase in the unreserved portion of the tax contingency, inclusive of any related interest, was primarily due to currency, as well as interest and new cases.

The increase in the unreserved portion of the tax contingency, inclusive of any related interest, was primarily due to currency, as well as interest, partially offset by the closed cases.

With respect to the unreserved tax contingency, the majority has been assessed by management as being remote as to the likelihood of ultimately resulting in a loss to the Company.

20 unchanged sentences

The parties have reached a stipulation of settlement that has been preliminarily approved by the court.

We have issued or provided approximately $ 227 of guarantees as of March 31, 2025 in the form of letters of credit or surety bonds issued to i) support certain insurance programs;

We have issued or provided approximately $ 248 of guarantees as of June 30, 2025 in the form of letters of credit or surety bonds issued to i) support certain insurance programs;

ii) support our obligations related to the Brazil contingencies;

6 unchanged sentences

Note 21 – Subsequent Events

We have evaluated subsequent events through May 6, 2025, which is the date the financial statements were issued.

Debt Issuance

We received net proceeds (after discount, fees and expenses) on the issuance of the First Lien Notes of $ 366 .

Additionally, $ 392 of net proceeds (after discount) was deposited into an escrow account upon the issuance of the Second Lien Notes.

On May 9, 2025, the Escrow Issuer issued an additional $ 100 of the 13.500 % Second Lien Notes at 95 % of par.

Also on May 9, 2025, $ 96 of the proceeds were deposited into the escrow account, which included $ 1 of accrued and unpaid interest.

Xerox Corporation made an additional deposit of $ 2 into the escrow account.

Net proceeds (after discounts, fees and expenses) were approximately $ 93 .

Aggregate net proceeds from both issuances of the Second Lien Notes was approximately $ 485 .

We expect to pay an additional $ 15 of commitment and underwriting fees upon the release of the proceeds from escrow to fund the Lexmark Acquisition (as defined below).

Xerox Corporation intends to use the net proceeds from the offering of the First Lien Notes, together with cash on hand, to redeem Xerox’s 5.000 % Senior Notes due 2025 (2025 Notes) in full on or prior to their maturity and to pay fees and expenses, including redemption premiums and accrued interest, in connection with the offering, the Lexmark Acquisition and the related transactions, including redemption premiums and accrued interest in connection with the related transactions.

Xerox redeemed an aggregate principal amount of $ 90 of the 2025 Notes on April 11, 2025, with the balance to be redeemed on or prior to maturity.

On April 11, 2025, Xerox also repaid $ 95 aggregate principal amount of borrowings under Xerox Corporation’s first lien senior secured term loan credit facility (the TLB Facility) with a portion of the proceeds of the First Lien Notes.

The application of the remaining proceeds from the First Lien Notes will be used for general corporate purposes.

Xerox Corporation intends to use the net proceeds from the offering of the Second Lien Notes to (i) fund a portion of the purchase price for the Lexmark Acquisition and the repayment of substantially all of Lexmark’s outstanding debt (together with accrued interest and any applicable expenses, fees or premiums) and (ii) pay fees and expenses in connection with the offering, the Lexmark Acquisition and the related transactions.

The First Lien Notes are governed by an indenture, dated as of April 11, 2025 (the First Lien Indenture), among Xerox Corporation, Xerox Holdings Corporation (Xerox and, together with Xerox Corporation, the Company), certain of Xerox’s domestic and foreign subsidiaries and U.S.

Bank Trust Company, National Association, as trustee and collateral agent.

The Second Lien Notes are governed by an indenture, dated as of April 11, 2025 (the Second Lien

Xerox 2025 Form 10-Q 39

Indenture and, together with the First Lien Indenture, the Indentures), between the Escrow Issuer and U.S.

Bank Trust Company, National Association, as trustee and collateral agent.

The First Lien Notes bear interest at a rate of 10.250 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2025.

The First Lien Notes are unconditionally guaranteed on a senior secured basis by Xerox and certain of Xerox’s domestic and foreign subsidiaries and, subject to certain exceptions and permitted liens, secured by security interests in substantially all of the assets of Xerox and such subsidiaries (the Xerox Collateral) on a first-priority basis by the Xerox Collateral that is Fixed Asset Collateral (as defined in the First Lien Indenture) and on a second-priority basis by the Xerox Collateral that is Current Asset Collateral (as defined in the First Lien Indenture).

The Second Lien Notes bear interest at a rate of 13.500 % per annum, payable semi-annually in arrears on April 15 and October 15, beginning on October 15, 2025.

The gross proceeds of the Second Lien Notes were deposited into an escrow account for the benefit of the holders of the Second Lien Notes until such date that certain escrow release conditions, including the consummation of the Lexmark Acquisition, have been satisfied.

The escrow account is pledged on a first priority basis in favor of the trustee for the Second Lien Notes for the benefit of holders of the Second Lien Notes.

If the Lexmark Acquisition is not consummated on or prior to December 22, 2025 (subject to extension) or upon the occurrence of certain other events, the Second Lien Notes will be subject to a special mandatory redemption at a price equal to 98 % of the aggregate principal amount of the Second Lien Notes, plus accrued and unpaid interest, if any, from, and including, the most recent interest payment date, or April 11, 2025, if no interest has been paid, to, but excluding, the special mandatory redemption date.

