What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-23 compared with 2021-02-25 · 281 added, 199 removed, 187 unchanged (72% of the section changed)

1 unchanged sentence

As customers seek to manage information across digital and physical platforms, we deliver a seamless, secure and sustainable experience.

Whether inventing the copier, the Ethernet, the laser printer or more, Xerox has long defined the modern work experience and continues to do so with investments in artificial intelligence (AI), sensors and services for Internet of Things (IoT), digital packaging, 3D printing and Clean Technologies (clean tech).

Whether inventing the copier, the Ethernet, the laser printer or more, Xerox has long defined the modern work experience and continues to do so with investments in artificial intelligence (AI), augmented reality (AR)-driven service experiences, robotic process automation (RPA), sensors and services for Internet of Things (IoT), 3D printing and Clean Technologies (clean tech).

Geographically, our footprint spans approximately 160 countries and allows us to deliver our technology and solutions to customers of all sizes, regardless of complexity or number of customer locations.

Recent Changes and Developments

In January 2021, we announced our intention to stand up our Software, Financing and Innovation organizations as separate and distinct businesses by 2022.

The Software business will include a growing portfolio comprised of:

In 2021, we proceeded with the standing up of three new businesses:

CareAR, Xerox Financial Services (now known as FITTLE) and Innovation (PARC).

We will proceed with these efforts in 2022 and provide additional information relating to these businesses during the year.

CareAR Holdings (CareAR) is Xerox’s newly formed software business and is comprised of:

CareAR, Inc., an enterprise augmented reality business Xerox acquired in late 2020;

DocuShare®, a cloud-based content management system;

FreeFlow®, automation software for production print;

XMPie, a multi-channel marketing software company;

and CareAR, an enterprise augmented reality business Xerox acquired in late 2020.

Xerox Financial Services (XFS) will become a global payment solutions business, offering leasing for Xerox and third-party technology and office equipment.

This will expand the Company’s customer base, create cross-selling opportunities and provide more leasing options for small and medium-sized businesses (SMBs).

The Innovation business will include the scientists and engineers located in Palo Alto, Calif.;

and XMPie, a multi-channel marketing software platform.

Together, these software assets combine to provide an AR and AI-driven visual support platform that provides real-time access to expertise for service companies, field service employees and end-use customers.

As disclosed at our Investor Conference on February 23, 2022, we have rebranded our Xerox Financial Services (XFS) business, which is now known as FITTLE.

The business has historically offered financing for direct channel customer purchases of Xerox equipment through bundled lease agreements and lease financing to end-user customers who purchase Xerox equipment through Xerox indirect dealer channels.

At the outset of 2021, FITTLE changed its strategy to broaden its portfolio of assets financed to include numerous growth opportunities independent of Xerox equipment and services, such as the expansion of its dealer relationships to include an increasing number of non-Xerox dealers, leveraging its existing dealer relationships to finance a wider breadth of products and forming relationships with new vendors.

Additionally, in 2021, FITTLE became the primary equipment lease provider for our XBS business.

Innovation (known as PARC Innovation, or PARC) includes the scientists and engineers located at our facilities in Palo Alto, Calif.;

Webster, N.Y.;

Cary, N.C., and Toronto and will be named PARC Innovation.

This team will be focused on incubating, productizing and commercializing disruptive technology aligned with our innovation focus areas such as 3D Printing and Digital Manufacturing, Sensors and Services for the IoT, AI and clean tech.

Cary, N.C., and Toronto, Canada.

PARC is focused on commercializing disruptive technology in the following areas:

3D Printing, IoT Sensors and clean tech.

In 2021, we also made progress toward our goal of monetizing and strategically diversifying our investments in innovation.

In May, we announced the formation of Eloque, a joint venture with the government of Victoria, Australia to commercialize IoT sensor-based technology and services for monitoring the structural health of bridges.

In September, we announced the formation of CareAR, in conjunction with a $10 million noncontrolling investment from digital workflow leader ServiceNow, Inc.

We also began commercializing our 3D liquid metal printing technology through the sales and placements of ElemX 3D printing devices.

The Company’s four strategic initiatives, summarized below, remain at the core of how we operate and deliver results for all stakeholders.

Optimize Operations for Simplicity

• Continuously improve our operating model for greater efficiency

• Invest further in robotic process automation, augmented reality and analytics to drive efficiencies

• Reduce complexity and simplify billing and offerings

• Continuously improve operating efficiency, revenue flow-through and return on assets

• Invest in augmented reality, robotic process automation, business process outsourcing, analytics and system enhancements to drive efficiencies

Drive Revenue

• Scale IT Services in the SMB

• Grow XFS as a global payment solutions business

• Expand software offerings in enterprise content management and customer experience

Re-energize the Innovation Engine

• Deliver revenue growth from 3D and IoT

• Launch a $250 million corporate venture capital fund

• Embed PARC’s AI technology into new and existing software offerings

• Drive increased adoption and utilization of CareAR

• Scale IT Services and robotic process automation in the small and medium-sized business (SMB) market

• Grow our financing business as a global financing solutions business

• Expand distribution of digital solutions among existing Print and Services clients

Xerox 2021 Annual Report 1

Monetize Innovation

• Leverage $250 million corporate venture fund to bolster investment and innovation

• Add value-added equity partners to accelerate development and market penetration

• Embed PARC’s technology into new and existing businesses

Focus on cash flow and increasing capital returns

4 unchanged sentences

(1) Free cash flow is defined as Operating cash flow from continuing operations less capital expenditures.

As a result of the COVID-19 pandemic, the workplace has been transformed into a more flexible, hybrid environment.

In response, we have further expanded our innovation investments in order to bolster and diversify our portfolio of offerings.

Xerox continues to position itself for the future through investments in our core print business including Digital Services such as Digital Mail, Capture & Content and Digital Hub & Cloud Print, which enable work to flow seamlessly between the office and home.

Additionally, the hybrid work environment has increased SMB needs for IT Services, an area in which we achieved organic growth in 2020, and which is an important focus area for our business.

Xerox 2020 Annual Report 1

The COVID-19 pandemic has accelerated the transformation of the workplace into a more flexible, hybrid environment.

In response, we continue to invest in innovation to bolster and diversify our portfolio of offerings for hybrid workplace environments, including investments in Digital Services such as Capture & Content and Customer Engagement Services, which enable work to flow seamlessly between the office and home.

During the year, we released Workflow Central, which extends the document workflow solutions available through our ConnectKey® multifunction printer interface to all devices, including PCs and smartphones, for easier access to workflow solutions on the go.

Additionally, the hybrid work environment has increased SMB needs for IT Services, an area in which we are well positioned to succeed given our direct SMB sales presence.

Organic and inorganic growth in digital and IT services, along with continued market share gains in equipment sales, are central to our objective of stabilizing and growing our Print and Services business for the long-term.

Optimize Operations for Simplicity

1 unchanged sentence

Through this initiative, we have delivered approximately $1.8 billion of gross savings during the 42 month-period ending December 31, 2021.

In 2020, we generated $450 million in gross cost savings and, consistent with our expectations, we plan to deliver $375 million of gross cost savings in 2021.

We exceeded our gross cost savings target of $375 million for Project Own It in 2021.

We expect to deliver $300 million of gross cost savings in 2022.

Savings generated by Project Own It will enable us to invest in our operations, targeted adjacencies and innovation focus areas and ultimately help improve our long-term revenue trajectory.

