What changed in this filing

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Item 1. Business

2023-02-23 compared with 2022-02-23 · 175 added, 252 removed, 216 unchanged (66% of the section changed)

Xerox is a workplace technology company, building and integrating software and hardware for enterprises large and small.

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

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

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

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

Whether inventing the copier, the Ethernet, the laser printer or more, Xerox has long defined the modern work experience and continues to do so with investments in artificial intelligence (AI), augmented reality (AR)-driven service experiences, robotic process automation (RPA) and other technologies that enable Xerox to deliver essential products and services to address productivity challenges of a hybrid workplace and distributed workforce.

Xerox serves customers globally in North America, Central and South America, Brazil, Europe, Eurasia, the Middle East, Africa and India.

This geographic span allows us to deliver our technology and solutions to customers of all sizes, regardless of complexity or number of customer locations.

Recent Changes and Developments

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

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

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

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

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

DocuShare®, a cloud-based content management system;

and XMPie, a multi-channel marketing software platform.

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

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

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

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

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

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

Webster, N.Y.;

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

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

3D Printing, IoT Sensors and clean tech.

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

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

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

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

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

Optimize Operations for Simplicity

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

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

Drive Revenue

• Drive increased adoption and utilization of CareAR

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

• Grow our financing business as a global financing solutions business

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

Xerox 2021 Annual Report 1

Monetize Innovation

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

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

• Embed PARC’s technology into new and existing businesses

Focus on cash flow and increasing capital returns

• Maximize annual free cash flow 1 generation

• Deploy excess capital for strategic M&A

• Opportunistic share repurchases

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

In 2022, we made progress in our efforts to monetize or improve and broaden the financial profile of two of the businesses we stood up in 2021:

FITTLE (formerly known as Xerox Financial Services) and Innovation (PARC).

FITTLE focused its strategy in 2022 to broaden its portfolio of financed assets to include growth opportunities independent of Xerox equipment and services, such as the expansion of its dealer relationships to include an increasing number of non-Xerox dealers, leveraging its existing dealer relationships to finance a wider breadth of products and forming relationships with new vendors.

In 2022, FITTLE’s non-captive (i.e., indirect) originations grew more than 20%.

In December, FITTLE entered into a receivables funding solution (the Receivables Funding Agreement) with an affiliate of HPS Investment Partners to sell pools of future lease receivables, primarily covering U.S.

direct leases (including leases originated through XBS) through January 2024.

The Receivables Funding Agreement, which anticipates sales of approximately $600 million in 2023, represents a strategic shift in the Company’s approach to funding FITTLE’s growth, allowing FITTLE to focus on being an asset-light, best-in-class provider and servicer of equipment leases while freeing up Xerox’s operating cash.

We also spun out two businesses incubated at PARC:

Mojave, an energy efficient HVAC technology development business, and Novity, an industrial predictive maintenance business.

Both companies were spun out as separate, independent businesses, with Xerox continuing to hold a noncontrolling minority share.

The transactions allow Xerox to preserve free cash flow as Mojave and Novity invest for growth, all while maintaining the opportunity to realize value from their future success.

Due to recent adverse changes in macroeconomic and other operating conditions, we have recently taken a more focused approach to the way in which we allocate R&D spending, placing greater emphasis on margin-accretive growth opportunities with near-term returns.

In 2022, we took actions to reduce and reallocate R&D spend toward projects and partnerships that augment our existing strengths and opportunities within Print, IT Services and Digital Services.

As a result, we paused growth investments at Elem, our 3D printing business, we exited our infrastructure-monitoring joint venture, Eloque, and rationalized spending at PARC’s research facilities.

Strategic Priorities

Our long-term strategic objective is to grow the share of our customer's technology spending as well as the Total Addressable Market (TAM) through expanded penetration of existing solutions and the development of new, data-driven solutions.

We believe Xerox’s globally recognizable brand, our deep understanding of clients’ industries and businesses and client trust have afforded us a path to win in IT and digital services – markets where we already have leading solutions and where we are actively investing to develop more.

Our strategic priorities for 2023 are:

Customer Success, Focus on Profitability and Shareholder Returns.

Customer Success:

We will take measures to make it easier to do business with Xerox by employing a holistic, client-centric approach to delivering essential products and services that address the productivity challenges of a hybrid workplace and distributed workforce.

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

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

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

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

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

Optimize Operations for Simplicity

Project Own It is Xerox’s enterprise-wide initiative to simplify operations, drive continuous improvement and free up capital to reinvest in the business.

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

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

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

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

Drive Revenue

Our roadmap, summarized below, focuses on growing revenue by increasing Xerox’s leadership position in the print market while expanding into targeted adjacent and new markets:

• Gain share in Print.

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

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

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

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

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

• Expand penetration of Managed and Digital services.

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

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

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

• Drive increased adoption and utilization of CareAR.

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

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

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

• Scale IT Services in the SMB market.

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

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

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

By focusing our sales efforts on providing solutions closely aligned to clients’ needs, rather than products, we believe we can grow our revenue while improving customer outcomes.

Xerox 2022 Annual Report 1

• Grow FITTLE as a global financing solutions business.

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

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

• Commercialize research at PARC.

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

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

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

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

Monetize Innovation

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

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

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

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

states to deploy pilots in early 2022.

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

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

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

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

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

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

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

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

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

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

Focus on Cash Flow and Increasing Capital Returns

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

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

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

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

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

• Selective pursuit of acquisitions in targeted growth areas.

Focus on Profitability:

We plan to implement a more flexible cost base and operating model to expand margins and direct investments towards margin-accretive growth opportunities with nearer-term returns.

Project Own It delivered approximately $2.2 billion of gross cost savings from 2018 to 2022, and the behaviors and processes instilled by this program remain a priority.

Just as we will focus on making it easier to do business with Xerox, we will look to make it easier to do business within Xerox by investing in processes that drive incremental organizational efficiencies and enable collaboration required to offer holistic solutions for our clients.

Shareholder Returns:

We will manage the business with the aim of optimizing free cash flow generation and return at least 50% of free cash flow to shareholders.

We expect to focus on driving higher profits, but we also remain focused on generating more cash flow per profit dollar.

In 2022, FITTLE entered into a Receivables Funding Agreement that we expect to improve Xerox’s cash flow profile while continuing to support FITTLE’s growth and we also intend to concentrate on inventory efficiency, which we expect to improve as supply chain conditions normalize.

Acquisitions and Investments

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

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

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

and an IT services business in the U.S.

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

Xerox 2021 Annual Report 3

Joint Venture Formation

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

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

ServiceNow, Inc.

Investment in CareAR

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

acquired a noncontrolling interest in CareAR Holdings LLC.

In 2022, Xerox acquired Powerland, an IT service provider in Canada, and Go Inspire, a print and digital marketing and communication services provider in the U.K.

Further details about our acquisitions and investments can be found in Note 6 - Acquisitions and Investments, in the Consolidated Financial Statements.

Segment Information

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

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

CareAR, FITTLE and Innovation (PARC).

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

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

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

These sales channels are structured to serve a range of customers for our products and services.

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

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

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

Reportable Segments and Geographic Sales Channels

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

We have two operating and reportable segments – Print and Other and Financing (FITTLE) .

• 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) – a financing solutions business primarily providing financing for the sales of Xerox equipment and also non-Xerox office equipment and IT services equipment.

We also operate a matrix organization that includes a geographic focus that is primarily organized from a sales perspective on the basis of “go-to-market” (GTM) sales channels as follows:

• Americas , which includes our sales channels in the U.S.

and Canada, as well as Mexico, Brazil, and Central and South America.

• EMEA , which includes our sales channels in Europe, the Middle East, Africa and India.

• Other , which primarily includes royalties and licensing revenue.

These GTM sales channels are structured to serve a range of customers for our products and services, including financing.

Accordingly, we will continue to provide information, primarily revenue related, with respect to our principal GTM sales channels.

Please refer to the Reportable Segments section of Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 4 - Segment and Geographic Area Reporting in the Consolidated Financial Statements for additional information.

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

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

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

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

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

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

• Entry primarily comprises A4 desktop monochrome and color printers and multifunction printers (MFPs) ranging from small personal devices to office workgroup devices.

We offer our ConnectKey® system of digital workflow and applications across a large portion of these devices.

Xerox 2022 Annual Report 2

• Mid-Range are primarily A3 devices that have more features and can handle higher print volumes and larger paper sizes than entry devices.

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

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

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

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

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

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

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

Xerox 2021 Annual Report 4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Webster, N.Y.;

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

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

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

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

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

Our Customer Communications Management and Campaigns on Demand solutions, such as those provided by recently acquired Go Inspire, help drive personalized and meaningful communications and touchpoints.

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

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

Xerox 2022 Annual Report 3

In addition to our four primary offering areas described above, a smaller but growing portion of our revenues comes from non-core streams including paper sales in our developing market countries, wide-format systems, licensing revenue, as well as standalone software such as CareAR, DocuShare® and XMPie.

In addition, our PARC innovation group, which comprises the research efforts undertaken at our facilities located in Palo Alto, Calif.;

Webster, N.Y.;

Cary, N.C., and Toronto, Canada, is focused on incubating, productizing and commercializing disruptive technology.

Geographic Information

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

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

As of December 31, 2022, Xerox held 7,105 U.S.

utility and design patents.

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

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

In 2022, we were party to multiple patent-related agreements in which we licensed or assigned our patents to others in return for revenue and/or access to their patents or to further our business goals.

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

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and behaving responsibly as a corporate citizen.

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

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

We continue this legacy by creating products and services that help our customers be more productive, profitable and sustainable.

We deliver solutions that drive customer success and enable a new, better world.

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

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

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

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

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

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

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

We share our roadmap to reach net zero in our 2022 CSR Report.

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

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

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

Our GHG emissions are

Xerox 2022 Annual Report 4

third-party assured in accordance with ISO 14064-3:2019 and are updated in our progress summary as new data becomes available.

In 2022, Xerox was named to CDP’s Annual "A List” for climate change transparency and performance.

CDP is a nonprofit organization that runs the global disclosure system for investors, companies, and regions to manage their environmental impacts.

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

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

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

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

The majority of spent toner cartridges and other consumables returned through Green World Alliance, Xerox's customer recycling program, are recycled, reused or remanufactured.

We continue to make progress towards increasing the post-consumer recycled content in our eco-label eligible devices.

Our Employees

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a reduction of approximately 2,800 (12.0%) employees since December 31, 2021.

The reduction is a result of net attrition (attrition net of gross hires), of which a large portion is not expected to be back filled, as well as the impact from organizational changes.

Approximately 11,900 employees were located in the U.S.

The reduction in headcount resulted from net attrition (attrition net of gross hires), restructuring, as well as the impact of organizational changes including employee transfers associated with shared services arrangements.

On a geographic basis, approximately 10,300 employees were located in the U.S.

and approximately 10,200 employees were located outside the U.S.

We had approximately 11,800 employees or almost half of our employees engaged in providing services to customers (direct service and managed services) and approximately 2,900 engaged in direct sales.

Approximately 20% of our employees are represented by unions or similar organizations, such as worker’s councils, and are covered by collective bargaining agreements, with approximately 90% located outside the U.S.

We had approximately 11,900 employees or approximately 60% of our employees engaged in providing services to customers (direct service and managed services) and approximately 3,000 engaged in direct sales.