Upon the consummation of the Lexmark Acquisition, subject to certain escrow release conditions, the escrowed proceeds will be released (the Escrow Release) from the escrow account and the Escrow Issuer will be merged with and into Xerox Corporation.

Upon the Escrow Release, Xerox Corporation, Xerox and certain of Xerox’s domestic and foreign subsidiaries that guarantee the First Lien Notes will enter into one or more supplemental indentures to the Second Lien Indenture to provide for the assumption by Xerox Corporation of the obligations of the Escrow Issuer as issuer of the Second Lien Notes and for the guarantees of the Second Lien Notes by Xerox and such subsidiaries (the Assumption).

On the date of Escrow Release and upon consummation of the Assumption, the Second Lien Notes, subject to certain exceptions and permitted liens, will be secured on a second-priority basis by the Xerox Collateral that is Fixed Asset Collateral and on a third-priority basis by the Xerox Collateral that is Current Asset Collateral.

We have evaluated subsequent events through August 7, 2025, which is the date the financial statements were issued.

Lexmark Acquisition

On July 1, 2025, Xerox Corporation completed its previously announced acquisition of all of the issued and outstanding equity securities of Lexmark International II, LLC (Lexmark) from Ninestar Group Company Limited (the Seller).

Total consideration transferred included cash of approximately $ 841 , as well as the assumption of Lexmark's debt of $ 327 .

This acquisition will be accounted for under the guidance of ASC 805-10, as a business combination under the acquisition method.

Based upon the timing of this acquisition, the initial accounting for the acquisition is not yet complete as the Company gathers additional information related to the assets acquired and the liabilities assumed.

The Company is in the process of obtaining third-party valuations of certain intangible assets.

The preliminary application of acquisition accounting to the assets acquired, and liabilities assumed, as well as the results of operations will first be reflected in the Company's consolidated financial statements as of and for the three months ended September 30, 2025.

On July 1, 2025, Xerox Corporation made an incremental term loan borrowing of approximately $ 327 (Incremental Term Loans) under its TLB Facility.

Substantially all of the net proceeds of the Incremental Term Loans were used to repay (through a cashless settlement) a portion of Lexmark’s outstanding debt.

On July 1, 2025, Xerox Holdings completed its offering of (i) $ 250 aggregate principal amount of 13.00 % Senior Notes due July 2030 (the 2030 Notes) issued by Xerox Holdings and (ii) $ 125 aggregate principal amount of 13.00 % Senior Unsecured Notes due June 2026 (the 2026 Notes) issued by Xerox Holdings.

We received net proceeds (after discount, fees and expenses) on the issuance of the 2030 Notes of approximately $ 245 , and net proceeds on the 2026 Notes of approximately $ 116 .

The 2030 Notes included associated pre-funded warrant with a fair value of approximately $ 11 .

Refer to the Unregistered Sales of Equity Securities section below for additional information regarding these warrants.

The 2026 Notes provide the option for Xerox (at its sole discretion) to extend the maturity of approximately $ 62.5 of the 2026 Notes for an additional six-month period (for a 2 % fee on the amount of notes outstanding after the payment on the scheduled maturity date).

During the extension period, the 2026 Notes will continue to bear interest at 13.00 % per annum.

Xerox used the net proceeds of the 2030 Notes to fund a portion of the purchase price for the Lexmark Acquisition and to repay a portion of Lexmark’s outstanding debt (together with accrued interest and any applicable expenses, fees or premiums) and to pay fees and expenses in connection with the Lexmark Acquisition and the related transactions.

The net proceeds of the 2026 Notes will be used for general corporate purposes including, without limitation, funding the realization of synergies associated with the Lexmark Acquisition.

The 2030 Notes are governed by an Indenture, dated as of July 1, 2025 (the 2030 Notes Indenture), among Xerox, certain of Xerox's domestic subsidiaries and U.S.

Bank Trust Company, National Association, as trustee.

Xerox 2025 Form 10-Q 44

unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, at any time and from time to time prior to April 15, 2028, up to 40 % of the aggregate principal amount of the Second Lien Notes are redeemable with funds from one or more equity offerings at a redemption price equal to 113.500 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

If Xerox Corporation experiences a Change of Control Triggering Event (as defined in the Indentures), Xerox Corporation will be required to offer to repurchase the First Lien Notes, and, following the Escrow Release, the Second Lien Notes, at 101 % of the principal amount of such Notes, respectively, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Indentures contain covenants that, following the issue date for the First Lien Notes and the Escrow Release for the Second Lien Notes, among other things, limit the ability of Xerox, Xerox Corporation and Xerox Corporation’s restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, prepay, redeem or repurchase certain subordinated debt, issue certain preferred stock or similar equity securities, make loans and investments, sell or otherwise dispose of assets, incur liens, enter into transactions with affiliates, enter into agreements restricting its subsidiaries’ ability to pay dividends, and consolidate, merge or sell all or substantially all assets.