3 unchanged sentences

Building on our leadership positions in Print is central to gaining market share.

In the workplace, we are continuing to differentiate Xerox multifunction printers with apps and integrated workflow solutions that speed digital transformation and support workers in and out of the office.

In production, investments are targeted to push Xerox into growth areas such as embellishments and inkjet and support customer growth goals.

• Expand services.

Managed and digital services leverage the full Xerox portfolio to offer horizontal and vertical offerings that grow wallet share and expand the Company's customer base.

Expanding XFS’s offerings to include leasing for both Xerox and third-party technology and office equipment will provide another avenue for new customers and account growth.

• Grow software.

Another growth driver is developing SaaS, cloud-based software for enterprise content management that supports a hybrid work environment and aids customers’ digital transformation.

We believe the recent acquisition of CareAR will help speed the execution of this approach.

• Target critical SMB market.

In the workplace, we continue to differentiate Xerox multifunction printers with apps and integrated workflow solutions that speed digital transformation and support workers in and out of the office.

In production, investments are targeted to push Xerox into growth areas such as embellishments and inkjet.

We recently made improvements to FreeFlow®, our software offering for the production print market which helps automate large and complex print workflows.

We gained market share in the last five consecutive quarters and are number one in Office and Production Print and Managed Print Services.

• Expand penetration of Managed and Digital services.

Managed and Digital services leverage the full Xerox portfolio to offer horizontal and vertical offerings that grow our share of our client's IT spend and expand the Company's customer base.

Increasingly, our Managed and Digital solutions offerings are targeting opportunities to help clients digitally transform their document workflows and manage the evolving nature of hybrid workplace formats.

Our direct relationships with large enterprises, governments and SMB provide us the opportunity to expand our share of our clients' spend with a broad breadth of services that are supported by leading levels of security.

• Drive increased adoption and utilization of CareAR.

CareAR’s AR-driven service experience platform is in the early stages of customer adoption.

To date, client interest and product trials have been positive, and we are seeing traction in the conversion of trials to subscriptions.

We are investing in CareAR’s product, people and distribution partners and expect our refined go-to-market approach to drive significant growth in 2022.

• Scale IT Services in the SMB market.

Ongoing investments in indirect market channels, Xerox Business Solutions (XBS) and similar European sales channels position Xerox to grow in the SMB market, which accounts for the majority of our business.

We are expanding our IT Services business geographically and with enhanced capabilities to support growth in this market.

• Enhance the digital experience.

Ongoing investments in automation, analytics and digital support tools will elevate the customer experience while increasing productivity.

E-commerce enhancements focus on driving sales of select hardware and supplies, with an emphasis on the SMB and low-end production markets.

• Drive innovation and new growth businesses.

Investments and an increased focus on incubating, productizing and commercializing disruptive technologies is essential for future growth.

The Company continues to make progress across its five innovation focus areas:

AI, IoT sensors and services, digital packaging, 3D printing and clean tech.

Re-energize the Innovation Engine

We are delivering on our commitment to re-energize Xerox’s innovation engine, by starting to monetize offerings in 3D print and IoT sensors.

In December, we reached an important milestone with the first installation of our Xerox ElemX 3D liquid metal printer at the Naval Postgraduate School in Monterey, Calif.

In industrial IoT sensors and services, monitoring critical infrastructure such as bridges and tunnels is a growing market opportunity that requires deep domain expertise and go-to-market partnerships with government agencies responsible for maintenance.

Having successfully piloted this technology with VicTrack, a state-owned enterprise that owns all railway and tram lines in Victoria, Australia, Xerox is planning broad commercialization of this offering.

To further monetize our innovation and develop disruptive offerings, PARC-developed technologies in AI, augmented reality and virtual reality will be integrated into CareAR’s product roadmaps and other parts of our portfolio.

Xerox also plans to establish a $250 million corporate venture capital fund to invest in startups and early and mid-stage growth companies aligned with the Company’s innovation focus areas and targeted adjacencies.

The corporate venture capital fund will further enhance the Company’s existing innovation ecosystem and drive growth through investment, commercial partnerships and co-development of new technologies.

Although highly dependent on the identification of investment targets, we expect to deploy funds over the next five years.

Refer to the Research, Development and Engineering Expenses (RD&E) section in Item 7 of this combined Form 10-K as well as Note 1 - Basis of Presentation and Summary of Significant Accounting Policies in the Consolidated Financial Statements for additional information regarding RD&E spending.

We are expanding our IT Services business geographically and with enhanced capabilities to support growth in this market, including an expansion of our offerings to include cyber security, RPA and other digital solutions.

Xerox 2021 Annual Report 2

• Grow FITTLE as a global financing solutions business.

As a newly stood up business, FITTLE will be charged with expanding its book of lease receivables beyond Xerox and beyond print and print services.

FITTLE’s long-term strategy for growth includes an expansion of dealer relationships, broadening its base of business beyond standard office equipment and signing direct financing arrangements with equipment vendors.

• Commercialize research at PARC.

Since 2019, PARC’s mandate has been to advance its research efforts through to the commercialization stage.

In that time, PARC's most substantially commercialized technology has been its Eloque IoT bridge sensor platform and its 3D print technology through sales of ElemX printers.

We expect both Eloque and 3D to grow revenues rapidly in future years.

PARC’s clean tech efforts address a large total addressable market (TAM), and our expectation is that this technology will reach commercialization within the next few years.

Monetize Innovation

In 2021, we delivered on our commitment to monetize innovation by commercializing offerings in 3D print and IoT sensors.

For 3D print, we began placing and selling ElemX printers.

For industrial IoT sensors and services, we deployed our sensor technology across bridges in Victoria, Australia and have signed orders to significantly expand the number of bridges with our sensor technology in 2022.

We are also in discussions with select European countries and multiple U.S.

states to deploy pilots in early 2022.

To further monetize our innovation and develop disruptive offerings, PARC-developed technologies in AI and AR are being integrated into CareAR’s product roadmaps and other parts of our portfolio.

We added equity partners to accelerate the development and market penetration of certain commercial offerings, including:

CareAR, with ServiceNow’s $10 million equity investment;

and our IoT bridge sensor technology, through the formation of Eloque.

In both cases, our investment partners possess specific domain expertise that can drive further development and adoption of our commercialized innovations.

We will look to structure more such investments across our portfolio of innovations as part of the commercialization strategy for each.

In 2021, Xerox established a $250 million corporate venture capital fund to invest in startups and early and mid-stage growth companies aligned with the Company’s innovation focus areas and targeted adjacencies.

The corporate venture capital fund further enhances the Company’s existing innovation ecosystem and drives growth and financial returns through investment, commercial partnerships and co-development of new technologies.

Xerox Ventures made investments totaling approximately $8 million in 2021, and plans to deploy the remainder of its $250 million of planned investment over the next one to five years.

Focus on Cash Flow and Increasing Capital Returns

Our business is based on a model where a large portion of revenues are generated by multi-year contractual arrangements, with approximately 80 percent coming from post sale revenue, our most profitable revenue stream.

Additionally, there is low annual capital expenditures (less than 2 percent of revenues) required to support our current business model.

These factors contribute to our ability to generate strong cash flow.

Additionally, low annual capital expenditures (less than 1 percent of revenues) are required to support our current business model.

These factors contribute to our ability to generate positive cash flow.

We will deploy our cash flow to drive shareholder returns through:

• A commitment to return at least 50 percent of our free cash flow (Operating cash flows from continuing operations less capital expenditures) to shareholders through a combination of dividends and share repurchases;

• A commitment to return at least 50 percent of our free cash flow (defined as Operating cash flows from continuing operations less capital expenditures) to shareholders through a combination of dividends and share repurchases;

• Selective pursuit of acquisitions in targeted growth areas.

Our strong balance sheet and cash flow generation allow us to pursue M&A opportunities to support our growth expectations.

Acquisitions and Investments

We believe our current capital structure and positive cash flow allow us to pursue M&A opportunities to support our growth expectations.

We maintain a broad M&A pipeline that includes targets within the print industry and adjacent markets.

In 2020, Xerox completed three acquisitions of local area resellers and partners (including multi-brand dealers) in the U.K., as well as one such acquisition in Canada.

These acquisitions support our strategy to expand Xerox's presence in the SMB market internationally.

In addition, in 2020 we acquired CareAR, a business that uses augmented reality to provide enhanced remote assistance technology for enterprises that can modernize field service, customer support and other IT Services.

This acquisition supports our growth strategy by enhancing our portfolio of software solutions.

Further details about our acquisitions can be found in Note 5 - Acquisitions, in the Consolidated Financial Statements.

In 2021, Xerox completed three acquisitions of local area resellers and partners (including multi-brand dealers) including an office equipment dealer in Canada, a document solutions provider in the U.S.

and an IT services business in the U.S.

Additionally, we acquired the CraftAR and MagicLens businesses in support of CareAR.

Xerox 2021 Annual Report 3

Joint Venture Formation

In 2021, Xerox and the Victorian Government (AU) (VicGov) announced that they have partnered to launch Eloque, a venture to commercialize new technology that will remotely monitor the structural health of critical infrastructure assets, such as road and railway bridges.

Under the terms of the agreement, Xerox contributed cash, along with technology and intellectual property for a controlling interest in the entity, while VicGov contributed cash, along with technology and intellectual property for a noncontrolling interest in the entity.

ServiceNow, Inc.

Investment in CareAR

In 2021, in connection with Xerox Holdings Corporation's announcement of the formation of the CareAR software business, ServiceNow, Inc.

acquired a noncontrolling interest in CareAR Holdings LLC.

Further details about our acquisitions and investments can be found in Note 5 - Acquisitions and Investments, in the Consolidated Financial Statements.

Segment Information

Our business is organized to ensure we focus on efficiently managing operations while serving our customers and markets in which we operate.

As previously noted, during 2021 we proceeded with the standing up of three new businesses:

CareAR, FITTLE and Innovation (PARC).

However, notwithstanding that effort, the operations and financial results for these units continued to be primarily managed by and reported in our “go-to-market” (GTM) sales channels and we did not have discrete and complete financial information for these new businesses.

Accordingly, we continued to have one operating and reportable segment in 2021.

We maintain a geographic focus and are primarily organized from a sales perspective on the basis of “go-to-market” sales channels.

1 unchanged sentence

As a result of this structure, we recognize that we have one operating and reportable segment - the design, development and sale of printing technology and related solutions.

As part of our strategy, we integrate our capabilities across technology, software and services which offer our customers the broadest solutions-enabled portfolio in the industry to address their needs of workflow simplification, security and productivity across their digital and physical document processes.

As part of our strategy, we integrate our capabilities across technology, software and services that offer our customers the broadest solutions-enabled portfolio in the industry to address their needs of workflow simplification, security and productivity across their digital and physical document processes.

We have a broad and diverse base of customers by both geography and industry, ranging from SMBs to printing production companies, governmental entities, educational institutions and Fortune 1000 corporations.

Our business does not depend upon a single customer, or a few customers, the loss of which would have a material adverse effect on our business.

Our business spans three primary offering areas:

Workplace Solutions, Graphic Communications and Production Solutions and Xerox Services .

Workplace Solutions is made up of two strategic product groups, Entry and Mid-Range , which share common technology, manufacturing and product platforms.

Workplace Solutions revenues include the sale of products and supplies, as well as the associated technical service and financing of those products.

Our business spans four primary offering areas:

Workplace Solutions, Production Solutions, Xerox Services and FITTLE.

Workplace Solutions is made up of two strategic product groups, Entry and Mid-Range , much of which share common solutions, apps and ConnectKey® software.

Workplace Solutions revenues include the sale of products (captured primarily as equipment sales) as well as the supplies and associated technical service and financing of those products through FITTLE (captured as post sale revenue).

• Entry comprises desktop monochrome and color printers and multifunction printers (MFPs) ranging from small personal devices to office workgroup printers and MFPs.

We recently extended our ConnectKey® system of digital workflow applications to select entry devices.

• Mid-Range are larger devices that have more features and can handle higher print volumes and larger paper sizes than entry devices.

We are a leader in this area of the market and offer a wide range of MFPs, digital printing presses and light production devices, as well as solutions that deliver flexibility and advanced features.

In the last 18 months Xerox has also introduced breakthrough embellishment capabilities for this product group, including the Adaptive CMYK+, an add-on kit that enables existing mid-range light production devices (and low-end production systems) to use metallic and specialty colors.

Graphic Communications and Production Solutions (High-End) are designed for customers in the graphic communications, in-plant and production print environments with high-volume printing requirements.

Production Solutions (High-End) are designed for customers in the graphic communications, in-plant and production print environments with high-volume printing requirements.

Our broad portfolio of presses and solutions provides full-color, on-demand printing of a wide range of applications.

Our xerographic presses provide high-speed, high-volume cut-sheet printing, ideal for publishing, transactional printing, including variable data for personalized content and one-to-one marketing, to the highest quality of color and

Xerox 2020 Annual Report 3

embellishment requirements.

Our inkjet presses offer a broad range of roll fed, continuous-feed printing technologies, including waterless inkjet and aqueous inkjet for vivid color, and toner-based flash fusing for black and white.

Our xerographic presses provide high-speed, high-volume cut-sheet printing, ideal for publishing, and transactional printing, including variable data for personalized content and one-to-one marketing, to the highest quality of color and embellishment requirements.

Our cut-sheet press enables new applications in true high-definition resolution with high fusion ink, AI Powered image quality and advanced productivity technologies.

Our portfolio spans a variety of print speeds, image quality, feeding, finishing and media options.

We are a worldwide leader in the cut-sheet color and monochrome production industry.

Graphic Communications and Production Solutions revenues include the sale of products, software and supplies, as well as the associated technical service and financing of those products.

Xerox Services includes a continuum of solutions and services that helps our customers optimize their print and communications infrastructure, apply automation and simplification to maximize productivity, and ensure the highest levels of security.

Production Solutions revenues include the sale of products (captured primarily in equipment sales) as well as, software, supplies and the associated technical service and financing of those products (captured as post sale revenue).

FreeFlow® is a portfolio of software offerings that brings intelligent workflow

Xerox 2021 Annual Report 4

automation and integration to the processing of high-end print jobs, from file preparation to final production, helping customers of all sizes address a wide range of business opportunities including automation, personalization and even electronic publishing.

Xerox Services includes a continuum of solutions and services that help our customers optimize their print and communications infrastructure, apply automation and simplification to maximize productivity, and ensure the highest levels of security.

Xerox has the capability to support integration and document security on a global scale, which are critical factors for large enterprises.

Our primary offerings in this area are Intelligent Workplace Services (IWS) and a range of Digital Services that leverage our software capabilities in Workflow Automation, Personalization and Communication Software, Content Management Solutions, and Digitization Services.

In addition, during 2020, business closures that resulted from the COVID-19 pandemic shifted our customers’ focus toward secure, efficient and flexible solutions to operate in a hybrid work environment.

As a result, we enhanced our focus on the development and promotion of Intelligent Workplace Services and Digital Services offerings to help our customers accelerate their digital transformation.

• Intelligent Workplace Services (IWS), which transcends the traditional MPS offering, utilizes our portfolio of security, analytics, cloud, digitization and ConnectKey® technologies to help companies optimize their print infrastructure, secure their print environment and automate related business processes.

Our primary offerings in this area are Managed Print Services (MPS), Capture & Content Services (CCS) and Customer Engagement Services (CES) as well as IT Services.

CCS and CES encompass a range of Digital Services that leverage our software capabilities in Workflow Automation, Personalization and Communication Software, Content Management Solutions, and Digitization Services.

The COVID-19 pandemic shifted our customers’ focus toward secure, efficient and flexible solutions to operate in a hybrid work environment.

As a result, we enhanced our focus on the development and promotion of offerings to help our customers accelerate their digital transformation.

• Managed Print Solutions (MPS) utilizes our portfolio of security, analytics, cloud, digitization and ConnectKey® technologies to help companies optimize their print infrastructure, secure their print environment and automate related business processes.

We provide the most comprehensive portfolio of MPS services in the industry and are recognized as an industry leader by major analyst firms including IDC and Quocirca.

Our IWS offering targets clients ranging from global enterprises to governmental entities and to small and medium-sized businesses, including those served via our channel partners.

This portfolio also includes:

Intelligent Workplace Services for Remote Workers , where we provide customers with cost effective and secure printing devices along with apps and software tools that enable work from anywhere with the productivity demanded of the workplace;

Virtual Print Management Services , where we provide clients with cloud server-enabled fleet management, security and automation software, and remote customer support to administer networks from anywhere;

and Home Worker Print Tracker , which strengthens enterprise security and cost controls by using workflows to route data to company-supplied or personal printers based on data classification.

• Digital Services enables the integration of Xerox technology, software and services to securely design and manage the digitization and workflow of our clients’ content and personalization and customization of targeted communications.

We utilize our domain expertise and technology to enable efficient and compliant business processing and communications in the demanding regulatory environments and markets such as healthcare or public sector.

These solutions include (for example):

Capture and Content offerings such as Digital Mailroom , where we use scanning and capture technology combined with AI to extract printed and digital information into usable data that is routed into business workflows (such as accounts payable) or into archives, integrating with cloud-based content management systems such as our DocuShare software;

and Digital Hub and Cloud Print services, a one-stop shop where customers can submit print jobs from anywhere and leverage our workflows and on and off-site printing networks to meet their printing or marketing collateral lifecycle management, integrally, safely and with enhanced productivity from scale.

In addition to our three primary offering areas described above, a smaller portion of our revenues comes from non-core streams including paper sales in our developing market countries, wide-format systems, licensing revenue, as well as from Software and IT Services , which are two areas of our business in which we have enhanced our focus and investments.

In software, we are focused on Personalization and Communications Software and Content Management , with our XMPie, DocuShare and FreeFlow solutions.

XMPie is a robust personalization and communication software that can support the needs of omni-channel communications customers, from onboarding to retention.

DocuShare is a content management platform that provides a better way to capture, store and share paper and digital content, either on-premise or in the cloud while automating time-consuming, document-heavy processes like accounts payable, HR onboarding, contract management and mortgage processing.

In addition, we operate a network of centers that digitize and automate paper and workflows, enabling our customers to operate cost-effectively in a fully-digitized environment with speed, quality and 24x7 availability.

FreeFlow is a portfolio of software offerings that brings intelligent workflow automation and integration to the processing of print jobs, from file preparation to final production, helping customers of all sizes address a wide range of business opportunities including automation, personalization and even electronic publishing.

In addition, in 2020 we added augmented reality to our software capabilities, with the acquisition of CareAR , an enterprise augmented reality business that offers live virtual assistance technology focused on modernizing field service, customer support and other IT Services.

In IT Services , we are focused on providing our SMB customers with cost efficient and secure solutions to

Our MPS offering targets clients ranging from global enterprises to governmental entities to small and medium-sized businesses, including those served via our channel partners.

This portfolio includes a suite of services to help clients manage hybrid workforces, including cost effective and secure printing devices along with apps and software tools that enable work from anywhere, cloud server-enabled fleet management, security and automation software and remote customer support.

In 2021, we launched Workflow Central, which extends the document workflow solutions available through our ConnectKey® technologies to all devices, including PCs and smartphones, for easier access to workflow solutions in hybrid workplace environments.

• Capture & Content Services (CCS) enables content digitization and management, workflow automation and intelligent document processing and includes offerings such as Digital Mailroom , where we use scanning and capture technology combined with AI to extract printed and digital information into usable data that is routed into business workflows (such as accounts payable) or into archives, integrating with cloud-based content management systems such as our DocuShare® software.

• Customer Engagement Services (CES) enable the integration of Xerox technology, software and services to securely design and manage our clients’ personalization and customization of targeted communications.

These services include Digital Hub and Cloud Print services, a one-stop shop where customers can submit print jobs from anywhere and leverage our Web2Print portal with on and off-site printing networks to meet their printing or marketing collateral needs on demand.

Our Customer Communications Management and Campaigns on Demand solutions help drive personalized and meaningful communications and touchpoints.

• IT Services , provides SMB customers with cost efficient and secure solutions, including end user computing devices, network infrastructure, communications technology, and a range of managed IT solutions, such as technology product support, professional engineering and commercial RPA.

FITTLE is a global financing solutions business and currently offers financing for direct channel customer purchases of Xerox equipment through bundled lease agreements, and lease financing to end-user customers who purchase Xerox equipment through our indirect channels.

In addition to our four primary offering areas described above, a smaller but growing portion of our revenues comes from non-core streams including paper sales in our developing market countries, wide-format systems, licensing revenue, as well as the following key focus areas for investment and growth:

• CareAR is Xerox’s newly formed software business and is comprised of:

CareAR , an AR and AI-driven visual support software platform that provides real-time access to expertise for service companies, field service employees and end-user customers;

DocuShare®, a content management software platform that provides a better way to capture, store and share paper and digital content, either on-premises or in the cloud while automating time-consuming, document-heavy processes like accounts payable, HR onboarding, contract management and mortgage processing;

and XMPie, a robust personalization and communication software platform that can support the needs of omni-channel communications customers, from onboarding to retention.

• PARC comprises the research efforts undertaken at our facilities located in Palo Alto, Calif.;

Webster, N.Y.;

Cary, N.C., and Toronto, Canada.

PARC is focused on incubating, productizing and commercializing disruptive technology aligned with innovation focus areas such as 3D Printing, Sensors and Services for the IoT, AI and clean tech.

Many of the technologies being researched are in early stages of development.

Certain technologies, such as IoT sensors, 3D and various government-funded projects currently generate revenue.

Xerox 2021 Annual Report 5

manage their IT needs including PC and network infrastructure, communications technology, and network administration.

Refer to the Impact of COVID-19 on Our Business Operations section of the Management’s Discussion and Analysis included in Item 7, as well as the Risk Factors included in Item 1A of this combined Form 10-K, for additional information

Geographic Information

3 unchanged sentences

In 2021, Xerox and its subsidiaries were awarded 314 U.S.

utility and design patents, and, including our research partner Fuji Xerox, we were awarded 831 U.S.

utility and design patents during the period.

Fuji Xerox continues to be a research partner subsequent to the sale of our remaining investment in Fuji Xerox in 2019 due to their significance to us as a product supplier.

Our patent portfolio evolves as new patents are awarded to us and as older patents expire.

utility and design patents.

Our patent portfolio evolves as new patents are awarded to us and older patents expire.

As of December 31, 2021, Xerox held approximately 7,930 U.S.

3 unchanged sentences

In addition, any of our proprietary rights could be challenged, invalidated or circumvented, or may not provide significant competitive advantages.

In 2020, we were party to multiple patent-licensing agreements and, in the majority of them, we licensed or assigned our patents to others in return for revenue and/or access to their patents or to further our business goals.

Most patent licenses expire concurrently with the expiration of the last patent identified in the license.

In 2021, we were party to multiple patent-related agreements and, in the majority of them, we licensed or assigned our patents to others in return for revenue and/or access to their patents or to further our business goals.

Most patent licenses expire concurrently with the expiration of the last patent identified in the license or after a specified term of years.

We were also party to a number of cross-licensing agreements with companies that also hold substantial patent portfolios.

These agreements vary in subject matter, scope, compensation, significance and duration.

In the U.S., we own about 188 U.S.

In the U.S., we own approximately 191 U.S.

trademarks, either registered or applied for.

1 unchanged sentence

We vigorously enforce and protect our trademarks.

Human Capital

Environmental, Social, and Governance (ESG)

At our core is a deep and long-lasting commitment to ESG, a pledge to inspire and support our people, conduct business ethically across the value chain and preserve our planet.

This commitment stems from our corporate values established over sixty years ago, which include:

succeeding through satisfied customers;

delivering quality and excellence in all we do;

requiring a premium return on assets;

using technology to develop market leaders;

valuing and empowering our employees;

and behaving responsibly as a corporate citizen.

We continue this legacy by turning investments in innovation into products and services that help our customers be more productive, profitable and sustainable.

Driving efficiency in our business operations, smart investments in technologies that afford our customers added agility-personalization, automation and better workflow as part of our customer-centric approach, underpin our corporate social responsibility efforts.

We do this in our own operations, as well as in workplaces, communities and cities around the world.

We recognize the world’s challenges such as climate change and human rights and understand the role we play.

We are focused on how we can simplify work, deliver more personalized experiences and improve productivity through new technologies.

We strive to connect the physical and digital worlds without adversely affecting the environment, human health and safety.

Our pledge to inspire and support our people, conduct business ethically and protect our planet remains at the core of everything we do.

At Xerox, we believe in continuously improving, and we apply this mentality to ensuring we are always finding ways to improve the sustainability of our operations.

The Xerox 2021 Corporate Social Responsibility (CSR) Report describes our management approach related to ESG.

Our work aligns with the United Nations Sustainable Development Goals (SDGs), which provide a framework to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere.

To ensure we are responsive to all stakeholders, Xerox has also been reporting in accordance with the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate Change Related Disclosures (TCFD).

(The 2021 CSR Report, SASB report and TCFD report are accessible at www.xerox.com/CSR.

The content of our website is not incorporated by reference in this combined Form 10-K unless expressly noted.)

With climate change being one of the defining issues of our time, we fast-tracked our net zero goal by 10 years to 2040 and integrated climate change-related risks and opportunities into our Enterprise Risk Management.

We are sharing our roadmap to reach net zero for the first time in our 2021 CSR Report.

Our roadmap covers our full value chain and focuses on improving processes and energy efficiency as well as designing environmentally responsible products and clean technologies that extend beyond print.

Our interim goal is to reduce our Scope 1 and Scope 2 GHG emissions at least 60% by 2030, against the Company’s 2016 baseline.

This is in line with the ambitious science-based global warming target, validated and approved by the Science Based Targets initiative (SBTi).

Our GHG emissions are third-party validated in accordance with ISO 140064-3:2006 and are updated in our progress summary as new data becomes available.

Xerox 2021 Annual Report 6

Xerox has long paired its technology with sustainability, influencing not just our industry but others.

Serving as an ENERGY STAR Charter Partner, Xerox helped the U.S.

Environmental Protection Agency (EPA) create its standards and still works with the agency today.

Since 1993, more than 500 Xerox® products have achieved ENERGY STAR registration.

In 2021, 100% of our eligible new products have achieved ENERGY STAR and EPEAT registration.

ENERGY STAR requirements serve as the foundation for other eco-labels such as Electronic Products Environmental Assessment Tool (EPEAT) that is composed of criteria spanning corporate and product requirements.

EPEAT product criteria combine comprehensive requirements for design, production, energy use, and recycling, with ongoing independent verification of manufacturer claims.

Circular economy initiatives remain a part of our business strategy.

Our first commercial product in 1959, the Xerox 914, introduced electronics remanufacturing long before the term “circular economy” became popular.

Our vision was to transform Xerox manufacturing, operations, offices and facilities into waste-free workplaces.

We had this same vision for our clients’ workplaces:

a world where electronics and supplies at the end of their useful life would come full circle to become raw materials for tomorrow’s technology.

In this model, quality and performance are not compromised, precious natural resources are conserved, and waste becomes obsolete.

Six decades later, we continue to demonstrate that a circular economy delivers environmental, economic and societal benefits.

To meet this commitment, we have developed several collection and waste reduction programs, while also designing technology to align with the circular economy’s key elements.

The majority of spent toner cartridges and other consumables returned through Green World Alliance (GWA) are recycled, reused or remanufactured.

We have established a product goal of 25% post-consumer recycled content in our eco-label eligible devices and have an intense effort underway for achievement in the short term.

Our Employees

9 unchanged sentences

Employee Safety

The Company’s number one priority is the health and safety of the Xerox community.

At the onset of the pandemic, we quickly mobilized to activate our business continuity and pandemic preparedness plans, which included setting up a COVID-19 Response Team of cross functional, global senior leaders, establishing a 24-hour command center to conduct risk assessments and develop mitigation plans, and creating a multi-channel, communication strategy to keep all of our key stakeholders informed.

The Response Team acted swiftly to monitor and implement COVID-19 guidance from the U.S.

Centers for Disease Control and Prevention (CDC), the World Health Organization (WHO), and federal, state, local and international governments, as applicable.

The efforts of the Response Team were critical, since many of our employees and operations are considered “essential” with a large portion of employees continuing to work at our facilities or on site with those clients also considered essential.

Throughout the pandemic, our priority has been the health and safety of our employees, clients, partners and their families.

We continue to monitor developments around the clock and utilize a 24/7 email box to keep the entire Xerox community safe while minimizing the impact on operations during this public emergency.

This year, we expanded the use of the Xerox Team Availability App to track employee vaccination rates in the U.S.

Employees in the U.S.

are required to use the app to indicate whether or not they are vaccinated.

Employees in Canada are asked to voluntarily disclose this information to aid decision-making.

Starting in May 2021, we ran an internal campaign to encourage employees to get vaccinated once they were able to do so.

The campaign kicked off with a message from our CEO, which linked to an intranet feature with employee stories about why it’s important for them to get vaccinated.

These included both professional and personal anecdotes.

To round out the campaign, we hosted a series of seven vaccination information sessions with independent medical doctors across multiple geographies and in three languages.

The doctors provided helpful information and answered employees' questions.

The Xerox COVID-19 Response Team - comprised of representatives from Environmental, Health, Safety & Sustainability, Human Resources, Security, Facilities, Legal, Communications and more - meets several times a week.

We closely follow government and public health organizations’ guidance.

Our business continuity and pandemic preparedness plans contain the latest standards from industry best practices and our own experience to define requirements.

Given the variety of operations and activities performed by our employees both in our Xerox workplace and client accounts across the world, we have conducted hazard analysis and put in place control processes including exposure assessments/contract tracing, personal protective equipment, work-from-home measures, safety procedures and COVID-19 testing.

These practices control transmission and maximize the safety of our employees

Xerox 2021 Annual Report 7

We created an extensive set of health and safety protocols that every Xerox facility and operation across the world implemented.

These protocols include, but are not limited to:

• Completing a daily health check to confirm that employees meet health requirements for entering a Xerox or customer workplace;

• Creating mandatory COVID-19 safety training for all employees before they engage in any Xerox work outside their home;

• Implementing specific risk-based safety requirements to address various workplace scenarios and role-specific protocols to guide employees on how the safety process and Personal Protective Equipment (PPE) guidelines apply to their roles;

• Requiring face coverings at all times, except when an employee is isolated for long periods of time, and always maintaining social distancing of at least 6 feet (2 meters).

Xerox updated its workplace layouts throughout the world, as needed, to support this protocol;

• Ensuring all facilities are regularly cleaned and sanitized and have sufficient ventilation.

Adhering to these protocols ensured that our essential employees could continue to work and support our customers, including hospitals, governments and educational institutions.

Additionally, the Company’s cautious, methodical and phased approach allowed us to safely return approximately 50% of our active employees to their workplaces by July 2020.

Although developments in the later part of 2020 have required us to return to more remote work as a result of the ongoing pandemic, we believe the actions put in place through 2020 have positioned the Company well to return more employees to the workplace once it is safe to do so.

Optimize Operations

and the clients we support.

In 2021, Xerox’s Days Away from Work Case Injury Rate was .37, which was 8% better than the 2020 rate of .40, and better than the 2021 targeted rate of .49 by 24%.

For 2022, Xerox has set the targeted Days Away From Work Injury Rate at .44.

Optimize Operations for Success

Under Project Own It, we have taken steps to ensure we have the right talent in place to support the evolving needs of our business.

3 unchanged sentences

• Optimizing shared services.

In addition, we also utilized government programs to furlough employees to protect both Xerox and their financial wellness.

In addition, we utilized government programs to furlough employees to protect both Xerox and our employees' financial wellness.

Diversity, Inclusion and Belonging

2 unchanged sentences

In 2020, we reaffirmed our commitment to DIB by developing a new roadmap to identify areas where we can have a bigger impact on employees and society.

To support this, our roadmap focuses on:

To support this, our roadmap and our actions during 2021 focuses on:

• Diverse Pipeline :

6 unchanged sentences

In 2020, we held our first-ever global DIB virtual conference, hosted by our Employee Resources Groups (ERGs), which was open to all Xerox employees.

The conference was an important milestone in our ongoing commitment to cultivating global and diverse teams across the Company.

The conference, which was also held in 2021, is an important milestone in our ongoing commitment to cultivating global and diverse teams across the Company.

• Community Outreach :

1 unchanged sentence

For example, in the U.S., we are partnering with A Better Chance (ABC) and the Thurgood Marshall College Fund Leadership Institute to help underrepresented and financially challenged youth pave a better career future.

In the U.K., we also support Blueprint for All to further their work and honor their mission of working with young people and local communities to create an inclusive society for all.

In the U.K., we partner with Black Young Professionals Network to mentor black professionals and provide career opportunities.

• Accountability :

Measuring our progress and continue to be transparent by utilizing our Corporate Social Responsibility Report to inform the public about our strategy and progress.

Measuring our progress against our ESG metrics and continuing to be transparent by utilizing our CSR Report to inform the public about our strategy and progress.

We are confident that over time, our efforts will yield sustainable progress in this critical business challenge.

Xerox 2020 Annual Report 6

Talent Management and Workforce Development

4 unchanged sentences

The Company is also committed to accelerating the careers of high-potential, diverse employees and women along with identifying more diverse candidates for open roles.

For example, we are currently working with the second cohort of our one-year, intensive development program, Vista, which is designed to accelerate and broaden our highest-potential, earlier-in-career professionals from all over the Company and the world.

Our leaders embrace and support the Wilson Rule, named after Joseph Wilson, a former CEO of the Company, which requires that one out of every three final candidates for professional roles be diverse.

1 unchanged sentence

Global Learning Innovation

The COVID-19 pandemic has accelerated the way HR leaders and organizations must prepare for and anticipate the needs of the business, not just today, but in the near future.

In 2020, results from our Future of Work survey found that respondents plan to change their work from home policy to some extent to support a hybrid workforce that includes both remote and onsite employees.

Recognizing the new skills required to support remote workers and develop talent that you are not going to see in person is critically important.

Our Learning and Development (L&D) function has been using different forms of digital technology to train and reskill employees such as salespeople who are no longer able to be out in the field due to the COVID-19 pandemic.

At the onset of the COVID-19 pandemic, our L&D function pivoted to a digital learning approach to train and reskill employees across the globe.

The COVID-19 pandemic has accelerated the way HR leaders and organizations must prepare for and anticipate the needs of the business, not just today, but in the near future, and most notably with regard to moving learning out of the live classroom.

At the onset of the COVID-19 pandemic, our L&D function pivoted to a digital learning approach to train

Xerox 2021 Annual Report 8

and reskill employees across the globe.

Our employees have access to a global learning platform that includes hundreds of targeted online courses, virtual classroom events, simulations, job aids, and other learning and development resources.

18 unchanged sentences

and a Profit Share Plan (PSP), designed to give a broad population of our employees an opportunity to share in the organization’s success.

A Long-Term Incentive (LTI) equity-based program is used to reinforce alignment of our leaders and key talent with shareholders.

Our benefit offerings provide our employees with choice and flexibility in order to help them reach their health and financial goals.

A Long-Term Incentive (LTI) equity-based program reinforces alignment of our leaders and key talent with shareholders.

Our benefit offerings provide our employees with choice and flexibility to help them reach their health and financial goals.

Our offerings include the following core programs:

health care, wellness, retirement, paid time off, life and disability, and voluntary benefits.

Environmental Social Governance (ESG)

At our core is a deep and long-lasting commitment to ESG, a pledge to inspire and support our people, conduct business ethically across the value chain and preserve our planet.

This commitment stems from the corporate values established over sixty years ago which include:

succeeding through satisfied customers;

delivering quality and excellence in all we do;

requiring a premium return on assets;

using technology to develop market leaders;

valuing and empowering our employees;

and behaving responsibly as a corporate citizen.

health care, wellness, retirement, paid time off, life and disability insurance, and access to voluntary benefits.

Philanthropy and Community Involvement

From our earliest days as a company, Xerox has demonstrated a steadfast commitment to corporate social responsibility.

Our greatest goal is to facilitate employee-driven philanthropy.

Together, Xerox and our employees are creating real impact and sustainable change for the greater good.

In 2021, Xerox employees volunteered for approximately 10,900 hours and we have set our 2022 goal at 15,000 Xerox employee volunteer hours.

Our efforts are focused on four strategic areas to maximize change:

• Strong vibrant communities:

Xerox invests in communities where our people and clients live and work, strengthening ties with our stakeholders and embedding Xerox into the fabric of communities around the world.

We encourage our people to give back to the causes they believe in, by providing employees a day each year to volunteer at a cause of their choice.

Xerox also offers a limited employee match to certain charitable organizations.

• Education and workforce preparedness:

Xerox supports the role of education in society—colleges, universities, science, technology, engineering and math (STEM) education programs, and workforce development programs that prepare the next generation of leaders, inventors and scientists.

• Science and technology:

Xerox invests in scientific research and partnerships to serve the long-term strategic interests of the Company and our world.

• Disaster relief:

Xerox provides aid to our employees and their neighbors in crises during natural disasters.

The Corporate Governance Committee of the Board of Directors has oversight for ESG.

The Committee reviews significant shareholder relations issues and environmental and CSR matters, ensuring that our actions align with our core values and citizenship priorities.

The CSR Council, comprised of senior executives who manage specific CSR topic areas, has centralized oversight of the Company’s management approach, including policies, goals, strategies and actions to drive progress.

The primary mission of the CSR Council is to drive strategies with a client-centric impact, across Xerox globally, to advance our legacy of leadership in corporate citizenship.

Actions taken must meet our stakeholders’ expectations, including customers, employees, investors, regulators and communities worldwide.

Xerox 2021 Annual Report 9

We continue this legacy by turning investments in innovation into products and services that help our customers be more productive, profitable and sustainable.

Driving efficiency in our business operations, smart investments in technologies that afford our customers added agility-personalization, automation and better workflow as part of our customer-centric approach, will underpin our corporate social responsibility efforts.

We do this in our own operations, as well as in workplaces, communities and cities around the world.

We recognize the world’s challenges such as climate change and human rights and understand the role we play.

We are focused on how we can simplify work, deliver more personalized experiences and improve productivity through new technologies.

We strive to connect the physical and digital worlds without adversely affecting the environment, human health and safety.

Our pledge to inspire and support our people, conduct business ethically and protect our planet remains at the core of everything we do.

At Xerox, we believe in continuously improving, and we apply this mentality to ensuring we are always finding ways to improve the sustainability of our operations.

The Xerox 2020 Corporate Social Responsibility (CSR) Report (available at www.xerox.com.

The content of our website is not incorporated by reference in this combined Form 10-K unless expressly noted.) describes our management approach related to ESG.

Xerox’s CSR report highlights include:

• 98% of supplies and consumables returned by customers at end-of-life were diverted from entering landfills.

Instead, we remanufactured, reused, recycled, or provided the waste to suppliers who converted it into an energy source.

• Over 1 billion pages offset through the PrintReleaf program.

• 100% of newly-launched, eligible Xerox products satisfied the Electronic Product Environmental Assessment Tool (EPEAT®) and EPA ENERGY STAR® eco-labels.

• 35% reduction in Greenhouse gas emissions (GHG) from our operations using a 2016 baseline;

moving us closer to our goal of 60% GHG reduction by 2030.

• Worldwide employee matching gift program for any qualified non-profit.

• Worldwide Total Recordable Injuries (TRI) rate of our employees in the U.S.

decreased by 2.5%.

• Day Away Rate decreased by 23.2%

• Supplier spend with suppliers representing small Tier I, minority, woman or veteran-owned businesses accounted for 13% of our total spend.

• Details on our diversity and inclusion programs including our global affinity groups.

• All Xerox ESG Priorities 3rd party validated by Business for Social Responsibility (BSR).

• 100% of production suppliers required to adhere to Responsible Business Alliance (RBA) Code of Conduct.

• Board oversight of corporate social responsibility.

• Disclosure of all political activities and trade association memberships.

Demonstrating our BOD's and executive staff's commitment to ESG:

• In 2021, we increased the diversity of our board of directors to 40%;

• Expanded the criteria for executives’ compensation to include ESG factors;

• Integrated climate change-related risks and opportunities into our Enterprise Risk Management.

Additionally, Xerox takes data protection very seriously.

Adherence to our policies governing data protection is enforced through a combination of technical and manual safeguards over our systems and facilities, disciplinary actions against employees, audit rights and other contractual rights against our vendors.

We are aligned with both the ISO 27000 Information Security Management System and the National Institute of Standards and Technology Cybersecurity Framework within Xerox, and many of our systems and data centers have been ISO 27000 certified by independent auditors.

Annual training regarding ethics, privacy, and security are required of all our employees.

Additional specialized training is required for certain roles and numerous training programs are available for employees to take on their own initiative.

In addition, a variety of proprietary and leading industry security features are also used to protect Xerox® devices from malicious attacks.

Xerox's robust security and education market solutions were recognized by KeyPoint Intelligence with the Buyers Lab (BLI) 2021-2022 PaceSetter Awards for Worldwide Document Imaging Security for Productions and Office, as well as for the Education Market in North America.

Material Government Regulations

Our business activities are worldwide and are subject to various federal, state, local, and foreign laws and our products and services are governed by a number of rules and regulations.

Currently costs incurred to comply with these governmental regulations are presently not material to our capital expenditures, results of operations and competitive position.

Currently costs incurred to comply with these governmental regulations are not material to our capital expenditures, results of operations and competitive position.

Although there is no assurance that existing or future government laws and regulations applicable to our operations, services or products will not have a material adverse effect on our capital expenditures, results of operations and competitive position, we do not currently anticipate material expenditures for government regulations.

1 unchanged sentence

and globally, we believe that environmental and global trade regulations could potentially materially impact our business in the future.

For a discussion of the risks associated with government regulations that may materially impact us, please see Risk Factors in Item 1A.

Xerox 2020 Annual Report 8

For a discussion of the risks associated with government regulations that may materially impact us, please see Risk Factors included in Item 1A of this combined Form 10-K.

Marketing and Distribution

We go to market with a services-led approach and sell our products and services directly to customers through our direct sales force and through independent agents, dealers, value-added resellers, systems integrators and the Web.

We go to market with a customer-centric, services-led approach, selling our products and services directly to customers through our direct sales force or indirectly through independent agents, dealers, value-added resellers, systems integrators and e-commerce marketplaces.

In addition, we continue to focus on broadening our distribution and offerings to SMBs primarily through XBS, our wholly-owned U.S.

subsidiary comprised of regional core companies which provide office technology and services, including IT Services, to SMB customers in the U.S., and through the acquisition of resellers and multi-brand dealers of document technology and IT Services in the U.S.

and internationally.

We are structured to serve our customers globally into two primary go-to-market units:

subsidiary comprised of regional core companies that provide office technology and services, including IT Services, to SMB customers in the U.S., and through acquisitions of dealers and IT Services providers internationally.

We are structured to serve our customers globally through two primary go-to-market units:

the Americas, comprised of the U.S.

1 unchanged sentence

and EMEA, which includes Europe, the Middle East, Africa and India.

We have also implemented a common global delivery model that aims to provide a consistent customer experience worldwide.

We believe that these changes create a leaner and more effective go-to-market model that will streamline our supply chain and provide our customers with best-in-class services.

In January 2020, Fuji Xerox notified Xerox of its intention to terminate the Technology Agreement (TA) on the agreement’s expiration date of March 31, 2021.

The series of transactions entered into between Xerox and FUJIFILM Holdings Corporation (FH) in November 2019, as disclosed in Note 6 - Divestitures in the Consolidated Financial Statements, included an amendment to the TA that would allow Fuji Xerox continued use of the Xerox brand trademark for two years after the date of termination of the TA as it transitions to a new brand in exchange for an upfront prepaid fixed royalty of $100 million.

At this time, we expect Fuji Xerox to continue to use the Xerox brand trademark over the next two years subsequent to termination of the TA and, therefore, to make the upfront payment due under the amended agreement.

We have an industry leading and common global delivery model that provides a consistent customer experience worldwide.

We believe that this structure creates a leaner and more effective go-to-market model that streamlines our supply chain and provides our customers with best-in-class services.

The Technology Agreement (TA) between Fuji Xerox and Xerox was terminated on March 31, 2021.

The TA included a provision that allowed Fuji Xerox continued use of the Xerox brand trademark for two years after the date of termination of the TA as it transitions to a new brand in exchange for an upfront prepaid fixed royalty of $100 million.

Fuji Xerox elected to continue its use the Xerox brand trademark over the two year period and, therefore, in April 2021, made the upfront payment due under the TA.

Accordingly, we expect any potential entry by Xerox into the Fuji Xerox territory under the Xerox brand to be deferred to at least April 1, 2023.

Upon termination of the TA, Xerox is free to use both Xerox and Fuji Xerox xerographic IP as well as non-xerographic IP contained in xerographic products worldwide, including in the FX territory.

Fuji Xerox on the other hand, can enter markets outside its territory with xerographic products, however it has no rights to the use of any Xerox IP outside of the Fuji Xerox territory.

The expiration of the TA does not affect our product sourcing arrangements with FX which are governed by separate, commercial agreements which continue under their existing terms.

The product supply agreements with Fuji Xerox will continue to be effective despite the termination of the TA, and Fuji Xerox and Xerox will continue to operate as each other's product supplier under existing or new purchase/supply agreements.

Xerox 2021 Annual Report 10

Although we encounter competition in all areas of our business, we are the leader - or among the leaders - in our core mid-range and high-end product groups.

We compete on the basis of technology, performance, price, quality, reliability, brand reputation, distribution, and customer service and support.

Our larger competitors include Canon, HP Inc., Konica Minolta and Ricoh.

The larger competitors in our print business include Canon, HP Inc., Konica Minolta and Ricoh.

Our brand recognition, reputation for document management expertise, innovative technology and service delivery excellence are our competitive advantages.

These advantages, combined with our breadth of product offerings, global distribution channels and customer relationships, position us as a strong competitor going forward.

As we continue our strategy to diversify and grow other businesses, there may be additional non-print competitors.

Customer Financing

8 unchanged sentences

Refer to "Debt and Customer Financing Activities" in the Capital Resources and Liquidity section of Management's Discussion and Analysis, included in Item 7 of this combined Form 10-K, for additional information.

In January 2021, we announced plans to expand our financing business to become a global payment solutions business, offering lease financing for Xerox and third-party technology and office equipment.

This will expand the Company’s customer base, create cross-selling opportunities and provide more leasing options for small and medium sized businesses.

Xerox 2020 Annual Report 9

Manufacturing and Supply

9 unchanged sentences

This diversification of suppliers brings flexibility and cost efficiency to our manufacturing and supply chain, a critical component in our strategic initiative to optimize operations for simplicity.

Fuji Xerox is our largest partner with whom we maintain product sourcing agreements for specific products across our entry, mid-range and high-end portfolios.

FUJIFILM Business Innovation Corp.

(formerly Fuji Xerox Co., Ltd.) is our largest partner with whom we maintain product sourcing agreements for specific products across our entry, mid-range and high-end portfolios.

We also acquire products from various third parties to increase the breadth of our product portfolio and meet channel requirements.

3 unchanged sentences

Reverse Logistics is an integral part of our sustainability mission, and we perform these operations at our facility in Cincinnati, OH, and with a network of various partners worldwide.

Refer to "Contractual Cash Obligations and Other Commercial Commitments and Contingencies" in the Capital Resources and Liquidity section of Management's Discussion and Analysis, included in Item 7 of this combined Form 10-K, as well as Note 12 - Investments in Affiliates, at Equity in the Consolidated Financial Statements for additional information regarding our relationship with Fuji Xerox.

Refer to "Contractual Cash Obligations and Other Commercial Commitments and Contingencies" in the Capital Resources and Liquidity section of Management's Discussion and Analysis, included in Item 7 of this combined Form 10-K for additional information regarding our relationship with FUJIFILM Business Innovation Corp.

International Operations

1 unchanged sentence

See also the risk factor entitled “Our business, results of operations and financial condition may be negatively impacted by conditions abroad, including local economic and political environments, fluctuating foreign currencies and shifting regulatory schemes” in Part I, Item 1A Risk Factors of this combined report on Form 10-K.

Xerox 2021 Annual Report 11

Our revenues may be affected by such factors as the introduction of new products, the length of sales cycles and the seasonality of technology purchases and printing volume.

These factors have historically resulted in lower revenues, operating profits and operating cash flows in the first and third quarters.

However, the COVID-19 pandemic and related business closures, impacted demand behaviors during 2020, and can potentially continue to have an impact on the seasonal fluctuations of our customers’ purchasing patterns in 2021.

For discussion regarding the impact of the COVID-19 pandemic on our business and financial results, see “Management’s Discussion and Analysis” included in Item 7 of this combined Form 10-K, as well as in Part I, Item 1A - Risk Factors of this combined report on Form 10-K.

However, the COVID-19 pandemic and related business closures, as well as supply chain disruptions that limited our ability to install orders, impacted demand behaviors and installation timing during 2021, and is expected to have an impact on the seasonal fluctuations in revenue during 2022.

For discussion regarding the impact of the COVID-19 pandemic and supply chain disruptions on our business and financial results, see Management's Discussion and Analysis, included in Item 7 of this combined Form 10-K, as well as in Part I, Item 1A Risk Factors of this combined report on Form 10-K.

In prior years, backlog has not been a meaningful indicator of future business prospects because a significant proportion of our revenue was fulfilled from existing inventories or within a short period of order signing.

Accordingly, our level of backlog remained fairly consistent period to period.

However, in 2021 we experienced an unprecedented level of supply chain disruption, in part due the ongoing effects of the COVID-19 pandemic.

These supply chain disruptions resulted in an increase to our backlog 1 of equipment and IT hardware to nearly $350 million, which is approximately 2.5 times higher than at the end of 2020.

In 2022, we expect to continue to have an elevated backlog at least through the first half of the year.

_____________

(1) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be installed, including orders with future installation dates.

It includes printing devices as well as IT hardware associated with our IT services offerings.

Other Information

15 unchanged sentences

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-K

Item 1. Business