4 unchanged sentences
Opinions on the Financial Statements and Internal Control over Financial Reporting
−Removed: We have audited the accompanying consolidated balance sheets of Xerox Holdings Corporation and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements").
+Added: We have audited the accompanying consolidated balance sheets of Xerox Holdings Corporation and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of (loss) income, of comprehensive (loss) income, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements").
We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
1 unchanged sentence
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
−Removed: Changes in Accounting Principles
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenues from contracts with customers in 2018.
Basis for Opinions
14 unchanged sentences
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
−Removed: Xerox 2020 Annual Report 66
−Removed: with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
+Added: (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
+Added: Xerox 2021 Annual Report 65
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
4 unchanged sentences
Realizability of Deferred Tax Assets
−Removed: As described in Note 20 to the consolidated financial statements, the Company has recorded $ 983 million of deferred tax assets as of December 31, 2020, net of a valuation allowance of $ 396 million.
+Added: As described in Note 20 to the consolidated financial statements, the Company has recorded $705 million of deferred tax assets, net of a valuation allowance of $357 million, as of December 31, 2021 .
Management records the estimated future tax effects of temporary differences between the tax bases of assets and amounts reported, as well as net operating loss and tax credit carryforwards.
Deferred tax assets are assessed for realizability and, where applicable, a valuation allowance is recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, be realized in the future.
−Removed: Management applied judgment in assessing the realizability of these deferred tax assets and the need for any valuation allowances, in particular the realizability of US tax credit carryforwards with a limited life.
+Added: Management applied judgment in assessing the realizability of these deferred tax assets and the need for any valuation allowances, in particular the realizability of U.S.
+Added: tax credit carryforwards with a limited life.
In determining the amount of deferred tax assets that are more-likely-than-not to be realized, management considered historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies.
−Removed: The principal considerations for our determination that performing procedures relating to the realizability of deferred tax assets is a critical audit matter are the significant judgment by management in assessing the available positive and negative evidence surrounding the realizability of deferred tax assets related to US tax credit carryforwards with a limited life, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating management’s significant assumptions related to projected future taxable income and application of income tax law.
+Added: The principal considerations for our determination that performing procedures relating to the realizability of deferred tax assets is a critical audit matter are the significant judgment by management in assessing the realizability of deferred tax assets related to the Company's U.S.
+Added: tax credit carryforwards with a limited life, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating management’s significant assumptions related to projected future taxable income.
In addition, the audit effort involved the use of professionals with specialized skill and knowledge.
1 unchanged sentence
These procedures included testing the effectiveness of controls relating to the realizability of deferred tax assets, including controls over projected future taxable income.
−Removed: These procedures also included, among others, evaluating management’s assessment of the realizability of deferred tax assets, including evaluating the assumption relating to projected future taxable income.
−Removed: Evaluating management’s assumption related to projected future taxable income involved evaluating historical profitability as well as other audit evidence related to management’s forecasts.
−Removed: Professionals with specialized skill and knowledge were also used to assist in evaluating management’s application of income tax law and the realizability of deferred tax assets relating to US tax credit carryforwards with a limited life.
−Removed: Goodwill Impairment Assessments
+Added: These procedures also included, among others, evaluating management’s assessment of the realizability of deferred tax assets related to the Company's U.S.
+Added: tax credit carryforwards with a limited life, including evaluating the reasonableness of the assumptions related to projected future taxable income.
+Added: Evaluating management’s assumptions related to projected future taxable income involved evaluating whether the assumptions were reasonable by considering historical profitability as well as other audit evidence related to management’s forecasts.
+Added: Professionals with specialized skill and knowledge were used to assist in the evaluation of management’s application of income tax law in determining projected future taxable income and the assessment of the realizability of deferred tax assets related to the Company's U.S.
+Added: tax credit carryforwards with a limited life.
+Added: Goodwill Impairment Assessment
As described in Notes 1 and 13 to the consolidated financial statements, the Company has recorded $3,287 million of goodwill as of December 31, 2021 for its single reporting unit.
Management assesses goodwill for impairment at least annually, during the fourth quarter based on balances as of October 1st, and more frequently if indicators of impairment exist or if a decision is made to sell or exit a business.
−Removed: If the fair value exceeds carrying value, goodwill is not considered impaired.
+Added: If the fair value exceeds the carrying value, goodwill is not considered impaired.
If the carrying value exceeds the fair value, goodwill is considered impaired and management would recognize an impairment loss for the excess.
Management performs an assessment of goodwill, utilizing either a qualitative or quantitative impairment test.
−Removed: The qualitative impairment test assesses several factors to determine whether it is more-likely-than-not that the fair value of the Company is less than its carrying value.
−Removed: In a quantitative impairment test, management assesses goodwill by comparing the carrying amount of the entity to its fair value, and the fair value of the entity is determined by using a weighted combination of an
+Added: The qualitative impairment test assesses several factors to determine whether it is more-likely-than-not that the fair value of the entity is less than its carrying amount.
+Added: In a quantitative impairment test, management assesses goodwill by comparing the carrying amount of the entity to its fair value, and the fair value of the entity is determined by using a weighted combination of an income approach and a market approach.
+Added: After completing the annual quantitative test in the fourth quarter 2021, management concluded that the fair value of the Company had declined below its carrying value.
+Added: As a result, the
Xerox 2021 Annual Report 66
−Removed: income approach and a market approach.
−Removed: In the second quarter 2020, management determined there was a triggering event requiring an interim quantitative evaluation of goodwill.
−Removed: After completing the interim impairment review, management concluded that goodwill was not impaired in the second quarter 2020.
−Removed: After completing the annual quantitative review in the fourth quarter 2020, management concluded that goodwill was not impaired.
−Removed: As disclosed by management, the income approach is based on the discounted cash flow method that uses the Company’s estimates of forecasted future financial performance including revenues, gross margins, operating expenses, taxes, working capital, and capital asset requirements.
+Added: Company recognized an after-tax non-cash impairment charge of $750 million ($781 million pre-tax) for the year ended December 31, 2021.
+Added: As disclosed by management, the income approach is based on the discounted cash flow method that uses management's estimates of forecasted future financial performance including revenues, gross margins, operating expenses, taxes, working capital, and capital asset requirements.
Projected cash flows are then discounted to a present value employing a discount rate that properly accounts for the estimated market weighted-average cost of capital, as well as any risk unique to the subject cash flows.
−Removed: The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments is a critical audit matter are the significant judgment by management in determining the fair value estimate of the reporting unit, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s discounted cash flow method and significant assumptions related to forecasted revenues, gross margins and operating expenses, and the discount rates.
+Added: The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter are the significant judgment by management in determining the fair value estimate of the reporting unit, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating management’s discounted cash flow method and significant assumptions related to forecasted revenues, gross margins and operating expenses, and the discount rate.
In addition, the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Company’s reporting unit and the controls over the development of the assumptions related to forecasted revenues, gross margins and operating expenses, and the discount rates.
+Added: These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting unit and the controls over the development of the assumptions related to forecasted revenues, gross margins and operating expenses, and the discount rate.
These procedures also included, among others (i) testing management’s process for determining the fair value estimate;
1 unchanged sentence
(iii) testing the completeness and accuracy of underlying data used in the estimate;
−Removed: and (iv) evaluating reasonableness of the significant assumptions used by management, relating to the forecasted revenues, gross margins and operating expenses, and the discount rates.
+Added: and (iv) evaluating the reasonableness of the significant assumptions used by management related to the forecasted revenues, gross margins and operating expenses, and the discount rate.
Evaluating management’s assumptions related to forecasted revenues, gross margins and operating expenses involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.
−Removed: Professionals with specialized skill and knowledge were also used to assist in evaluation of the Company’s discounted cash flow method and the discount rates.
−Removed: /s/ P RICEWATERHOUSE C OOPERS LLP
+Added: Professionals with specialized skill and knowledge were also used to assist in the evaluation of the Company’s discounted cash flow method and the discount rate assumption.
+Added: /s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
5 unchanged sentences
Opinions on the Financial Statements and Internal Control over Financial Reporting
−Removed: We have audited the accompanying consolidated balance sheets of Xerox Corporation and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements").
+Added: We have audited the accompanying consolidated balance sheets of Xerox Corporation and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of (loss) income, of comprehensive (loss) income, of shareholder's equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements").
We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
1 unchanged sentence
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
−Removed: Changes in Accounting Principles
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenues from contracts with customers in 2018.
Basis for Opinions
14 unchanged sentences
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
−Removed: Xerox 2020 Annual Report 69
−Removed: with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
+Added: (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
+Added: Xerox 2021 Annual Report 68
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
3 unchanged sentences
Realizability of Deferred Tax Assets
−Removed: As described in Note 20 to the consolidated financial statements, the Company has recorded $ 983 million of deferred tax assets as of December 31, 2020 , net of a valuation allowance of $ 396 million.
+Added: As described in Note 20 to the consolidated financial statements, the Company has recorded $705 million of deferred tax assets, net of a valuation allowance of $357 million, as of December 31, 2021 .
Management records the estimated future tax effects of temporary differences between the tax bases of assets and amounts reported, as well as net operating loss and tax credit carryforwards.
Deferred tax assets are assessed for realizability and, where applicable, a valuation allowance is recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, be realized in the future.
−Removed: Management applied judgment in assessing the realizability of these deferred tax assets and the need for any valuation allowances, in particular the realizability of US tax credit carryforwards with a limited life.
+Added: Management applied judgment in assessing the realizability of these deferred tax assets and the need for any valuation allowances, in particular the realizability of U.S.
+Added: tax credit carryforwards with a limited life.
In determining the amount of deferred tax assets that are more-likely-than-not to be realized, management considered historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies.
−Removed: The principal considerations for our determination that performing procedures relating to the realizability of deferred tax assets is a critical audit matter are the significant judgment by management in assessing the available positive and negative evidence surrounding the realizability of deferred tax assets related to US tax credit carryforwards with a limited life, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating management’s significant assumptions related to projected future taxable income and application of income tax law.
+Added: The principal considerations for our determination that performing procedures relating to the realizability of deferred tax assets is a critical audit matter are the significant judgment by management in assessing the realizability of deferred tax assets related to the Company's U.S.
+Added: tax credit carryforwards with a limited life, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating management’s significant assumptions related to projected future taxable income.
In addition, the audit effort involved the use of professionals with specialized skill and knowledge.
1 unchanged sentence
These procedures included testing the effectiveness of controls relating to the realizability of deferred tax assets, including controls over projected future taxable income.
−Removed: These procedures also included, among others, evaluating management’s assessment of the realizability of deferred tax assets, including evaluating the assumption relating to projected future taxable income.
−Removed: Evaluating management’s assumption related to projected future taxable income involved evaluating historical profitability as well as other audit evidence related to management’s forecasts.
−Removed: Professionals with specialized skill and knowledge were also used to assist in evaluating management’s application of income tax law and the realizability of deferred tax assets relating to US tax credit carryforwards with a limited life.
−Removed: Goodwill Impairment Assessments
+Added: These procedures also included, among others, evaluating management’s assessment of the realizability of deferred tax assets related to the Company's U.S.
+Added: tax credit carryforwards with a limited life, including evaluating the reasonableness of the assumptions related to projected future taxable income.
+Added: Evaluating management’s assumptions related to projected future taxable income involved evaluating whether the assumptions were reasonable by considering historical profitability as well as other audit evidence related to management’s forecasts.
+Added: Professionals with specialized skill and knowledge were used to assist in the evaluation of management’s application of income tax law in determining projected future taxable income and the assessment of the realizability of deferred tax assets related to the Company's U.S.
+Added: tax credit carryforwards with a limited life.
+Added: Goodwill Impairment Assessment
As described in Notes 1 and 13 to the consolidated financial statements, the Company has recorded $3,287 million of goodwill as of December 31, 2021 for its single reporting unit.
Management assesses goodwill for impairment at least annually, during the fourth quarter based on balances as of October 1st, and more frequently if indicators of impairment exist or if a decision is made to sell or exit a business.
−Removed: If the fair value exceeds carrying value, goodwill is not considered impaired.
+Added: If the fair value exceeds the carrying value, goodwill is not considered impaired.
If the carrying value exceeds the fair value, goodwill is considered impaired and management would recognize an impairment loss for the excess.
Management performs an assessment of goodwill, utilizing either a qualitative or quantitative impairment test.
−Removed: The qualitative impairment test assesses several factors to determine whether it is more-likely-than-not that the fair value of the Company is less than its carrying value.
−Removed: In a quantitative impairment test, management assesses goodwill by comparing the carrying amount
+Added: The qualitative impairment test assesses several factors to determine whether it is more-likely-than-not that the fair value of the entity is less than its carrying amount.
+Added: In a quantitative impairment test, management assesses goodwill by comparing the carrying amount of the entity to its fair value, and the fair value of the entity is determined by using a weighted combination of an income approach and a market approach.
+Added: After completing the annual quantitative test in the fourth quarter 2021, management concluded that the fair value of the Company had declined below its carrying value.
+Added: As a result, the Company recognized an after-tax non-cash impairment charge of $750 million ($781 million pre-tax) for the year
Xerox 2021 Annual Report 69
−Removed: of the entity to its fair value, and the fair value of the entity is determined by using a weighted combination of an income approach and a market approach.
−Removed: In the second quarter 2020, management determined there was a triggering event requiring an interim quantitative evaluation of goodwill.
−Removed: After completing the interim impairment review, management concluded that goodwill was not impaired in the second quarter 2020.
−Removed: After completing the annual quantitative review in the fourth quarter 2020, management concluded that goodwill was not impaired.
−Removed: As disclosed by management, the income approach is based on the discounted cash flow method that uses the Company’s estimates of forecasted future financial performance including revenues, gross margins, operating expenses, taxes, working capital, and capital asset requirements.
+Added: ended December 31, 2021.
+Added: As disclosed by management, the income approach is based on the discounted cash flow method that uses management’s estimates of forecasted future financial performance including revenues, gross margins, operating expenses, taxes, working capital, and capital asset requirements.
Projected cash flows are then discounted to a present value employing a discount rate that properly accounts for the estimated market weighted-average cost of capital, as well as any risk unique to the subject cash flows.
−Removed: The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments is a critical audit matter are the significant judgment by management in determining the fair value estimate of the reporting unit, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s discounted cash flow method and significant assumptions related to forecasted revenues, gross margins and operating expenses, and the discount rates.
+Added: The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter are the significant judgment by management in determining the fair value estimate of the reporting unit, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating management’s discounted cash flow method and significant assumptions related to forecasted revenues, gross margins and operating expenses, and the discount rate.
In addition, the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Company’s reporting unit and the controls over the development of the assumptions related to forecasted revenues, gross margins and operating expenses, and the discount rates.
+Added: These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting unit and the controls over the development of the assumptions related to forecasted revenues, gross margins and operating expenses, and the discount rate.
These procedures also included, among others (i) testing management’s process for determining the fair value estimate;
1 unchanged sentence
(iii) testing the completeness and accuracy of underlying data used in the estimate;
−Removed: and (iv) evaluating reasonableness of the significant assumptions used by management, relating to the forecasted revenues, gross margins and operating expenses, and the discount rates.
+Added: and (iv) evaluating the reasonableness of the significant assumptions used by management related to the forecasted revenues, gross margins and operating expenses, and the discount rate.
Evaluating management’s assumptions related to forecasted revenues, gross margins and operating expenses involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.
−Removed: Professionals with specialized skill and knowledge were also used to assist in evaluation of the Company’s discounted cash flow method and the discount rates.
−Removed: /s/ P RICEWATERHOUSE C OOPERS LLP
+Added: Professionals with specialized skill and knowledge were also used to assist in the evaluation of the Company’s discounted cash flow method and the discount rate assumption.
+Added: /s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
43 unchanged sentences
Xerox Holdings Corporation
−Removed: Consolidated Statements of Income
+Added: Consolidated Statements of (Loss) Income
Year Ended December 31,
10 unchanged sentences
Selling, administrative and general expenses 1,718 1,851 2,085
+Added: Goodwill impairment 781 — —
Restructuring and related costs, net 38 93 229
3 unchanged sentences
Total Costs and Expenses 7,513 6,770 8,244
−Removed: Income before Income Taxes and Equity Income 252 822 549
−Removed: Income tax expense 64 179 247
+Added: Income before Income Taxes and Equity (Loss) Income ( 475 ) 252 822
+Added: Income tax (benefit) expense ( 17 ) 64 179
Equity in net income of unconsolidated affiliates 3 4 8
−Removed: Income from Continuing Operations 192 651 310
+Added: (Loss) Income from Continuing Operations ( 455 ) 192 651
Income from discontinued operations, net of tax — — 710
−Removed: Net Income 192 1,361 374
+Added: Net (Loss) Income ( 455 ) 192 1,361
Income from continuing operations attributable to noncontrolling interests — — 3
Income from discontinued operations attributable to noncontrolling interests — — 5
−Removed: Net Income Attributable to Xerox Holdings $ 192 $ 1,353 $ 361
+Added: Net (Loss) Income Attributable to Xerox Holdings $ ( 455 ) $ 192 $ 1,353
Amounts attributable to Xerox Holdings:
−Removed: Income from continuing operations $ 192 $ 648 $ 306
+Added: (Loss) Income from continuing operations $ ( 455 ) $ 192 $ 648
Income from discontinued operations — — 705
−Removed: Net Income Attributable to Xerox Holdings $ 192 $ 1,353 $ 361
−Removed: Basic Earnings per Share:
+Added: Net (Loss) Income Attributable to Xerox Holdings $ ( 455 ) $ 192 $ 1,353
+Added: Basic (Loss) Earnings per Share:
Continuing operations $ ( 2.56 ) $ 0.85 $ 2.86
Discontinued operations — — 3.17
−Removed: Total Basic Earnings per Share $ 0.85 $ 6.03 $ 1.40
−Removed: Diluted Earnings per Share:
+Added: Total Basic (Loss) Earnings per Share $ ( 2.56 ) $ 0.85 $ 6.03
+Added: Diluted (Loss) Earnings per Share:
Continuing operations $ ( 2.56 ) $ 0.84 $ 2.78
Discontinued operations — — 3.02
−Removed: Diluted Earnings per Share $ 0.84 $ 5.80 $ 1.38
+Added: Total Diluted (Loss) Earnings per Share $ ( 2.56 ) $ 0.84 $ 5.80
The accompanying notes are an integral part of these Consolidated Financial Statements.
1 unchanged sentence
Xerox Holdings Corporation
−Removed: Consolidated Statements of Comprehensive Income
+Added: Consolidated Statements of Comprehensive (Loss) Income
Year Ended December 31,
(in millions) 2021 2020 2019
−Removed: Net Income $ 192 $ 1,361 $ 374
+Added: Net (Loss) Income $ ( 455 ) $ 192 $ 1,361
Income from continuing operations attributable to noncontrolling interests — — 3
Income from discontinued operations attributable to noncontrolling interests — — 5
−Removed: Net Income Attributable to Xerox Holdings $ 192 $ 1,353 $ 361
−Removed: Other Comprehensive Income (Loss), Net (1)
+Added: Net (Loss) Income Attributable to Xerox Holdings $ ( 455 ) $ 192 $ 1,353
+Added: Other Comprehensive (Loss) Income, Net (1)
Translation adjustments, net $ ( 141 ) $ 241 $ 62
−Removed: Unrealized gains (losses), net 4 ( 6 ) 16
+Added: Unrealized (losses) gains, net ( 4 ) 4 ( 6 )
Changes in defined benefit plans, net 489 69 ( 10 )
Other Comprehensive Income, Net Attributable to Xerox Holdings $ 344 $ 314 $ 46
−Removed: Comprehensive Income, Net $ 506 $ 1,407 $ 557
+Added: Comprehensive (Loss) Income, Net $ ( 111 ) $ 506 $ 1,407
Comprehensive income, net from continuing operations attributable to noncontrolling interests — — 3
Comprehensive income, net from discontinued operations attributable to noncontrolling interests — — 5
−Removed: Comprehensive Income, Net Attributable to Xerox Holdings $ 506 $ 1,399 $ 544
+Added: Comprehensive (Loss) Income, Net Attributable to Xerox Holdings $ ( 111 ) $ 506 $ 1,399
_____________
32 unchanged sentences
Commitments and Contingencies (See Note 21)
+Added: Noncontrolling Interests (See Note 5) 10 —
Convertible Preferred Stock 214 214
11 unchanged sentences
Shares of Common Stock Outstanding 159,394 198,386
−Removed: _____________
−Removed: (1) Allowances at December 31, 2020 determined in accordance with ASU 2016-13 adopted effective January 1, 2020.
−Removed: Refer to Notes 1, 7 and 8 for additional information.
The accompanying notes are an integral part of these Consolidated Financial Statements.
5 unchanged sentences
Cash Flows from Operating Activities
−Removed: Net income $ 192 $ 1,361 $ 374
+Added: Net (loss) income $ ( 455 ) $ 192 $ 1,361
Income from discontinued operations, net of tax — — ( 710 )
−Removed: Income from continuing operations 192 651 310
−Removed: Adjustments required to reconcile Net income to Cash flows from operating activities
+Added: (Loss) income from continuing operations ( 455 ) 192 651
+Added: Adjustments required to reconcile Net (loss) income to Cash flows from operating activities
Depreciation and amortization 327 368 430
Provisions 46 147 73
−Removed: Deferred tax expense 34 124 135
+Added: Deferred tax (benefit) expense ( 89 ) 34 124
Net gain on sales of businesses and assets ( 40 ) ( 30 ) ( 21 )
Stock-based compensation 54 42 50
+Added: Goodwill impairment 781 — —
Restructuring and asset impairment charges 27 87 127
3 unchanged sentences
Decrease in accounts receivable and billed portion of finance receivables 41 369 10
−Removed: (Increase) decrease in inventories ( 134 ) 109 17
+Added: Decrease (increase) in inventories 88 ( 134 ) 109
Increase in equipment on operating leases ( 129 ) ( 118 ) ( 153 )
1 unchanged sentence
Decrease (increase) in other current and long-term assets 68 8 ( 14 )
−Removed: (Decrease) increase in accounts payable ( 123 ) ( 47 ) 1
+Added: Increase (decrease) in accounts payable 118 ( 123 ) ( 47 )
Decrease in accrued compensation ( 95 ) ( 189 ) ( 94 )
−Removed: (Decrease) increase in other current and long-term liabilities ( 165 ) 40 52
+Added: Increase (decrease) in other current and long-term liabilities 89 ( 165 ) 40
Net change in income tax assets and liabilities 10 ( 2 ) ( 34 )
13 unchanged sentences
Cash Flows from Financing Activities
−Removed: Net payments on short-term debt — — ( 5 )
Proceeds from issuance of long-term debt 311 2,359 10
8 unchanged sentences
Cash, Cash Equivalents and Restricted Cash at End of Year $ 1,909 $ 2,691 $ 2,795
−Removed: $ 2,691 $ 2,795 $ 1,148
−Removed: _____________
−Removed: (1) Balance at December 31, 2018 includes $ 3 associated with discontinued operations.
The accompanying notes are an integral part of these Consolidated Financial Statements.
9 unchanged sentences
Balance at December 31, 2018 $ 232 $ 3,321 $ ( 55 ) $ 5,072 $ ( 3,565 ) $ 5,005 $ 34 $ 5,039
−Removed: Cumulative effect of change in accounting principles (2)
−Removed: — — — 120 — 120 — 120
+Added: Cumulative effect of change in accounting principle — — — 127 ( 127 ) — — —
Comprehensive income, net — — — 1,353 46 1,399 8 1,407
7 unchanged sentences
Distributions to noncontrolling interests — — — — — — ( 3 ) ( 3 )
−Removed: Balance at December 31, 2018 $ 232 $ 3,321 $ ( 55 ) $ 5,072 $ ( 3,565 ) $ 5,005 $ 34 $ 5,039
−Removed: Cumulative effect of change in accounting principle (5)
+Added: Divestiture (4)
— — — — — — ( 32 ) ( 32 )
+Added: Balance at December 31, 2019 $ 215 $ 2,782 $ ( 76 ) $ 6,312 $ ( 3,646 ) $ 5,587 $ 7 $ 5,594
Comprehensive income, net — — — 192 314 506 — 506
7 unchanged sentences
Distributions to noncontrolling interests — — — — — — ( 3 ) ( 3 )
−Removed: Divestiture (6)
−Removed: — — — — — — ( 32 ) ( 32 )
Balance at December 31, 2020 $ 198 $ 2,445 $ — $ 6,281 $ ( 3,332 ) $ 5,592 $ 4 $ 5,596
−Removed: Comprehensive income, net — — — 192 314 506 — 506
+Added: Comprehensive (loss) income, net — — — ( 455 ) 344 ( 111 ) — ( 111 )
Cash dividends declared-common (2)
5 unchanged sentences
Cancellation of treasury stock ( 32 ) ( 679 ) 711 — — — — —
+Added: Investment from noncontrolling interests (5)
+Added: — 1 — — — 1 4 5
Distributions to noncontrolling interests — — — — — — ( 1 ) ( 1 )
2 unchanged sentences
(1) AOCL - Accumulated other comprehensive loss.
−Removed: (2) Includes $ 117 related to the adoption of the Revenue Recognition Standard ASU 2014-09 - Revenue from Contracts with Customers (ASC Topic 606), see Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, and $3 related to our share of Fuji Xerox's adoption of ASU 2016-01 - Financial Instruments - Classification and Measurement.
(2) Cash dividends declared on common stock for 2021, 2020 and 2019 were $ 0.25 per share on a quarterly basis and $ 1.00 per share on an annual basis.
(3) Cash dividends declared on preferred stock for 2021, 2020 and 2019 were $ 20 per share on a quarterly basis and $ 80 per share on an annual basis.
−Removed: (5) Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies - Income Taxes for additional information related to the adoption of ASU 2018-02.
(4) Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies and Note 6 - Divestitures for additional information regarding divestitures.
+Added: (5) Refer to Note 5 - Acquisitions and Investments for additional information regarding this noncontrolling interests.
The accompanying notes are an integral part of these Consolidated Financial Statements.
1 unchanged sentence
Xerox Corporation
−Removed: Consolidated Statements of Income
+Added: Consolidated Statements of (Loss) Income
Year Ended December 31,
10 unchanged sentences
Selling, administrative and general expenses 1,718 1,851 2,085
+Added: Goodwill impairment 781 — —
Restructuring and related costs, net 38 93 229
3 unchanged sentences
Total Costs and Expenses 7,513 6,770 8,244
−Removed: Income before Income Taxes and Equity Income 253 822 549
−Removed: Income tax expense 64 179 247
+Added: Income before Income Taxes and Equity (Loss) Income ( 475 ) 252 822
+Added: Income tax (benefit) expense ( 17 ) 64 179
Equity in net income of unconsolidated affiliates 3 4 8
−Removed: Income from Continuing Operations 193 651 310
+Added: (Loss) Income from Continuing Operations ( 455 ) 192 651
Income from discontinued operations, net of tax — — 710
−Removed: Net Income 193 1,361 374
+Added: Net (Loss) Income ( 455 ) 192 1,361
Income from continuing operations attributable to noncontrolling interests — — 3
Income from discontinued operations attributable to noncontrolling interests — — 5
−Removed: Net Income Attributable to Xerox $ 193 $ 1,353 $ 361
+Added: Net (Loss) Income Attributable to Xerox $ ( 455 ) $ 192 $ 1,353
Amounts attributable to Xerox:
−Removed: Income from continuing operations $ 193 $ 648 $ 306
+Added: (Loss) Income from continuing operations $ ( 455 ) $ 192 $ 648
Income from discontinued operations — — 705
−Removed: Net Income Attributable to Xerox $ 193 $ 1,353 $ 361
+Added: Net (Loss) Income Attributable to Xerox $ ( 455 ) $ 192 $ 1,353
The accompanying notes are an integral part of these Consolidated Financial Statements.
1 unchanged sentence
Xerox Corporation
−Removed: Consolidated Statements of Comprehensive Income
+Added: Consolidated Statements of Comprehensive (Loss) Income
Year Ended December 31,
(in millions) 2021 2020 2019
−Removed: Net Income $ 193 $ 1,361 $ 374
+Added: Net (Loss) Income $ ( 455 ) $ 192 $ 1,361
Income from continuing operations attributable to noncontrolling interests — — 3
Income from discontinued operations attributable to noncontrolling interests — — 5
−Removed: Net Income Attributable to Xerox $ 193 $ 1,353 $ 361
−Removed: Other Comprehensive Income (Loss), Net (1)
+Added: Net (Loss) Income Attributable to Xerox $ ( 455 ) $ 192 $ 1,353
+Added: Other Comprehensive (Loss) Income, Net (1)
Translation adjustments, net $ ( 141 ) $ 241 $ 62
−Removed: Unrealized gains (losses), net 4 ( 6 ) 16
+Added: Unrealized (losses) gains, net ( 4 ) 4 ( 6 )
Changes in defined benefit plans, net 489 69 ( 10 )
Other Comprehensive Income, Net Attributable to Xerox $ 344 $ 314 $ 46
−Removed: Comprehensive Income, Net $ 507 $ 1,407 $ 557
+Added: Comprehensive (Loss) Income, Net $ ( 111 ) $ 506 $ 1,407
Comprehensive income, net from continuing operations attributable to noncontrolling interests — — 3
Comprehensive income, net from discontinued operations attributable to noncontrolling interests — — 5
−Removed: Comprehensive Income, Net Attributable to Xerox $ 507 $ 1,399 $ 544
+Added: Comprehensive (Loss) Income, Net Attributable to Xerox $ ( 111 ) $ 506 $ 1,399
_____________
27 unchanged sentences
Long-term debt 2,102 2,557
+Added: Related party debt 1,494 —
Pension and other benefit liabilities 1,373 1,566
3 unchanged sentences
Commitments and Contingencies (See Note 21)
+Added: Noncontrolling Interests (See Note 5) 10 —
Additional paid-in capital 3,202 4,888
5 unchanged sentences
Total Liabilities and Equity $ 13,215 $ 14,741
−Removed: _____________
−Removed: (1) Allowances at December 31, 2020 determined in accordance with ASU 2016-13 adopted effective January 1, 2020.
−Removed: Refer to Notes 1, 7 and 8 for additional information.
The accompanying notes are an integral part of these Consolidated Financial Statements.
5 unchanged sentences
Cash Flows from Operating Activities
−Removed: Net income $ 193 $ 1,361 $ 374
+Added: Net (loss) income $ ( 455 ) $ 192 $ 1,361
Income from discontinued operations, net of tax — — ( 710 )
−Removed: Income from continuing operations 193 651 310
−Removed: Adjustments required to reconcile Net income to Cash flows from operating activities
+Added: (Loss) income from continuing operations ( 455 ) 192 651
+Added: Adjustments required to reconcile Net (loss) income to Cash flows from operating activities
Depreciation and amortization 327 368 430
Provisions 46 147 73
−Removed: Deferred tax expense 34 124 135
+Added: Deferred tax (benefit) expense ( 89 ) 34 124
Net gain on sales of businesses and assets ( 40 ) ( 30 ) ( 21 )
Stock-based compensation 54 42 50
+Added: Goodwill impairment 781 — —
Restructuring and asset impairment charges 27 87 127
3 unchanged sentences
Decrease in accounts receivable and billed portion of finance receivables 41 369 10
−Removed: (Increase) decrease in inventories ( 134 ) 109 17
+Added: Decrease (increase) in inventories 88 ( 134 ) 109
Increase in equipment on operating leases ( 129 ) ( 118 ) ( 153 )
1 unchanged sentence
Decrease (increase) in other current and long-term assets 68 8 ( 14 )
−Removed: (Decrease) increase in accounts payable ( 123 ) ( 47 ) 1
+Added: Increase (decrease) in accounts payable 118 ( 123 ) ( 47 )
Decrease in accrued compensation ( 95 ) ( 189 ) ( 94 )
−Removed: (Decrease) increase in other current and long-term liabilities ( 166 ) 40 52
+Added: Increase (decrease) in other current and long-term liabilities 89 ( 165 ) 40
Net change in income tax assets and liabilities 10 ( 2 ) ( 34 )
13 unchanged sentences
Cash Flows from Financing Activities
−Removed: Net payments on short-term debt — — ( 5 )
Proceeds from issuance of long-term debt 311 852 10
10 unchanged sentences
Cash, Cash Equivalents and Restricted Cash at End of Year $ 1,909 $ 2,691 $ 2,795
−Removed: $ 2,691 $ 2,795 $ 1,148
−Removed: _____________
−Removed: (1) Balance at December 31, 2018 includes $ 3 associated with discontinued operations.
The accompanying notes are an integral part of these Consolidated Financial Statements.
1 unchanged sentence
Xerox Corporation
−Removed: Consolidated Statements of Shareholders' Equity
+Added: Consolidated Statements of Shareholder's Equity
(in millions) Common Stock Additional
1 unchanged sentence
Earnings AOCL (1)
−Removed: Shareholders’
+Added: Shareholder's
Interests Total
Balance at December 31, 2018 $ 232 $ 3,321 $ ( 55 ) $ 5,072 $ ( 3,565 ) $ 5,005 $ 34 $ 5,039
−Removed: Cumulative effect of change in accounting principles (2)
−Removed: — — — 120 — 120 — 120
−Removed: Comprehensive income, net — — — 361 183 544 13 557
−Removed: Cash dividends declared-common — — — ( 251 ) — ( 251 ) — ( 251 )
−Removed: Cash dividends declared-preferred — — — ( 14 ) — ( 14 ) — ( 14 )
−Removed: Stock option and incentive plans, net 1 49 — — — 50 — 50
−Removed: Payments to acquire treasury stock, including fees — — ( 700 ) — — ( 700 ) — ( 700 )
−Removed: Cancellation of treasury stock ( 24 ) ( 621 ) 645 — — — — —
−Removed: Distributions to noncontrolling interests — — — — — — ( 16 ) ( 16 )
−Removed: Balance at December 31, 2018 $ 232 $ 3,321 $ ( 55 ) $ 5,072 $ ( 3,565 ) $ 5,005 $ 34 $ 5,039
Cumulative effect of change in accounting principle — — — 127 ( 127 ) — — —
−Removed: — — — 127 ( 127 ) — — —
Comprehensive income, net — — — 1,353 46 1,399 8 1,407
18 unchanged sentences
Balance at December 31, 2020 $ — $ 4,888 $ — $ 5,834 $ ( 3,332 ) $ 7,390 $ 4 $ 7,394
+Added: Comprehensive (loss) income, net — — — ( 455 ) 344 ( 111 ) — ( 111 )
+Added: Dividends declared to parent — — — ( 903 ) — ( 903 ) — ( 903 )
+Added: Intercompany loan capitalization (4)
— ( 1,494 ) — — — ( 1,494 ) — ( 1,494 )
+Added: Transfers to parent — ( 193 ) — — — ( 193 ) — ( 193 )
+Added: Investment from noncontrolling interests (5)
+Added: — 1 — — — 1 4 5
+Added: Distributions to noncontrolling interests — — — — — — ( 1 ) ( 1 )
+Added: Balance at December 31, 2021 $ — $ 3,202 $ — $ 4,476 $ ( 2,988 ) $ 4,690 $ 7 $ 4,697
+Added: _____________
(1) AOCL - Accumulated other comprehensive loss.
−Removed: (2) Includes $ 117 related to the adoption of the Revenue Recognition Standard ASU 2014-09 - Revenue from Contracts with Customers (ASC Topic 606), see Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, and $3 related to our share of Fuji Xerox's adoption of ASU 2016-01 - Financial Instruments - Classification and Measurement.
−Removed: (3) Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies - Income Taxes for additional information related to the adoption of ASU 2018-02.
(2) Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies and Note 6 - Divestitures for additional information regarding divestitures.
1 unchanged sentence
Refer to Note 16 - Debt for additional information regarding the Senior Notes offerings.
+Added: (4) Refer to Note 16 - Debt for information regarding capitalization of balance to Intercompany Loan with Xerox Holdings Corporation.
+Added: (5) Refer to Note 5 - Acquisitions and Investments for additional information regarding this investment from noncontrolling interests.
The accompanying notes are an integral part of these Consolidated Financial Statements.
8 unchanged sentences
References to “Xerox Holdings Corporation” refer to the stand-alone parent company and do not include its subsidiaries.
−Removed: References to “Xerox Corporation” refer to the stand-alone company and do not include subsidiaries.
−Removed: The accompanying Consolidated Financial Statements and footnotes represent the respective consolidated results and financial results of Xerox Holdings and Xerox and all respective subsidiaries that each registrant directly or indirectly controls, either through majority ownership or otherwise.
+Added: References to “Xerox Corporation” refer to the stand-alone company and do not include its subsidiaries.
+Added: The accompanying Consolidated Financial Statements and footnotes represent the respective consolidated results and financial results of Xerox Holdings and Xerox and all respective companies that each registrant directly or indirectly controls, either through majority ownership or otherwise.
This is a combined report of Xerox Holdings and Xerox, which includes separate Consolidated Financial Statements for each registrant.
2 unchanged sentences
Description of Business
−Removed: Currently, Xerox Holdings' primary direct operating subsidiary is Xerox and Xerox represents nearly all of Xerox Holdings' operations.
+Added: Currently, Xerox Holdings' primary direct operating subsidiary is Xerox and therefore Xerox represents nearly all of Xerox Holdings' operations.
Xerox is a global enterprise for document management solutions.
1 unchanged sentence
We operate in approximately 160 countries worldwide.
−Removed: Xerox Holdings' other direct operating subsidiary is CareAR, a small SaaS solutions provider, which was acquired for $ 9 in 2020.
+Added: Xerox Holdings' other direct subsidiary is Xerox Ventures LLC, which was established in 2021 solely to invest in startups and early/mid-stage growth companies aligned with the Company’s innovation focus areas and targeted adjacencies.
+Added: Xerox Ventures LLC had investments of approximately $ 8 at December 31, 2021.
Basis of Consolidation
1 unchanged sentence
Investments in business entities in which we do not have control, but we have the ability to exercise significant influence over operating and financial policies (generally 20 % to 50 % ownership) are accounted for using the equity method of accounting.
−Removed: Operating results of acquired businesses are included in the Consolidated Statements of Income from the date of acquisition.
+Added: Operating results of acquired businesses are included in the Consolidated Statements of (Loss) Income from the date of acquisition.
We consolidate variable interest entities if we are deemed to be the primary beneficiary of the entity.
−Removed: Operating results for variable interest entities in which we are determined to be the primary beneficiary are included in the Consolidated Statements of Income from the date such determination is made.
−Removed: For convenience and ease of reference, we refer to the financial statement caption “Income before Income Taxes and Equity Income” as “pre-tax income” throughout the Notes to the Consolidated Financial Statements.
+Added: Operating results for variable interest entities in which we are determined to be the primary beneficiary are included in the Consolidated Statements of (Loss) Income from the date such determination is made.
+Added: For convenience and ease of reference, we refer to the financial statement caption “Income before Income Taxes and Equity Income” as “pre-tax (loss) income” throughout the Notes to the Consolidated Financial Statements.
+Added: Transfer of CareAR Holdings LLC to Xerox
+Added: In August 2021, in connection with Xerox Holdings Corporation's announcement of the formation of the CareAR software business, the ownership of CareAR Holdings LLC was transferred from Xerox Holdings Corporation to Xerox Corporation.
+Added: The transfer was accounted for as a transfer of an entity under common control with retrospective adjustment of Xerox's prior period financial statements to reflect the ownership of the business from its acquisition in the fourth quarter 2020.
+Added: The impact of this retrospective adjustment was not material to Xerox as the acquisition value was $ 9 and the entity incurred approximately $ 1 of expenses in 2020.
Discontinued Operations
−Removed: In November 2019, Xerox Holdings completed a series of transactions to restructure its relationship with FUJIFILM Holdings Corporation (FH), including the sale of its indirect 25 % equity interest in Fuji Xerox (FX) as well as the sale of its indirect 51 % partnership interest in Xerox International Partners (XIP) (collectively the Sales).
−Removed: As a result of the Sales of FX and XIP and the related strategic shift in our business the historical financial results of our equity method investment in FX and our XIP business (which was consolidated) for the periods prior to the Sales are reflected as a discontinued operation and as such, their impact is excluded from continuing operations for all periods presented.
−Removed: The accompanying Notes to the Consolidated Financial Statements have all been revised to reflect the effect of the Sales and all prior year balances have been revised accordingly to reflect continuing operations only.
+Added: In November 2019, Xerox Holdings completed a series of transactions to restructure its relationship with FUJIFILM Holdings Corporation (FH), including the sale of its indirect 25 % equity interest in Fuji Xerox (now known as FUJIFILM Business Innovation Corp.) as well as the sale of its indirect 51 % partnership interest in Xerox
+Added: Xerox 2021 Annual Report 83
+Added: International Partners (XIP) (collectively the Sales).
+Added: As a result of the Sales of FX and XIP and the related strategic shift in our business, the historical financial results of our equity method investment in FX and our XIP business (which was consolidated) for 2019 are reflected as a discontinued operation and as such, their impact is excluded from continuing operations for 2019.
The historical statements of Comprehensive Income and Shareholders' Equity have not been revised to reflect the Sales and instead reflect the Sales as an adjustment to the balances at December 31, 2019.
Refer to Note 6 - Divestitures for additional information regarding discontinued operations.
−Removed: Xerox 2020 Annual Report 84
−Removed: Prior Period Adjustments
−Removed: In 2018, we determined that the Projected Benefit Obligation (PBO) for our U.K.
−Removed: funded pension plan at December 31, 2017 was overstated by approximately GBP 40 million (approximately USD $ 53 or $ 43 after-tax).
−Removed: The error was the result of the plan administrator under-reporting benefit payments.
−Removed: The correction of the PBO was recorded as an out-of-period adjustment in 2018 with the offset to the balance sheet recorded as a credit to Changes in defined benefit plans, net in Other comprehensive income for the period.
−Removed: We assessed the impact of this error and concluded that it was not material to the financial statements previously issued for any interim or annual period and the correction was not material to the annual financial statements for 2018.
Use of Estimates
7 unchanged sentences
Such changes and refinements in estimation methodologies are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the Notes to the Consolidated Financial Statements and in Management's Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: As of December 31, 2020, the impact of the COVID-19 pandemic continues to unfold.
−Removed: As a result, many of our estimates and assumptions have required increased judgment and carry a higher degree of variability and volatility.
−Removed: As events continue to evolve and additional information becomes available, our estimates may change materially in the future.
+Added: As of December 31, 2021, the impact of the COVID-19 pandemic continues to have varying and divergent impacts across various regions and countries in which we operate and a degree of economic uncertainty still remains.
+Added: We expect the pandemic's effects will likely continue to impact our financial results into at least the first half of 2022.
+Added: Accordingly, many of our estimates and assumptions continue to require a greater degree of judgment and may change in the future as events continue to evolve and additional information becomes available.
New Accounting Standards and Accounting Changes
1 unchanged sentence
Accounting Standard Updates to be Adopted:
+Added: Government Assistance
+Added: In November 2021, the FASB issued ASU 2021-10 , Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance.
+Added: The update increases the transparency surrounding government assistance by requiring disclosure of 1) the types of assistance received, 2) an entity’s accounting for the assistance, and 3) the effect of the assistance on the entity’s financial statements.
+Added: We expect to adopt this update effective for our fiscal year beginning January 1, 2022.
+Added: We are currently evaluating the impact of the adoption of this update on our Consolidated Financial Statements, which will largely depend on the amounts of government assistance expected to be received in the future.
+Added: However, prior to the COVID pandemic, the amounts of government assistance the Company received were not material and since the update is limited to increased disclosures, we do not expect the adoption to have a material impact on our financial condition, results of operations, and cash flows.
+Added: Business Combinations
+Added: In October 2021, the FASB issued ASU 2021-08 , Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.
+Added: The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC Topic 606, Revenue from Contracts with Customers , as if the acquirer had originated the contracts.
+Added: This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value.
+Added: This update is effective for our fiscal year beginning January 1, 2023, with early adoption permitted.
+Added: The impact of adopting the new standard will depend on the magnitude of future acquisitions.
+Added: The standard will not impact contract assets or liabilities acquired in business combinations that occurred prior to the adoption date.
+Added: Xerox 2021 Annual Report 84
+Added: Reference Rate Reform
+Added: In March 2020, the FASB issued ASU 2020-04 , Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S.
+Added: GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.
+Added: In January 2021, the FASB issued ASU 2021-01 , Reference Rate Reform (Topic 848), Scope, which provided clarification to ASU 2020-04.
+Added: These ASUs were effective commencing with our quarter ended March 31, 2020 and will continue through December 31, 2022.
+Added: There has been no impact to date as a result of adopting ASU 2020-04 or ASU 2021-01 and subsequent amendments on reference rate reform.
+Added: However, we continue to evaluate potential future impacts that may result from the discontinuation of LIBOR or other reference rates as well as the accounting provided in this update on our financial condition, results of operations, and cash flows.
+Added: Accounting Standard Updates Recently Adopted:
In August 2020, the FASB issued ASU 2020-06 , Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40).
1 unchanged sentence
This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share.
−Removed: This update is effective for our fiscal year beginning January 1, 2022.
−Removed: We are currently evaluating the impact of the adoption of this standard on the Consolidated Financial Statements and related disclosures.
−Removed: Reference Rate Reform
−Removed: In March 2020, the FASB issued ASU 2020-04 , Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying U.S.
−Removed: GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued.
−Removed: The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.
−Removed: There has been no impact to date as a result of ASU 2020-04 and subsequent amendments on reference rate reform, however we continue to evaluate potential future impacts that may result from the discontinuation of LIBOR or other reference rates as well as the accounting provided in this update on our financial condition, results of operations, and cash flows.
−Removed: Xerox 2020 Annual Report 85
+Added: We adopted this update effective for our fiscal year beginning January 1, 2022.
+Added: The adoption of this standard did not have a material impact on our Consolidated Financial Statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12 , Income Taxes (Topic 740):
1 unchanged sentence
ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.
−Removed: This update is effective for our fiscal year beginning January 1, 2021.
−Removed: Although we continue to evaluate the effects of this update on our Consolidated Financial Statements, at this stage we do not expect the adoption to have a material impact on our results of operations, financial position, cash flows or disclosures.
−Removed: Accounting Standard Updates Recently Adopted:
+Added: We adopted this update effective for our fiscal year beginning January 1, 2021.
+Added: The adoption did not have a material impact on our results of operations, financial position, cash flows or disclosures.
In April 2020, the FASB staff issued a question and answer (Q&A) document on the application of lease accounting guidance related to lease concessions provided as a result of the economic disruption caused by the COVID-19 pandemic (Topic 842 Q&A).
4 unchanged sentences
Through September 30, 2020 we provided rent deferrals as a Lessor that were primarily offered to customers with sales type lease receivables.
−Removed: This special program was discontinued in the fourth quarter.
+Added: This special program was discontinued in the fourth quarter of 2020.
We elected to account for the deferrals in the timing of lease payments as if there were no changes in the lease contracts.
−Removed: Under this approach, assuming that collectibility of future lease payments is still probable, the classification of the leases is not updated and we retain the balance of the deferral as a receivable and will settle that receivable at the revised payment date or dates.
+Added: Under this approach, assuming that collectibility of future lease payments is still probable, the classification of the leases was not updated and we retained the balance of the deferral as a receivable and will settle that receivable at the revised payment date or dates.
Through September 30, 2020, we approved payment deferrals of up to 3 months for approximately $ 33 or approximately 1 % of our total finance receivable portfolio.
3 unchanged sentences
We remeasure the remaining consideration in the contract, reallocate it to the lease and non-lease components as applicable, and remeasure the lease liability with an adjustment to the right-of-use asset for the same amount.
−Removed: If the total lease payments remain exactly the same, the lease cost remains unchanged.
−Removed: The impact of this election was not material to our financial condition, results of operations or cash flows, as no rent concessions provided to Xerox in 2020 were material, individually or in the aggregate.
+Added: If the total lease
+Added: Xerox 2021 Annual Report 85
+Added: payments remain exactly the same, the lease cost remains unchanged.
+Added: The impact of this election was not material to our financial condition, results of operations or cash flows, as rent concessions provided to Xerox in 2021 or 2020 were not material, individually or in the aggregate.
On January 1, 2019, we adopted ASU 2016-02 , Leases (ASC Topic 842).
This update, as well as additional amendments and targeted improvements issued in 2018 and early 2019, supersedes existing lease accounting guidance found under ASC 840, Leases (ASC 840) and requires the recognition of right-to-use assets and lease obligations by lessees for those leases originally classified as operating leases under prior lease guidance.
−Removed: Effective with the adoption, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition.
+Added: Effective with the adoption, leases are classified as either finance or operating, with such classification affecting the pattern of expense recognition.
Short-term leases with a term of 12 months or less are not required to be recognized.
−Removed: The update also requires qualitative and quantitative disclosure of key information regarding the amount, timing and uncertainty of cash flows arising from leasing arrangements to increase transparency and comparability among companies.
+Added: The update also requires qualitative and quantitative disclosure of key information regarding the amount, timing and uncertainty of cash flows arising from leasing arrangements in order to increase transparency and comparability among companies.
The accounting for lessors does not fundamentally change with this update except for changes to conform and align guidance to the lessee guidance, as well as to the revenue recognition guidance in ASU 2014-09.
−Removed: Some of these conforming changes, such as those related to the definition of lease term and minimum lease payments, resulted in certain lease arrangements, that would have been previously accounted for as operating leases, to be classified and accounted for as sales-type leases with a corresponding up-front recognition of equipment sales revenue.
+Added: Some of these conforming changes, such as those related to the definition of lease term and minimum lease payments, resulted in certain lease arrangements that would have been previously accounted for as operating leases, to instead be classified and accounted for as sales-type leases with a corresponding up-front recognition of equipment sales revenue.
Upon adoption, we applied the transition option, whereby prior comparative periods are not retrospectively presented in the Consolidated Financial Statements.
−Removed: We also elected the package of practical expedients not to
−Removed: Xerox 2020 Annual Report 86
−Removed: reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components for certain asset classes (real estate lease arrangements for offices and warehouses).
+Added: We also elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components for certain asset classes (real estate lease arrangements for offices and warehouses).
Additionally, we made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes.
19 unchanged sentences
The adoption of ASU 2018-15 did not have a material impact on our financial condition, results of operations or cash flows as we had previously capitalized these implementation costs and such amounts were not material.
−Removed: In February 2018, the FASB issued ASU 2018-02 , Income Statement - Reporting Comprehensive Income (Topic 220):
−Removed: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .
−Removed: We adopted ASU 2018-02 effective for our fiscal year beginning January 1, 2019 and upon adoption reclassified $ 127 from Accumulated other comprehensive loss (AOCL) to Retained earnings related to the stranded tax effects resulting from the Tax Cuts and Jobs Act (Tax Act) enacted in December 2017.
−Removed: The reclassification was primarily related to the stranded tax effects associated with amounts in AOCL from our retirement-related benefit plans.
−Removed: Accordingly, the adoption of this update eliminated the stranded tax effects resulting from the Tax Act.
−Removed: However, because the update only relates to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in Income from continuing operations is not affected.
−Removed: Revenue Recognition
−Removed: On January 1, 2018, we adopted ASU 2014-09 , Revenue from Contracts with Customers (ASC Topic 606), which superseded nearly all existing revenue recognition guidance under U.S.
−Removed: The core principle of ASC Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services.
−Removed: ASC Topic 606 defines a five-step process to recognize revenue and requires more judgment and estimates within the revenue recognition process than required under previous U.S.
−Removed: GAAP, including identifying performance obligations in the contract, estimating
Xerox 2021 Annual Report 86
−Removed: the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.
−Removed: We adopted this standard using the modified retrospective method of adoption and therefore we did not revise periods prior to adoption (e.g.
−Removed: Under ASC Topic 606, based on the nature of our contracts and consistent with prior practice, we recognize revenue upon invoicing the customer for the large majority of our revenue.
−Removed: Additionally, the unit of accounting, that is, the identification of performance obligations, is consistent with prior revenue recognition practice.
−Removed: Accordingly, the adoption of this standard did not have a material impact on the large majority of our revenues.
−Removed: A significant portion of our Equipment sales are either recorded as sales-type leases or through direct sales to distributors and resellers and these revenue streams are not impacted by the adoption of ASC Topic 606.
−Removed: The only change of significance identified in our adoption involves a change in the classification of certain revenues that were previously reported in Services revenues.
−Removed: These revenues relate to certain analyst services performed in connection with the installation of equipment that are being considered part of the equipment sale performance obligation effective beginning January 1, 2018.
−Removed: Accordingly, these revenues are now reported as part of Sales.
−Removed: Another change identified upon adoption was with respect to deferred contract costs, which include incremental costs of obtaining a contract and costs to fulfill a contract.
−Removed: Deferred contract costs had been minimal under our prior practices as most costs to obtain a contract and fulfill a contract were expensed as incurred.
−Removed: However, as a result of the contract cost guidance included in ASC Topic 606 and ASC Topic 340-40 " Contracts with Customers ", upon adoption on January 1, 2018, we recorded a transition asset of $ 153 , and a net of tax increase of $ 117 to Retained earnings, related to the incremental cost to obtain contracts.
−Removed: Substantially all of this adjustment is related to the deferral of sales commissions paid to sales people and agents in connection with the placement of equipment with post sale service arrangements.
−Removed: The impact to the Statement of Income from this change is not material.
Other Updates
The FASB also issued the following Accounting Standards Updates, which have not had, and are not expected to have, a material impact on our financial condition, results of operations or cash flows upon adoption.
−Removed: Those updates are as follows:
+Added: • Equity Instruments:
+Added: ASU 2021-04 , Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options).
+Added: This update is effective for our fiscal year beginning January 1, 2022.
+Added: ASU 2021-05 , Leases - Certain Lease Payments with Variable Lease Payments (ASC 842).
+Added: This update is effective for our fiscal year beginning January 1, 2022.
• Investments:
ASU 2020-01 , Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) .
−Removed: This update is effective for our fiscal year beginning January 1, 2021.
+Added: This update was effective for our fiscal year beginning January 1, 2021.
• Compensation - Stock Compensation and Revenue from Contracts with Customers:
1 unchanged sentence
This update was effective for our fiscal year beginning January 1, 2020.
−Removed: • Collaborative Arrangements:
−Removed: ASU 2018-18 , (Topic 808) Clarifying the Interaction between Topic 808 and Topic 606.
−Removed: This update was effective for our fiscal year beginning January 1, 2020.
−Removed: • Compensation - Retirement Benefits - Defined Benefit Plans - General:
−Removed: ASU 2018-14 , (Topic 715-20) Changes to the Disclosure Requirements for Defined Benefit Plans.
−Removed: We elected to early adopt this update effective for our fiscal year ended December 31, 2019.
−Removed: Refer to Note 19 - Employee Benefit Plans for changes in the disclosures for our Defined Benefit Plans.
−Removed: • Fair Value Measurement:
−Removed: ASU 2018-13 , (Topic 820) Disclosure Framework.
−Removed: This update was effective for our fiscal year beginning January 1, 2020.
Summary of Accounting Policies
Revenue Recognition
−Removed: We generate revenue through the sale of equipment, supplies and maintenance and printing services.
−Removed: Revenue is measured based on consideration specified in a contract with a customer and is recognized when we satisfy a performance obligation by transferring control of a product to a customer or in the period the customer benefits from the service.
+Added: We generate revenue through the sale of equipment and supplies and by providing maintenance and printing services.
+Added: Revenue is measured based on the consideration specified in a contract with a customer and is recognized when we satisfy a performance obligation by transferring control of a product to a customer or in the period the customer benefits from the service.
With the exception of our sales-type lease arrangements, our invoices to the customer, which normally have short-term payment terms, are typically aligned to the transfer of goods or as services are rendered to our customers and therefore in most cases we recognize revenue based on our right to invoice customers.
1 unchanged sentence
Significant judgments primarily include the identification of performance obligations in our Document management services arrangements as well the pattern of delivery for those services.
−Removed: Xerox 2020 Annual Report 88
More specifically, revenue related to our products and services is generally recognized as follows:
−Removed: Revenues from the sale of equipment directly to end customers, including those from sales-type leases (see below), are recognized when obligations under the terms of a contract with our customer are satisfied and control has been transferred to the customer.
+Added: Revenues from the sale of equipment directly to end-user customers, including those from sales-type leases (see below), are recognized when obligations under the terms of a contract with our customer are satisfied and control has been transferred to the customer.
For equipment placements that require us to install the product at the customer location, revenue is normally recognized when the equipment has been delivered and installed at the customer location.
6 unchanged sentences
We normally account for these maintenance agreements as a single performance obligation for printing services being delivered in a series with delivery being measured by usage as billed to the customer.
−Removed: Accordingly, revenue on these agreements are normally recognized as billed to the customer over the term of the agreements based on page volumes.
+Added: Accordingly, revenue on these types of agreements is normally recognized as billed to the customer over the term of the agreements based on page volumes.
A substantial portion of our products are sold with full service maintenance agreements, accordingly, other than the product warranty obligations associated with certain of our entry level products, we do not have any significant warranty obligations, including any obligations under customer satisfaction programs.
3 unchanged sentences
We account for these arrangements as a single performance obligation for printing services being delivered in a series with delivery being measured by usage as billed to the customer .
+Added: Xerox 2021 Annual Report 87
Our services contracts may also include the sale or lease of equipment and software.
7 unchanged sentences
However, revenue is only recognized when the distributor or reseller has economic substance apart from the Company such that collectability is probable and we have no further obligations related to bringing about the resale, delivery or installation of the product that would impact transfer of control.
−Removed: Revenues associated with maintenance agreements sold through distributors and resellers to end customers are recognized in a consistent manner for maintenance services.
+Added: Revenues associated with maintenance agreements sold through distributors and resellers to end-user customers are recognized in a consistent manner for maintenance services.
Revenue that may be subject to a reversal of revenue due to contractual terms or uncertainties is not recorded as revenue until the contractual provisions lapse or the uncertainties are resolved.
Distributors and resellers participate in various rebate, price-protection, cooperative marketing and other programs.
−Removed: We estimate the variable consideration associated with these programs and record those amounts as a reduction to revenue when the sales occur.
−Removed: Similarly, we account for our estimates of sales returns and other allowances when the sales occur based on our historical experience.
+Added: We estimate the variable consideration associated with these programs and record those amounts as a reduction to revenue when sales occur.
+Added: Similarly, we account for our estimates of sales returns and other allowances when sales occur based on our historical experience.
In certain instances, we may provide lease financing to end-user customers who purchased equipment we sold to distributors or resellers.
4 unchanged sentences
Supplies revenue is recognized upon transfer of control to the customer, generally upon utilization or shipment to the customer in accordance with the sales contract terms.
−Removed: Xerox 2020 Annual Report 89
Finance income attributable to sales-type leases, direct financing leases and installment loans is recognized on the accrual basis using the effective interest method.
Bundled Lease Arrangements:
−Removed: A significant portion of our direct sales of equipment to end customers are made through bundled lease arrangements that typically include equipment, maintenance and financing components for which the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term.
−Removed: These arrangements also typically include an incremental, variable component for page volumes in excess of contractual page volume minimums, which are often expressed in terms of price-per-page.
−Removed: The fixed minimum monthly payments are multiplied by the number of months in the contract term to arrive at the total fixed minimum payments that the customer is obligated to make (fixed payments) over the lease term.
−Removed: In applying our lease accounting methodology, we only consider the fixed payments for purposes of allocating to the relative fair value elements of the contract.
−Removed: Revenues under bundled arrangements are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement.
−Removed: Lease deliverables include the equipment, financing, maintenance and other executory costs, while non-lease deliverables generally consist of the supplies and non-maintenance services.
−Removed: The allocation for the lease deliverables begins by allocating revenues to the maintenance and other executory costs plus a profit thereon.
−Removed: These elements are generally recognized over the term of the lease as service revenue.
−Removed: The remaining amounts are allocated to the equipment and financing elements, which are subjected to the accounting estimates noted below under “Leases”.
−Removed: The two primary lease accounting provisions we assess for the classification of transactions as sales-type or operating leases are:
−Removed: (1) a review of the lease term to determine if it is equal to or greater than 75% of the economic life of the equipment and (2) a review of the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the equipment at the inception of the lease.
−Removed: Equipment placements included in arrangements meeting these conditions are accounted for as sales-type leases and revenue is recognized as noted above for Equipment.
+Added: A portion of our direct sales of equipment to end-user customers are made through bundled lease arrangements which typically include equipment, services (maintenance and managed services) and financing components, where the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term.
+Added: These arrangements also typically include an incremental, variable component for page volumes in excess of the contractual page volume minimums, which are often expressed in terms of price-per-image or page.
+Added: Revenues under these bundled lease arrangements are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement.
+Added: Lease deliverables include the equipment and financing, while the non-lease deliverables generally consist of the services, which include supplies.
+Added: Consistent with the guidance in ASC 842 and ASC 606, regarding the allocation of fixed and variable consideration, we only consider the fixed payments for purposes of allocation to the lease elements of the contract.
+Added: The fixed minimum monthly payments are multiplied by the number of months in the contract term to arrive at the total fixed lease payments that the customer is obligated to make over the lease term.
+Added: Amounts allocated to the equipment and financing elements are then subjected to the accounting estimates noted below under Leases to ensure the values reflect standalone selling prices.
+Added: The remainder of any fixed payments, as well as the variable payments, are allocated to non-lease elements because the variable consideration for incremental page volume or usage is considered attributable to the delivery of those elements.
+Added: The consideration for the non-lease elements is not dependent on the consideration for equipment and vice versa, and the consideration for the equipment and services is priced at the appropriate standalone values;
+Added: therefore, the relative standalone selling price allocation method is not necessary.
+Added: The revenue associated with the non-lease elements are normally accounted for as a single performance obligation being delivered in a series, with delivery being measured as the usage billed to the customer.
+Added: Accordingly, revenue from these agreements is recognized in a manner consistent with the guidance for Maintenance and Services agreements.
+Added: Xerox 2021 Annual Report 88
+Added: The two primary accounting provisions we use to classify transactions as sales-type or operating leases are:
+Added: (i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than 75%);
+Added: and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease (defined as greater than 90%).
+Added: Equipment placements included in arrangements meeting these conditions are accounted for as sales-type leases and revenue is recognized in a manner consistent with Equipment sales.
Equipment placements included in arrangements that do not meet these conditions are accounted for as operating leases and revenue is recognized over the term of the lease.
2 unchanged sentences
We believe five years is representative of the period during which the equipment is expected to be economically usable, with normal service, for the purpose for which it is intended.
−Removed: Residual values are not significant.
−Removed: With respect to fair value, we perform an analysis of equipment fair value based on cash selling prices during the applicable period.
−Removed: The cash selling prices are compared to the range of values determined for our leases.
−Removed: The range of cash selling prices must be reasonably consistent with the lease selling prices in order for us to determine that such lease prices are indicative of fair value.
−Removed: Our lease pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon a variety of factors including local prevailing rates in the marketplace and the customer’s credit history, industry and credit class.
+Added: We perform an analysis of the stand-alone selling price of equipment based on cash selling prices as well as other methodologies including a margin analysis during the applicable period.
+Added: With respect to the analysis of cash sales, cash selling prices are compared to the range of values determined for our leases.
+Added: The range of cash selling prices must be reasonably consistent with the lease selling prices in order for us to determine that such lease prices reflect stand-alone value.
+Added: Our lease pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon a variety of factors including local prevailing rates in the marketplace, cost of funds and the customer’s credit history, industry and credit class.
We reassess our pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace.
−Removed: These interest rates have generally been adjusted if the rates vary by 25 basis points or more, cumulatively, from the rate last in effect.
−Removed: The pricing interest rates generally equal the implicit rates within the leases, as corroborated by our comparisons of cash to lease selling prices.
−Removed: The above two revenue recognition policies apply to 2018 only and were updated as a result of our adoption of ASC Topic 842 effective January 1, 2019.
−Removed: Refer to Note 4 - Lessor for the updated policies.
+Added: The pricing interest rates generally equal the implicit rates within the leases, as corroborated by our comparisons of cash to lease selling prices and other analyses as noted above.
+Added: Additional Lease Payments:
+Added: Certain leases may require the customer to pay property taxes and insurance on the equipment.
+Added: In these instances, the amounts for property taxes and insurance that we invoice to customers and pay to third parties are considered variable payments and are recorded as other revenues and other cost of revenues, respectively.
+Added: Amounts related to property taxes and insurance are not material.
+Added: We exclude from variable payments all lessor costs that are explicitly required to be paid directly by a lessee on behalf of the lessor to a third party.
Other Revenue Recognition Policies
3 unchanged sentences
Shipping and Handling:
−Removed: Shipping and handling costs are accounted for as a fulfillment cost and are included in Cost of sales in the Consolidated Statements of Income.
+Added: Shipping and handling costs are accounted for as a fulfillment cost and are included in Cost of sales in the Consolidated Statements of (Loss) Income.
Refer to Note 2 - Revenue for additional information regarding revenue recognition policies with respect to contract assets and liabilities as well as contract costs.
−Removed: Xerox 2020 Annual Report 90
Other Significant Accounting Policies
1 unchanged sentence
Cash and cash equivalents consist of cash on hand, including money market funds, and investments with original maturities of three months or less.
+Added: Allowance for Doubtful Accounts and Credit Losses
+Added: The allowance for doubtful accounts and provision for credit losses represents an estimate of the losses expected to be incurred from the Company's trade and finance receivable portfolio.
+Added: The measurement and recognition of expected credit losses is based on an expected loss model and incorporates an assessment of past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends.
+Added: The allowance of finance receivables is determined on a collective basis by year of origination through the application of projected loss rates to our different portfolios by country, which represent our portfolio segments.
+Added: This is the level at which we develop and document our methodology to determine the allowance for credit losses.
+Added: These projected loss rates are primarily based upon historical loss experience adjusted for judgments about the probable
+Added: Xerox 2021 Annual Report 89
+Added: effects of relevant observable data including current and future economic conditions as well as delinquency trends, resolution rates, the aging of receivables, credit quality indicators and the financial health of specific customer classes or groups.
+Added: The allowance for finance receivables is inherently more difficult to estimate than the allowance for trade accounts receivable because the underlying lease portfolio has an average maturity, at any time, of approximately two to three years and contains past due billed amounts, as well as unbilled amounts.
+Added: We consider all available information in our quarterly assessments of the adequacy of the allowance for doubtful accounts.
+Added: We believe our estimates, including any qualitative adjustments, are reasonable and have considered all reasonably available information about past events, current conditions, and reasonable and supportable forecasts of future events and economic conditions.
+Added: The identification of account-specific exposure is not a significant factor in establishing the allowance for doubtful finance receivables.
Receivable Sales
−Removed: We transfer certain portions of our receivable portfolios and normally account for those transfers as sales based on meeting the criteria for derecognition in accordance with ASC Topic 860 "Transfer and Servicing" of Financial Assets.
+Added: We transfer certain portions of our receivable portfolios to third parties and normally account for those transfers as sales based on meeting the criteria for derecognition in accordance with ASC Topic 860 "Transfer and Servicing" of Financial Assets.
Gains or losses on the sale of receivables depend, in part, on both (a) the cash proceeds and (b) the net non-cash proceeds received or paid.
21 unchanged sentences
Leased Assets
−Removed: We lease buildings and equipment, substantially all of which are accounted for as operating leases.
−Removed: Refer to Note 11- Lessee for accounting policies with respect to leased assets and the adoption of ASC Topic 842.
+Added: We determine at inception whether an arrangement is a lease.
+Added: Our leases do not include assets of a specialized nature, or the transfer of ownership at the end of the lease, and the exercise of end-of-lease purchase options, which are primarily in our equipment leases, is not reasonably assured at lease inception.
+Added: Accordingly, the two primary criteria we use to classify transactions as operating leases or finance leases are:
+Added: (i) a review of the lease term to determine if it is equal to or greater than 75% of the economic life of the asset, and (ii) a review of the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the asset at the inception of the lease.
+Added: Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
+Added: We also assess arrangements for goods or services to determine if the arrangement contains a lease at its inception.
+Added: This assessment first considers whether there is an implicitly or explicitly identified asset in the arrangement and then whether there is a right to control the use of the asset.
+Added: If there is an embedded lease within a
+Added: Xerox 2021 Annual Report 90
+Added: contract, the Company determines the classification of the lease at the lease inception date consistent with standalone leases of assets.
+Added: Operating leases are included in Other long-term assets, Accrued expenses and other current liabilities, and Other long-term liabilities in our Consolidated Balance Sheets.
+Added: Finance leases are included in Land, buildings and equipment, net, Accrued expenses and other current liabilities, and Other long-term liabilities in our Consolidated Balance Sheets.
+Added: Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.
+Added: Since the implicit rate for almost all of our leases is not readily determinable, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
+Added: The incremental borrowing rate is the rate of interest that we would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
+Added: The rate is dependent on several factors, including the lease term and currency of the lease payments.
+Added: Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as we do not have reasonable certainty at lease inception that these options will be exercised.
+Added: We generally consider the economic life of our operating lease ROU assets to be comparable to the useful life of similar owned assets.
+Added: We have elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less.
+Added: Our leases generally do not provide a residual guarantee.
+Added: The operating lease ROU asset also excludes lease incentives.
+Added: Lease expense is recognized on a straight-line basis over the lease term.
+Added: We have lease agreements with lease and non-lease components.
+Added: These components are accounted for separately for vehicle and equipment leases.
+Added: We account for the lease and non-lease components as a single lease component for real estate leases of offices and warehouses.
+Added: We review the potential impairment of our ROU assets consistent with the approach applied for our other long-lived assets.
+Added: We review the recoverability of our long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable.
+Added: The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.
+Added: We have elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
Software - Internal Use and Product
1 unchanged sentence
Costs incurred for upgrades and enhancements that will not result in additional functionality are expensed as incurred.
−Removed: Amounts expended for Internal Use Software are included in Cash Flows from Investing.
+Added: Amounts expended for Internal Use Software are included in Cash Flows from Investing activities.
We also capitalize certain costs related to the development of software solutions to be sold to our customers upon reaching technological feasibility (Product Software).
4 unchanged sentences
Refer to Note 10 - Land, Buildings, Equipment and Software, Net for further information.
−Removed: Xerox 2020 Annual Report 91
Goodwill and Other Intangible Assets
2 unchanged sentences
Goodwill is not amortized, but rather is tested for impairment annually, or more frequently whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable and an impairment loss may have been incurred.
−Removed: We normally assess goodwill for impairment at least annually, during the fourth quarter based on balances as of October 1 st , and more frequently if indicators of impairment exist or if a decision is made to sell or exit a business.
+Added: We assess goodwill for impairment at least annually, during the fourth quarter based on balances as of October 1st, and more frequently if indicators of impairment exist or if a decision is made to sell or exit a business.
Impairment testing for goodwill is done at the reporting unit level.
−Removed: A reporting unit is an operating segment or one level below an operating segment (a component) if the component constitutes a business for which discrete financial information is available, and segment management regularly reviews the operating results of that component.
+Added: A reporting unit is an operating segment or one level below an
+Added: Xerox 2021 Annual Report 91
+Added: operating segment (a component) if the component constitutes a business for which discrete financial information is available, and segment management regularly reviews the operating results of that component.
Consistent with the determination that we had one operating segment, we determined that there is one reporting unit and tested goodwill for impairment at the entity level.
7 unchanged sentences
If the carrying value exceeds the fair value, goodwill is considered impaired and we would recognize an impairment loss for the excess.
−Removed: In the second quarter 2020, as a result of the continued negative financial impacts from the COVID-19 pandemic on our current and near-term future operations, the expected slower recovery during the latter half of 2020 as businesses return to their respective offices, as well as a sustained market capitalization below our book value, we determined there was a triggering event requiring an interim quantitative evaluation of Goodwill.
−Removed: After completing our interim impairment review, we concluded that Goodwill was not impaired in the second quarter 2020.
−Removed: Although business performance improved in the second half of 2020, the COVID-19 pandemic continued to have a significant impact on the Company’s revenues, expenses, cash flows and market capitalization in 2020.
−Removed: As result of these impacts as well as related macroeconomic and industry factors we elected to utilize a quantitative model for the assessment of the recoverability of our goodwill balance for our annual fourth quarter 2020 impairment test.
−Removed: After completing our annual quantitative impairment review in the fourth quarter 2020, we concluded that Goodwill was not impaired.
+Added: The COVID-19 pandemic continued to have a significant effect on the Company’s operations impacting revenues, expenses, cash flows and market capitalization in 2021.
+Added: Although business results improved in the first half of 2021 and the Company was meeting expectations, the emergence of new COVID-19 variants during the year resulted in many of our customers delaying their plans to return employees to workplaces and allowing employees to continue to work remotely and in a hybrid environment.
+Added: This impact combined with the global supply chain and logistic issues, created in part by the COVID-19 pandemic, had a negative effect on the Company’s results particularly in the third and fourth quarter of 2021.
+Added: As a result of these impacts and projections of these impacts on our future operating results, as well as a sustained market capitalization below book value, we elected to utilize a quantitative model for the assessment of the recoverability of our Goodwill balance for our annual fourth quarter 2021 impairment test.
+Added: After completing our annual impairment test, we concluded that the fair value of the Company - our single reporting unit - had declined below its carrying value.
+Added: As a result, we recognized an after-tax non-cash impairment charge of $ 750 ($ 781 pre-tax) related to our goodwill for the year ended December 31, 2021.
Other intangible assets primarily consist of assets obtained in connection with business acquisitions, including installed customer base and distribution network relationships, existing technology, trademarks and non-compete agreements.
11 unchanged sentences
abandoned or when asset ceases to be used).
−Removed: Xerox 2020 Annual Report 92
+Added: In 2021, we evaluated the recoverability of our Long-Lived Assets and Other Intangible Assets to be held and used by comparing the carrying amount of those assets to the net undiscounted cash flows expected to be generated by the business unit/component using those assets to determine if the carrying value was not recoverable.
+Added: The recoverability test/income approach indicated that our Long-Lived assets and Other Intangible Assets were not impaired.
Pension and Post-Retirement Benefit Obligations
We sponsor various forms of defined benefit pension plans in several countries covering employees who meet eligibility requirements.
−Removed: Retiree health benefit plans cover U.S.
+Added: Retiree health benefit plans cover a portion of our U.S.
and Canadian employees for retiree medical costs.
We employ a delayed recognition feature in measuring the costs of pension and post-retirement benefit plans.
−Removed: This requires changes in the benefit obligations and changes in the value of assets set aside to meet those obligations to be recognized not as they occur, but systematically and gradually over subsequent periods.
+Added: This requires changes in the benefit obligations and changes in the value of assets set aside to meet
+Added: Xerox 2021 Annual Report 92
+Added: those obligations to be recognized not as they occur, but systematically and gradually over subsequent periods.
All changes are ultimately recognized as components of net periodic benefit cost, except to the extent they may be offset by subsequent changes.
1 unchanged sentence
Several statistical and other factors that attempt to anticipate future events are used in calculating the expense, liability and asset values related to our pension and retiree health benefit plans.
−Removed: These factors include assumptions we make about the discount rate, expected return on plan assets, cash balance interest-crediting rate, rate of increase in healthcare costs, the rate of future compensation increases and mortality.
+Added: These factors include assumptions we make about the applicable discount rate, expected return on plan assets, cash balance interest-crediting rate, rate of increase in healthcare costs, the rate of future compensation increases and mortality.
Actual returns on plan assets are not immediately recognized in our income statement due to the delayed recognition requirement.
23 unchanged sentences
Sustaining engineering costs were $ 59 , $ 54 and $ 62 in for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: Xerox 2020 Annual Report 93
Government Grants/Assistance
−Removed: Government grants related to income are recognized as a reduction of related expenses in the Consolidated Statements of Income when there is a reasonable assurance that the entity will comply with the conditions attached to the grant and that the grants will be received.
−Removed: The timing and pattern of recognition of government grants is made on a systematic basis over the periods in which the Company recognizes the related expenses or losses that the grants are intended to compensate.
+Added: Government grants related to income are recognized as a reduction of related expenses in the Consolidated Statements of (Loss) Income when there is a reasonable assurance that the entity will comply with the conditions attached to the grant and that the grants will be received.
+Added: The timing and pattern of recognition of government
+Added: Xerox 2021 Annual Report 93
+Added: grants is made on a systematic basis over the periods in which the Company recognizes the related expenses or losses that the grants are intended to compensate.
Foreign Currency Translation and Remeasurement
36 unchanged sentences
(2) Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through our channel partners as Xerox Partner Print Services (XPPS).
−Removed: (3) Primarily includes revenues from our Managed Services offerings (formerly our Managed Documents Services arrangements).
−Removed: Also includes revenues from embedded operating leases, which were not significant.
+Added: (3) Primarily includes revenues from our Managed Services arrangements.
+Added: Also includes revenues from embedded operating leases in our Managed Services arrangements, which were not significant.
(4) Primarily reflects sales through bundled lease arrangements.
4 unchanged sentences
The majority of the balance at December 31, 2021 will be amortized to revenue over approximately the next 30 months.
−Removed: Xerox 2020 Annual Report 94
Contract Costs:
2 unchanged sentences
We pay commensurate sales commissions upon customer renewals, therefore our amortization period is aligned to our initial contract term.
+Added: Xerox 2021 Annual Report 94
+Added: Incremental direct costs are as follows:
Year Ended December 31,
13 unchanged sentences
These sales channels are structured to serve a range of customers for our products and services.
−Removed: As a result of this structure, we concluded that we have one operating and reportable segment - the design, development and sale of document management systems and solutions.
+Added: As a result of this structure, we concluded that for 2021 we had one operating and reportable segment - the design, development and sale of document management systems and solutions.
Our chief executive officer was identified as the chief operating decision maker (CODM).
12 unchanged sentences
_____________
−Removed: (1) Long-lived assets are comprised of (i) Land, buildings and equipment, net, (ii) Equipment on operating leases, net, (iii) Leased right-of-use (ROU) assets, net, and (iv) Internal use software, net.
+Added: (1) Long-lived assets are comprised of (i) Land, buildings and equipment, net, (ii) Equipment on operating leases, net, (iii) Leased right-of-use (ROU) assets, net, (iv) Internal use software, net, and v) Capitalized product software, net.
Xerox 2021 Annual Report 95
Note 4 – Lessor
−Removed: Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies - New Accounting Standards and Accounting Changes for additional information related to the adoption of ASU 2016-02 , Leases (ASC Topic 842).
−Removed: Lessor Accounting Policies:
−Removed: The following represent the updated disclosures to our Revenue Recognition policies as a result of the adoption of ASC Topic 842 effective January 1, 2019:
−Removed: Bundled Lease Arrangements:
−Removed: A portion of our direct sales of equipment to end customers are made through bundled lease arrangements which typically include equipment, services (maintenance and managed services) and financing components where the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term.
−Removed: These arrangements also typically include an incremental, variable component for page volumes in excess of the contractual page volume minimums, which are often expressed in terms of price-per-image or page.
−Removed: Revenues under these bundled lease arrangements are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement.
−Removed: Lease deliverables include the equipment and financing, while the non-lease deliverables generally consist of the services, which include supplies.
−Removed: Consistent with the guidance in ASC 842 and ASC 606, regarding the allocation of fixed and variable consideration, we only consider the fixed payments for purposes of allocation to the lease elements of the contract.
−Removed: The fixed minimum monthly payments are multiplied by the number of months in the contract term to arrive at the total fixed lease payments that the customer is obligated to make over the lease term.
−Removed: Amounts allocated to the equipment and financing elements are then subjected to the accounting estimates noted below under Leases to ensure the values reflect standalone selling prices.
−Removed: The remainder of any fixed payments, as well as the variable payments, are allocated to non-lease elements because the variable consideration for incremental page volume or usage is considered attributable to the delivery of those elements.
−Removed: The consideration for the non-lease elements is not dependent on the consideration for equipment and vice versa and the consideration for the equipment and services is priced at the appropriate standalone values;
−Removed: therefore, the relative standalone selling price allocation method is not necessary.
−Removed: The revenue associated with the non-lease elements are normally accounted for as a single performance obligation being delivered in a series with delivery being measured as the usage billed to the customer.
−Removed: Accordingly, revenue from these agreements is recognized in a manner consistent with the guidance for Maintenance and Services agreements.
−Removed: Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies.
−Removed: The two primary accounting provisions we use to classify transactions as sales-type or operating leases are:
−Removed: (i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than 75%);
−Removed: and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease (defined as greater than 90%).
−Removed: Equipment placements included in arrangements meeting these conditions are accounted for as sales-type leases and revenue is recognized in a manner consistent with Equipment.
−Removed: Equipment placements included in arrangements that do not meet these conditions are accounted for as operating leases and revenue is recognized over the term of the lease.
−Removed: We consider the economic life of most of our products to be five years , since this represents the most frequent contractual lease term for our principal products and only a small percentage of our leases are for original terms longer than five years .
−Removed: There is no significant after-market for our used equipment.
−Removed: We believe five years is representative of the period during which the equipment is expected to be economically usable, with normal service, for the purpose for which it is intended.
−Removed: We perform an analysis of the stand-alone selling price of equipment based on cash selling prices during the applicable period.
−Removed: The cash selling prices are compared to the range of values determined for our leases.
−Removed: The range of cash selling prices must be reasonably consistent with the lease selling prices in order for us to determine that such lease prices reflects stand-alone value.
−Removed: Our lease pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon a variety of factors including local prevailing rates in the marketplace and the customer’s credit history, industry and credit class.
−Removed: We reassess our pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace.
−Removed: The pricing interest rates generally equal the implicit rates within the leases, as corroborated by our comparisons of cash to lease selling prices noted above.
−Removed: Additional Lease Payments:
−Removed: Certain leases may require the customer to pay property taxes and insurance on the equipment.
−Removed: In these instances, the amounts for property taxes and insurance that we invoice to customers and pay to third parties are considered variable payments and are recorded as other revenues and other cost of revenues,
−Removed: Xerox 2020 Annual Report 96
−Removed: respectively.
−Removed: Amounts related to property taxes and insurance are not material.
−Removed: We exclude from variable payments all lessor costs that are explicitly required to be paid directly by a lessee on behalf of the lessor to a third party.
−Removed: Presentation:
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.
1 unchanged sentence
The components of lease income are as follows:
−Removed: Location in Statements of Income Year Ended December 31,
+Added: Location in Statements of (Loss) Income Year Ended December 31,
2021 2020 2019
5 unchanged sentences
Profit at lease commencement on sales type leases was estimated to be approximately $ 221 , $ 207 and $ 276 for the three years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: Note 5 – Acquisitions
−Removed: 2020 Acquisitions
−Removed: Xerox continues to focus on further penetrating the small-to-medium sized business (SMB) market through organic and inorganic growth, which includes acquisitions of local area resellers and partners (including multi-brand dealers).
−Removed: During 2020, business acquisitions associated with this initiative totaled $ 194 , net of cash acquired, and included three acquisitions in the U.K.
−Removed: for $ 172 (GBP 133 million) - Arena Group, Altodigital Networks and ITEC Connect, as well as an acquisition in Canada for approximately $ 22 (CAD 29 million).
−Removed: These acquisitions are expected to expand our presence in the SMB market in both Western Europe and Canada.
−Removed: 2020 also included the acquisition of CareAR directly by Xerox Holdings for $ 9 .
−Removed: All of our 2020 acquisitions resulted in 100 % ownership of the acquired companies.
−Removed: The operating results of these acquisitions are not material to our financial statements and are included within our results from the respective acquisition dates.
−Removed: The purchase prices were all cash and were primarily allocated to Intangible assets, net and Goodwill, of which, none is expected to be deductible for tax purposes.
−Removed: Our 2020 acquisitions contributed aggregate revenues of approximately $ 99 to our 2020 total revenues from their respective acquisition dates.
+Added: Note 5 – Acquisitions and Investments
The following table summarizes the purchase price allocations for our acquisitions as of the acquisition dates:
−Removed: Weighted-Average Life Total 2020 Acquisitions
+Added: Year Ended December 31, 2021 Year Ended December 31, 2020
+Added: Weighted-Average Life Acquisitions Weighted-Average Life Acquisitions
Accounts/finance receivables $ 5 $ 20
Intangible assets:
−Removed: Customer relationships 9 years 69
−Removed: Trademarks 9 years 9
−Removed: Technology 3 years 9
+Added: Customer relationships 9 years 27 9 years 69
+Added: Trademarks 5 years 3 9 years 9
+Added: Technology 3 years 1 3 years 9
+Added: Goodwill 25 111
Other assets 4 44
2 unchanged sentences
Total Purchase Price $ 53 $ 203
+Added: 2021 Acquisitions
+Added: In 2021, Xerox continued its strategy of focusing on further penetrating the small-to-medium sized business (SMB) market through acquisitions of local area resellers and partners, including multi-brand dealers as well as companies with an adjacent or sole IT services business.
+Added: During 2021, we acquired businesses associated with this initiative that totaled $ 50 , net of cash acquired, which included an office equipment dealer in Canada for approximately $ 31 , as well as two acquisitions in the U.S.
+Added: for approximately $ 19 .
+Added: 2021 also included smaller acquisitions totaling approximately $ 3 .
+Added: All of our 2021 acquisitions resulted in 100 % ownership of the acquired companies.
+Added: The operating results of these acquisitions are not material to our financial statements and are included within our results from the respective acquisition dates.
+Added: The purchase prices were all cash and were primarily allocated to Intangible assets, net and Goodwill, of which, none is expected to be deductible for tax purposes.
+Added: 2020 Acquisitions
+Added: Business acquisitions in 2020 totaled $ 194 , net of cash acquired, and included three acquisitions in the U.K.
+Added: for $ 172 (GBP 133 million) - Arena Group, Altodigital Networks and ITEC Connect, as well as an acquisition in Canada for approximately $ 22 (CAD 29 million).
+Added: These acquisitions are expected to expand our presence in the SMB market in both Western Europe and Canada.
+Added: 2020 also included the acquisition of CareAR for $ 9 .
+Added: All of our 2020 acquisitions resulted in 100 % ownership of the acquired companies.
+Added: The operating results of these acquisitions are not material to our financial statements and are included within our results from the respective
Xerox 2021 Annual Report 96
+Added: acquisition dates.
+Added: The purchase prices were all cash and were primarily allocated to Intangible assets, net and Goodwill, of which, none is expected to be deductible for tax purposes.
2019 Acquisitions
6 unchanged sentences
The purchase prices for these acquisitions were all cash and were primarily allocated to Intangible assets, net and Goodwill.
−Removed: Our 2019 acquisitions contributed aggregate revenues of approximately $ 21 and $ 18 to our 2020 and 2019 total revenues from their respective acquisition dates.
−Removed: 2018 Acquisitions
−Removed: There were no business acquisitions in 2018.
−Removed: Termination of Proposed Transaction with HP Inc.
−Removed: In November 2019, Xerox Holdings commenced a proposed business combination transaction with HP Inc.
−Removed: HP rejected our initial and subsequent proposals and refused to engage in mutual due diligence or negotiations.
−Removed: In January 2020, Xerox Holdings nominated a slate of directors to HP’s board to be voted on at HP’s 2020 annual meeting of stockholders and shortly thereafter, it launched a tender offer to acquire all outstanding shares of HP, as it intended to continue to pursue the proposed business combination transaction.
−Removed: However, the COVID-19 pandemic and resulting macroeconomic and market turmoil created an environment that the Company determined was not conducive to Xerox Holdings continuing an acquisition of HP.
−Removed: Accordingly, on March 31, 2020 Xerox Holdings withdrew its tender offer to acquire HP and terminated its proxy solicitation to nominate a slate of candidates to HP’s board of directors.
−Removed: In 2020, Xerox Holdings had obtained $ 24 billion in financing commitments from several banks to support the cash portion of the proposed business combination transaction with HP.
−Removed: On March 31, 2020, following the withdrawal of Xerox Holdings' tender offer to acquire HP, notice was provided to the banks of the immediate termination of the financing commitment.
−Removed: No termination penalties were paid as a result of termination .
+Added: Revenue Summary
+Added: Our acquisitions contributed aggregate revenues from their respective acquisition dates as follows:
+Added: Year Ended December 31,
+Added: Acquisition Year 2021 2020 2019
+Added: 2021 $ 19 $ — $ —
+Added: 2020 137 99 —
+Added: 2019 17 21 18
+Added: Total Contributed Aggregate Revenue $ 173 $ 120 $ 18
+Added: Joint Venture Formation
+Added: In May 2021, Xerox and the Victorian Government (AU) (VicGov) 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.
+Added: Under the terms of the agreement, Xerox contributed approximately $ 5 in cash, along with technology and intellectual property for a controlling interest in the entity, whereas VicGov contributed approximately $ 5 in cash, along with technology and intellectual property for a noncontrolling interest in the entity.
+Added: As a result of Xerox’s controlling interest in the newly formed entity, beginning with the second quarter 2021, Xerox consolidated the new entity and the VicGov investment was reported as a noncontrolling interest.
+Added: The revenues and expenses of the new entity post formation did not materially impact the Company’s reported results for the year ended December 31, 2021.
+Added: ServiceNow Inc.
+Added: Investment in CareAR
+Added: In August 2021, in connection with Xerox Holdings Corporation's formation of the CareAR software business, ServiceNow, Inc.
+Added: acquired a noncontrolling interest in CareAR Holdings LLC for $ 10 .
+Added: CareAR Holdings LLC is a direct operating subsidiary of Xerox Corporation and includes Xerox’s XMPie, Inc., DocuShare LLC and CareAR, Inc.
+Added: business units.
+Added: ServiceNow’s investment includes a fair value redemption right, which is contingent on the non-occurrence of a future liquidity event (e.g., sale, public offering, spin-off, etc.) within 6 years of the closing of the investment.
+Added: As a result of this contingent redemption right, we classified ServiceNow’s noncontrolling interest in CareAR Holdings LLC as temporary equity within Xerox’s Consolidated Balance Sheet.
+Added: Xerox 2021 Annual Report 97
Note 6 – Divestitures
2 unchanged sentences
and Xerox International Partners
−Removed: In November 2019, Xerox Holdings completed a series of transactions to restructure its relationship with FUJIFILM Holdings Corporation (FH), including the sale of its indirect 25 % equity interest in Fuji Xerox (FX) for approximately $ 2.2 billion as well as the sale of its indirect 51 % partnership interest in Xerox International Partners (XIP) for approximately $ 23 (collectively the Sales).
−Removed: As a result of the Sales and the related strategic shift in our business, the historical financial results of our equity method investment in FX and our XIP business (which was consolidated) for the periods prior to the Sales are reflected as a discontinued operation and as such, their impact is excluded from continuing operations for all periods presented.
+Added: In November 2019, Xerox Holdings completed a series of transactions to restructure its relationship with FUJIFILM Holdings Corporation (FH), including the sale of its indirect 25 % equity interest in Fuji Xerox (now known as FUJIFILM Business Innovation Corp.) for approximately $ 2.2 billion as well as the sale of its indirect 51 % partnership interest in Xerox International Partners (XIP) for approximately $ 23 (collectively the Sales).
+Added: As a result of the Sales and the related strategic shift in our business, the financial results of our equity method investment in Fuji Xerox and our XIP business (which was consolidated) are reflected as a discontinued operation and as such, their impact is excluded from continuing operations for 2019.
The Sales resulted in a pre-tax gain of $ 629 ($ 539 after-tax), and included a reclassification from Accumulated other comprehensive loss of $ 165 (Refer to Note 25 - Other Comprehensive Income (Loss)) as well as approximately $ 9 of transaction costs and $ 9 of allocated goodwill associated with our XIP business (Refer to Note 13 - Goodwill and Intangible Assets, Net).
The XIP allocated goodwill was based on the relative fair value of our XIP business, as evidenced by the sales price, as compared to the total estimated fair value of Xerox.
−Removed: No Goodwill was allocated for our investment in FX based on consideration of the guidance in ASC 350-20-40-2 and the fact that an equity investment is not considered a business in accordance with ASC 805-10-55, as it was not controlled by Xerox.
−Removed: The transactions with FH also included an OEM license agreement by and between FX and Xerox, granting FX the right to use specific Xerox Intellectual Property (IP) in providing certain named original equipment manufacturers (OEM’s) with products (such as printer engines) in exchange for a one-time upfront license fee of $ 77 .
+Added: No Goodwill was allocated for our investment in Fuji Xerox based on consideration of the guidance in ASC 350-20-40-2 and the fact that an equity investment is not considered a business in accordance with ASC 805-10-55, as Fuji Xerox was not controlled by Xerox.
+Added: The transactions with FH also included an OEM license agreement by and between Fuji Xerox and Xerox, granting Fuji Xerox the right to use specific Xerox Intellectual Property (IP) in providing certain named original equipment manufacturers (OEM’s) with products (such as printer engines) in exchange for a one-time upfront license fee of $ 77 .
The license fee is recorded within Rental and other revenues for 2019.
−Removed: In addition, arrangements with FX whereby we purchase
−Removed: Xerox 2020 Annual Report 98
−Removed: inventory from and sell inventory to FX, will continue after the Sales and, as a result of our Technology Agreement with Fuji Xerox which remains in effect through March 2021, we will continue to receive royalty payments for FX’s use of our Xerox brand trademark, as well as rights to access our patent portfolio in exchange for access to their patent portfolio.
−Removed: Refer to Note 12 - Investment in Affiliates, at Equity, for additional information on transactions with FX as well as FX's intention to terminate the Technology Agreement effective March 31, 2021.
+Added: Our Technology Agreement (TA) with Fuji Xerox expired on March 31, 2021.
+Added: 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 .
+Added: Fuji Xerox elected to continue its use of the Xerox brand trademark over the two year period and, therefore, in April 2021, made the $ 100 upfront payment due under the TA, which is included in Operating cash flows for the year ended December 31, 2021.
+Added: We are recognizing the revenue associated with this extended brand license ratably over the two year transition period in Service, maintenance and rental revenues.
+Added: Accordingly, any potential entry by Xerox for Xerographic products into the Fuji Xerox territory under the Xerox brand will be deferred to at least April 1, 2023.
+Added: 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 purchase/supply agreements.
+Added: Prior to the sale of our investment in Fuji Xerox, pricing of the transactions under these arrangements were based on terms the Company believed to be negotiated at arm's length.
+Added: Our purchase commitments with Fuji Xerox are in the normal course of business and typically have a lead time of three months .
+Added: In addition, we pay Fuji Xerox and they pay us for unique research and development costs.
+Added: There were no discontinued operations in 2021 or 2020, nor were there any adjustments to the 2019 Discontinued Operation.
Summarized financial information for our Discontinued Operations is as follows:
Year Ended December 31, 2019
−Removed: 2020 2019 2018
−Removed: Revenue $ — $ 79 $ 168
Income from operations $ 176
5 unchanged sentences
Income from discontinued operations, attributable to Xerox, net of tax $ 705
+Added: Xerox 2021 Annual Report 98
The following is a summary of selected financial information for our Discontinued Operations:
Year Ended December 31, 2019
−Removed: 2020 2019 2018
Cost and Expenses:
8 unchanged sentences
Capital expenditures —
−Removed: Refer to Note 12 - Investments in Affiliates, at Equity for additional information regarding FX, including summarized financial information of FX.
−Removed: Xerox 2020 Annual Report 99
+Added: Refer to Note 12 - Investments in Affiliates, at Equity for additional information regarding Fuji Xerox, including summarized financial information of Fuji Xerox.
Note 7 – Accounts Receivable, Net
14 unchanged sentences
(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.
−Removed: We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness.
−Removed: Consistent with our adoption of ASU 2016-13 effective January 1, 2020 (refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies), the allowance for uncollectible 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.
−Removed: Based on that assessment, and primarily as a result of the macroeconomic and market disruption caused by the COVID-19 pandemic, the allowance for doubtful accounts as a percentage of gross receivables increased to 7.2 % at December 31, 2020 from 4.3 % at December 31, 2019.
−Removed: Accounts Receivable Sales Arrangements
−Removed: Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and liquidity management.
+Added: The allowance for doubtful accounts as a percentage of gross receivables was 6.6 % at December 31, 2021 and 7.2 % at December 31, 2020.
+Added: The allowance for doubtful accounts as a percent of gross accounts receivable remains at an elevated level as compared to historical levels primarily as a result of the macroeconomic and market disruption caused by the COVID-19 pandemic.
+Added: Accounts Receivable Sale Arrangements
+Added: Accounts receivable sale arrangements are utilized in the normal course of business as part of our cash and liquidity management.
The accounts receivable sold are generally short-term trade receivables with payment due dates of less than 60 days.
We have one facility in Europe that enables us to sell accounts receivable associated with our distributor network on an ongoing basis without recourse.
−Removed: Under this arrangement, we sell our entire interest in the related accounts receivable for cash and no portion of the payment is held back or deferred by the purchaser.
+Added: Under this arrangement, we sell our entire
+Added: Xerox 2021 Annual Report 99
+Added: interest in the related accounts receivable for cash and no portion of the payment is held back or deferred by the purchaser.
Of the accounts receivable sold and derecognized from our balance sheet, $ 102 and $ 136 remained uncollected as of December 31, 2021 and 2020, respectively.
9 unchanged sentences
The activity associated with these arrangements is not reflected in this disclosure, as payments under these arrangements have not been material and these are customer directed arrangements.
−Removed: Xerox 2020 Annual Report 100
Note 8 – Finance Receivables, Net
23 unchanged sentences
Customer credit limits are based upon an initial evaluation of the customer's credit quality and we adjust that limit accordingly based upon ongoing credit assessments of the customer, including payment history and changes in credit quality.
−Removed: Consistent with our adoption of ASU 2016-13 effective January 1, 2020 (refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies), the allowance for credit losses is determined principally based on an assessment of origination year and past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends.
−Removed: Based on that assessment, and primarily as a result of the macroeconomic and market turmoil caused by the COVID-19 pandemic, the allowance for doubtful credit losses was increased to 4.0 % of gross finance receivables (net of unearned income) at December 31, 2020 from 2.6 % at December 31, 2019.
−Removed: In determining the level of reserve required as of December 31, 2020, we critically assessed current and forecasted economic conditions in light of the COVID-19 pandemic to ensure we objectively included those expected impacts in the determination of our reserve.
−Removed: Our assessment also included current portfolio credit metrics and the level of reserves and write-offs we recorded on our receivables portfolio during the credit crisis in 2008/09 as additional reference points to objectively determine the adequacy of our allowance.
−Removed: The allowance for doubtful accounts and provision for credit losses represents an estimate of the losses expected to be incurred by the Company from its finance receivable portfolio.
−Removed: The level of the allowance is determined on a collective basis by applying projected loss rates to our different portfolios by country, which represent our portfolio segments.
−Removed: This is the level at which we develop and document our methodology to determine the allowance for credit losses.
−Removed: These projected loss rates are primarily based upon historical loss experience adjusted for judgments about the probable effects of relevant observable data including current and future economic conditions as well as delinquency trends, resolution rates, the aging of receivables, credit quality indicators and the financial health of specific customer classes or groups.
−Removed: The allowance for doubtful finance receivables is inherently more difficult to estimate than the allowance for trade accounts receivable because the underlying lease portfolio has an average maturity, at any time, of approximately two to three years and contains past due billed amounts, as well as unbilled amounts.
−Removed: We consider all available
+Added: The allowance for doubtful credit losses as a percentage of gross financial receivables (net of unearned income) was 3.7 % at December 31, 2021 and 4.0 % at December 31, 2020.
+Added: In determining the level of reserve required, we critically assessed current and forecasted economic conditions in light of the COVID-19 pandemic to ensure we objectively included those expected impacts in the determination of our reserve.
+Added: Our assessment also included a
Xerox 2021 Annual Report 100
−Removed: information in our quarterly assessments of the adequacy of the allowance for doubtful accounts.
−Removed: We believe our estimates, including any qualitative adjustments, are reasonable and have considered all reasonably available information about past events, current conditions, and reasonable and supportable forecasts of future events and economic conditions.
−Removed: The identification of account-specific exposure is not a significant factor in establishing the allowance for doubtful finance receivables.
−Removed: Our policy and methodology used to establish our allowance for doubtful accounts has been consistently applied over all periods presented, with the exception of the updates required as part of our adoption of ASU 2016-13 effective January 1, 2020.
−Removed: Our allowance for doubtful finance receivables is effectively determined by geography, so the risk characteristics in our finance receivable portfolio segments will generally be consistent with the risk factors associated with the economies of the countries/regions included in those geographies.
+Added: review of current portfolio credit metrics and the level of write-offs incurred over the past year of the COVID-19 pandemic.
+Added: Our allowance for doubtful finance receivables is effectively determined by geography.
+Added: The risk characteristics in our finance receivable portfolio segments are generally consistent with the risk factors associated with the economies of the countries/regions included in those geographies.
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 the countries.
−Removed: The increase in charge-offs in 2020 as compared to 2019 was primarily in the U.S.
−Removed: and reflected the impacts from the COVID-19 pandemic and the lower level of government subsidy and support to U.S.
−Removed: based customers as compared to support provided to Europe based customers.
−Removed: However, as reflected in our allowance for doubtful receivables, charge-offs are expected to increase into 2021 as a result of the follow-on economic disruption related to the COVID-19 pandemic and as the level of government subsidies and support decreases in 2021.
−Removed: Amounts disclosed below for the year ended December 31, 2020 reflect the adoption of ASU 2016-13 in January 2020.
−Removed: Amounts disclosed below for comparable periods in 2019 reflect superseded guidance.
+Added: The bad debt provision of $( 1 ) for the year ended December 31, 2021 included a reserve reduction of approximately $ 31 reflecting improvements in the macroeconomic environment as well as lower write-offs as a result of the COVID-19 pandemic.
+Added: This compares to a bad debt provision of $ 81 for the year ended December 31, 2020, which included a first quarter 2020 charge of approximately $ 60 to initially record expected losses from the COVID-19 pandemic.
+Added: Actual write-offs incurred to date have lagged expectations but we believe estimates of additional losses are in line with current and future economic conditions including the estimated impacts from the on-going COVID-19 pandemic.
+Added: Despite improvement in the global economy, local economies continue to recover from the impacts of the COVID-19 pandemic including the cessation of government support as well as labor, interest rate and inflation risks and the potential for higher taxes.
+Added: As a result of these uncertainties, we continue to also consider these various adverse macroeconomic impacts in our models.
+Added: Accordingly, although our reserves as a percent of receivables have declined from the prior year, they remain elevated as compared to pre-pandemic levels.
The allowance for doubtful accounts as well as the related investment in finance receivables were as follows:
17 unchanged sentences
_____________
−Removed: (1) Prior year amounts have been recast to include the Other geographic region, which was previously disclosed as a separate grouping, conforming to the current year's presentation .
+Added: (1) 2019 amounts have been recast to include the Other geographic region, which was previously disclosed as a separate grouping, conforming to the current year's presentation .
(2) Includes developing market countries.
2 unchanged sentences
In the U.S., customers are further evaluated by class based on the type of lease origination.
−Removed: The primary categories are direct, which primarily includes leases originated directly with end customers through bundled lease arrangements, and indirect, which includes lease financing to end-user customers who purchased equipment we sold to distributors or resellers.
−Removed: Indirect also includes leases originated through our XBS sales channel, which utilizes a combination of internal and third party leasing in its lease arrangements with end customers.
−Removed: We evaluate our customers within the various classes based on the following credit quality indicators:
+Added: The primary categories are direct, which primarily includes leases originated directly with end-user customers through bundled lease arrangements, and indirect, which primarily includes leases originated through our XBS sales channel that utilizes a combination of internal and third-party leasing in its lease arrangements with end-user customers.
+Added: Indirect also includes lease financing to end-user customers who purchased equipment we sold to distributors or resellers.
+Added: We evaluate our customers based on the following credit quality indicators:
• Low Credit Risk:
3 unchanged sentences
Loss rates in this category in the normal course are generally less than 1 %.
−Removed: Xerox 2020 Annual Report 102
• Average Credit Risk:
2 unchanged sentences
Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base.
−Removed: In addition, the higher loss rates are largely offset by the higher rates of return we obtain with such leases.
+Added: Xerox 2021 Annual Report 101
+Added: addition, the higher loss rates are largely offset by the higher rates of return we obtain with such leases.
Loss rates in this category in the normal course are generally in the range of 2 % to 5 %.
7 unchanged sentences
Details about our finance receivables portfolio based on geography, origination year and credit quality indicators are as follows:
−Removed: December 31, 2020 December 31, 2019
+Added: December 31, 2021
2021 2020 2019 2018 2017 Prior Total
−Removed: Finance Receivables Total
Finance Receivables
−Removed: Total United States (Direct):
+Added: United States (Direct):
Low Credit Risk $ 148 $ 121 $ 98 $ 68 $ 21 $ 3 $ 459
2 unchanged sentences
Total 299 234 186 107 35 6 867
−Removed: Total United States (Indirect):
+Added: United States (Indirect):
Low Credit Risk 235 145 100 43 11 — 534
15 unchanged sentences
Total $ 1,236 $ 837 $ 642 $ 346 $ 110 $ 17 $ 3,188
+Added: Xerox 2021 Annual Report 102
+Added: December 31, 2020
+Added: 2020 2019 2018 2017 2016 Prior Total
+Added: Finance Receivables
+Added: United States (Direct):
+Added: Low Credit Risk $ 164 $ 151 $ 128 $ 71 $ 32 $ 4 $ 550
+Added: Average Credit Risk 54 95 52 26 8 2 237
+Added: High Credit Risk 90 42 27 13 5 3 180
+Added: Total 308 288 207 110 45 9 967
+Added: United States (Indirect):
+Added: Low Credit Risk 193 140 79 33 7 — 452
+Added: Average Credit Risk 129 124 71 31 8 — 363
+Added: High Credit Risk 19 9 9 3 1 — 41
+Added: Total 341 273 159 67 16 — 856
+Added: Low Credit Risk 37 34 24 10 5 1 111
+Added: Average Credit Risk 46 39 26 17 6 1 135
+Added: High Credit Risk 18 10 10 10 3 — 51
+Added: Total 101 83 60 37 14 2 297
+Added: Low Credit Risk 197 177 131 62 20 4 591
+Added: Average Credit Risk 170 160 108 51 17 4 510
+Added: High Credit Risk 23 24 15 10 4 1 77
+Added: Total 390 361 254 123 41 9 1,178
+Added: Total Finance Receivables
+Added: Low Credit Risk 591 502 362 176 64 9 1,704
+Added: Average Credit Risk 399 418 257 125 39 7 1,245
+Added: High Credit Risk 150 85 61 36 13 4 349
+Added: Total $ 1,140 $ 1,005 $ 680 $ 337 $ 116 $ 20 $ 3,298
_____________
−Removed: (1) Prior year amounts have been recast to include the Other geographic region, which was previously disclosed as a separate grouping, conforming to the current year's presentation.
(1) Includes developing market countries.
26 unchanged sentences
Total United States 54 10 12 76 1,747 1,823 74
−Removed: 8 2 1 11 315 326 17
+Added: Canada 8 2 — 10 287 297 12
12 3 2 17 1,161 1,178 23
1 unchanged sentence
_____________
−Removed: (1) Prior year amounts have been recasted to include the Other geographic region, which was previously disclosed as a separate grouping, conforming to the current year's presentation
(1) Includes developing market countries.
Secured Borrowings and Collateral
−Removed: In July 2020, we sold $ 355 of U.S.
−Removed: based finance receivables to a consolidated special purpose entity (SPE), which funded the purchase through a secured loan agreement with a financial institution.
−Removed: As of December 31, 2020 the SPE held $ 286 of total Finance receivables, net, which are included in our Consolidated Balance Sheet as collateral for the secured loan agreement.
+Added: In September 2021, we sold $ 331 of U.S.
+Added: based finance receivables to a consolidated special purpose entity (SPE).
+Added: At December 31, 2021 the SPE holds $ 308 of total Finance receivables, net, which are included in our Consolidated Balance Sheet as collateral for the secured loan.
In December 2020, we sold $ 610 of U.S.
−Removed: based finance receivables to a consolidated SPE, which funded the purchase through a secured loan agreement with a financial institution.
−Removed: As of December 31, 2020 the SPE held $ 602 of total Finance receivables, net, which are included in our Consolidated Balance Sheet as collateral for the secured loan agreement.
+Added: based finance receivables to a consolidated SPE.
+Added: As of December 31, 2021 the SPE holds $ 380 of total Finance receivables, net, which are included in our Consolidated Balance Sheet as collateral for the secured loan.
Refer to Note 16 - Debt, for additional information related to these arrangements including the related secured loan agreement.
12 unchanged sentences
Equipment on operating leases, net $ 253 $ 296
−Removed: Depreciable lives generally vary from three to five years consistent with our planned and historical usage of the equipment subject to operating leases.
+Added: Depreciable lives generally vary from four to five years consistent with our planned and historical usage of the equipment subject to operating leases.
Estimated minimum future revenues associated with Equipment on operating leases are as follows:
7 unchanged sentences
Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, for the years ended December 31, 2021, 2020 and 2019 amounted to $ 62 , $ 66 and $ 107 , respectively.
−Removed: The decrease in contingent rentals for the year ended December 31, 2020 is primarily the result of lower equipment usage during 2020 as a result of business closures from the COVID-19 pandemic.
−Removed: The amount disclosed for the year ended December 31, 2018 was accounted for under ASC 840, Leases, which was superseded by ASC 842, Leases, adopted on January 1, 2019.
−Removed: Differences upon adoption were not material.
−Removed: Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, Recent Accounting Pronouncements for additional information.
+Added: The decrease in contingent rentals for the year ended December 31, 2020 is primarily the result of lower equipment usage during 2020 as a result of business closures related to the COVID-19 pandemic.
Secured Borrowings and Collateral
−Removed: In July 2020, we sold the rights to payments under operating leases with an equipment net book value of $ 10 to a consolidated SPE, which funded the purchase through a secured loan agreement with a financial institution.
+Added: In September 2021, we sold the rights to payments under operating leases with an equipment net book value of $ 9 to a consolidated SPE, which funded the purchase through a secured loan agreement with a financial institution.
As of December 31, 2021 the SPE holds $ 8 of Equipment on operating leases, net, which are included in our Consolidated Balance Sheet as collateral for the secured loan agreement.
−Removed: Refer to Note 16 - Debt, for additional information related to this arrangement including the related secured loan agreement.
+Added: Refer to Note 16 - Debt, for additional information related to this arrangement .
Xerox 2021 Annual Report 105
4 unchanged sentences
Building and building equipment 25 to 50
−Removed: Leasehold improvements Varies 124 135
+Added: Leasehold improvements 1 to 12
Plant machinery 5 to 12
Office furniture and equipment 3 to 15
−Removed: Other 4 to 20 45 45
+Added: Finance leases (1)
Construction in progress 17 17
2 unchanged sentences
Land, buildings and equipment, net $ 358 $ 407
+Added: _____________
+Added: (1) Prior year amounts have been recast to conform to the current year's presentation to separately report finance lease ROU assets.
Depreciation expense was $ 76 , $ 87 and $ 101 for the three years ended December 31, 2021, 2020 and 2019, respectively.
5 unchanged sentences
Useful lives of our internal use software generally vary from three to seven years .
−Removed: Xerox 2020 Annual Report 106
Note 11 – Lessee
−Removed: Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies - New Accounting Standards and Accounting Changes for additional information related to the adoption of ASU 2016-02 , Leases (ASC Topic 842).
−Removed: Lessee Accounting Policies:
−Removed: We determine at inception whether an arrangement is a lease.
−Removed: Our leases do not include assets of a specialized nature, or the transfer of ownership at the end of the lease, and the exercise of end-of-lease purchase options, which are primarily in our equipment leases, is not reasonably assured at lease inception.
−Removed: Accordingly, the two primary criteria we use to classify transactions as operating or finance leases are:
−Removed: (i) a review of the lease term to determine if it is equal to or greater than 75% of the economic life of the asset, and (ii) a review of the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the asset at the inception of the lease.
−Removed: Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
−Removed: We also assess arrangements for goods or services to determine if the arrangement contains a lease at its inception.
−Removed: This assessment first considers whether there is an implicitly or explicitly identified asset in the arrangement and then whether there is a right to control the use of the asset.
−Removed: If there is an embedded lease within a contract, the Company determines the classification of the lease at the lease inception date consistent with standalone leases of assets.
−Removed: Operating leases are included in Other long-term assets, Accrued expenses and other current liabilities, and Other long-term liabilities in our Consolidated Balance Sheets.
−Removed: Finance leases are included in Land, buildings and equipment, net, Accrued expenses and other current liabilities, and Other long-term liabilities in our Consolidated Balance Sheets.
−Removed: Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.
−Removed: Since the implicit rate for almost all of our leases is not readily determinable, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
−Removed: The incremental borrowing rate is the rate of interest that we would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
−Removed: The rate is dependent on several factors, including the lease term and currency of the lease payments.
−Removed: Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as we do not have reasonable certainty at lease inception that these options will be exercised.
−Removed: We generally consider the economic life of our operating lease ROU assets to be comparable to the useful life of similar owned assets.
−Removed: We have elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less.
−Removed: Our leases generally do not provide a residual guarantee.
−Removed: The operating lease ROU asset also excludes lease incentives.
−Removed: Lease expense is recognized on a straight-line basis over the lease term.
−Removed: We have lease agreements with lease and non-lease components.
−Removed: These components are accounted for separately for vehicle and equipment leases.
−Removed: We account for the lease and non-lease components as a single lease component for real estate leases of offices and warehouses.
−Removed: We review the impairment of our ROU assets consistent with the approach applied for our other long-lived assets.
−Removed: We review the recoverability of our long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable.
−Removed: The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.
−Removed: We have elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
−Removed: Lessee Summary:
Operating Leases
1 unchanged sentence
Additionally, we have identified embedded operating leases within certain supply chain contracts for warehouses, primarily within our domestic operations.
−Removed: Our leases have remaining terms of up to twelve years and a variety of renewal and/or termination options.
−Removed: Xerox 2020 Annual Report 107
+Added: Our leases have remaining terms of up to eleven years and a variety of renewal and/or termination options.
The components of lease expense are as follows:
Year Ended December 31,
+Added: 2021 2020 2019
Operating lease expense $ 104 $ 113 $ 125
6 unchanged sentences
As of December 31, 2021, we had no additional operating leases that had not yet commenced.
+Added: Xerox 2021 Annual Report 106
Operating leases ROU assets, net and operating lease liabilities were reported in the Consolidated Balance Sheets as follows:
5 unchanged sentences
Year Ended December 31,
+Added: 2021 2020 2019
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows $ 109 $ 119 $ 126
Right-of-use assets obtained in exchange for new lease liabilities (1)
−Removed: Weighted-average remaining lease term 5 years 4 years
+Added: Weighted-average remaining lease term 5 years 5 years 4 years
Weighted-average discount rate 4.67 % 5.03 % 5.47 %
14 unchanged sentences
and Europe and related infrastructure, within outsourced warehouse supply arrangements, in the U.S.
−Removed: These leases have varying maturities up to six years with a maximum expiration date through December 2026.
+Added: These leases have remaining maturities up to nine years with a maximum expiration date through December 2030.
As of December 31, 2021 and 2020, the remaining lease obligation for all finance leases is $ 7 and $ 9 , respectively, based on discount rates of 4.51 % and 4.34 %, respectively.
The ROU asset balances associated with these finance leases at December 31, 2021 and 2020 of $ 9 and $ 10 , respectively are included in Land, buildings and equipment, net in the Consolidated Balance Sheets.
−Removed: Prior Period Disclosures under ASC 840
−Removed: For the year ended December 31, 2018, operating lease expense, net of sublease income, was $ 147 .
Xerox 2021 Annual Report 107
Note 12 – Investment in Affiliates, at Equity
−Removed: As disclosed in Note 6 - Divestitures, in November 2019 Xerox Holdings sold its remaining indirect 25 % equity interest in Fuji Xerox, which had been previously accounted for as an equity method investment.
+Added: As disclosed in Note 6 - Divestitures, in November 2019 Xerox Holdings sold its remaining indirect 25 % equity interest in Fuji Xerox (now known as FUJIFILM Business Innovation Corp.), which had been previously accounted for as an equity method investment.
Accordingly, our remaining Investment in Affiliates, at Equity largely consists of several minor investments in entities in the Middle East region.
Investments in corporate joint ventures and other companies in which we generally have a 20% to 50% ownership interest were $ 45 and $ 47 at December 31, 2021 and 2020, respectively.
−Removed: Our equity in net income of our unconsolidated affiliates was as follows:
+Added: Our equity in net income of our unconsolidated affiliates is as follows:
Year Ended December 31,
4 unchanged sentences
_____________
−Removed: (1) Equity in net income for Fuji Xerox is reported in Income from discontinued operations, net of tax for 2019 and 2018.
−Removed: The equity in net income for Fuji Xerox in 2019 is through the date of sale.
−Removed: Fuji Xerox is headquartered in Tokyo and operates in Japan, China, Australia, New Zealand, Vietnam and other areas of the Pacific Rim.
−Removed: Equity in net income of Fuji Xerox was affected by certain adjustments to reflect the deferral of profit associated with intercompany sales.
−Removed: These adjustments resulted in recorded equity income that may have been different from that implied by our (former) 25 % ownership interest.
−Removed: In addition, the Equity in net income of Fuji Xerox for the years ended December 31, 2019 and 2018, includes after-tax restructuring and other charges of $ 20 and $ 95 , respectively.
−Removed: We also received dividends from Fuji Xerox for the years ended December 31, 2019 and 2018, which were reflected as a reduction in our investment upon receipt, of $ 69 and $ 23 , respectively.
−Removed: Summarized financial information for Fuji Xerox is as follows:
−Removed: Through Date of Sale Year Ended December 31, 2018
+Added: (1) Equity in net income for Fuji Xerox is reported in Income from discontinued operations, net of tax for 2019 and is through the date of sale.
+Added: We received dividends of $ 69 from Fuji Xerox for the year ended December 31, 2019, which was reflected as a reduction in our investment upon receipt.
+Added: No dividends were received from Fuji Xerox in 2021 or 2020 due to the Sale of our equity interest in Fuji Xerox in 2019.
+Added: Summarized financial information for Fuji Xerox was as follows:
+Added: Through Date of Sale
Summary of Operations
6 unchanged sentences
Net Income - Fuji Xerox $ 592
−Removed: Balance Sheet At Date of Sale December 31, 2018
−Removed: Current assets $ 4,876 $ 4,179
−Removed: Long-term assets 3,964 4,034
−Removed: Total Assets $ 8,840 $ 8,213
−Removed: Liabilities and Equity
−Removed: Short-term debt $ 49 $ 130
−Removed: Other current liabilities 1,932 1,827
−Removed: Long-term debt 16 24
−Removed: Other long-term liabilities 514 395
−Removed: Noncontrolling interests 18 30
−Removed: Fuji Xerox shareholders' equity 6,311 5,807
−Removed: Total Liabilities and Equity $ 8,840 $ 8,213
−Removed: Xerox 2020 Annual Report 109
−Removed: Dollar exchange rates used to translate are as follows:
+Added: Dollar exchange rate used to translate was as follows:
Financial Statement Exchange Basis 2019
Summary of Operations Weighted average rate 109.03
−Removed: Balance Sheet Year-end rate 108.83 110.26
−Removed: Transactions with Fuji Xerox
−Removed: We have a Technology Agreement (TA) with Fuji Xerox whereby we receive royalty payments for their use of our Xerox brand trademark, as well as rights to access our patent portfolio in exchange for access to their patent portfolio.
−Removed: These payments are included in Services, maintenance and rentals revenues in the Consolidated Statements of Income.
−Removed: In January 2020, Fuji Xerox notified Xerox of its intention to terminate the TA on the agreement’s expiration date of March 31, 2021.
−Removed: The series of transactions entered into between Xerox and FH in November 2019, as disclosed in Note 6 - Divestitures, 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 .
−Removed: 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.
−Removed: 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.
−Removed: 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 purchase/supply agreements.
−Removed: Prior to the sale of our investment in Fuji Xerox, pricing of the transactions under these arrangements were based on terms the Company believed to be negotiated at arm's length.
−Removed: Our purchase commitments with Fuji Xerox are in the normal course of business and typically have a lead time of three months.
−Removed: In addition, we pay Fuji Xerox and they pay us for unique research and development costs.
−Removed: As disclosed in Note 6 - Divestitures, these agreements continue to be in effect after the sale of our Investment in Fuji Xerox.
−Removed: Transactions with Fuji Xerox were as follows:
−Removed: Year Ended December 31,
−Removed: 2020 2019 2018
−Removed: Royalty revenue earned $ 88 $ 99 $ 96
−Removed: Inventory purchases from Fuji Xerox 1,077 1,337 1,501
−Removed: Inventory sales to Fuji Xerox 25 33 43
−Removed: R&D payments received from Fuji Xerox 1 — 1
−Removed: R&D payments paid to Fuji Xerox 5 4 8
−Removed: As of December 31, 2020 and 2019, net amounts due to Fuji Xerox were $ 102 and $ 353 , respectively.
Xerox 2021 Annual Report 108
3 unchanged sentences
Foreign currency translation 28
+Added: Acquisitions 14
Balance at December 31, 2019 $ 3,900
1 unchanged sentence
Acquisitions:
+Added: Acquisitions 98
+Added: Canada Acquisition 10
Balance at December 31, 2020 (1)
3 unchanged sentences
Canada Acquisition 16
+Added: Goodwill impairment (2)
Balance at December 31, 2021 $ 3,287
_____________
−Removed: (1) Balance at December 31, 2020 includes $ 3 of Goodwill recorded by Xerox Holdings.
+Added: (1) CareAR Holdings, LLC was transferred from Xerox Holdings to Xerox in 2021.
+Added: Accordingly, the balance at December 31, 2020 reflects the balance for both Xerox Holdings and Xerox.
+Added: (2) Non-cash, pre-tax Goodwill impairment charge of $ 781 ($ 750 after-tax).
+Added: After completing our annual impairment test in the fourth quarter of 2021, we concluded that the estimated fair value of the Company had declined below its carrying value.
+Added: As a result, we recognized an after-tax non-cash impairment charge of $ 750 ($ 781 pre-tax) related to our Goodwill for the year ended December 31, 2021.
+Added: Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies for additional information related to the Goodwill impairment.
Intangible Assets, Net
14 unchanged sentences
_____________
−Removed: (1) Balance at December 31, 2020 includes $ 8 of Intangible assets, net, related to existing technology, recorded by Xerox Holdings.
+Added: (1) CareAR Holdings, LLC was transferred from Xerox Holdings to Xerox in 2021.
+Added: Accordingly, the balances at December 31, 2020 reflect the balances for both Xerox Holdings and Xerox.
Amortization expense related to intangible assets was $ 55 , $ 56 and $ 45 for the three years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: Amortization expense in 2020 includes $ 11 related to write-offs of certain XBS trade names that were discontinued.
−Removed: Excluding the impact of future acquisitions, amortization expense is expected to approximate $ 39 in 2021, 2022 and 2023, $ 36 in 2024 and $ 31 in 2025.
−Removed: The decrease from 2024 to 2025 is related to the distribution network, which is expected to be fully amortized by 2025.
+Added: Excluding the impact of future acquisitions, amortization expense is expected to approximate $ 43 in 2022, $ 40 in 2023, $ 38 in 2024, $ 33 in 2025 and $ 33 in 2026.
+Added: Distribution network assets are expected to be fully amortized by 2025.
Xerox 2021 Annual Report 109
1 unchanged sentence
We engage in restructuring actions, including Project Own It, as well as other transformation efforts in order to reduce our cost structure and realign it to the changing nature of our business.
−Removed: As part of our efforts to reduce costs, our restructuring actions may also include the off-shoring or outsourcing of certain operations, services and other functions, as well as reducing our real estate footprint.
+Added: As part of our efforts to reduce costs, our restructuring actions may also include the off-shoring and/or outsourcing of certain operations, services and other functions, as well as reducing our real estate footprint.
Restructuring costs include employee severance and related costs, other contractual termination costs and asset impairments that may result from employee reductions, migration of facilities from higher-cost to lower-cost countries, and the consolidation of facilities within countries.
4 unchanged sentences
Restructuring activities may include the disposal or abandonment of assets, including leased right-of-use assets, that require an acceleration of depreciation or an impairment charge reflecting the excess of an asset's book value over fair value or other recoveries.
−Removed: The recognition of restructuring costs requires that we make certain judgments and estimates regarding the nature, timing and amount of costs associated with the planned initiative.
+Added: The recognition of restructuring costs requires that we make certain judgments and estimates regarding the nature, timing and amount of costs associated with planned initiatives.
To the extent our actual results differ from our estimates and assumptions, we may be required to revise the estimated liabilities, requiring the recognition of additional restructuring costs or the reduction of liabilities already recognized.
19 unchanged sentences
Net Current Period Charges (1)
+Added: 17 ( 3 ) 13 27
Charges against reserve and currency ( 70 ) 1 ( 13 ) ( 82 )
1 unchanged sentence
_____________
−Removed: (1) Represents net amount recognized within the Consolidated Statements of Income for the years shown for restructuring and asset impairment charges.
+Added: (1) Represents net amount recognized within the Consolidated Statements of (Loss) Income for the years shown for restructuring and asset impairment charges.
+Added: Reversals of prior charges primarily includes net changes in estimated reserves from prior period initiatives.
+Added: Net reversals for 2021 also include a $ 4 gain on the sale of surplus land.
(2) Primarily includes additional costs incurred upon the exit from our facilities including decommissioning costs and associated contractual termination costs.
1 unchanged sentence
(4) Amounts primarily relate to the exit and abandonment of leased and owned facilities.
−Removed: For the year ended December 31, 2020 and 2019, the charge includes the accelerated write-off of $ 4 and $ 39 , respectively, for leased right-of-use assets and $ 2 and $ 22 , respectively, for owned assets and are net of any potential sublease income or other recovery amounts .
+Added: For the year ended December 31, 2021, 2020 and 2019, the charge includes the accelerated write-off of $ 3 , $ 4 and $ 39 , respectively, for leased right-of-use assets and $ 12 , $ 2 and $ 22 , respectively, for owned assets.
+Added: Impairments are net of any potential sublease income or other recovery amounts .
Xerox 2021 Annual Report 110
8 unchanged sentences
Year Ended December 31,
+Added: 2021 2020 2019
Retention related severance/bonuses (1)
2 unchanged sentences
$ 11 $ 6 $ 102
+Added: _____________
(1) Includes retention related severance and bonuses for employees expected to continue working beyond their minimum retention period before termination.
1 unchanged sentence
(3) Represents professional support services associated with our business transformation initiatives.
−Removed: Cash payments for restructuring related costs were approximately $ 26 and $ 65 in 2020 and 2019, respectively, while the reserve was $ 21 and $ 37 at December 31, 2020 and 2019, respectively.
+Added: For the years ended December 31, 2021, 2020 and 2019, cash payments for restructuring related costs were approximately $ 13 , $ 26 and $ 65 , respectively, while the reserve was $ 18 and $ 21 at December 31, 2021 and 2020, respectively.
The balance at December 31, 2021 is expected to be paid over the next twelve months.
1 unchanged sentence
Note 15 - Supplementary Financial Information
−Removed: The components of Other assets and liabilities were as follows:
+Added: The components of Other assets and liabilities are as follows:
Other Current Assets
11 unchanged sentences
Customer contract costs, net 147 158
−Removed: Operating lease right-of-use asset 310 319
+Added: Operating lease right-of-use assets 264 310
Deferred compensation plan investments 18 18
Investments in affiliates, at equity (1)
+Added: Investments at cost - Xerox Holdings 8 —
Other 103 137
Total Other Long-term Assets (2)
+Added: $ 1,960 $ 1,455
Accrued Expenses and Other Current Liabilities
1 unchanged sentence
Other taxes payable 69 68
−Removed: Operating lease obligation 83 87
−Removed: Financing lease obligation 2 2
+Added: Operating lease obligations 79 83
+Added: Financing lease obligations 2 2
Interest payable 53 56
11 unchanged sentences
Income taxes payable 40 57
−Removed: Operating lease obligation 250 260
−Removed: Finance lease obligation 7 5
+Added: Operating lease obligations 204 250
+Added: Finance lease obligations 5 7
Environmental reserves 9 9
4 unchanged sentences
(1) Refer to Note 12 - Investments in Affiliates, at Equity for additional information.
+Added: (2) Xerox's balance of 1,952 at December 31, 2021 excludes Investments at cost.
(3) Represents dividends payable by Xerox Holdings Corporation on Common and Preferred Stock.
−Removed: (3) Xerox's balance of $ 750 at December 31, 2020 excludes Interest Payable of $ 32 and Dividends Payable of $ 59 .
(4) Xerox's balance of $ 823 at December 31, 2021 excludes Dividends Payable of $ 48 .
+Added: Xerox's balance of $ 749 at December 31, 2020 excludes Interest Payable of $ 32 and Dividends Payable of $ 59 .
Xerox 2021 Annual Report 112
Cash, Cash Equivalents and Restricted Cash
−Removed: Restricted cash primarily relates to escrow cash deposits made in Brazil associated with ongoing litigation.
+Added: 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.
As more fully discussed in Note 21 - Contingencies and Litigation, various litigation matters in Brazil require us to make cash deposits to escrow as a condition of continuing the litigation.
Restricted cash amounts are classified in our Consolidated Balance Sheets based on when the cash will be contractually or judicially released.
−Removed: Cash, cash equivalents and restricted cash amounts were as follows:
+Added: Cash, cash equivalents and restricted cash amounts are as follows:
Cash and cash equivalents $ 1,840 $ 2,625
1 unchanged sentence
Litigation deposits in Brazil 34 42
−Removed: Escrow and cash collections related to finance receivable sales (1)
+Added: Escrow and cash collections related to secured borrowing arrangements (1)
Other restricted cash 3 2
3 unchanged sentences
(1) Represents collections on finance receivables pledged for secured borrowings that will be remitted to lenders in the following month.
−Removed: Restricted cash was reported in the Consolidated Balance Sheets as follows:
+Added: Restricted cash is reported in the Consolidated Balance Sheets as follows:
Other current assets $ 33 $ 23
9 unchanged sentences
(1) Refer to Note 19 - Employee Benefit Plans for additional information regarding pension liabilities.
−Removed: (2) As of December 31, 2020 and 2019, includes amounts measured at fair value on a recurring basis of $ 17 and $ 18 , respectively.
+Added: (2) Includes amounts measured at fair value on a recurring basis at December 31, 2021 and 2020 of $ 18 and $ 17 , respectively.
Refer to Note 18 - Fair Value of Financial Assets and Liabilities for additional information regarding deferred compensation liabilities.
4 unchanged sentences
Provision for receivables $ 12 $ 116 $ 49
−Removed: Provision for inventory 31 24 30
−Removed: Provision for product warranty 8 12 14
+Added: Provision for inventories 34 31 24
+Added: Provision for product warranties 8 8 12
Depreciation of buildings and equipment 76 87 101
9 unchanged sentences
Repurchases related to stock-based compensation - Xerox Holdings 18 19 28
+Added: Investments from noncontrolling interests 15 — —
__________________________
13 unchanged sentences
We defer costs associated with debt issuance over the applicable term, or to the first put date in the case of convertible debt or debt with a put feature.
−Removed: These costs are amortized as interest expense in our Consolidated Statements of Income.
+Added: These costs are amortized as interest expense in our Consolidated Statements of (Loss) Income.
Long-term debt was as follows:
7 unchanged sentences
Senior Notes due 2023 (2)
−Removed: Senior Notes due 2020 — 376
−Removed: Senior Notes due 2021 — 1,062
−Removed: Senior Notes due 2022 4.07 % 4.07 % 300 300
−Removed: Senior Notes due 2023 (2)
4.38 % 3.68 % 1,000 1,000
6 unchanged sentences
Secured Borrowing - December 2020 1.74 % 1.74 % 268 500
+Added: Secured Borrowing - September 2021 1.40 % 1.40 % 293 —
Subtotal - Xerox - Other Subsidiaries $ 561 $ 767
4 unchanged sentences
Subtotal - Debt issuance costs ( 18 ) ( 27 )
−Removed: Unamortized premium (discount) 3 ( 16 )
+Added: Unamortized premium 3 3
Fair value adjustments (4)
5 unchanged sentences
(1) Represents the weighted average effective interest rate, which includes the effect of discounts and premiums on issued debt.
−Removed: (2) As a result of the downgrade of our debt ratings in December 2018, the original coupon rate of 3.625 % increased by 0.50 % to 4.125 % effective March 15, 2019.
(2) As a result of the downgrade of our debt ratings in August 2020, the coupon rate of 4.125 % increased by 0.25 % to 4.375 % effective September 15, 2020.
16 unchanged sentences
(2) Represents subsidiaries of Xerox Corporation.
+Added: Xerox Holdings Corporation/Xerox Corporation Intercompany Loan
In August 2020, Xerox Holdings Corporation issued $ 550 of 5.00 % Senior Notes due August 2025 (the "2025 Senior Notes") at par and $ 550 of 5.50 % Senior Notes due August 2028 (the "2028 Senior Notes") at par resulting in aggregate net proceeds (after fees and expenses) of approximately $ 1,089 .
On August 24, 2020, Xerox Holdings Corporation issued an additional $ 200 of the 2025 Senior Notes at 100.75 % of par and an additional $ 200 of the 2028 Senior Notes at 102.50 % of par resulting in additional aggregate net proceeds (after premium, fees and expenses) of approximately $ 405 for total aggregate net proceeds from both issuances of approximately $ 1,494 .
−Removed: The Notes are fully and unconditionally guaranteed by Xerox Corporation.
−Removed: In addition, the notes and the related guarantees were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and have not been registered for sale under the Securities Act or any state securities laws.
−Removed: Interest on the 2025 and 2028 Senior Notes is payable semi-annually.
−Removed: Debt issuance costs of approximately $ 13 were paid and deferred in connection with the issuance of the 2025 and 2028 Senior Notes and will be amortized over the term of the Senior Notes.
−Removed: The net debt proceeds were contributed by Xerox Holdings Corporation to Xerox Corporation and used to repay $ 362 aggregate principal amount of 3.50 % Senior Notes of Xerox Corporation and $ 376 aggregate principal amount of 2.75 % Senior Notes of Xerox Corporation, which were both due to mature in third quarter 2020.
−Removed: Xerox Corporation also used the balance of the net proceeds to repay in October 2020 $ 750 of the 4.50 % Senior Notes due in May 2021.
−Removed: (Refer to the section Early Extinguishment of Senior Notes below for additional information regarding the repayment of the Senior Notes due May 2021, as well as the Xerox Statement of Shareholder's Equity for additional information regarding the contribution received from Xerox Holdings Corporation).
−Removed: Early Extinguishment of Senior Notes
−Removed: In October 2020, we completed the early redemption of $ 750 of the $ 1,062 of Xerox Corporation 4.50 % Senior Notes due May 2021, for $ 769 in cash consideration, which included a redemption premium of $ 19 .
−Removed: The early redemption resulted in a net loss of $ 18 (which included the write-off of debt carrying value adjustments).
−Removed: In December 2020, we completed the early redemption of the remaining $ 312 of Xerox Corporation 4.50 % Senior Notes due May 2021, for $ 317 in cash consideration, which included a redemption premium of $ 5 .
−Removed: The early redemption resulted in a net loss of $ 8 (which included the write-off of debt carrying value adjustments).
+Added: In 2020, the net debt proceeds were contributed by Xerox Holdings Corporation to Xerox Corporation and recorded as Additional paid-in capital by Xerox Corporation.
+Added: In February 2021, Xerox Holdings Corporation and Xerox Corporation entered into an Intercompany Loan agreement for the net proceeds of $ 1,494 contributed by Xerox Holdings Corporation to Xerox Corporation in 2020.
+Added: The intercompany loan, which did not involve the exchange of cash in the current period, resulted in capitalization of the amount as Related Party Debt for Xerox Corporation.
+Added: The amount was originally recorded as Additional paid-in capital in 2020 when the cash was contributed by Xerox Holdings Corporation.
+Added: The intercompany loan was established to mirror the terms of Xerox Holdings Corporation’s 2025 and 2028 Senior Notes, including interest rates and payment dates.
+Added: The intercompany interest expense also includes a ratable amount to reimburse Xerox Holdings Corporation for its debt issuance costs and premium.
+Added: At December 31, 2021, the balance of the Intercompany Loan reported in Xerox Corporation’s Consolidated Balance Sheet was $ 1,495 , which is net of related debt issuance costs, and the intercompany interest payable was $ 30 .
+Added: Xerox Corporation’s interest expense included interest expense associated with this Intercompany Loan of $ 80 and $ 32 for the years ended December 31, 2021 and 2020, respectively.
Credit Facility
−Removed: We have a $ 1.8 billion unsecured revolving Credit Facility with a group of lenders, which matures in August 2022.
−Removed: The Credit Facility includes a $ 250 letter of credit sub-facility as well as an accordion feature that allows us to increase (from time to time, with willing lenders) the overall size of the facility by $ 750 .
−Removed: We also have the right to request a one year extension on any anniversary of the restated amendment date.
+Added: We have a $ 1.8 billion unsecured revolving Credit Facility with a group of lenders, that matures in August 2022.
+Added: The Credit Facility includes a $ 250 letter of credit sub-facility.
Proceeds from any borrowings under the Credit Facility can be used to provide working capital for the Company and its subsidiaries and for general corporate purposes.
2 unchanged sentences
Any borrowings under the Credit Facility by Xerox Corporation will be guaranteed by Xerox Holdings Corporation.
−Removed: Any domestic subsidiary that guarantees more than $ 100 of Xerox Corporation debt must also guaranty our obligations under the Credit Facility.
+Added: Any domestic subsidiary that guarantees more than $ 100 of Xerox Corporation debt must also guaranty Xerox Corporation's obligations under the Credit Facility.
In the event that any of our subsidiaries borrows under the Credit Facility, its borrowings thereunder would be guaranteed by us.
1 unchanged sentence
On July 31, 2020, Xerox and Xerox Holdings entered into Amendment No.
−Removed: 3 to the Credit Facility, which modified the financial covenants to require that, during a specified covenant modification period (which begins on the effective date of the Amendment and ends on the earlier of (1) December 31, 2021 and (2) the date on which Xerox
+Added: 3 to the Credit Facility, which modified the facility's financial covenants.
+Added: During a specified covenant modification period, which began on the effective date of July 31, 2020 and ended effective and inclusive of December 31, 2021 (the Covenant Modification Period), Xerox was required to maintain unrestricted cash (as defined in the Amendment) in an amount not less than $ 1.0 billion.
+Added: Further, the Amendment modified the financial maintenance leverage covenant in the Credit Agreement by requiring that, during the Covenant Modification Period, Xerox was required to maintain a ratio of net debt for borrowed money to consolidated EBITDA of not greater than 4.25 x (with a cap on cash netting of $ 1.75 billion), in lieu of the 4.25 x total debt for borrowed money to consolidated EBITDA ratio requirement applicable prior to the Amendment.
+Added: The Covenant Modification Period ended effective and inclusive of December 31, 2021.
+Added: Accordingly, for the quarter ended March 31, 2022, the financial maintenance covenants return to the covenants in effect prior to the July 31, 2020 amendment to the Credit Facility.
Xerox 2021 Annual Report 115
−Removed: delivers a written notice to the Administrative Agent electing to end such period (the Covenant Modification Period), Xerox must maintain unrestricted cash (as defined in the Amendment) in an amount not less than $ 1.0 billion.
−Removed: Further, the Amendment relaxed the financial maintenance leverage covenant in the Credit Agreement by requiring that, during the Covenant Modification Period, Xerox maintain a ratio of net debt for borrowed money to consolidated EBITDA of not greater than 4.25 x (with a cap on cash netting of $ 1.75 billion), in lieu of the 4.25x total debt for borrowed money to consolidated EBITDA ratio requirement applicable prior to the Amendment.
Borrowings under the Credit Facility bear interest at our choice, at either (a) a Base Rate as defined in the Credit Facility agreement, plus a spread that varies between 0.000 % and 0.700 % depending on our credit rating at the time of borrowing, or (b) LIBOR plus an all-in spread that varies between 1.000 % and 1.700 % depending on our credit rating at the time of borrowing.
Based on our credit rating as of December 31, 2021, the applicable all-in spreads for the Base Rate and LIBOR borrowing were 0.375 % and 1.375 %, respectively.
+Added: Effective December 31, 2021 the Credit Facility was modified to acknowledge certain LIBOR currencies and tenors would cease to be available as of January 1, 2022, and therefore, the Company agreed to suspend rights to request borrowings under those currencies and tenors for the remainder of the term of the Credit Facility.
An annual facility fee is payable to each lender in the Credit Facility at a rate that varies between 0.125 % and 0.300 % depending on our credit rating.
2 unchanged sentences
Certain of the more significant covenants are summarized below:
−Removed: (a) Minimum Unrestricted Cash during the Covenant Modification Period, at all times, maintain Unrestricted Cash (as defined in the amended and restated Credit Facility) in an amount not less than $1,000.
+Added: (a) Minimum Unrestricted Cash during the Covenant Modification Period, at all times, maintain Unrestricted Cash (as defined in the amended and restated Credit Facility) in an amount not less than $ 1.0 billion.
+Added: This covenant expired December 31, 2021.
(b) Maximum leverage ratio during the Covenant Modification Period (a quarterly test that is calculated as net debt for borrowed money divided by consolidated EBITDA, both as defined in the amended and restated Credit Facility - with a cap on cash netting of $ 1.75 billion) of 4.25 x.
−Removed: This temporarily replaces the maximum leverage ratio (a quarterly test that is calculated as debt for borrowed money divided by consolidated EBITDA, both as defined in the amended and restated Credit Facility) of 4.25x .
+Added: This ratio had temporarily replaced the pre-amendment maximum leverage ratio (a quarterly test that is calculated as debt for borrowed money divided by consolidated EBITDA, both as defined in the amended and restated Credit Facility) of 4.25 x, which is effective for the quarter ended March 31, 2022.
(c) Minimum interest coverage ratio (a quarterly test that is calculated as consolidated EBITDA divided by consolidated interest expense, both as defined in the amended and restated Credit Facility) may not be less than 3.00x .
4 unchanged sentences
Secured Borrowings and Collateral
−Removed: In July 2020, we entered into a secured loan agreement with a financial institution where we sold $ 355 of U.S.
+Added: In September 2021, we entered into a secured loan agreement with a financial institution where we sold $ 331 of U.S.
based finance receivables and the rights to payments under operating leases with an equipment net book value of $ 9 to a special purpose entity (SPE).
−Removed: The purchase by the SPE was funded through an amortizing secured loan to the SPE from the financial institution of $ 340 .
−Removed: The debt has a variable interest rate based on LIBOR plus a spread and an expected life of less than three years with half projected to be repaid within the first year based on collections of the underlying portfolio of receivables.
−Removed: We also entered into an interest rate hedge agreement to cap LIBOR over the life of the loan.
−Removed: The proceeds from this debt replenished the cash used in May 2020 to repay the $ 313 aggregate principal amount of 2.80 % Senior Notes due 2020 of Xerox Corporation.
−Removed: In December 2020, we entered into a second secured loan agreement with a financial institution where we sold $ 610 of U.S.
+Added: The purchase by the SPE was funded through a $ 311 amortizing secured loan to the SPE from the financial institution.
+Added: The secured loan was an amendment of the July 2020 secured borrowing with the same financial institution, which had a remaining balance of $ 136 , and we received the incremental net cash.
+Added: The transaction was accounted for as an extinguishment of debt and the issuance of new debt and associated collateral.
+Added: The new loan has a variable interest rate based on LIBOR plus a spread (current rate of 1.40 % at December 31, 2021) and an expected life of approximately 2.5 years with half projected to be repaid within the first year based on collections of the underlying portfolio of receivables.
+Added: In October 2021, we entered into an interest rate hedge agreement to cap LIBOR over the life of the loan.
+Added: In December 2020, we entered into a secured loan agreement with a financial institution where we sold $ 610 of U.S.
based finance receivables to an SPE.
The purchase by the SPE was funded through an amortizing secured loan to the SPE from the financial institution of $ 500 .
−Removed: The debt has a variable interest rate based on the financial institution's cost of funds plus a spread and an expected life of approximately 2.5 years with half projected to be repaid within the first year based on collections of the underlying portfolio of receivables.
−Removed: A portion of the proceeds from this debt was used to repay the remaining $ 312 principal amount of 4.50 % Senior Notes due May 2021 of Xerox Corporation (see Early Extinguishment of Senior Notes above for additional information).
+Added: The debt has a variable interest rate based on the financial institution's cost of funds plus a spread (current rate of 1.74 % at December 31, 2021).
+Added: Refer to Note 27 - Subsequent Events for additional information related to this arrangement.
The sales of the receivables to the SPEs were structured as "true sales at law," and we have received opinions to that effect from outside legal counsel.
−Removed: However, the transactions were accounted for as secured borrowings as we consolidate the SPEs since we have both the power to direct the activities that most significantly impact the SPEs'
+Added: However, the transactions were accounted for as secured borrowings as we consolidate the SPEs since we have both the power to direct the activities that most significantly impact the SPEs' economic performance through our role as servicer of all the receivables held by the SPEs, and the obligation through variable interests in the SPEs to absorb losses or receive benefits that could potentially be significant to the
Xerox 2021 Annual Report 116
−Removed: economic performance through our role as servicer of all the receivables held by the SPEs, and the obligation through variable interests in the SPEs to absorb losses or receive benefits that could potentially be significant to the SPEs.
As a result, the assets of the SPEs are not available to satisfy any of our other obligations.
1 unchanged sentence
Below are the assets and liabilities held by the consolidated SPEs, which are included in our Consolidated Balance Sheet:
+Added: 2021 December 31,
Assets held by SPEs
11 unchanged sentences
(2) Amounts net of unamortized debt issuance costs of $ 1 .
−Removed: (3) Amounts net of unamortized debt issuance costs of $ 2 .
Interest paid on our short-term and long-term debt amounted to $ 203 , $ 181 and $ 221 for the years ended December 31, 2021, 2020 and 2019, respectively.
6 unchanged sentences
_____________
−Removed: (1) Includes Equipment financing interest expense, as well as non-financing interest expense included in Other expenses, net in the Consolidated Statements of Income.
−Removed: (2) 2020 Interest expense for Xerox Corporation includes $ 32 of interest paid to Xerox Holdings Corporation as reimbursement for the interest expense incurred on the Xerox Holdings Corporation Senior Notes as the net proceeds from those notes were contributed in full to Xerox Corporation and used to repay existing debt of Xerox.
−Removed: (3) Includes Finance income, as well as other interest income that is included in Other expenses, net in the Consolidated Statements of Income.
+Added: (1) Includes Equipment financing interest as well as non-financing interest expense included in Other expenses, net in the Consolidated Statements of (Loss) Income.
+Added: (2) Interest expense of Xerox Corporation included intercompany expense associated with the Xerox Holdings Corporation/Xerox Corporation Intercompany Loan of $ 80 and $ 32 for the years ended December 31, 2021 and 2020, respectively.
+Added: (3) Includes Finance income, as well as other interest income that is included in Other expenses, net in the Consolidated Statements of (Loss) Income.
Equipment financing interest is determined based on an estimated cost of funds, applied against the estimated level of debt required to support our net finance receivables.
18 unchanged sentences
These derivatives may be designated as fair value hedges or cash flow hedges depending on the nature of the risk being hedged.
+Added: At December 31, 2021, there was one interest rate cap contract outstanding.
Fair Value Hedges
4 unchanged sentences
Prior to termination no ineffective portion was recorded to earnings for the years ended December 31, 2020 and 2019.
−Removed: The corresponding net fair value adjustment to the hedged debt of $( 4 ) will be recognized in earnings concurrently with the remaining term of the related debt, which may include early extinguishment.
−Removed: During the period from 2004 to 2011, we also early terminated several interest rate swaps that were designated as fair value hedges of certain debt instruments.
−Removed: The associated net fair value adjustments to the debt instruments for these terminated swaps were likewise recognized in earnings concurrently with the remaining term of the related debt, which may include early extinguishment.
+Added: The corresponding net fair value adjustment to the hedged debt of ($ 4 ) is being recognized in earnings concurrently with the remaining term of the related debt, which may include early extinguishment.
The remaining unamortized debt fair value adjustment associated with all terminated swaps was $ 0 and $ 1 at December 31, 2021 and 2020, respectively.
7 unchanged sentences
At December 31, 2021, approximately 84 % of these contracts mature within three months, 7 % in three to six months and 9 % in six to twelve months.
−Removed: The associated exposures being hedged at December 31, 2020 were higher by 6.4 %, as compared to December 31, 2019.
+Added: The associated exposures being hedged at December 31, 2021 were lower by 4.1 %, as compared to December 31, 2020.
There has not been any material changes in our hedging strategy during 2021.
9 unchanged sentences
Dollar/Canadian Dollar 50 1
−Removed: Pound Sterling/Euro 37 —
−Removed: Dollar/Japanese Yen 31 —
Euro/Danish Krone 34 —
+Added: Euro/Canadian Dollar 28 —
+Added: Pound Sterling/Euro 23 —
Dollar/Russian Ruble 10 —
−Removed: Dollar/Israeli Shekel 9 —
Dollar/Brazilian Real 10 —
−Removed: Euro/Norwegian Kroner 4 —
+Added: Dollar/Israeli Shekel 8 —
+Added: Russian Ruble/U.S.
All Other 51 ( 1 )
3 unchanged sentences
We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases, sales and expenses.
−Removed: No amount of ineffectiveness was recorded in the Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
−Removed: The net asset (liability) fair value of these contracts were $ 2 and $( 4 ) as of December 31, 2020 and 2019, respectively.
+Added: No amount of ineffectiveness was recorded in the Consolidated Statements of (Loss) Income for these designated cash flow hedges and all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
+Added: The net (liability) asset fair value of these contracts were $( 3 ) and $ 2 as of December 31, 2021 and 2020, respectively.
Summary of Derivative Instruments Fair Value
5 unchanged sentences
Foreign currency options Other current assets — 1
−Removed: Interest rate swaps Other long-term assets — 1
−Removed: Net Designated Derivative Asset (Liability) $ 2 $ ( 3 )
+Added: Interest rate cap Other long-term assets 1 —
+Added: Net Designated Derivative (Liability) Asset $ ( 2 ) $ 2
Derivatives NOT Designated as Hedging Instruments
4 unchanged sentences
Total Derivative Liabilities ( 11 ) ( 5 )
−Removed: Net Derivative Asset (Liability) $ 2 $ ( 5 )
+Added: Net Derivative (Liability) Asset $ ( 6 ) $ 2
Xerox 2021 Annual Report 119
4 unchanged sentences
The following tables provide a summary of gains (losses) on derivative instruments:
−Removed: Year Ended December 31,
+Added: Derivative (Loss) Gain Recognized in Income Hedged Item Gain (Loss) Recognized in Income
Derivatives in Fair Value
Relationships Location of Gain (Loss)
−Removed: Recognized in Income Derivative (Loss) Gain Recognized in Income Hedged Item Gain (Loss) Recognized in Income
+Added: Recognized in Income Year Ended December 31,
2021 2020 2019 2021 2020 2019
Interest rate contracts Interest expense $ — $ ( 1 ) $ 4 $ — $ 1 $ ( 4 )
−Removed: Year Ended December 31,
+Added: Derivative (Loss) Gain Recognized in OCI (Effective Portion) (Loss) Gain Reclassified from AOCI to Income (Effective Portion)
Derivatives in Cash Flow
−Removed: Hedging Relationships Derivative Gain Recognized in OCI (Effective Portion) Location of Derivative
−Removed: Gain (Loss) Reclassified
+Added: Hedging Relationships Year Ended December 31, Location of Derivative
+Added: (Loss) Gain Reclassified
from AOCI into Income
−Removed: (Effective Portion) (Loss) Gain Reclassified from AOCI to Income (Effective Portion)
+Added: (Effective Portion) Year Ended December 31,
2021 2020 2019 2021 2020 2019
Foreign exchange contracts – forwards/options $ ( 12 ) $ 4 $ 2 Cost of sales $ ( 7 ) $ ( 1 ) $ 9
−Removed: For the three years ended December 31, 2020, 2019 and 2018 no amount of ineffectiveness was recorded in the Consolidated Statements of Income for these designated cash flow hedges.
+Added: For the three years ended December 31, 2021, 2020 and 2019 no amount of ineffectiveness was recorded in the Consolidated Statements of (Loss) Income for these designated cash flow hedges.
All components of each derivative’s gain or (loss) were included in the assessment of hedge effectiveness.
In addition, no amount was recorded for an underlying exposure that did not occur or was not expected to occur.
−Removed: At December 31, 2020, a net after-tax gain of $ 2 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.
+Added: At December 31, 2021, a net after-tax loss of $ 2 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.
4 unchanged sentences
Year Ended December 31,
−Removed: Derivatives NOT Designated as Hedging Instruments Location of Derivative Gain (Loss) 2020 2019 2018
−Removed: Foreign exchange contracts – forwards Other expense – Currency gains (losses), net $ 14 $ ( 6 ) $ 21
+Added: Derivatives NOT Designated as Hedging Instruments Location of Derivative (Loss) Gain 2021 2020 2019
+Added: Foreign exchange contracts – forwards Other expense – Currency (losses) gains, net $ ( 26 ) $ 14 $ ( 6 )
For the three years ended December 31, 2021, 2020 and 2019, we recorded Currency losses, net of $ 7 , $ 3 and $ 7 , respectively.
7 unchanged sentences
Foreign currency options — 1
−Removed: Interest rate swaps — 1
+Added: Interest rate cap 1 —
Deferred compensation investments in mutual funds 18 18
18 unchanged sentences
Xerox - Other Subsidiaries (1)
+Added: 210 210 370 372
Total Long-term debt $ 3,596 $ 3,776 $ 4,050 $ 4,266
32 unchanged sentences
Plan participants' contributions — — 3 3 8 10
−Removed: Actuarial loss 240 564 439 472 4 8
+Added: Actuarial (gain) loss ( 86 ) 240 ( 233 ) 439 ( 1 ) 4
Currency exchange rate changes — — ( 193 ) 374 — 3
23 unchanged sentences
(1) Includes under-funded and unfunded plans.
−Removed: Benefit plans pre-tax amounts recognized in AOCL at December 31:
+Added: Benefit plans pre-tax amounts recognized in AOCL at December 31st:
Pension Benefits
31 unchanged sentences
Total $ 4,629 $ 3,295 $ 5,201 $ 3,675
−Removed: Our pension plan assets and benefit obligations at December 31, 2020 were as follows:
−Removed: Fair Value of Pension Plan Assets Pension Benefit Obligations Net Funded Status
+Added: Pension plan assets and benefit obligations by country were as follows:
+Added: December 31, 2021 December 31, 2020
+Added: Fair Value of Pension Plan Assets Pension Benefit Obligations Net Funded Status Fair Value of Pension Plan Assets Pension Benefit Obligations Net Funded Status
funded $ 2,544 $ 3,056 $ ( 512 ) $ 2,802 $ 3,408 $ ( 606 )
30 unchanged sentences
( 57 ) ( 105 ) 243 ( 425 ) ( 9 ) 24 ( 1 ) 4 8
−Removed: Prior service cost (credit) — — — 4 — 41 ( 11 ) — ( 234 )
+Added: Prior service (credit) cost — — — ( 4 ) 4 — ( 50 ) ( 11 ) —
Amortization of net actuarial (loss) gain ( 71 ) ( 80 ) ( 117 ) ( 60 ) ( 59 ) ( 44 ) ( 1 ) 1 5
7 unchanged sentences
(2) Expected return on plan assets includes expected investment income on non-TRA assets of $ 307 , $ 283 and $ 315 and actual investment income (loss) on TRA assets of $ 18 , $ 125 and $ 128 for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: (3) The non-U.S.
−Removed: plans Net actuarial (gain) loss for 2018 reflects an out-of-period adjustment in third quarter 2018 of $( 53 ) to correct an overstated benefit obligation for our U.K.
−Removed: Final Salary Pension Plan at December 31, 2017.
−Removed: Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies for additional information regarding this adjustment.
−Removed: (4) Amounts represent the pre-tax effect included in Other comprehensive income (loss).
+Added: (3) Amounts represent the pre-tax effect included in Other comprehensive income.
Refer to Note 25 - Other Comprehensive Income (Loss) for the related tax effects and the net of tax amounts.
4 unchanged sentences
defined benefit pension plans.
−Removed: Based on the above ruling, we currently estimate the cost of equalization under the minimum cost approach permitted by the High Court’s ruling to be approximately 1.2 % of our U.K.
+Added: Based on the above ruling, we estimated the cost of equalization under the minimum cost approach permitted by the High Court’s ruling to be approximately 1.2 % of our U.K.
defined benefit plan obligation at December 31, 2018 or approximately GBP 33 million (approximately USD $ 42 ).
2 unchanged sentences
Consistent with our approach to the estimate in 2018, the increase in the benefit obligation was recorded as a plan amendment in 2020 and together with the 2018 adjustment will be amortized to future net periodic benefit costs as a prior service cost (total approximately USD $ 2 per year covering both adjustments).
+Added: At December 31, 2021, the aggregate cost for this matter is estimated to be approximately 0.8 % of the U.K.
+Added: defined benefit plan obligation before equalization or approximately GBP 23 million (approximately USD $ 31 ) a reduction of
Xerox 2021 Annual Report 125
−Removed: The aggregate amount recorded for this matter continues to reflect our best estimate of the impact from these rulings.
+Added: approximately GBP 13 million (approximately USD $ 18 ) from prior estimates, which was accounted for as an actuarial gain.
+Added: This latest estimate reflects a more recent analysis completed by the Plan Actuary.
However, several significant uncertainties remain and therefore our estimate is subject to future change and adjustment.
5 unchanged sentences
Retiree Health Plans:
+Added: In December 2021, we amended our U.S.
+Added: Retiree Health Plan to reduce certain benefits for existing union retirees through the reduction or elimination of coverage or cost-sharing subsidies for retiree health care and life insurance costs.
+Added: This negative plan amendment resulted in a reduction of $ 50 in the postretirement benefit obligation.
+Added: The amount for the plan amendment will be amortized to future net periodic benefit costs as a prior service credit beginning in 2022.
In October 2020, we reduced the level of Company cost sharing for retiree health care benefits provided to certain existing non-union retirees.
This change to our U.S.
−Removed: Retiree Health Plan is effective January 1, 2021.
+Added: Retiree Health Plan was effective January 1, 2021.
The change in cost sharing is considered a negative plan amendment resulting in a reduction in the postretirement benefit obligation of $ 11 .
The amount for the plan amendment will be amortized to future net periodic benefit costs as a prior service credit.
−Removed: In December 2018, we amended our Canadian Retiree Health Plan to eliminate coverage for certain future and existing retirees.
−Removed: This negative plan amendment resulted in a reduction in the postretirement benefit obligation of $ 19 , which is being amortized to future net periodic benefit costs as a prior service credit.
−Removed: In October 2018, we amended our U.S.
−Removed: Retiree Health Plan effective January 1, 2019, to reduce certain benefits for existing non-union retirees through the reduction or elimination of coverage or cost-sharing subsidies for retiree health care and life insurance costs.
−Removed: This negative plan amendment resulted in a reduction in the postretirement benefit obligation of $ 283 , which consisted of $ 216 for the plan amendment and an actuarial gain of $ 67 related to the required plan remeasurement upon amendment.
−Removed: The amount for the plan amendment is being amortized to future net periodic benefit costs as a prior service credit.
Current Allocation
23 unchanged sentences
(2) Other NAV includes mutual funds of $ 75 (measured at NAV) which are invested approximately 75 % in fixed income securities and approximately 25 % in equity securities.
−Removed: (3) Other Level 1 includes net non-financial assets of $ 7 U.S.
+Added: (3) Other Level 1 includes mutual funds of $ 93 , which are invested in equity securities, and net non-financial assets of $ 2 U.S.
and $ 22 Non-U.S., respectively, such as due to/from broker, interest receivables and accrued expenses.
28 unchanged sentences
Sales — ( 15 ) — ( 4 ) ( 19 )
−Removed: Unrealized gains — 9 4 2 15
+Added: Unrealized losses ( 1 ) ( 8 ) ( 4 ) ( 8 ) ( 20 )
Currency translation — 12 ( 1 ) 8 19
2 unchanged sentences
Sales — ( 33 ) — ( 5 ) ( 38 )
−Removed: Unrealized losses ( 1 ) ( 8 ) ( 4 ) ( 8 ) ( 20 )
+Added: Unrealized gains (losses) 5 ( 12 ) 1 1 ( 10 )
Currency translation — ( 9 ) — ( 7 ) ( 16 )
Balance at December 31, 2021 $ 51 $ 164 $ 4 $ 75 $ 243
−Removed: Xerox 2020 Annual Report 129
Level 3 Valuation Method
4 unchanged sentences
The valuation techniques and inputs for our Level 3 assets have been consistently applied for all periods presented.
+Added: Xerox 2021 Annual Report 127
Investment Strategy
1 unchanged sentence
Equity investments (1)
+Added: 24 % 15 % 23 % 15 %
Fixed income investments 60 % 44 % 61 % 44 %
3 unchanged sentences
Total Investment Strategy 100 % 100 % 100 % 100 %
+Added: _____________
+Added: (1) Target allows for an additional allocation to synthetic equity which is offset by cash.
We employ a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk.
6 unchanged sentences
Other assets such as real estate, private equity, and hedge funds are used to improve portfolio diversification.
−Removed: Derivatives may be used to hedge market exposure in an efficient and timely manner;
−Removed: however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments.
+Added: Derivatives may be used to hedge market exposure in an efficient, timely and cost-effective manner;
+Added: however, derivatives may not be used to speculate or leverage the portfolio beyond the market value of the underlying investments.
Investment risks and returns are measured and monitored on an ongoing basis through annual liability measurements and quarterly investment portfolio reviews.
13 unchanged sentences
Retiree Health $ 25 $ 25
−Removed: Contributions to our U.S.
−Removed: Plans in 2020 include $ 25 associated with our non-qualified plan and $ 10 for one of our tax-qualified defined benefit plans.
−Removed: Estimated contributions to our U.S.
−Removed: Plans in 2021 are associated with our non-qualified plan as no other amounts were required to meet the minimum funding requirements for our tax qualified plans.
+Added: The 2021 U.S.
+Added: Defined benefit plans contributions did not include any contributions for our domestic tax-qualified defined benefit plans because none were required to meet the minimum funding requirements.
+Added: There are no contributions required in 2022 for our U.S.
+Added: tax-qualified defined benefit plans to meet the minimum funding requirements.
Xerox 2021 Annual Report 128
40 unchanged sentences
We recorded charges related to our defined contribution plans of $ 18 in 2021, $ 19 in 2020 and $ 49 in 2019.
+Added: During 2021, the Company suspended, and did not make, its full year 2021 employer matching contribution for its U.S.
+Added: based 401(k) plan for salaried (non-union) employees.
+Added: The suspension resulted in savings of $ 20 for the year ended December 31, 2021.
Xerox 2021 Annual Report 129
Note 20 - Income and Other Taxes
−Removed: Income before income taxes and equity income (pre-tax income) from continuing operations was as follows:
+Added: (Loss) income before income taxes and equity income (pre-tax (loss) income) from continuing operations was as follows:
Year Ended December 31,
2021 2020 2019
−Removed: Domestic income $ 353 $ 679 $ 331
+Added: Domestic (loss) income $ ( 343 ) $ 353 $ 679
Foreign (loss) income ( 132 ) ( 101 ) 143
−Removed: Income before Income Taxes and Equity Income $ 252 $ 822 $ 549
−Removed: The components of Income tax expense from continuing operations were as follows:
+Added: (Loss) Income before Income Taxes and Equity Income $ ( 475 ) $ 252 $ 822
+Added: The components of Income tax (benefit) expense from continuing operations were as follows:
Year Ended December 31,
9 unchanged sentences
Deferred ( 8 ) 10 21
−Removed: Income Tax Expense $ 64 $ 179 $ 247
+Added: Income Tax (Benefit) Expense $ ( 17 ) $ 64 $ 179
A reconciliation of the U.S.
13 unchanged sentences
Stock-based compensation ( 0.2 ) % 2.3 % ( 0.3 ) %
+Added: Goodwill impairment ( 29.1 ) % — % — %
Other 0.1 % 0.2 % 0.3 %
6 unchanged sentences
On a consolidated basis, including discontinued operations, we paid a total of $ 61 , $ 32 and $ 94 in income taxes to federal, foreign and state jurisdictions during the three years ended December 31, 2021, 2020 and 2019, respectively.
+Added: Xerox 2021 Annual Report 130
Total income tax expense (benefit) was allocated to the following items:
1 unchanged sentence
2021 2020 2019
−Removed: Pre-tax income $ 64 $ 179 $ 247
+Added: Pre-tax (loss) income $ ( 17 ) $ 64 $ 179
Discontinued operations (1)
7 unchanged sentences
(1) Refer to Note 6 - Divestitures for additional information regarding discontinued operations.
−Removed: Xerox 2020 Annual Report 132
Unrecognized Tax Benefits and Audit Resolutions
31 unchanged sentences
With respect to our major foreign jurisdictions, we are no longer subject to tax examinations by tax authorities for years before 2011.
+Added: Xerox 2021 Annual Report 131
Deferred Income Taxes
At December 31, 2021 we have not provided deferred taxes on our undistributed pre-1987 E&P of approximately $ 330 , as such undistributed earnings have been determined to be indefinitely reinvested and we currently do not plan to initiate any action that would precipitate a deferred tax impact.
−Removed: The increase from the amount at December 31, 2019 of $ 350 is due to foreign currency translation adjustments.
+Added: The decrease from the amount at December 31, 2020 of $ 350 is due to foreign currency translation adjustments.
Additionally, we have also not provided deferred taxes on the outside basis differences in our investments in foreign subsidiaries that are unrelated to undistributed earnings.
1 unchanged sentence
A determination of the unrecognized deferred taxes related to these components is not practicable.
−Removed: Xerox 2020 Annual Report 133
The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows:
−Removed: 2020 2019 (2)
Deferred Tax Assets
25 unchanged sentences
(1) Represents the deferred tax liabilities recorded in Other long-term liabilities - refer to Note 15 - Supplementary Financial Information.
−Removed: (2) The deferred tax assets and liabilities disclosure at December 31, 2019 has been adjusted to primarily reflect the tax effect of the gross deferred tax Operating Lease (ROU) Assets and the tax effect of the related gross deferred tax Operating lease liabilities recognized in accordance with ASC 842.
−Removed: There was no impact on Total Deferred Taxes, Net from this adjustment.
We record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and the amounts reported, as well as net operating loss and tax credit carryforwards.
4 unchanged sentences
tax credit carryforwards with a limited life.
−Removed: The net change in the total valuation allowance for the years ended December 31, 2020, 2019 and 2018 was a decrease of $ 3 , an increase of $ 2 and a decrease of $ 38 , respectively.
+Added: The net change in the total valuation allowance for the years ended December 31, 2021, 2020 and 2019 was a decrease of $ 39 , a decrease of $ 3 and an increase of $ 2 , respectively.
The valuation allowance relates primarily to certain net operating loss carryforwards, tax credit carryforwards and deductible temporary differences for which we have concluded it is more-likely-than-not that these items will not be realized in the ordinary course of operations.
−Removed: Although realization is not assured, we have concluded that it is more-likely-than-not that the deferred tax assets, for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and projected income from operating activities.
−Removed: The amount of the net deferred tax assets considered realizable, however, could change in the near term if future 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.
+Added: Although realization is not assured, we have concluded that it is more-likely-than-not that the deferred tax assets, for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of
Xerox 2021 Annual Report 132
+Added: operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and projected income from operating activities.
+Added: The amount of the net deferred tax assets considered realizable, however, could change in the near term if future 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.
At December 31, 2021, we had tax credit carryforwards of $ 143 available to offset future income taxes, of which $ 2 are available to carryforward indefinitely while the remaining $ 141 will expire 2022 through 2042 if not utilized.
13 unchanged sentences
Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs.
−Removed: Additionally, guarantees, indemnifications and claims arise during the ordinary course of business from relationships with suppliers, customers and nonconsolidated affiliates, as well as through divestitures and sales of businesses, when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur.
+Added: Additionally, guarantees, indemnifications and claims may arise during the ordinary course of business from relationships with suppliers, customers and nonconsolidated affiliates, as well as through divestitures and sales of businesses, when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur.
Nonperformance under a contract could trigger an obligation of the Company.
15 unchanged sentences
Liens on Brazilian assets — —
−Removed: The decrease in the unreserved portion of the tax contingency, inclusive of any related interest, was primarily related to closed cases.
+Added: The decrease in the unreserved portion of the tax contingency, inclusive of any related interest, was primarily related to closed cases and currency, partially offset by interest.
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.
1 unchanged sentence
Generally, any escrowed amounts would be refundable and any liens on assets would be removed to the extent the matters are resolved in our favor.
−Removed: We are also involved in certain disputes with contract and former employees.
−Removed: Exposures related to labor matters are not material to the financial statements as of December 31, 2020.
−Removed: We routinely assess all these matters as to probability of ultimately incurring a liability against our Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable.
Xerox 2021 Annual Report 133
+Added: also involved in certain disputes with contract and former employees.
+Added: Exposures related to labor matters are not material to the financial statements as of December 31, 2021 and 2020.
+Added: We routinely assess all these matters as to probability of ultimately incurring a liability against our Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable.
Litigation Against the Company
−Removed: Pending Litigation Relating to the Fuji Transaction:
−Removed: Jacobson, et al.:
−Removed: On April 11, 2019, Carmen Ribbe filed a putative derivative and class action stockholder complaint in the Supreme Court of the State of New York for New York County, naming as defendants Xerox, current Board members Joseph J.
−Removed: Echevarria, Cheryl Gordon Krongard, Keith Cozza, Giovanni G.
−Removed: Visentin, Jonathan Christodoro, Nicholas Graziano, and A.
−Removed: Scott Letier, and former Board members Jeffrey Jacobson, William Curt Hunter, Robert J.
−Removed: Keegan, Charles Prince, Ann N.
−Removed: Reese, Stephen H.
−Removed: Rusckowski, Gregory Q.
−Removed: Brown, and Sara Martinez Tucker.
−Removed: Plaintiff previously filed a putative shareholder derivative lawsuit on May 24, 2018 against certain of these defendants, as well as others, in the same court;
−Removed: that lawsuit was dismissed without prejudice on December 6, 2018.
−Removed: The new complaint included putative derivative claims on behalf of Xerox for breach of fiduciary duty against the then members of the Xerox Board who approved Xerox’s entry into agreements to settle shareholder actions filed in 2018 in the same court against Xerox, its then directors, and FUJIFILM Holdings Corporation (“Fujifilm”) in connection with a proposed transaction announced in January 2018 to combine Xerox and Fuji Xerox (the “Fuji Transaction”), including a consolidated putative class action, In re Xerox Corporation Consolidated Shareholder Litigation (“XCCSL”) , and actions filed by Darwin Deason, Deason v.
−Removed: Fujifilm Holdings Corp., et al.
−Removed: and Deason v.
−Removed: Xerox Corporation, et al.
−Removed: , against the same defendants as well as, in the first Deason action, former Xerox Chief Executive Officer Ursula M.
−Removed: Burns (the "Fuji Transaction Shareholder Lawsuits").
−Removed: Plaintiff alleged that the settlements ceded control of the Board and the Company to Darwin Deason and Carl C.
−Removed: Icahn without a vote by, or compensation to, other Xerox stockholders;
−Removed: improperly provided certain benefits and releases to the resigning and continuing directors;
−Removed: and subjected Xerox to potential breach of contract damages in an action by Fuji relating to Xerox’s termination of the proposed Fuji Transaction.
−Removed: Plaintiff also alleged that the current Board members breached their fiduciary duties by allegedly rejecting plaintiff’s January 14, 2019 shareholder demand on the Board to remedy harms arising from entry into the Deason and XCCSL settlements.
−Removed: The new complaint further included direct claims for breach of fiduciary duty on behalf of a putative class of current Xerox stockholders other than Mr.
−Removed: Icahn, and their affiliated entities (the “Ribbe Class”) against the defendants for causing Xerox to enter into the Deason and XCCSL settlements, which plaintiff alleged perpetuated control of Xerox by Mr.
−Removed: Icahn and Mr.
−Removed: Deason and denied the voting franchise of Xerox shareholders.
−Removed: Among other things, plaintiff sought damages in an unspecified amount for the alleged fiduciary breaches in favor of Xerox against defendants jointly and severally;
−Removed: rescission or reformation of the Deason and XCCSL settlements;
−Removed: restitution of funds paid to the resigning directors under the Deason settlement;
−Removed: an injunction against defendants’ engaging in the alleged wrongful practices and equitable relief affording the putative Ribbe Class the ability to determine the composition of the Board;
−Removed: costs and attorneys’ fees;
−Removed: and other further relief as the Court may deem proper.
−Removed: Defendants accepted service of the complaint as of May 16, 2019.
−Removed: On June 4, 2019, the Court entered an order setting a briefing schedule for defendants’ motions to dismiss the complaint.
−Removed: On July 12, 2019, plaintiff filed a motion to preclude defendants from referencing in their motions to dismiss the formation of, or work by, the committee of the Board established to investigate plaintiff’s shareholder demand.
−Removed: On July 18, 2019, the Court denied plaintiff’s motion and adjourned sine die the deadline by which defendants must file any motions to dismiss the complaint.
−Removed: On January 6, 2020, plaintiff filed his first amended complaint (“FAC”).
−Removed: The FAC included many of plaintiff’s original allegations regarding the 2018 shareholder litigation and settlements, as well as additional allegations, including, among others, that the members of the Special Committee of the Board that investigated plaintiff’s demand lacked independence and wrongfully refused to pursue the claims in the demand;
−Removed: allegations that an agreement announced in November 2019 for, among other things, the sale by Xerox of its interest in Fuji Xerox to Fujifilm and dismissal of Fujifilm’s breach of contract lawsuit against Xerox (the “FX Sale Transaction”), was unfavorable to Xerox;
−Removed: and allegations about a potential acquisition by Xerox of HP similar to those in the Miami Firefighters derivative action described below.
−Removed: In addition to the claims in the April 11, 2019 complaint, the FAC added as defendants Carl C.
−Removed: Icahn, Icahn Capital LP, and High River Limited Partnership (the “Icahn defendants”) and asserted claims against those defendants and the Board similar to those in Miami Firefighters relating to the Icahn defendants’ purchases of HP stock allegedly with knowledge of material nonpublic information concerning Xerox’s potential acquisition of HP.
−Removed: In addition to the relief sought in Ribbe’s prior complaint, the FAC sought relief similar to that sought in Miami Firefighters relating to the Icahn defendants’ alleged purchases of HP stock.
−Removed: On January 21, 2020, plaintiff in the Miami Firefighters action filed a motion seeking to intervene in Ribbe and to have stayed, or alternatively, severed and consolidated with the Miami Firefighters action, any claims first filed in Miami Firefighters and later asserted by Ribbe.
−Removed: At a conference held on February 25, 2020, the Court denied the motion to intervene without prejudice.
−Removed: On March 6, 2020, plaintiff in the Miami Firefighters action renewed its
−Removed: Xerox 2020 Annual Report 136
−Removed: On July 23, 2020, after hearing oral argument, the Court issued an order denying the motion and setting certain case deadlines.
−Removed: Discovery commenced.
−Removed: On August 7, 2020, Xerox, the director defendants, and the Icahn defendants filed separate motions to dismiss.
−Removed: On October 1, 2020, plaintiff filed a cross-motion seeking, among other relief, joinder of Xerox Holdings Corporation as a nominal defendant.
−Removed: Briefing on the motions to dismiss and plaintiff’s cross-motion was completed on October 16, 2020.
−Removed: On December 14, 2020, following oral argument, the Court issued a decision and order denying plaintiff’s cross-motion and granting defendants’ motions, dismissing the action in its entirety as to all defendants.
−Removed: Dismissal as to the Icahn defendants was conditioned on the filing of an affidavit, which the Icahn defendants filed on December 16, 2020, indicating whether defendant Icahn gained a profit or incurred a loss on purchases of HP stock during the relevant time period.
−Removed: On January 13, 2021, plaintiff filed a notice of appeal of the December 14, 2020 dismissal order to the Appellate Division, First Department.
−Removed: Xerox will vigorously defend against this matter.
−Removed: At this time, it is premature to make any conclusion regarding the probability of incurring material losses in this litigation.
−Removed: Should developments cause a change in our determination as to an unfavorable outcome, or result in a final adverse judgment or settlement, there could be a material adverse effect on our results of operations, cash flows and financial position in the period in which such change in determination, judgment, or settlement occurs.
Miami Firefighters’ Relief & Pension Fund v.
Icahn, et al.:
−Removed: On December 13, 2019, alleged shareholder Miami Firefighters’ Relief & Pension Fund (“Miami Firefighters”) filed a purported derivative complaint in New York State Supreme Court, New York County on behalf of Xerox Holdings Corporation ("Xerox Holdings") (as nominal defendant) against Carl Icahn and his affiliated entities High River Limited Partnership and Icahn Capital LP (the "Icahn defendants"), Xerox Holdings, and all current Xerox Holdings directors (the "Directors").
−Removed: Plaintiff made no demand on the Board before bringing the action, but instead alleged that doing so would be futile because the Directors lack independence due to alleged direct or indirect relationships with Icahn.
−Removed: Among other things, the complaint alleged that Icahn controlled and dominated Xerox Holdings and therefore owed a fiduciary duty of loyalty to Xerox Holdings, which he breached by acquiring HP stock at a time when he knew that Xerox Holdings was considering an offer to acquire HP or had knowledge of the "obvious merits" of such potential acquisition, and that the Icahn defendants’ holdings of HP common stock had risen in market value by approximately $ 128 since disclosure of the offer.
−Removed: The complaint included four causes of action:
+Added: On December 13, 2019, alleged shareholder Miami Firefighters’ Relief & Pension Fund (“Miami Firefighters”) filed a purported derivative complaint in New York State Supreme Court, New York County on behalf of Xerox Holdings Corporation ("Xerox Holdings") (as nominal defendant) against Carl Icahn and his affiliated entities High River Limited Partnership and Icahn Capital LP (the "Icahn defendants"), Xerox Holdings, and all then-current Xerox Holdings directors (the "Directors").
+Added: Plaintiff made no demand on the Board before bringing the action, but instead alleges that doing so would be futile because the Directors lack independence due to alleged direct or indirect relationships with Icahn.
+Added: Among other things, the complaint alleges that Icahn controls and dominates Xerox Holdings and therefore owes a fiduciary duty of loyalty to Xerox Holdings, which he breached by acquiring HP stock at a time when he knew that Xerox Holdings was considering an offer to acquire HP or had knowledge of the "obvious merits" of such potential acquisition, and that the Icahn defendants’ holdings of HP common stock have risen in market value by approximately $ 128 since disclosure of the offer.
+Added: The complaint includes four causes of action:
breach of fiduciary duty of loyalty against the Icahn defendants;
2 unchanged sentences
and breach of fiduciary duty of loyalty against the Directors (for any consent to the Icahn defendants’ purchases of HP common stock while Xerox Holdings was considering acquiring HP).
−Removed: The complaint sought a judgment of breach of fiduciary duties against the Icahn defendants and the Directors;
+Added: The complaint seeks a judgment of breach of fiduciary duties against the Icahn defendants and the Directors;
a declaration that Icahn breached his confidentiality agreement with Xerox Holdings;
5 unchanged sentences
Reynolds against the same parties in the same court, and designating Miami Firefighters’ counsel as lead counsel in the consolidated action.
−Removed: On January 21, 2020, plaintiff filed a motion seeking to intervene in Ribbe v.
−Removed: Jacobson, et al.
−Removed: , described above, and to have stayed, or alternatively, severed and consolidated with this action, any claims first filed in this action and later asserted by Ribbe.
−Removed: At a conference held on February 25, 2020, the Court denied the motion to intervene without prejudice.
−Removed: On March 6, 2020, plaintiff in the Miami Firefighters action renewed its motion.
−Removed: On July 23, 2020, after hearing oral argument, the Court issued an order denying the motion and setting certain case deadlines.
Discovery commenced.
6 unchanged sentences
On January 15, 2021, the Court issued a decision and order denying the motion.
−Removed: Xerox 2020 Annual Report 137
Also on January 15, 2021, plaintiff filed a notice of appeal of the December 14, 2020 dismissal order to the Appellate Division, First Department.
On January 20, 2021, plaintiff filed a notice of appeal of the January 15, 2021 order denying its motion for discovery to the Appellate Division, First Department.
−Removed: Xerox Holdings will vigorously defend against this matter.
−Removed: At this time, it is premature to make any conclusion regarding the probability of incurring material losses in this litigation.
−Removed: Should developments cause a change in our determination as to an unfavorable outcome, or result in a final adverse judgment or settlement, there could be a material adverse effect on our results of operations, cash flows and financial position in the period in which such change in determination, judgment, or settlement occurs.
+Added: On July 15, 2021, plaintiff filed its brief in connection with the appeals of the December 14, 2020 dismissal order and the January 15, 2021 discovery order.
+Added: On November 18, 2021, the Appellate Division issued its decision.
+Added: The Court reversed the lower court’s ruling to the extent that it dismissed the claims asserted against the Icahn defendants.
+Added: The claims asserted against the Directors remain dismissed.
+Added: On December 8, 2021, the Xerox Board approved the formation of a Special Litigation Committee to investigate and evaluate the claims and allegations asserted in the Miami Firefighters’ case and determine the course of action that would be in the best interests of the Company and its shareholders.
+Added: The Special Litigation Committee moved to stay the litigation pending its investigation and on January 25, 2022, the Court issued an order staying all discovery until February 28, 2022, except as related to the issue of the alleged damages sustained by Xerox.
+Added: Xerox 2021 Annual Report 134
+Added: Xerox Holdings Corporation v.
+Added: Factory Mutual Insurance Company and Related Actions:
+Added: On March 10, 2021, Xerox Holdings Corporation (“Xerox Holdings”) filed a complaint for breach of contract and declaratory judgment against Factory Mutual Insurance Company in Rhode Island Superior Court, Providence County seeking insurance coverage for business interruption losses resulting from the coronavirus/COVID-19 pandemic.
+Added: The complaint alleges that defendant agreed to provide Xerox Holdings with up to $ 1 billion in per-occurrence coverage for losses resulting from pandemic-related loss or damage to certain real and other property, including business interruption loss resulting from insured property damage;
+Added: that the pandemic had inflicted significant physical loss or damage to property of Xerox Holdings and its direct and indirect customers;
+Added: that Xerox Holdings’ worldwide actual and projected losses through the end of 2020 totaled in excess of $ 300 (and is still increasing);
+Added: and that following Xerox Holdings' timely and proper claim in March 2020 for coverage under the “all risk” commercial property insurance policy it had purchased from defendant, defendant improperly denied and rejected coverage for most of the claim.
+Added: The complaint seeks a jury trial, a declaratory judgment against defendant declaring that Xerox is entitled to full coverage of costs and losses under defendant’s policy and declaring that defendant is required to pay for such costs and losses, subject to any applicable limits;
+Added: damages in an amount to be determined at trial;
+Added: consequential damages;
+Added: attorneys’ fees and costs;
+Added: pre- and post-judgment interest;
+Added: and other relief the Court deems just and proper.
+Added: Also on March 10, 2021, subsidiaries of Xerox Holdings filed similar complaints and related requests for arbitration in Toronto, London, and Amsterdam for Canadian, UK and European losses.
+Added: Xerox Holdings consented to defendant’s request for an extension of its time in which to answer or otherwise respond to the complaint.
+Added: On May 6, 2021, FMG filed its answer to the complaint.
+Added: The parties thereafter agreed to stay all non-U.S.
+Added: proceedings pending the outcome of the U.S.
Guarantees, Indemnifications and Warranty Liabilities
18 unchanged sentences
In the case of lease guarantees, we may contest the liabilities asserted under the lease.
−Removed: Further, our obligations under these agreements and guarantees may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments we made.
+Added: Xerox 2021 Annual Report 135
+Added: obligations under these agreements and guarantees may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments we made.
Patent Indemnifications
3 unchanged sentences
Indemnification of Officers and Directors
−Removed: The corporate by-laws of Xerox Holdings Corporation and Xerox Corporation require that, except to the extent expressly prohibited by law, we must indemnify Xerox Holdings Corporation's and Xerox Corporation's officers and directors, respectively, against judgments, fines, penalties and amounts paid in settlement, including legal fees and
−Removed: Xerox 2020 Annual Report 138
−Removed: all appeals, incurred in connection with civil or criminal action or proceedings, as it relates to their services to Xerox Holdings Corporation and/or Xerox Corporation and their subsidiaries.
+Added: The corporate by-laws of Xerox Holdings Corporation and Xerox Corporation require that, except to the extent expressly prohibited by law, we must indemnify Xerox Holdings Corporation's and Xerox Corporation's officers and directors, respectively, against judgments, fines, penalties and amounts paid in settlement, including legal fees and all appeals, incurred in connection with civil or criminal action or proceedings, as it relates to their services to Xerox Holdings Corporation and/or Xerox Corporation and their subsidiaries.
Although the by-laws provide no limit on the amount of indemnification, Xerox Holdings Corporation or Xerox Corporation may have recourse against our insurance carriers for certain payments made by Xerox Holdings Corporation or Xerox Corporation.
15 unchanged sentences
ii) support our obligations related to the Brazil tax and labor contingencies (see Brazil Contingencies );
−Removed: and iii) support certain contracts, primarily with public sector customers, which require us to provide a surety bond as a guarantee of our performance of contractual obligations.
−Removed: In general, we would only be liable for the amount of these guarantees in the event we defaulted in performing our obligations under each contract;
+Added: iii) support our obligations related to our U.K.
+Added: pension plans;
+Added: and iv) support certain contracts, primarily with public sector customers, which require us to provide a surety bond as a guarantee of our performance of contractual obligations.
+Added: In general, we would only be liable for the amount of these guarantees in the event we, or one of our direct or indirect subsidiaries whose obligations we have guaranteed, defaulted in performing our obligations under each contract;
the probability of which we believe is remote.
We believe that our capacity in the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support.
+Added: Xerox 2021 Annual Report 136
Note 22 - Preferred Stock
8 unchanged sentences
The Series A Preferred Stock is classified as temporary equity (i.e., apart from permanent equity) as a result of the contingent redemption feature.
−Removed: Xerox 2020 Annual Report 139
Series A Preferred Stock Voting Rights
−Removed: The Xerox Holdings Corporation Series A Preferred Stock will vote together with the Xerox Holdings Corporation common stock, as a single class, on all matters submitted to the shareholders of Xerox Holdings Corporation, but the Xerox Holdings Corporation Series A Voting Preferred Stock will only be entitled to one vote for every ten shares of Xerox Holdings Corporation common stock into which the Xerox Holdings Corporation Series A Preferred Stock is convertible ( 674,157 votes at December 31, 2020).
+Added: The Xerox Holdings Corporation Series A Preferred Stock votes together with the Xerox Holdings Corporation common stock, as a single class, on all matters submitted to the shareholders of Xerox Holdings Corporation, but the Xerox Holdings Corporation Series A Voting Preferred Stock is only entitled to one vote for every ten shares of Xerox Holdings Corporation common stock into which the Xerox Holdings Corporation Series A Preferred Stock is convertible ( 674,157 votes at December 31, 2021).
+Added: Xerox 2021 Annual Report 137
Note 23 – Shareholders’ Equity
6 unchanged sentences
Treasury Stock
−Removed: Xerox Holdings accounts for the repurchased common stock under the cost method and includes such treasury stock as a component of our common shareholders' equity.
+Added: Xerox Holdings Corporation accounts for the repurchased Common stock under the cost method and includes such Treasury stock as a component of our Common shareholders' equity.
Retirement of Treasury stock is recorded as a reduction of Common stock and Additional paid-in capital at the time such retirement is approved by our Board of Directors.
−Removed: The following provides cumulative information relating to Xerox Holdings' share repurchase program from its inception through December 31, 2020 (shares in thousands):
+Added: In October 2021, the Xerox Holdings Corporation's Board of Directors authorized a $ 500 share repurchase program (exclusive of commissions and fees).
+Added: This program replaced the approximate $ 450 thousand of authority remaining under Xerox Holdings Corporation's previously authorized $ 1.1 billion share repurchase program.
+Added: The following provides cumulative information relating to Xerox Holdings Corporation's current share repurchase program from its inception in October 2021 through December 31, 2021 (shares in thousands):
Authorized share repurchase program $ 500
2 unchanged sentences
Number of shares repurchased 19,401
−Removed: Of the $ 1.0 billion of share repurchase granted in 2019 by Xerox Holdings Corporation's Board of Directors, approximately $ 400 of that authority remained available at December 31, 2020.
−Removed: In January 2021, Xerox Holdings Corporation's Board of Directors authorized an additional $ 100 of share repurchase authority increasing the remaining authorization to $ 500 .
+Added: Of the $ 500 of share repurchase granted in October 2021 by Xerox Holdings Corporation's Board of Directors, approximately $ 113 of that authority remained available at December 31, 2021.
The following table reflects the changes in Common and Treasury stock shares (shares in thousands).
28 unchanged sentences
In 2019, the timing of our annual grant of awards was changed from April to January to more closely align the grant date with the underlying performance period related to PSUs.
−Removed: Stock options were not awarded under the 2020 or 2019 grants.
+Added: Stock options were last awarded under the 2018 grant.
Restricted Stock Units
3 unchanged sentences
Prior to the 2018 grant, RSUs vested on a three-year cliff basis from the date of grant.
+Added: Beginning with the 2021 grant, RSUs vest on a graded schedule as follows:
+Added: 33 % after one year of service, 33 % after two years of service and 34 % after three years of service from the date of grant.
Performance Share Units
4 unchanged sentences
The measures are independent of each other and depending on the achievement of these metrics, a recipient of a PSU award is entitled to receive a number of shares equal to a percentage, ranging from 0 % to 200 % of the PSU award granted.
−Removed: The 2020 and 2019 PSUs retained the three-year cliff vesting from the date of grant.
+Added: PSUs have a three-year cliff vesting from the date of grant.
In November 2020, the Xerox Holdings Corporation Board approved grants of RSUs to employees who had received grants of PSUs in 2019 and/or 2020 that included performance and market metrics that have been permanently adversely impacted by the COVID-19 pandemic.
1 unchanged sentence
The grant-date value of the new RSUs for each recipient was approximately 50 % of the grant-date value of the recipient’s 2020 and/or 2019 PSUs.
−Removed: These RSU grants are not intended to take the place of the Company’s 2021 regular annual equity incentive programs.
−Removed: PSU awards granted by the Xerox Holdings Corporation in 2018 were comprised of a performance-based component that included Revenue Growth and Free Cash Flow metrics and a market-based component that included a Total Shareholder Return (TSR) metric.
−Removed: The metrics were equally weighted;
−Removed: accordingly, each PSU grant was two-thirds performance-based (Revenue Growth and Free Cash Flow) and one-third market-based (TSR).
−Removed: The measures are independent of each other and depending on the achievement of these metrics, a recipient of a PSU award is entitled to receive a number of shares equal to a percentage, ranging from 0 % to 200 % of the PSU award granted.
−Removed: The 2018 PSUs have a three-year cliff vesting from the date of grant.
−Removed: In December 2018, the Xerox Holdings Corporation Board approved and modified the performance-based metrics and the market-based metric of the 2018 PSU grant to a one-year performance period (2018), and a two-year time-based requirement (2019 and 2020).
−Removed: PSU awards granted in 2017 were exclusively performance based and included metrics for Revenue Growth, Earnings per Share and Cash Flow from Operations that were measured over a three-year performance period.
−Removed: The 2017 PSUs had a three-year cliff vesting from the date of grant.
−Removed: Xerox 2020 Annual Report 141
+Added: These RSU grants were not intended to take the place of the Company’s 2021 regular annual equity incentive programs.
Performance-Based Component:
8 unchanged sentences
Since the Absolute Share Price metric of the PSU award represents a market condition, a Monte Carlo simulation was used to determine the grant-date fair value.
+Added: Xerox 2021 Annual Report 139
The TSR metric included as the market-based component of the 2018 PSU grant was based on the percentage change in Xerox Corporation stock price plus dividends paid over the three-year measurement period.
1 unchanged sentence
Since the TSR metric of the PSU award represented a market condition, a Monte Carlo simulation was used to determine the grant-date fair value.
−Removed: A summary of Xerox Holdings key valuation input assumptions used in the Monte Carlo simulation relative to the 2020, 2019 and 2018 PSU awards granted were as follows:
−Removed: 2020 Award 2019 Award 2018 Award
−Removed: Term 3 years 3 years 3 years
+Added: A summary of Xerox Holdings key valuation input assumptions used in the Monte Carlo simulation relative to awards granted were as follows:
+Added: 2021 Award 2020 Award 2019 Award 2018 Award
+Added: Term 3 years 3 years 3 years 3 years
Risk-free interest rate (1)
14 unchanged sentences
2020 Total Return Targets (1)
−Removed: 200 % $45.00 and above $40.00 and above
+Added: 2019 Total Return Targets (1)
+Added: 200 % $ 33.00 and above
+Added: $ 45.00 and above
+Added: $ 40.00 and above
100 % $ 30.00 $ 40.00 $ 35.00
50 % $ 27.00 $ 37.00 $ 30.00
−Removed: 0 % Below $37.00 Below $30.00
+Added: 0 % Below $ 27.00
+Added: Below $ 37.00
+Added: Below $ 30.00
Our 2018 TSR metric compared to the peer group TSR will determine the payout as follows:
31 unchanged sentences
2021 2020 2019
−Removed: Shares Weighted Average Grant Date Fair Value (1)
−Removed: Shares Weighted Average Grant Date Fair Value (1)
+Added: Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value (1)
Shares Weighted Average Grant Date Fair Value (1)
7 unchanged sentences
Outstanding at January 1 2,425 $ 26.67 2,830 $ 24.99 2,462 $ 29.83
−Removed: Granted 901 37.59 1,433 19.46 1,060 27.36
+Added: 1,195 24.67 901 37.59 1,433 19.46
Vested ( 672 ) 28.08 ( 993 ) 31.94 ( 633 ) 29.56
10 unchanged sentences
(2) Includes a 2018 Restricted Stock Award (RSA) grant of 351 shares with a corresponding grant date fair value of $ 28.51 , which vested in 2019.
+Added: (3) Includes 60 shares associated with the over-performance of our 2018 PSU grant.
Unrecognized compensation cost related to non-vested stock-based awards at December 31, 2021 was as follows:
7 unchanged sentences
Stock Options (1)
−Removed: (1) Strike price greater than Xerox Holdings Corporation Stock price at December 31, 2020, therefore, intrinsic value considered to be $ 0 .
+Added: (1) Strike price greater than Xerox Holdings Corporation Stock price at December 31, 2021, therefore, intrinsic value is considered to be $ 0 .
The intrinsic value and actual tax benefit realized for all vested and exercised stock-based awards was as follows:
December 31, 2021 December 31, 2020 December 31, 2019
−Removed: Awards Total Intrinsic Value Cash Received Tax Benefit Total Intrinsic Value (1)
−Removed: Cash Received Tax Benefit Total Intrinsic Value Cash Received Tax Benefit
+Added: Awards Total Intrinsic Value Cash Received Tax Benefit Total Intrinsic Value Cash Received Tax Benefit Total Intrinsic Value (1)
+Added: Cash Received Tax Benefit
Restricted Stock Units $ 30 $ — $ 5 $ 33 $ — $ 5 $ 55 $ — $ 11
11 unchanged sentences
Pre-tax Net of Tax Pre-tax Net of Tax Pre-tax Net of Tax
−Removed: Translation Adjustments Gains (Losses)
−Removed: Aggregate adjustment in period $ 238 $ 241 $ 53 $ 45 $ ( 251 ) $ ( 242 )
+Added: Translation Adjustments (Losses) Gains
+Added: Aggregates adjustment in period $ ( 145 ) $ ( 141 ) $ 238 $ 241 $ 53 $ 45
Divestiture - reclassification — — — — 17 17
−Removed: Net Translation Adjustments Gains (Losses) 238 241 70 62 ( 251 ) ( 242 )
+Added: Net Translation Adjustments (Losses) Gains ( 145 ) ( 141 ) 238 241 70 62
Unrealized Gains (Losses)
−Removed: Changes in fair value of cash flow hedges gains 4 3 2 1 9 8
+Added: Changes in fair value of cash flow hedges (losses) gains ( 12 ) ( 9 ) 4 3 2 1
Changes in cash flow hedges reclassed to earnings (1)
7 5 1 1 ( 9 ) ( 7 )
−Removed: Other losses — — — — ( 2 ) ( 2 )
−Removed: Net Unrealized Gains (Losses) 5 4 ( 7 ) ( 6 ) 21 16
+Added: Net Unrealized (Losses) Gains ( 5 ) ( 4 ) 5 4 ( 7 ) ( 6 )
Defined Benefit Plans Gains (Losses)
5 unchanged sentences
Fuji Xerox changes in defined benefit plans, net (3)
−Removed: — — 8 8 ( 25 ) ( 25 )
Other (losses) gains (4)
12 unchanged sentences
Cumulative translation adjustments $ ( 1,861 ) $ ( 1,720 ) $ ( 1,961 )
−Removed: Other unrealized gains (losses), net 2 ( 2 ) 4
+Added: Other unrealized (losses) gains, net ( 2 ) 2 ( 2 )
Benefit plans net actuarial losses and prior service credits ( 1,125 ) ( 1,614 ) ( 1,683 )
−Removed: ( 1,614 ) ( 1,683 ) ( 1,546 )
Total Accumulated Other Comprehensive Loss Attributable to Xerox Holdings/Xerox $ ( 2,988 ) $ ( 3,332 ) $ ( 3,646 )
−Removed: _____________
−Removed: (1) Amounts prior to 2019 include our share of Fuji Xerox balances.
−Removed: (2) The change from December 31, 2018 includes $( 127 ) related to the adoption of ASU 2018-02 and the reclassification of stranded tax effects resulting from the Tax Act - Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies for additional information.
We utilize the aggregate portfolio approach for releasing disproportionate income tax effects from AOCL.
Xerox 2021 Annual Report 143
−Removed: Note 26 – Earnings per Share
+Added: Note 26 – (Loss) Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share of Xerox Holdings Corporation's Common stock (shares in thousands):
1 unchanged sentence
2021 2020 2019
−Removed: Basic Earnings per Share:
−Removed: Net Income from continuing operations attributable to Xerox Holdings $ 192 $ 648 $ 306
+Added: Basic (Loss) Earnings per Share:
+Added: Net (Loss) Income from continuing operations attributable to Xerox Holdings $ ( 455 ) $ 192 $ 648
Accrued dividends on preferred stock ( 14 ) ( 14 ) ( 14 )
−Removed: Adjusted Net income from continuing operations available to common shareholders 178 634 292
+Added: Adjusted Net (Loss) income from continuing operations available to common shareholders ( 469 ) 178 634
Income from discontinued operations attributable to Xerox Holdings, net of tax — — 705
−Removed: Adjusted Net income available to common shareholders $ 178 $ 1,339 $ 347
+Added: Adjusted Net (Loss) income available to common shareholders $ ( 469 ) $ 178 $ 1,339
Weighted average common shares outstanding 183,168 208,983 221,969
−Removed: Basic Earnings per Share:
+Added: Basic (Loss) Earnings per Share:
Continuing operations $ ( 2.56 ) $ 0.85 $ 2.86
Discontinued operations — — 3.17
−Removed: Basic Earnings per Share $ 0.85 $ 6.03 $ 1.40
−Removed: Diluted Earnings per Share:
−Removed: Net Income from continuing operations attributable to Xerox Holdings $ 192 $ 648 $ 306
+Added: Basic (Loss) Earnings per Share $ ( 2.56 ) $ 0.85 $ 6.03
+Added: Diluted (Loss) Earnings per Share:
+Added: Net (Loss) Income from continuing operations attributable to Xerox Holdings $ ( 455 ) $ 192 $ 648
Accrued dividends on preferred stock ( 14 ) ( 14 ) —
−Removed: Adjusted Net income from continuing operations available to common shareholders 178 648 292
+Added: Adjusted Net (Loss) income from continuing operations available to common shareholders ( 469 ) 178 648
Income from discontinued operations attributable to Xerox Holdings, net of tax — — 705
−Removed: Adjusted Net income available to common shareholders $ 178 $ 1,353 $ 347
+Added: Adjusted Net (Loss) income available to common shareholders $ ( 469 ) $ 178 $ 1,353
Weighted average common shares outstanding 183,168 208,983 221,969
4 unchanged sentences
Adjusted Weighted average common shares outstanding 183,168 211,437 233,169
−Removed: Diluted Earnings per Share:
+Added: Diluted (Loss) Earnings per Share:
Continuing operations $ ( 2.56 ) $ 0.84 $ 2.78
Discontinued operations — — 3.02
−Removed: Diluted Earnings per Share $ 0.84 $ 5.80 $ 1.38
+Added: Diluted (Loss) Earnings per Share $ ( 2.56 ) $ 0.84 $ 5.80
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 (shares in thousands):
5 unchanged sentences
Xerox 2021 Annual Report 144
−Removed: Xerox Holdings Corporation
−Removed: Quarterly Results of Operations (Unaudited)
−Removed: (in millions, except per-share data) First
−Removed: Quarter Second
−Removed: Quarter Third
−Removed: Quarter Fourth
−Removed: Quarter (2)(3)
−Removed: Total Revenues
−Removed: $ 1,860 $ 1,465 $ 1,767 $ 1,930 $ 7,022
−Removed: Costs and Expenses
−Removed: 1,865 1,430 1,648 1,827 6,770
−Removed: (Loss) Income before Income Taxes and Equity Income (5) 35 119 103 252
−Removed: Income tax (benefit) expense
−Removed: (1) 8 29 28 64
−Removed: Equity in net income of unconsolidated affiliates
−Removed: (Loss) Income from Continuing Operations (2) 27 90 77 192
−Removed: Income from discontinued operations, net of tax — — — — —
−Removed: Net (Loss) Income Attributable to Xerox Holdings $ (2) $ 27 $ 90 $ 77 $ 192
−Removed: Basic (Loss) Earnings per Share (1) :
−Removed: Continuing operations $ (0.03) $ 0.11 $ 0.41 $ 0.37 $ 0.85
−Removed: Discontinued operations — — — — —
−Removed: Total Basic (Loss) Earnings per Share
−Removed: $ (0.03) $ 0.11 $ 0.41 $ 0.37 $ 0.85
−Removed: Diluted (Loss) Earnings per Share (1) :
−Removed: Continuing operations $ (0.03) $ 0.11 $ 0.41 $ 0.36 $ 0.84
−Removed: Discontinued operations — — — — —
−Removed: Total Diluted (Loss) Earnings per Share
−Removed: $ (0.03) $ 0.11 $ 0.41 $ 0.36 $ 0.84
−Removed: Total Revenues
−Removed: $ 2,180 $ 2,263 $ 2,179 $ 2,444 $ 9,066
−Removed: Costs and Expenses
−Removed: 2,107 2,073 1,956 2,108 8,244
−Removed: Income before Income Taxes and Equity Income 73 190 223 336 822
−Removed: Income tax (benefit) expense
−Removed: (10) 50 66 73 179
−Removed: Equity in net income of unconsolidated affiliates
−Removed: Income from Continuing Operations 85 142 158 266 651
−Removed: Income from discontinued operations, net of tax 51 42 64 553 710
−Removed: Net Income 136 184 222 819 1,361
−Removed: Income from continuing operations attributable to noncontrolling interests 1 1 1 — 3
−Removed: Income from discontinued operations attributable to noncontrolling interests 2 2 — 1 5
−Removed: Net Income Attributable to Xerox Holdings $ 133 $ 181 $ 221 $ 818 $ 1,353
−Removed: Basic Earnings per Share (1) :
−Removed: Continuing operations $ 0.35 $ 0.62 $ 0.70 $ 1.22 $ 2.86
−Removed: Discontinued operations 0.22 0.17 0.29 2.56 3.17
−Removed: Total Basic Earnings per Share
−Removed: $ 0.57 $ 0.79 $ 0.99 $ 3.78 $ 6.03
−Removed: Diluted Earnings per Share (1) :
−Removed: Continuing operations $ 0.34 $ 0.60 $ 0.68 $ 1.17 $ 2.78
−Removed: Discontinued operations 0.21 0.17 0.28 2.44 3.02
−Removed: Total Diluted Earnings per Share
−Removed: $ 0.55 $ 0.77 $ 0.96 $ 3.61 $ 5.80
−Removed: _____________
−Removed: (1) The sum of quarterly earnings per share may differ from the full-year amounts due to rounding, or in the case of diluted earnings per share, because securities that are anti-dilutive in certain quarters may not be anti-dilutive on a full-year basis.
−Removed: (2) Fourth Quarter 2019 Revenues includes $77 million related to an OEM license agreement by and between Fuji Xerox and Xerox and Fourth Quarter 2019 Income from discontinued operations, net of tax includes an after-tax gain of $539 million on the sale of our investments in Fuji Xerox and Xerox International Partners.
−Removed: Refer to Note 6 - Divestitures in the Consolidated Financial Statements for additional information.
−Removed: (3) Fourth Quarter 2020 income tax expense includes a $7 million benefit for a reduction in the deferred tax liability associated with undistributed earnings that should have been recorded in Fourth Quarter 2019.
−Removed: Xerox 2020 Annual Report 147
−Removed: Xerox Corporation
−Removed: Quarterly Results of Operations (Unaudited)
−Removed: (in millions) First
−Removed: Quarter Second
−Removed: Quarter Third
−Removed: Quarter Fourth
−Removed: Quarter (1)(2)
−Removed: Total Revenues
−Removed: $ 1,860 $ 1,465 $ 1,767 $ 1,930 $ 7,022
−Removed: Costs and Expenses
−Removed: 1,865 1,430 1,637 1,837 6,769
−Removed: (Loss) Income before Income Taxes and Equity Income (5) 35 130 93 253
−Removed: Income tax (benefit) expense
−Removed: (1) 8 29 28 64
−Removed: Equity in net income of unconsolidated affiliates
−Removed: (Loss) Income from Continuing Operations (2) 27 101 67 193
−Removed: Income from discontinued operations, net of tax — — — — —
−Removed: Net (Loss) Income Attributable to Xerox Holdings $ (2) $ 27 $ 101 $ 67 $ 193
−Removed: Total Revenues
−Removed: $ 2,180 $ 2,263 $ 2,179 $ 2,444 $ 9,066
−Removed: Costs and Expenses
−Removed: 2,107 2,073 1,956 2,108 8,244
−Removed: Income before Income Taxes and Equity Income 73 190 223 336 822
−Removed: Income tax (benefit) expense
−Removed: (10) 50 66 73 179
−Removed: Equity in net income of unconsolidated affiliates
−Removed: Income from Continuing Operations 85 142 158 266 651
−Removed: Income from discontinued operations, net of tax 51 42 64 553 710
−Removed: Net Income 136 184 222 819 1,361
−Removed: Income from continuing operations attributable to noncontrolling interests 1 1 1 — 3
−Removed: Income from discontinued operations attributable to noncontrolling interests 2 2 — 1 5
−Removed: Net Income Attributable to Xerox $ 133 $ 181 $ 221 $ 818 $ 1,353
−Removed: _____________
−Removed: (1) Fourth Quarter 2019 Revenues includes $77 million related to an OEM license agreement by and between Fuji Xerox and Xerox and Fourth Quarter 2019 Income from discontinued operations, net of tax includes an after-tax gain of $539 million on the sale of our investments in Fuji Xerox and Xerox International Partners.
−Removed: Refer to Note 6 - Divestitures in the Consolidated Financial Statements for additional information.
−Removed: (2) Fourth Quarter 2020 income tax expense includes a $7 million benefit for a reduction in the deferred tax liability associated with undistributed earnings that should have been recorded in Fourth Quarter 2019.
+Added: Note 27 – Subsequent Events
+Added: Secured Borrowings
+Added: In January 2022, we entered into a secured loan agreement with financial institutions where we sold $ 789 of U.S.
+Added: based finance receivables to an SPE.
+Added: The purchase by the SPE was funded through a $ 668 amortizing secured loan to the SPE from the financial institutions.
+Added: The SPE is fully consolidated in our financial statements.
+Added: The secured loan was an amendment of the December 2020 secured borrowing, which had a remaining balance of $ 248 , and we received the incremental net cash.
+Added: The transaction was accounted for as an extinguishment of debt and the issuance of new debt and associated collateral.
+Added: The new loan has a variable interest rate based on the financial institutions' cost of funds plus a spread (initial rate of 1.40 %) and an expected life of approximately 2.5 years, with half of the loan projected to be repaid within the first year based on collections of the underlying portfolio of receivables.
+Added: Acquisition of Powerland
+Added: In February 2022, Xerox acquired Powerland, a leading IT services provider in Canada for approximately $ 60 (CAD 76 million), which includes certain holdbacks and payment of assumed tax liabilities.
+Added: The acquisition also includes contingent consideration up to approximately $ 22 (CAD 28 million) based on future performance of the acquisition over the next two years .
+Added: The acquisition strengthens Xerox’s IT services offerings in North America, which include cloud, cyber security, end user computing and managed services.
+Added: We are currently assessing the purchase price allocation but expect the majority to be allocated to Intangible assets and Goodwill.
Xerox 2021 Annual Report 145
1 unchanged sentence
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.