In addition, the notes include restrictions which limit the use of proceeds under certain sales of finance receivables.

The restrictions would require proceeds from certain sales to be used to repay existing first lien debt.

Lexmark Committed Debt Financing

On May 2, 2025, we received a letter (the Notice Letter) from representatives of Christy 2017, LP (the Thompson Commitment Party), one of the commitment parties under the commitment letter, among Xerox, DCS Finance LLC (DCS Finance) and the Thompson Commitment Party, dated December 22, 2024 (the Commitment Letter), providing for the commitment from the Thompson Commitment Party to purchase $ 225 aggregate principal amount of the Private Senior Unsecured Notes.

The Notice Letter stated that the Thompson Commitment Party was considering its purported legal options with regard to terminating the Commitment Letter.

We believe that the Notice Letter has no merit and that upon satisfaction of the conditions precedent set forth in the Commitment Letter, the Thompson Commitment Party is obligated to purchase the applicable Private Senior Unsecured Notes.

Representatives of DCS Finance, who have provided a commitment to purchase $ 25 on aggregate principal amount of the Private Senior Unsecured Notes under the Commitment Letter, have informed us that they intend to fulfill their obligations under the Commitment Letter in full and that they do not believe that commitment parties to the Commitment Letter have any rights to terminate the Commitment Letter.

We are engaging in discussions with representatives of the Thompson Commitment Party in order to resolve this matter.

Notes are payable quarterly in arrears on April 1, July 1, October 1 and January 1 of each year, beginning on October 1, 2025.

The Initial Interest Rate on the 2030 Notes will increase (Interest Rate Step-Up) to the rates (on a per annum basis) set forth below for the period from and including the dates indicated below (each a Step-Up Date) to but excluding the next succeeding Step-up Date, or the stated maturity of the 2030 Notes, as applicable.

The 2030 Notes are unconditionally guaranteed on an unsecured basis by Xerox and certain of Xerox’s domestic subsidiaries, with certain of Xerox’s foreign subsidiaries to provide guarantees on a post-closing basis.

Step-Up Date Interest Rate Step-Up

July 1, 2026 13.500 %

July 1, 2027 14.000 %

October 1, 2027 14.125 %

January 1, 2028 14.250 %

April 1, 2028 14.500 %

July 1, 2028 14.750 %

October 1, 2028 15.000 %

January 1, 2029 15.250 %

April 1, 2029 15.500 %

July 1, 2029 15.750 %

October 1, 2029 16.000 %

January 1, 2030 16.250 %

April 1, 2030 16.500 %

July 1, 2030 16.750 %

The 2026 Notes initially bear interest at a rate of 13.00 % per annum, payable quarterly in arrears on April 1, July 1, October 1 and January 1 of each year, beginning on October 1, 2025.

The 2026 Notes are governed by an indenture, dated as of July 1, 2025 (the 2026 Notes Indenture), among Xerox, certain of Xerox’s domestic subsidiaries and U.S.

Bank Trust Company, National Association, as trustee.

Additionally, the 2026 Notes are unconditionally guaranteed on an unsecured basis by Xerox Corporation and certain of Xerox’s domestic subsidiaries, with certain of Xerox’s foreign subsidiaries to provide guarantees on a post-closing basis.

Unregistered Sales of Equity Securities

In connection with the issuance of the 2030 Note, Xerox Holdings issued a pre-funded warrant (the Warrant), exercisable for 2,160,256 shares of Xerox Holdings Corporation’s common stock (Common Stock), at an exercise price of $ 1.00 per share, of which $ 0.99 was prefunded, to one of the purchasers of the 2030 Notes.

The exercise price and the number of shares of Common Stock issuable upon exercise of the Warrant is subject to appropriate adjustment in the event of certain stock dividends, stock splits, stock combinations, or similar events affecting the Common Stock.

The Warrant is exercisable in cash or by means of a cashless exercise and will remain outstanding until exercised.

Tax Law Change

On July 4, 2025, H.R.

1, the One Big Beautiful Bill Act (the Act), was signed into law.

The Act includes several tax changes, such as making certain provisions from the Tax Cuts and Jobs Act permanent, updating international tax rules, and reinstating immediate expensing for domestic research expenditures.

The Act contains multiple effective dates, with certain provisions applicable beginning in 2025 and others in subsequent years.

The Company is currently evaluating the potential impacts of the Act on its consolidated financial statements.

These impacts may be material, particularly with respect to the Company’s assessment of its valuation allowance on U.S.

deferred tax assets.

As of June 30, 2025, our total deferred tax asset balance was $ 551 , which is net of total valuation allowances of $ 567 .

The Company will continue to evaluate both the effects of the law and the Company’s operating results, and may adjust its valuation allowance, accordingly, based on whether it is more likely than not that the deferred tax assets will be realized.

Any such changes may result in the recognition or reversal of a valuation allowance, which could materially affect income tax expense in the period recognized and future periods.

We expect the impacts of the Act to be reflected in the Company's consolidated financial statements as of and for the three months ended September 30, 2025.

Xerox 2025 Form 10-Q 45

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements