What changed in this filing

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Item 1. Financial Statements

2022-11-02 compared with 2022-08-03 · 303 added, 224 removed, 1253 unchanged (30% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per-share data) 2022 2021 2022 2021

9 unchanged sentences

Selling, administrative and general expenses 418 413 1,332 1,295

Goodwill impairment 412 — 412 —

Restructuring and related costs, net 22 10 41 39

6 unchanged sentences

Net (Loss) Income ( 382 ) 89 ( 444 ) 219

Net loss attributable to noncontrolling interests ( 1 ) — ( 2 ) —

Net income (loss) attributable to noncontrolling interests 1 ( 1 ) ( 1 ) ( 1 )

Net (Loss) Income Attributable to Xerox Holdings $ ( 383 ) $ 90 $ ( 443 ) $ 220

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2022 2021 2022 2021

Net (Loss) Income $ ( 382 ) $ 89 $ ( 444 ) $ 219

Net loss attributable to noncontrolling interests ( 1 ) — ( 2 ) —

Net income (loss) attributable to noncontrolling interests 1 ( 1 ) ( 1 ) ( 1 )

Net (Loss) Income Attributable to Xerox Holdings ( 383 ) 90 ( 443 ) 220

1 unchanged sentence

Translation adjustments, net ( 277 ) ( 125 ) ( 636 ) ( 122 )

Unrealized losses, net ( 14 ) — ( 25 ) ( 7 )

Unrealized gains (losses), net 6 4 ( 19 ) ( 3 )

Changes in defined benefit plans, net 54 51 96 122

Other Comprehensive (Loss) Income, Net Attributable to Xerox Holdings ( 298 ) 70 ( 342 ) 67

Other Comprehensive Loss, Net Attributable to Xerox Holdings ( 217 ) ( 70 ) ( 559 ) ( 3 )

Comprehensive (Loss) Income, Net ( 599 ) 19 ( 1,003 ) 216

Comprehensive loss, net attributable to noncontrolling interests ( 1 ) — ( 2 ) —

Comprehensive income (loss), net attributable to noncontrolling interests 1 ( 1 ) ( 1 ) ( 1 )

Comprehensive (Loss) Income, Net Attributable to Xerox Holdings $ ( 600 ) $ 20 $ ( 1,002 ) $ 217

_____________

(1) Refer to Note 20 - Other Comprehensive (Loss) Income for gross components of Other comprehensive (loss) income, net, reclassification adjustments out of Accumulated other comprehensive loss and related tax effects.

(1) Refer to Note 20 - Other Comprehensive (Loss) Income for gross components of Other comprehensive loss, net, reclassification adjustments out of Accumulated other comprehensive loss and related tax effects.

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

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

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

2022 December 31,

44 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2022 2021

6 unchanged sentences

Stock-based compensation 63 44

Goodwill impairment 412 —

Restructuring and asset impairment charges 44 28

4 unchanged sentences

( 106 ) ( 119 )

(Increase) decrease in accounts receivable and billed portion of finance receivables ( 49 ) 37

Increase in accounts receivable and billed portion of finance receivables ( 48 ) ( 30 )

(Increase) decrease in inventories ( 136 ) 10

Increase in equipment on operating leases ( 74 ) ( 92 )

Decrease in finance receivables 17 12

(Increase) decrease in finance receivables ( 10 ) 33

Decrease in other current and long-term assets 36 64

Increase (decrease) in accounts payable 172 ( 33 )

Increase in accounts payable 198 74

Increase in accrued compensation (1)

11 unchanged sentences

Cash Flows from Financing Activities

Net proceeds from short-term debt — 1

Proceeds from issuance of long-term debt 754 311

18 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2022 2021 2022 2021

9 unchanged sentences

Selling, administrative and general expenses 418 413 1,332 1,295

Goodwill impairment 412 — 412 —

Restructuring and related costs, net 22 10 41 39

6 unchanged sentences

Net (Loss) Income ( 382 ) 89 ( 444 ) 219

Net loss attributable to noncontrolling interests ( 1 ) — ( 2 ) —

Net income (loss) attributable to noncontrolling interests 1 ( 1 ) ( 1 ) ( 1 )

Net (Loss) Income Attributable to Xerox $ ( 383 ) $ 90 $ ( 443 ) $ 220

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2022 2021 2022 2021

Net (Loss) Income $ ( 382 ) $ 89 $ ( 444 ) $ 219

Net loss attributable to noncontrolling interests ( 1 ) — ( 2 ) —

Net income (loss) attributable to noncontrolling interests 1 ( 1 ) ( 1 ) ( 1 )

Net (Loss) Income Attributable to Xerox ( 383 ) 90 ( 443 ) 220

1 unchanged sentence

Translation adjustments, net ( 277 ) ( 125 ) ( 636 ) ( 122 )

Unrealized losses, net ( 14 ) — ( 25 ) ( 7 )

Unrealized gains (losses), net 6 4 ( 19 ) ( 3 )

Changes in defined benefit plans, net 54 51 96 122

Other Comprehensive (Loss) Income, Net Attributable to Xerox ( 298 ) 70 ( 342 ) 67

Other Comprehensive Loss, Net Attributable to Xerox ( 217 ) ( 70 ) ( 559 ) ( 3 )

Comprehensive (Loss) Income, Net ( 599 ) 19 ( 1,003 ) 216

Comprehensive loss, net attributable to noncontrolling interests ( 1 ) — ( 2 ) —

Comprehensive income (loss), net attributable to noncontrolling interests 1 ( 1 ) ( 1 ) ( 1 )

Comprehensive (Loss) Income, Net Attributable to Xerox $ ( 600 ) $ 20 $ ( 1,002 ) $ 217

_____________

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

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions) June 30,

(in millions) September 30,

2022 December 31,

39 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2022 2021

6 unchanged sentences

Stock-based compensation 63 44

Goodwill impairment 412 —

Restructuring and asset impairment charges 44 28

4 unchanged sentences

( 106 ) ( 119 )

(Increase) decrease in accounts receivable and billed portion of finance receivables ( 49 ) 37

Increase in accounts receivable and billed portion of finance receivables ( 48 ) ( 30 )

(Increase) decrease in inventories ( 136 ) 10

Increase in equipment on operating leases ( 74 ) ( 92 )

Decrease in finance receivables 17 12

(Increase) decrease in finance receivables ( 10 ) 33

Decrease in other current and long-term assets 36 64

Increase (decrease) in accounts payable 172 ( 33 )

Increase in accounts payable 198 74

Increase in accrued compensation (1)

8 unchanged sentences

Acquisitions, net of cash acquired ( 93 ) ( 38 )

Other investing, net 1 —

Net cash used in investing activities ( 82 ) ( 51 )

Cash Flows from Financing Activities

Net proceeds from short-term debt — 1

Proceeds from issuance of long-term debt 754 311

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References to “Xerox Holdings” refer to Xerox Holdings Corporation and its consolidated subsidiaries, while references to “Xerox” refer to Xerox Corporation and its consolidated subsidiaries.

References herein to “we,” “us,” “our,” the “Company” refer collectively to both Xerox Holdings and Xerox unless the context suggests otherwise.

References herein to “we,” “us,” “our,” and the “Company” refer collectively to both Xerox Holdings and Xerox unless the context suggests otherwise.

References to "Xerox Holdings Corporation" refer to the stand-alone parent company and do not include its subsidiaries.

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Interim Impairment Evaluation

Our goodwill balance was $ 3.2 billion and $ 3.3 billion at June 30, 2022 and December 31, 2021, respectively.

The balance at December 31, 2021 reflects a pre-tax impairment charge of $ 781 recorded in the fourth quarter 2021 after completion of our fourth quarter annual goodwill impairment assessment.

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

During 2022, we had events and conditions in the first quarter and third quarter that required an interim assessment of Goodwill.

As noted above, during the first quarter 2022, the Company made a change to its operating and reportable segments from one operating/reportable segment - Printing - to two operating/reportable segments - Print and Other, and Financing (FITTLE).

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Prior to this change, consistent with the determination that we had one operating/reportable segment, we determined that we had one reporting unit for Goodwill assessment purposes.

Our reassessment during the first quarter of 2022 determined that, consistent with the determination that we had two operating/reportable segments and two reporting units – Print and Other, and Financing (FITTLE).

Xerox 2022 Form 10-Q 11

reassessment during the first quarter of 2022 determined that likewise consistent with the determination that we had two operating/reportable segments, we now have two reporting units – Print and Other, and Financing (FITTLE).

As a result of the change in reporting units, effective January 1, 2022, we estimated the fair value of our new reporting units and, based on an assessment of the relative fair values of our new reporting units after the change, we determined that no Goodwill was allocable to the Financing (FITTLE) segment.

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The Company performed those impairment tests, which did not result in the identification of an impairment loss as of January 1, 2022.

During the first half of 2022, the Company continued to encounter significant operational challenges due to supply chain constraints, inflationary pressure on product and labor costs, geopolitical uncertainty in Europe and the continued impacts from additional COVID-19 variants.

Operating results did improve in the second quarter 2022 as compared to the first quarter 2022 and operating results are expected to improve further in the second half of 2022 .

The Company's latest projections for the full year 2022 as well as for 2023 and 2024 are still within the range of our sensitivity analysis performed as part of the January 1, 2022 interim impairment assessment.

Accordingly, based on our interim assessment as of June 30, 2022, we determined that it was more-likely-than-not that the fair value of the Print and Other reporting unit (the only reporting unit with goodwill) was still greater than its net book value and that we did not have a “triggering event” requiring a quantitative assessment of Goodwill.

However, given macroeconomic conditions, specifically rising interest rates and their impact on discount rates, our goodwill excess fair value over carrying value is likely reduced as compared to the impairment test as of January 1, 2022.

If assumptions or estimates with respect to the Company's future performance vary from what is expected, including those assumptions relating to the supply chain constraints, interest rates, inflationary pressure on product and labor costs, geopolitical uncertainty in Europe and the threat of additional COVID-19 variants, this may impact the impairment analysis and could reduce the underlying cash flows used to estimate fair values and result in a decline in fair value that may trigger future impairment charges.

We will continue to monitor developments in 2022 including updates to our forecasts as well as our market capitalization, and an update of our assessment and related estimates may be required in the future.

In 2022, the Company continued to encounter operational challenges due to unfavorable product and services mix associated with supply chain constraints as well the impacts of unfavorable macroeconomic conditions including inflationary pressure on product and labor costs, geopolitical uncertainty in Europe and the continued impacts from the COVID-19 recovery.

Additionally, higher interest rates continue to put downward pressure on the Company’s valuation.

Although the Company expects operating results to improve in the fourth quarter of 2022, and in full-year 2023 as the Company works down its backlog and realizes benefits from price increases and cost actions;

operating results are expected to be below previous forecasts and will continue to be pressured as result of these unfavorable macroeconomic conditions.

As a result of these negative financial impacts and a sustained market capitalization below our book value, in the third quarter 2022 we determined there was a triggering event requiring an interim quantitative assessment of Goodwill.

After completing our interim impairment test, we concluded that the estimated fair value of the Print and Other reporting unit (the only reporting unit with Goodwill) had declined below its carrying value and we recognized an after-tax non-cash impairment charge of $ 395 ($ 412 pre-tax) related to our Goodwill in the third quarter 2022.

The estimated fair value of the Print and Other reporting unit is based on estimates and assumptions that are considered Level 3 inputs under the fair value hierarchy.

If the Company's future performance varies from current expectations, assumptions, or estimates, including those assumptions relating to the supply chain constraints, interest rates, inflationary pressure on product and labor costs, geopolitical uncertainty in Europe, or the continued impacts from the COVID-19 recovery, this may impact the impairment analysis and could reduce the underlying cash flows used to estimate fair values and result in a decline in fair value that may trigger future impairment charges.

We will continue to monitor developments throughout the remainder of 2022 including updates to our forecasts as well as our market capitalization, and an update of our assessment and related estimates may be required in the future.

Note 2 – Recent Accounting Pronouncements

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Accounting Standard Updates to be Adopted:

In September 2022, the FASB issued ASU 2022-04 , Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations.

The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

The new standard’s requirements to disclose the key terms of the programs and information about obligations outstanding are effective for all interim and annual periods of our fiscal year beginning on January 1, 2023.

The new standard’s requirement to disclose a rollforward of obligations outstanding will be effective for our fiscal year beginning on January 1, 2024.

Early adoption is permitted.

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

Financial Instruments

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The amendments in this update eliminate the accounting guidance for Troubled Debt Restructurings (TDRs) by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty.

The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables.

The update is applicable for financing receivables and net investments in leases that are within the scope of ASC 326-20 , Financial Instruments - Credit Losses - Measured at Amortized Cost .

This update is effective for our fiscal year beginning on January 1, 2023, but early adoption is permitted.

The amendments also require disclosure of current-period gross write-offs by year of origination for financing

Xerox 2022 Form 10-Q 12

The disclosure of current-period gross write-offs by year of origination is applicable for financing receivables and net investments in leases that are within the scope of ASC 326-20 , Financial Instruments - Credit Losses - Measured at Amortized Cost .

This update is effective for our fiscal year beginning on January 1, 2023.

The provisions of this amendment are to be applied on a prospective basis.

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

Since this standard primarily relates to new disclosure, we do not expect the adoption to have a material impact on our financial condition, results of operations, and cash flows in future periods.

Reference Rate Reform

4 unchanged sentences

These ASUs were effective commencing with our quarter ended March 31, 2020 through December 31, 2022.

Xerox 2022 Form 10-Q 12

There has been no impact to date as a result of ASU 2020-04 or ASU 2021-01 and subsequent amendments on reference rate reform.

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The adoption of this update did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Xerox 2022 Form 10-Q 13

Other Updates

12 unchanged sentences

This update is effective for our fiscal year beginning January 1, 2022.

Xerox 2022 Form 10-Q 13

Note 3 – Revenue

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

29 unchanged sentences

(5) Primarily reflects sales through our two-tier distribution channels.

Xerox 2022 Form 10-Q 14

Contract Assets and Liabilities:

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

Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advance billings for maintenance and other services to be performed and were approximately $ 144 and $ 144 at June 30, 2022 and December 31, 2021, respectively.

The majority of the balance at June 30, 2022 will be amortized to revenue over approximately the next 30 months.

Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advance billings for maintenance and other services to be performed and were approximately $ 131 and $ 144 at September 30, 2022 and December 31, 2021, respectively.

The majority of the balance at September 30, 2022 will be amortized to revenue over approximately the next 30 months.

Contract Costs:

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

1 unchanged sentence

Amortization of incremental direct costs 17 18 51 55

Xerox 2022 Form 10-Q 14

The balance of deferred incremental direct costs net of accumulated amortization at June 30, 2022 and December 31, 2021 was $ 124 and $ 132 , respectively.

The balance of deferred incremental direct costs net of accumulated amortization at September 30, 2022 and December 31, 2021 was $ 121 and $ 132 , respectively.

This amount is expected to be amortized over its estimated period of benefit, which we currently estimate to be approximately four years .

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In addition, we provide inducements to certain customers in various forms, including contractual credits, which are capitalized and amortized as a reduction of revenue over the term of the contract.

As of June 30, 2022 and December 31, 2021, amounts deferred associated with contract fulfillment costs and inducements were $ 12 and $ 15 , respectively, and the related amortization was $ 2 and $ 2 for the three months ended June 30, 2022 and 2021, respectively, and $ 3 and $ 3 for the six months ended June 30, 2022 and 2021, respectively.

As of September 30, 2022 and December 31, 2021, amounts deferred associated with contract fulfillment costs and inducements were $ 11 and $ 15 , respectively, and the related amortization was $ 1 and $ 2 for the three months ended September 30, 2022 and 2021, respectively, and $ 4 and $ 5 for the nine months ended September 30, 2022 and 2021, respectively.

Equipment and software used in the fulfillment of service arrangements, and where the Company retains control, are capitalized and depreciated over the shorter of their useful life or the term of the contract if an asset is contract specific.

Xerox 2022 Form 10-Q 15

Note 4 – Segment Reporting

Our reportable segments are aligned with how we manage the business and view the markets we serve.

During the first quarter of 2022, the Company changed to its reportable segments from one reportable segment to two reportable segments - Print and Other, and Financing (FITTLE) to align with a change in how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s key growth strategies.

During the first quarter of 2022, the Company changed its reportable segments from one reportable segment to two reportable segments – Print and Other, and Financing (FITTLE) to align with a change in how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s key growth strategies.

Our two reportable segments are based on the information reviewed by the CODM together with the Company’s management to evaluate performance of the business and allocate resources.

As such, prior period reportable segment results and related disclosures have been conformed to reflect the Company’s current reportable segments.

During 2021 we progressed with internally standing up of three new businesses:

During 2021, we progressed with internally standing up three new businesses:

Software (CareAR), Financing (FITTLE) and Innovation (PARC).

As a result of this effort, during the first quarter of 2022, we reassessed our operating and reportable segments and determined that, based on the financial information reviewed by our CODM as well as the CEO’s management and assessment of the Company’s operations, we had two operating and reportable segments - Print and Other, and Financing.

• Print and Other - the design, development and sale of document management systems, solutions and services as well as associated technology offerings including IT and software products and services.

• Financing (FITTLE) – primarily provides financing for the sales of Xerox equipment.

We also determined that the other businesses – Software and Innovation – did not meet the requirements to be considered separate operating segments largely due to their continued management through the Print and Other Segment as well as their immateriality to our results at this stage.

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Customers also include graphic communication enterprises as well as channel partners including distributors and resellers.

Segment revenues also include commissions and other payments from the Financing segment for the exclusive right to provide lease financing for Xerox products.

Segment revenues also include commissions and other payments from the Financing (FITTLE) segment for the exclusive right to provide lease financing for Xerox products.

These revenues are reported as part of Intersegment Revenues, which are eliminated in consolidated revenues.

Xerox 2022 Form 10-Q 15

The Financing (FITTLE) segment provides leasing solutions through either bundled or unbundled lease agreements of Xerox products or direct purchases of equipment.

The Financing (FITTLE) segment provides leasing solutions through either bundled or unbundled lease agreements of Xerox and non-Xerox products.

These leasing solutions support a wide range of customers, from government to graphic communications and SMB to Enterprise as well as financing for direct channel customer purchases of both Xerox and non-Xerox equipment.

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The segment results include a significant level of management estimates regarding the allocation of revenues such as finance income in bundled lease arrangements and other leasing revenues and operating lease revenues embedded in our managed services contracts as well as the allocation of expenses for shared selling and administrative services.

Accordingly, the financial results for the Financing segment may not be indicative of the results the business would have as on a standalone basis or what might be presented for the business in stand-alone financial statements.

Accordingly, the financial results for the segments may not be indicative of the results the businesses would have as on a standalone basis or what might be presented for the businesses in stand-alone financial statements.

The CODM measures the performance of each segment based on several metrics, including segment revenues and profit.

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The Financing (FITTLE) segment also includes interest expense associated with allocated debt of the Company in support of its Finance assets, while no interest expense is allocated to the Print and Other segment.

Xerox 2022 Form 10-Q 16

Selected financial information for our reportable segments was as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Print and Other Financing (FITTLE) Total Print and Other Financing (FITTLE) Total

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— 30 30 — 31 31

Six Months Ended June 30,

Nine Months Ended September 30,

Print and Other Financing (FITTLE) Total Print and Other Financing (FITTLE) Total

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Total Segment net revenue $ 4,824 $ 459 $ 5,283 $ 4,889 $ 528 $ 5,417

Segment (loss) profit $ ( 2 ) $ 34 $ 32 $ 182 $ 33 $ 215

Segment (loss) margin (2)

Segment profit $ 55 $ 42 $ 97 $ 232 $ 57 $ 289

Segment margin (2)

1.2 % 9.3 % 1.9 % 4.9 % 11.0 % 5.5 %

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_____________

(1) Intersegment net revenue is primarily commissions and other payments made by the Financing Segment (FITTLE) to the Print and Other Segment for the lease of Xerox Equipment placements.

(1) Intersegment net revenue is primarily commissions and other payments made by the Financing (FITTLE) Segment to the Print and Other Segment for the lease of Xerox Equipment placements.

(2) Segment margin based on External net revenue only.

(3) Interest expense for the Financing Segment includes non-financing interest expense on allocated debt associated with Equipment on operating lease of $ 2 and $ 2 for the three months ended June 30, 2022 and 2021, respectively, and $ 4 and $ 4 for the six months ended June 30, 2022 and 2021, respectively.

(3) Interest expense for the Financing (FITTLE) Segment includes non-financing interest expense on allocated debt associated with Equipment on operating lease of $ 2 and $ 2 for the three months ended September 30, 2022 and 2021, respectively, and $ 6 and $ 6 for the nine months ended September 30, 2022 and 2021, respectively.

Xerox 2022 Form 10-Q 17

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Total reported segments $ 65 $ 74 $ 97 $ 289

Goodwill impairment ( 412 ) — ( 412 ) —

Restructuring and related costs, net ( 22 ) ( 10 ) ( 41 ) ( 39 )

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Location in Statements of (Loss) Income 2022 2021 2022 2021

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Total Lease income $ 253 $ 294 $ 760 $ 890

Profit at lease commencement on sales-type leases was estimated to be $ 44 and $ 57 for the three months ended June 30, 2022 and 2021, respectively, and $ 88 and $ 101 for the six months ended June 30, 2022 and 2021, respectively.

Profit at lease commencement on sales-type leases was estimated to be $ 39 and $ 51 for the three months ended September 30, 2022 and 2021, respectively, and $ 127 and $ 152 for the nine months ended September 30, 2022 and 2021, respectively.

Xerox 2022 Form 10-Q 18

Note 6 – Acquisitions and Investments

In the first quarter 2022, Xerox acquired Powerland, a leading IT services provider in Canada, for approximately $ 52 (CAD 66 million).

In the first quarter 2022, Xerox acquired Powerland, a leading IT services provider in Canada, for approximately $ 52 (CAD 66 million), net of cash.

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 .

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The Goodwill associated with the acquisition of Powerland is included in our Print and Other segment.

The operating results of this acquisition are not material to our financial statements and are included within our results from the acquisition date.

The purchase price was all cash for 100 % ownership of the acquired company and was primarily allocated to Intangible assets, net (approximately $ 39 ) and Goodwill (approximately $ 40 ), with the remainder to tangible assets and assumed/recorded liabilities.

In July 2022, Xerox acquired Go Inspire, a U.K.-based print and digital marketing and communication services provider, for approximately $ 41 (GBP 34 million), net of cash.

The acquisition strengthens Xerox’s strategy to grow its global Digital Services presence in EMEA.

The Goodwill associated with the acquisition of Go Inspire is included in our Print and Other segment.

The operating results of these acquisitions are not material to our financial statements and are included within our results from the acquisition date.

The purchase prices for both acquisitions were all cash for 100 % ownership of the acquired company and were primarily allocated to Intangible assets, net (approximately $ 51 ) and Goodwill (approximately $ 64 ), with the remainder to tangible assets and assumed/recorded liabilities.

The allocations are based on preliminary management estimates, which continue to be reviewed, and are expected to be finalized by the end of 2022 and may include input and support from third-party valuations.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Cash, cash equivalents and restricted cash amounts are as follows:

September 30,

2022 December 31,

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

Xerox 2022 Form 10-Q 19

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

September 30,

2022 December 31,

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Total Restricted cash $ 69 $ 69

Xerox 2022 Form 10-Q 18

Supplemental Cash Flow Information

Summarized cash flow information is as follows:

Six Months Ended

Provision for receivables $ 21 $ 15

Provision for inventory 14 19

Provision for product warranties 3 4

Depreciation of buildings and equipment 34 38

Depreciation and obsolescence of equipment on operating leases 62 83

Amortization of internal use software 23 20

Amortization of acquired intangible assets 21 29

Location in Statement of Cash Flows Nine Months Ended

September 30,

Provision for receivables Operating $ 25 $ 13

Provision for inventory Operating 23 25

Provision for product warranties Operating 5 6

Depreciation of buildings and equipment Operating 51 57

Depreciation and obsolescence of equipment on operating leases Operating 89 120

Amortization of internal use software Operating 34 30

Amortization of acquired intangible assets Operating 31 42

Amortization of customer contract costs (1)

Cost of additions to land, buildings and equipment 19 12

Cost of additions to internal use software 10 21

Common stock dividends - Xerox Holdings 81 101

Preferred stock dividends - Xerox Holdings 7 7

Payments to noncontrolling interests 1 —

Investment from noncontrolling interests 5 5

Repurchases related to stock-based compensation - Xerox Holdings 10 14

Operating 55 60

Cost of additions to land, buildings and equipment Investing 24 21

Cost of additions to internal use software Investing 15 31

Payments to acquire noncontrolling interests Investing 13 3

Common stock dividends - Xerox Holdings Financing 120 146

Preferred stock dividends - Xerox Holdings Financing 11 11

Payments to noncontrolling interests Financing 1 —

Proceeds from noncontrolling interests Financing 6 15

Repurchases related to stock-based compensation - Xerox Holdings Financing 10 14

_____________

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

Xerox 2022 Form 10-Q 20

Note 8 – Accounts Receivable, Net

Accounts receivable, net were as follows:

September 30,

2022 December 31,

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Balance at June 30 th

Provision ( 1 ) 0

Charge-offs ( 5 ) ( 5 )

Recoveries and other (1)

Balance at September 30 th

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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.

Based on that assessment the allowance for doubtful accounts as a percent of gross accounts receivable was 6.9 % at June 30, 2022 and 6.6 % at December 31, 2021.

The increase in the allowance is primarily due to an increased provision to cover expected write-offs of receivables in our Russian subsidiary.

Xerox 2022 Form 10-Q 19

Based on that assessment the allowance for doubtful accounts as a percent of gross accounts receivable was 5.8 % at September 30, 2022 and 6.6 % at December 31, 2021.

The decrease in the allowance is primarily due to a reduction in estimated losses for customer accommodations and other billing adjustments.

Accounts Receivable Sales Arrangements

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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.

Of the accounts receivable sold and derecognized from our balance sheet, $ 84 and $ 102 remained uncollected as of June 30, 2022 and December 31, 2021, respectively.

Of the accounts receivable sold and derecognized from our balance sheet, $ 119 and $ 102 remained uncollected as of September 30, 2022 and December 31, 2021, respectively.

Accounts receivable sales activity was as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 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.

Xerox 2022 Form 10-Q 21

Note 9 – Finance Receivables, Net

2 unchanged sentences

Finance receivables, net were as follows:

September 30,

2022 December 31,

13 unchanged sentences

The allowance for doubtful credit losses is principally determined 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.

Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.8 % at June 30, 2022 and 3.7 % and 4.0 % at December 31, 2021 and 2020, respectively.

Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.9 % at September 30, 2022 and 3.7 % and 4.0 % at December 31, 2021 and 2020, respectively.

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

2 unchanged sentences

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

Xerox 2022 Form 10-Q 20

economies, the risk profile within that portfolio segment is somewhat more diversified due to the varying economic conditions among and within the countries.

Although actual finance receivable write-offs incurred to date continue to lag expectations, we believe our current reserve position remains sufficient to cover expected future losses that may result from current and future macro-economic conditions.

We continue to believe that uncertainties remain as economies continue to recover from the impacts of the COVID-19 pandemic and deal with recent macro-economic trends including higher interest rates and inflation as well as the prospects of a potential recession.

In addition, there is also uncertainty regarding the impact the Russia/Ukraine war and related global sanctions will have on the macro or global economy.

As a result of these uncertainties, our reserves as a percent of receivables have remained elevated and fairly consistent subsequent to the first quarter 2020 increase to initially record expected losses from the COVID-19 pandemic.

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.

Although write-offs incurred to date continue to lag expectations, we believe our current reserve position remains sufficient to cover expected future losses that may result from current and future macro-economic conditions including higher inflation and interest rates.

In addition, there continues to be uncertainty regarding the effects from the Russia/Ukraine war and its impact on the macro or global economy.

As a result of these uncertainties, our reserves as a percent of receivables have remained largely consistent since to the first quarter 2020 increase to initially record expected losses from the COVID-19 pandemic.

We continue to monitor developments in future economic conditions and trends, and as a result, our reserves may need to be updated in future periods.

Xerox 2022 Form 10-Q 22

The allowance for doubtful accounts as well as the related investment in finance receivables were as follows:

11 unchanged sentences

Balance at June 30, 2022 75 11 30 116

Finance receivables as of June 30, 2022 collectively evaluated for impairment (3)

Provision 6 1 2 9

Charge-offs ( 4 ) ( 1 ) ( 1 ) ( 6 )

Recoveries and other (2)

— — ( 2 ) ( 2 )

Balance at September 30, 2022 $ 77 $ 11 $ 29 $ 117

Finance receivables as of September 30, 2022 collectively evaluated for impairment (3)

$ 1,883 $ 214 $ 920 $ 3,017

Balance at December 31, 2020

9 unchanged sentences

Balance at June 30, 2021 81 15 37 133

Finance receivables as of June 30, 2021 collectively evaluated for impairment (3)

Provision — ( 3 ) ( 1 ) ( 4 )

Charge-offs ( 1 ) ( 1 ) — ( 2 )

Recoveries and other (2)

Balance at September 30, 2021 $ 80 $ 11 $ 36 $ 127

Finance receivables as of September 30, 2021 collectively evaluated for impairment (3)

$ 1,866 $ 262 $ 1,074 $ 3,202

2 unchanged sentences

(2) 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.

(3) Total Finance receivables exclude the allowance for credit losses of $ 116 and $ 133 at June 30, 2022 and 2021, respectively.

(3) Total Finance receivables exclude the allowance for credit losses of $ 117 and $ 127 at September 30, 2022 and 2021, respectively.

In the U.S., customers are further evaluated by class based on the type of lease origination.

21 unchanged sentences

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

June 30, 2022

September 30, 2022

2022 2021 2020 2019 2018 Prior Total

56 unchanged sentences

We generally continue to maintain equipment on lease and provide services to customers that have invoices for finance receivables that are 90 days or more past due and, as a result of the bundled nature of billings, we also continue to accrue interest on those receivables.

However, interest revenue for such billings is only recognized if collectability is deemed reasonably assured.

However, interest revenue for such billings is only recognized if collectability is deemed probable.

The aging of our billed finance receivables is as follows:

June 30, 2022

September 30, 2022

Current 31-90

22 unchanged sentences

The following is a summary of Inventories by major category:

September 30,

2022 December 31,

7 unchanged sentences

Equipment on operating leases and the related accumulated depreciation were as follows:

September 30,

2022 December 31,

2 unchanged sentences

Equipment on operating leases, net $ 216 $ 253

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 16 and $ 16 for the three months ended June 30, 2022 and 2021, respectively, and $ 31 and $ 31 for the six months ended June 30, 2022 and 2021, respectively.

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 16 and $ 15 for the three months ended September 30, 2022 and 2021, respectively, and $ 47 and $ 46 for the nine months ended September 30, 2022 and 2021, respectively.

Secured Borrowings and Collateral

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

6 unchanged sentences

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

As of June 30, 2022, operating leases that had not yet commenced were not material.

As of September 30, 2022, operating leases that had not yet commenced were not material.

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

September 30,

2022 December 31,

7 unchanged sentences

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.

During the six months ended June 30, 2022, we recorded net restructuring charges of $ 40 , which included $ 44 of severance costs related to headcount reductions of approximately 1,050 employees worldwide, and $ 1 of other contractual termination costs.

During the nine months ended September 30, 2022, we recorded net restructuring charges of $ 54 , which included $ 59 of severance costs related to headcount reductions of approximately 1,600 employees worldwide, and $ 1 of other contractual termination costs.

These costs were partially offset by $ 6 of net reversals, which primarily reflect changes in estimated reserves from prior period initiatives.

15 unchanged sentences

Balance at June 30, 2022 44 2 46

Provision 15 — 15

Reversals ( 1 ) — ( 1 )

Net current period charges (1)

Charges against reserve and currency ( 19 ) — ( 19 )

Balance at September 30, 2022 $ 39 $ 2 $ 41

_____________ _

2 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

Charges against reserve and currency $ ( 40 ) $ ( 74 )

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

6 unchanged sentences

(1) Includes retention related severance and bonuses for employees expected to continue working beyond their minimum notification period before termination.

The credit for the six months ended June 30, 2022 and 2021 reflects a change in estimate.

Cash paid for restructuring related costs were $ 2 and $ 6 for the six months ended June 30, 2022 and 2021, respectively.

The restructuring related costs reserve was $ 13 and $ 18 at June 30, 2022 and December 31, 2021, respectively.

The balance at June 30, 2022 is expected to be paid over the next twelve months.

The credit for the nine months ended September 30, 2022 and 2021 reflects a change in estimate.

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

Xerox 2022 Form 10-Q 28

In connection with our restructuring programs, during the six months ended June 30, 2022, we recorded a net gain of $ 18 , which included a gain of $ 20 on the sale of surplus buildings and land.

Cash paid for restructuring related costs were $ 4 and $ 9 for the nine months ended September 30, 2022 and 2021, respectively.

The restructuring related costs reserve was $ 10 and $ 18 at September 30, 2022 and December 31, 2021, respectively.

The balance at September 30, 2022 is expected to be paid over the next twelve months.

In connection with our restructuring programs, during the nine months ended September 30, 2022, we recorded a net gain of $ 10 associated with initiatives involving the Company's owned and leased facilities, including the exit, abandonment, sale and sublease of those facilities.

Information related to our restructuring-related asset impairment activity is summarized below:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Lease right of use assets (1)

$ 1 $ — $ 2 $ 2

Owned assets (1)

Asset impairments 10 — 12 12

Gain on sales of assets (2)

Gain on sales of owned assets (2)

( 2 ) — ( 22 ) —

Adjustments/Reversals — — — ( 1 )

Net asset impairment charges $ ( 19 ) $ 1 $ ( 18 ) $ 11

Net asset impairment charge (credit) $ 8 $ — $ ( 10 ) $ 11

_____________ _

(1) Primarily related to the exit and abandonment of leased and owned facilities, net of any potential sublease income and recoveries.

(2) Primarily related to the sale of land and a facility during the second quarter of 2022.

(2) Reflect gain on the sales of exited surplus facilities.

Note 13 – Debt

6 unchanged sentences

The intercompany interest expense also includes a ratable amount to reimburse Xerox Holdings Corporation for its debt issuance costs and premium.

At June 30, 2022 and December 31, 2021, the balance of the Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 1,495 and $ 1,494 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 30 and $ 30 , respectively.

Xerox Corporation’s interest expense included interest expense associated with this Intercompany Loan of $ 19 and $ 19 for the three months ended June 30, 2022 and 2021, respectively, and $ 39 and $ 39 for the six months ended June 30, 2022 and 2021, respectively.

At September 30, 2022 and December 31, 2021, the balance of the Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 1,496 and $ 1,494 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 10 and $ 30 , respectively.

Xerox Corporation’s interest expense included interest expense associated with this Intercompany Loan of $ 20 and $ 21 for the three months ended September 30, 2022 and 2021, respectively, and $ 59 and $ 60 for the nine months ended September 30, 2022 and 2021, respectively.

Credit Facility

In July 2022, Xerox Corporation entered into an agreement for a new $ 500 revolving Credit Facility.

In July 2022, Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation, entered into a new Credit Agreement with several participating lending banks.

The new Credit Agreement provides Xerox Corporation with a $ 500 Revolving Credit Facility and has a maturity date of July 7, 2024.

We deferred $ 3 of debt issuance costs in connection with this credit agreement, which will be amortized over the two-year term of the arrangement.

This new facility replaced our prior $ 1.5 billion Credit Facility.

Refer to Note 23 - Subsequent Events for additional information related to this Credit Facility.

The new revolving Credit Facility includes an uncommitted accordion feature that allows the Company to increase the facility by a total of up to $ 150 , subject to obtaining additional commitments from existing lenders or new lending institutions.

The new revolving Credit Agreement also includes a $ 150 letter of credit sub-facility.

At September 30, 2022, we had no outstanding borrowings or letters of credit under the new revolving Credit Facility.

At Xerox Corporation’s election, the borrowings under the new revolving Credit Facility in U.S.

dollars will bear interest at either (i) a rate per annum equal to the highest of Citibank’s prime rate or a rate 0.5 % in excess of the Federal Funds Rate or a rate 1.0 % in excess of one-month Term SOFR (the Base Rate), in each case plus an applicable margin, or (ii) the one-, three-, or six-month per annum Term SOFR (the Term SOFR Rate), as selected by the Company, plus an applicable margin.

The applicable margin for Base Rate loans, through the quarterly

Xerox 2022 Form 10-Q 29

reporting for the fiscal quarter ending September 30, 2022, is 1.00 % per annum, and thereafter varies from 0.50 % to 1.25 % depending on the Company’s consolidated total net leverage ratio (as defined in the New Credit Agreement).

The applicable margin for Term SOFR Rate loans, through the quarterly reporting for the fiscal quarter ending September 30, 2022, is 2.00 % per annum, and thereafter varies from 1.50 % to 2.25 % depending on the Company’s consolidated total net leverage ratio.

Xerox Corporation may also borrow in currencies other than U.S.

dollars pursuant to the credit agreement, and such borrowings will bear interest calculated under a construct similar to that described above.

Principal outstanding would be payable in full at maturity on July 7, 2024.

Xerox Corporation’s borrowings under the new revolving Credit Facility are supported by guarantees from the Company and its subsidiary guarantors, and by security interests in substantially all of the assets of Xerox Holdings Corporation, as well as Xerox Corporation and its subsidiary guarantors, subject to certain exceptions.

If an event of default occurs under the new revolving Credit Facility, the entire principal amount outstanding under the New Revolving Credit Facility, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable, subject, in certain instances, to the expiration of applicable cure periods.

The new revolving Credit Facility requires the Company to comply with the following financial covenants measured as of the end of each fiscal quarter, commencing with the quarter ending September 30, 2022:

(a) Minimum Unrestricted Cash - maintain an Unrestricted Cash balance, as defined in the new revolving Credit Agreement, in an amount not less than $ 500 as of the last day of the quarter.

(b) Total Net Leverage Ratio - a quarterly test that is calculated as net debt for borrowed money divided by consolidated EBITDA, both as defined in the new revolving Credit Agreement - with a cap on cash netting of $ 1.0 billion.

The required Total Net Leverage Ratio is 5.25 :1 at September 30, 2022;

5.00 :1.00 at December 31, 2022;

4.75 :1.00 at March 31, 2023;

4.50 :1:00 at June 30, 2023 and 4.25 :1.00 thereafter.

(c) Interest Coverage Ratio - a quarterly test that is calculated as consolidated EBITDA divided by consolidated interest expense, both as defined in the new revolving Credit Agreement.

The Interest Coverage Ratio is 2.25 :1:00 at September 30, 2022;

2.50 :1.00 at December 31, 2022;

and 2.75 :1.00 thereafter.

In addition, the new revolving Credit Facility requires that no more than $ 300 of the remaining $ 650 2023 Senior Notes is outstanding as of December 15, 2022 in order for the facility to remain in effect.

The new revolving Credit Facility also imposes restrictions on the Company and its subsidiaries, including on the amount of dividends the Company is permitted to pay and the amount of shares the Company is permitted to repurchase.

Pursuant to the credit agreement, provided there is no event of default existing, the Company may declare and pay cash dividends on shares of its common stock and its preferred stock, and may repurchase shares of its common stock and its preferred stock (i) in an unlimited amount if, at the time such dividend or repurchase is made, the Company’s Total Net Leverage ratio is 3.5 to 1.00 or less or (ii) in an aggregate amount in any fiscal year not to exceed the greater of (x) $ 200 or (y) 50 % of free cash flow, which is operating cash flows less capital expenditures, for the prior fiscal year, commencing with the fiscal year ending December 31, 2022.

Secured Borrowings and Collateral

9 unchanged sentences

Below are the secured assets and obligations held by the SPEs, which are included in our Condensed Consolidated Balance Sheets.

June 30, 2022

September 30, 2022

Finance Receivables, Net (1)

1 unchanged sentence

Interest Rate Expected Maturity

United States

January 2022 $ 595 $ — $ 474 4.30 % 2024

7 unchanged sentences

Interest Rate Expected Maturity

United States

September 2021 $ 308 $ 8 $ 293 1.40 % 2024

2 unchanged sentences

____________ _

(1) Includes (i) Billed portion of finance receivables, net (ii) Finance receivables, net and (iii) Finance receivables due after one year, net as included in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021.

(2) Net of debt issuance costs of $ 2 and $ 1 as of June 30, 2022 and December 31, 2021, respectively.

(2) Net of debt issuance costs of $ 2 and $ 1 as of September 30, 2022 and December 31, 2021, respectively.

Interest Expense and Income

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

(1) Includes Cost of financing as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of (Loss) Income.

(2) Interest expense of Xerox Corporation included intercompany interest expense associated with the Xerox Holdings Corporation / Xerox Corporation Intercompany Loan of $ 19 and $ 19 for the three months ended June 30, 2022 and 2021, respectively, and $ 39 and $ 39 for the six months ended June 30, 2022 and 2021, respectively.

(2) Interest expense of Xerox Corporation included intercompany interest expense associated with the Xerox Holdings Corporation / Xerox Corporation Intercompany Loan of $ 20 and $ 21 for the three months ended September 30, 2022 and 2021, respectively, and $ 59 and $ 60 for the nine months ended September 30, 2022 and 2021, respectively.

(3) Includes Financing revenue as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of (Loss) Income.

9 unchanged sentences

• Forecasted purchases and sales in foreign currency

At June 30, 2022 and December 31, 2021, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 1,170 and $ 1,113 respectively, with terms of less than 12 months.

Approximately 81 % of the contracts at June 30, 2022 mature within three months, 9 % mature in three to six months and 10 % in six to twelve months.

At September 30, 2022 and December 31, 2021, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 1,201 and $ 1,113 respectively, with terms of less than 12 months.

Approximately 83 % of the contracts at September 30, 2022 mature within three months, 8 % mature in three to six months and 9 % in six to twelve months.

There have not been any material changes in our hedging strategy.

1 unchanged sentence

We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases, sales and expenses.

The net liability fair value of these contracts were $ 28 and $ 3 as of June 30, 2022 and December 31, 2021, respectively.

The net liability fair value of these contracts was $ 21 and $ 3 as of September 30, 2022 and December 31, 2021, respectively.

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:

Designation of Derivatives Balance Sheet Location June 30,

Designation of Derivatives Balance Sheet Location September 30,

2022 December 31,

3 unchanged sentences

Interest rate cap Other long-term assets 5 1

Interest rate swap Other long-term assets 1 —

Net designated derivative liabilities $ ( 15 ) $ ( 2 )

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Loss on Derivative Instruments 2022 2021 2022 2021

2 unchanged sentences

Derivative loss reclassified from AOCL to income - Cost of sales (effective portion) ( 11 ) ( 2 ) ( 17 ) ( 5 )

During the six months ended June 30, 2022 and 2021, no amount of ineffectiveness was recorded in the Condensed 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.

During the nine months ended September 30, 2022 and 2021, no amount of ineffectiveness was recorded in the Condensed 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.

In addition, no amount was recorded for an underlying exposure that did not occur or was not expected to occur.

As of June 30, 2022, a net after-tax loss of $ 27 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.

As of September 30, 2022, a net after-tax loss of $ 21 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

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

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Foreign exchange contracts – forwards Other expense – Currency losses, net $ ( 14 ) $ ( 4 ) $ ( 23 ) $ ( 22 )

Currency losses, net were $ 1 and $ 1 for the three months ended June 30, 2022 and 2021, respectively, and $ 1 and $ 3 for six months ended June 30, 2022 and 2021, respectively.

Foreign exchange contracts – forwards Other expense – Currency gains (losses), net $ 1 $ 2 $ ( 22 ) $ ( 20 )

Currency losses, net were $ 1 and $ 3 for the three months ended September 30, 2022 and 2021, respectively, and $ 2 and $ 6 for nine months ended September 30, 2022 and 2021, respectively.

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

3 unchanged sentences

The basis for the measurement at fair value in all cases is Level 2 – Significant Other Observable Inputs.

September 30,

2022 December 31,

1 unchanged sentence

Interest rate cap 5 1

Interest rate swap 1 —

Deferred compensation plan investments in mutual funds 15 18

9 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 932 $ 932 $ 1,840 $ 1,840

14 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30,

Pension Benefits

13 unchanged sentences

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

Net actuarial (gain) loss (1)

Net actuarial loss (gain) (1)

27 ( 14 ) 1 — ( 13 ) 1

Prior service cost — — 48 — — —

Prior service credit — — — — ( 10 ) —

Amortization of net actuarial (loss) gain ( 13 ) ( 17 ) ( 6 ) ( 15 ) 1 —

3 unchanged sentences

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive (Loss) Income $ 34 $ ( 24 ) $ ( 18 ) $ ( 20 ) $ ( 21 ) $ 3

Six Months Ended June 30,

Nine Months Ended September 30,

Pension Benefits

22 unchanged sentences

_____________

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

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

(1) The 2022 and 2021 net actuarial loss (gain) for U.S.

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

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

net actuarial loss reflects remeasurement related to the second quarter 2022 Pension Plan amendment in the UK.

The 2022 net actuarial loss for Non-U.S.

Plans reflects the remeasurement related to the second quarter 2022 Pension Plan amendment for our UK Defined Benefit Pension Plan..The 2022 net actuarial gain for Retiree Health plans reflect remeasurements related to the first and third quarter 2022 Plan Amendments for our U.S.

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

3 unchanged sentences

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

Six Months Ended

June 30, Year Ended

Nine Months Ended

September 30, Year Ended

2022 2021 Estimated 2022

6 unchanged sentences

tax-qualified defined benefit plans to meet the minimum funding requirements.

In addition, further contributions to our U.K.

defined benefit pension plan are not required after October 2022 following agreement of the triennial valuation of the Plan with the Plan Trustees.

Retiree Health Plan Amendment

3 unchanged sentences

The amount for the plan amendment will be amortized to future net periodic benefit costs as a prior service credit.

During the third quarter of 2022, we further amended our U.S.

Retiree Health Plan to eliminate Retiree Flex benefits for certain union employees as a result of contract negotiations.

This negative plan amendment resulted in a reduction of approximately $ 10 in the Company's postretirement benefit obligation.

The amount for the plan amendment will be amortized to future net periodic benefit costs as a prior service credit.

Pension Plan Amendment

1 unchanged sentence

defined benefit pension plan was amended, at the sole discretion of the Plan Trustees as legally allowed, to increase the capped inflation indexation for the April 2022 pension increase award to 7.5 % in line with the December 2021 UK Retail Price Index (RPI).

This amendment resulted in an increase of approximately $ 48 (GBP 39 million) in the projected benefit obligation (PBO) for this plan (approximately 1.4 % of the plan PBO as of December 31, 2021).

This amendment resulted in an increase of approximately $ 48 in the projected benefit obligation (PBO) for this plan (approximately 1.4 % of the plan PBO as of December 31, 2021).

The associated impacts from the required remeasurement of the plan assets and obligations for updates to discount rates, actual returns and actuarial experience as of the effective date of the amendment resulted in an additional actuarial loss of $ 31 .

7 unchanged sentences

Xerox Holdings Shareholders’ Equity Non-controlling Interests Total

Balance at March 31, 2022 $ 156 $ 1,560 $ ( 32 ) $ 5,532 $ ( 3,032 ) $ 4,184 $ 5 $ 4,189

Comprehensive loss, net — — — ( 4 ) ( 298 ) ( 302 ) ( 1 ) ( 303 )

Balance at June 30, 2022 $ 155 $ 1,564 $ — $ 5,484 $ ( 3,330 ) $ 3,873 $ 9 $ 3,882

Comprehensive (loss) income, net — — — ( 383 ) ( 217 ) ( 600 ) 1 ( 599 )

Cash dividends declared - common (3)

3 unchanged sentences

Stock option and incentive plans, net 1 13 — — — 14 — 14

Cancellation of treasury stock ( 2 ) ( 30 ) 32 — — — — —

Investment from noncontrolling interests — — — — — — 1 1

Balance at June 30, 2022 $ 155 $ 1,564 $ — $ 5,484 $ ( 3,330 ) $ 3,873 $ 9 $ 3,882

Balance at September 30, 2022 $ 156 $ 1,577 $ — $ 5,057 $ ( 3,547 ) $ 3,243 $ 11 $ 3,254

Additional Paid-in Capital Treasury Stock Retained Earnings AOCL (2)

Xerox Holdings Shareholders’ Equity Non- controlling Interests Total

Balance at March 31, 2021 $ 199 $ 2,456 $ ( 162 ) $ 6,267 $ ( 3,335 ) $ 5,425 $ 4 $ 5,429

Comprehensive income, net — — — 91 70 161 — 161

Balance at June 30, 2021 $ 189 $ 2,214 $ ( 159 ) $ 6,308 $ ( 3,265 ) $ 5,287 $ 8 $ 5,295

Comprehensive income (loss), net — — — 90 ( 70 ) 20 ( 1 ) 19

Cash dividends declared - common (3)

5 unchanged sentences

Cancellation of treasury stock ( 7 ) ( 152 ) 159 — — — — —

Investment from noncontrolling interests — 1 — — — 1 4 5

Other — 4 — — — 4 — 4

Balance at June 30, 2021 $ 189 $ 2,214 $ ( 159 ) $ 6,308 $ ( 3,265 ) $ 5,287 $ 8 $ 5,295

Balance at September 30, 2021 $ 182 $ 2,080 $ ( 87 ) $ 6,348 $ ( 3,335 ) $ 5,188 $ 7 $ 5,195

Treasury Stock Retained

13 unchanged sentences

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

Balance at June 30, 2022

Balance at September 30, 2022

$ 156 $ 1,577 $ — $ 5,057 $ ( 3,547 ) $ 3,243 $ 11 $ 3,254

4 unchanged sentences

Balance at December 31, 2020 $ 198 $ 2,445 $ — $ 6,281 $ ( 3,332 ) $ 5,592 $ 4 $ 5,596

Comprehensive income, net — — — 130 67 197 — 197

Comprehensive income (loss), net — — — 220 ( 3 ) 217 ( 1 ) 216

Cash dividends declared - common (3)

6 unchanged sentences

Investment from noncontrolling interests — 1 — — — 1 4 5

Other — ( 4 ) — — — ( 4 ) — ( 4 )

Balance at June 30, 2021

Balance at September 30, 2021

$ 182 $ 2,080 $ ( 87 ) $ 6,348 $ ( 3,335 ) $ 5,188 $ 7 $ 5,195

2 unchanged sentences

(2) Refer to Note 20 - Other Comprehensive (Loss) Income for the components of AOCL.

(3) Cash dividends declared on common stock for the three and six months ended June 30, 2022 and 2021 were $ 0.25 per share, respectively, and $ 0.50 per share, respectively.

(4) Cash dividends declared on preferred stock for the three and six months ended June 30, 2022 and 2021 were $ 20.00 per share, respectively, and $ 40.00 per share, respectively.

(3) Cash dividends declared on common stock for the three and nine months ended September 30, 2022 and 2021 were $ 0.25 per share, respectively, and $ 0.75 per share, respectively.

(4) Cash dividends declared on preferred stock for the three and nine months ended September 30, 2022 and 2021 were $ 20.00 per share, respectively, and $ 60.00 per share, respectively.

Common Stock and Treasury Stock

9 unchanged sentences

Balance at June 30, 2022 154,966 —

Stock based compensation plans, net 604 —

Balance at September 30, 2022 155,570 —

Xerox 2022 Form 10-Q 38

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Xerox Shareholder's Equity Non- controlling Interests Total

Balance at March 31, 2022 $ 3,592 $ 3,871 $ ( 3,032 ) $ 4,431 $ 5 $ 4,436

Comprehensive loss, net — ( 4 ) ( 298 ) ( 302 ) ( 1 ) ( 303 )

Balance at June 30, 2022 $ 3,630 $ 3,820 $ ( 3,330 ) $ 4,120 $ 9 $ 4,129

Comprehensive (loss) income, net — ( 383 ) ( 217 ) ( 600 ) 1 ( 599 )

Dividends declared to parent — ( 49 ) — ( 49 ) — ( 49 )

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Investment from noncontrolling interests — — — — 1 1

Balance at June 30, 2022 $ 3,630 $ 3,820 $ ( 3,330 ) $ 4,120 $ 9 $ 4,129

Balance at September 30, 2022 $ 3,643 $ 3,388 $ ( 3,547 ) $ 3,484 $ 11 $ 3,495

Additional Paid-in Capital Retained Earnings AOCL (1)

Xerox Shareholder's Equity Non-

Balance at March 31, 2021 $ 3,360 $ 5,672 $ ( 3,335 ) $ 5,697 $ 4 $ 5,701

Comprehensive income, net — 91 70 161 — 161

Balance at June 30, 2021 $ 3,413 $ 5,405 $ ( 3,265 ) $ 5,553 $ 8 $ 5,561

Comprehensive income (loss), net — 90 ( 70 ) 20 ( 1 ) 19

Dividends declared to parent — ( 215 ) — ( 215 ) — ( 215 )

Transfers from parent 96 — — 96 — 96

Investment from noncontrolling interests 1 — — 1 4 5

Balance at June 30, 2021 $ 3,413 $ 5,405 $ ( 3,265 ) $ 5,553 $ 8 $ 5,561

Balance at September 30, 2021 $ 3,509 $ 5,280 $ ( 3,335 ) $ 5,454 $ 7 $ 5,461

Additional Paid-in Capital Retained Earnings AOCL (1)

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

Balance at June 30, 2022

Balance at September 30, 2022

$ 3,643 $ 3,388 $ ( 3,547 ) $ 3,484 $ 11 $ 3,495

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Balance at December 31, 2020 $ 4,888 $ 5,834 $ ( 3,332 ) $ 7,390 $ 4 $ 7,394

Comprehensive income, net — 130 67 197 — 197

Comprehensive income (loss), net — 220 ( 3 ) 217 ( 1 ) 216

Dividends declared to parent — ( 774 ) — ( 774 ) — ( 774 )

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Investment from noncontrolling interests 1 — — 1 4 5

Balance at June 30, 2021 $ 3,413 $ 5,405 $ ( 3,265 ) $ 5,553 $ 8 $ 5,561

Balance at September 30, 2021 $ 3,509 $ 5,280 $ ( 3,335 ) $ 5,454 $ 7 $ 5,461

_____________

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Note 19 – Stock-Based Compensation

Stock-based compensation expense of $ 50 for the six months ended June 30, 2022 reflects $ 21 of accelerated expense associated with the vesting of all outstanding equity awards, according to the terms of the award agreement, in connection with the passing of Xerox Holding's former CEO.

Stock-based compensation expense of $ 63 for the nine months ended September 30, 2022 reflects $ 21 of accelerated expense associated with the vesting of all outstanding equity awards, according to the terms of the award agreement, in connection with the passing of Xerox Holding's former CEO.

Stock Options – CareAR Holdings, LLC

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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

Translation Adjustments (Losses) Gains $ ( 295 ) $ ( 287 ) $ 55 $ 54 $ ( 366 ) $ ( 359 ) $ 3 $ 3

Translation Adjustments Losses $ ( 280 ) $ ( 277 ) $ ( 129 ) $ ( 125 ) $ ( 646 ) $ ( 636 ) $ ( 126 ) $ ( 122 )

Unrealized (Losses) Gains

Changes in fair value of cash flow hedges losses ( 23 ) ( 16 ) ( 2 ) ( 1 ) ( 38 ) ( 29 ) ( 12 ) ( 9 )

Changes in fair value of cash flow hedges (losses) gains ( 3 ) ( 3 ) 3 2 ( 41 ) ( 32 ) ( 9 ) ( 7 )

Changes in cash flow hedges reclassed to earnings (1)

11 9 2 2 17 13 5 4

Net Unrealized Losses ( 19 ) ( 14 ) — — ( 32 ) ( 25 ) ( 9 ) ( 7 )

Net Unrealized Gains (Losses) 8 6 5 4 ( 24 ) ( 19 ) ( 4 ) ( 3 )

Defined Benefit Plans (Losses) Gains

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18 14 32 23 69 52 98 72

Other gains (losses) (3)

Other gains (3)

47 47 30 30 99 99 28 28

Changes in Defined Benefit Plans (Losses) Gains ( 9 ) 3 26 16 40 42 96 71

Changes in Defined Benefit Plans Gains 57 54 59 51 97 96 155 122

Other Comprehensive (Loss) Income Attributable to Xerox Holdings/Xerox $ ( 215 ) $ ( 217 ) $ ( 65 ) $ ( 70 ) $ ( 573 ) $ ( 559 ) $ 25 $ ( 3 )

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AOCL is comprised of the following:

September 30,

2022 December 31,

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(shares in thousands)

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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(1) Includes unissued shares associated with the accelerated share vesting since all contingencies regarding issuance have lapsed.

Xerox 2022 Form 10-Q 41

Note 22 – Contingencies and Litigation

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We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies.

Xerox 2022 Form 10-Q 38

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.

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.

Brazil Contingencies

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Below is a summary of our Brazilian tax contingencies:

September 30,

2022 December 31,

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Liens on Brazilian assets — —

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

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

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.

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We are also involved in certain disputes with contract and former employees.

Exposures related to labor matters are not material to the financial statements as of June 30, 2022 and December 31, 2021.

Exposures related to labor matters are not material to the financial statements as of September 30, 2022 and December 31, 2021.

We routinely assess all these matters as to the 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

Miami Firefighters’ Relief & Pension Fund v.

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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.

The complaint includes four causes of action:

The complaint includes four causes of

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breach of fiduciary duty of loyalty against the Icahn defendants;

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Reynolds against the same parties in the same court, and designating Miami Firefighters’ counsel as lead counsel in the consolidated action.

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Defendants moved to dismiss in August 2020, and the Court granted defendants’ motions and dismissed the action in its entirety, on December 14, 2020.

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The Court also granted the plaintiffs limited discovery to be completed within 60 days.

On September 30, 2022, the Special Litigation Committee, the Icahn Defendants and plaintiffs filed supplemental briefs in support of the Special Litigation Committee’s renewed motion to dismiss and/or for summary judgment and the Icahn Defendants’ renewed motion for summary judgment.

The parties filed response briefs on October 24, 2022.

Oral argument on the motions is scheduled for November 28, 2022.

Xerox Holdings Corporation v.

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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.

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Xerox Holdings consented to defendant’s request for an extension of its time in which to answer or otherwise respond to the complaint.

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proceedings pending the outcome of the U.S.

We have issued or provided approximately $ 258 of guarantees as of June 30, 2022 in the form of letters of credit or surety bonds issued to i) support certain insurance programs;

We have issued or provided approximately $ 253 of guarantees as of September 30, 2022 in the form of letters of credit or surety bonds issued to i) support certain insurance programs;

ii) support our obligations related to the Brazil contingencies;

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Xerox 2022 Form 10-Q 44

Note 23 – Subsequent Events

Credit Facility

On July 7, 2022, Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation (the Company), entered into a new Credit Agreement with several participating lending banks.

The new Credit Agreement provides Xerox Corporation with a $ 500 Revolving Credit Facility (the New Revolving Credit Facility) and has a maturity date of July 7, 2024.

We deferred $ 3 of debt issuance costs in connection with this agreement, which will be amortized over the two-year term of the arrangement.

The New Revolving Credit Agreement includes an uncommitted accordion feature that allows the Company to increase the facility by a total of up to $ 150 , subject to obtaining additional commitments from existing lenders or new lending institutions.

The New Revolving Credit Agreement also includes a $ 150 letter of credit sub-facility.

At Xerox Corporation’s election, the borrowings under the New Revolving Credit Facility in U.S.

The applicable margin for Base Rate loans, through the quarterly reporting for the fiscal quarter ending September 30, 2022, is 1.00 % per annum, and thereafter varies from 0.50 % to 1.25 % depending on the Company’s consolidated total net leverage ratio (as defined in the New Credit Agreement).

Xerox Corporation may also borrow in currencies other than U.S.

dollars under the New Revolving Credit Agreement, and such borrowings will bear interest calculated under a construct similar to that described above.

Principal outstanding would be payable in full at maturity on July 7, 2024.

Xerox Corporation’s borrowings under the New Revolving Credit Facility are supported by guarantees from the Company and its subsidiary guarantors, and by security interests in substantially all of the assets of Xerox Corporation, the Company, and its subsidiary guarantors, subject to certain exceptions.

If an event of default occurs under the New Revolving Credit Facility, the entire principal amount outstanding under the New Revolving Credit Facility, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable, subject, in certain instances, to the expiration of applicable cure periods.

The New Revolving Credit Facility requires the Company to comply with the following financial covenants measured as of the end of each fiscal quarter, commencing with the quarter ending September 30, 2022:

(a) Minimum Unrestricted Cash - maintain an Unrestricted Cash balance, as defined in the New Revolving Credit Agreement, in an amount not less than $ 500 as of the last day of the quarter.

(b) Total Net Leverage Ratio - a quarterly test that is calculated as net debt for borrowed money divided by consolidated EBITDA, both as defined in the New Revolving Credit Agreement - with a cap on cash netting of $ 1.0 billion.

(c) Interest Coverage Ratio - a quarterly test that is calculated as consolidated EBITDA divided by consolidated interest expense, both as defined in the New Revolving Credit Agreement.

In addition, the New Revolving Credit Facility requires that no more than $ 300 of the $ 650 2023 Senior Notes is outstanding as of December 15, 2022 in order for the facility to remain in effect.

The New Revolving Credit Facility also imposes restrictions on the Company and its subsidiaries, including on the amount of dividends the Company is permitted to pay and the amount of shares the Company is permitted to repurchase.

Under the New Revolving Credit Facility, provided there is no event of default existing, the Company may declare and pay cash dividends on shares of its common stock and its preferred stock, and may repurchase shares of its common stock and its preferred stock (i) in an unlimited amount if, at the time such dividend or repurchase is made, the Company’s Total Net Leverage ratio is 3.5 to 1.00 or less or (ii) in an aggregate amount in any fiscal year not to exceed the greater of (x) $ 200 or (y) 50 % of free cash flow, which is operating cash flows less capital expenditures, for the prior fiscal year, commencing with the fiscal year ending December 31, 2022.

In July 2022, Xerox acquired Go Inspire, a U.K.-based print and digital marketing and communication services provider, for approximately $ 48 (GBP 40 million).

The acquisition strengthens Xerox’s strategy to grow its global Digital Services presence in EMEA.

The purchase price was all cash for 100 % ownership of the acquired company and is expected to be primarily allocated to intangible assets and goodwill.

The goodwill associated with the acquisition of Go Inspire will be included in our Print and Other segment.

The operating results of this acquisition are not expected to be material to our financial statements.

Xerox 2022 Form 10-Q 41

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

What changed 10-Q

Item 1. Financial Statements