Approximately 20% of our employees are represented by unions or similar organizations, such as worker’s councils with approximately 90% located outside the U.S.

As of December 31, 2022, approximately 25% of our employees were women and 30% of our U.S.

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Employee Safety

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

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

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

Employees in the U.S.

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

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

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

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

These included both professional and personal anecdotes.

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

The doctors provided helpful information and answered employees' questions.

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

We closely follow government and public health organizations’ guidance.

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

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

These practices control transmission and maximize the safety of our employees

Xerox 2021 Annual Report 7

and the clients we support.

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

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

Optimize Operations for Success

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

Steps taken include, but are not limited to:

• Realigning the workforce in support of the Company’s strategy;

• Right-sizing parts of the business based on shifting customer needs;

• Optimizing shared services.

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

At Xerox, we are committed to maintaining a safe workplace environment for our people.

We have an incident reporting process, workplace safety inspections and hazard analysis that allows improvements in areas where we can reduce or prevent incidents.

Several methods are also used to raise employee safety awareness including site-specific hazard management, off-the-job safety information and communications regarding safety concerns.

In 2022, Xerox’s Day Away from Work Case Injury Rate was 0.40, which was an 8.1% increase from the 2021 rate of 0.37, and better than the 2022 targeted rate of 0.44 by 9.1%.

Diversity, Inclusion and Belonging

Diversity, inclusion and belonging (DIB) is an essential part of our culture and value system.

For over half a century, Xerox has always strived to be a leader in this space and continues to be at the forefront of driving change within our Company and our communities.

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

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

Diversity, inclusion and belonging (DIB) is more than in our DNA at Xerox, it connects us culturally.

Our first CEO, Joseph Wilson, called for social responsibility, diversity and inclusion by shaping our core values to reflect on the value of our employees for races and ethnicities.

After we reaffirmed our commitment to DIB in 2020, we have expanded our commitment to social responsibility and diversity through employee listening sessions to educate and to cultivate belonging.

Joseph Wilson’s vision is still reflected today in our DIB roadmap through the development and execution of ESG targets.

Our DIB roadmap continues to enable us to have a bigger impact on employees and society.

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

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• Diverse Pipeline :

Building a diverse pipeline and accelerating the careers of underrepresented talent within the organization.

Recruit, hire and promote more women globally, and underrepresented talent within the U.S.

for professional-level job roles.

Our pipeline is governed by Xerox's diversity policy known as the Wilson Rule.

• Partnership :

Building relationships with external organizations to ensure that our incoming talent better reflects the markets and communities we serve.

For example, we are working with AI vendors to increase the pool of women and diverse candidates for our job openings using their unique artificial intelligence algorithms.

Build relationships with external organizations to increase the sourcing of incoming talent to better reflect the markets and communities we serve.

For example, we are working with AI vendors using their unique algorithms to increase the pool of women and underrepresented candidates for our job openings.

• Culture Change :

Reinforcing a Company-wide culture of belonging.

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

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

Leveled-up our culture cohesion by hosting organization-wide DIB learning events and listening sessions, and expansion of our Employee Resource Groups (ERGs) to 10 groups.

In 2022, we held our third annual global DIB virtual event, called All of Us Together.

This global event is planned by members of our ERGs, and it is open to all Xerox employees.

In addition to increasing global employee participation in ERGs, we expanded the footprint of our ERGs with the creation of our new disability ERG called Enable_All.

• Community Outreach :

Extending our reach into the communities that we serve.

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

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

Fostering relationships with partners that reflect the communities that we serve is at the heart of our DIB roadmap.

We continue to nurture our partnership with A Better Chance (ABC) and the Thurgood Marshall College Fund Leadership Institute through mentorship, sponsorship, and scholarship support to youth of color, providing equality-opportunities for more successful career outcomes.

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

• Accountability :

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

In 2022, we completed an assurance audit against the Social KPIs that confirmed the accuracy in the methodology.

Talent Management and Workforce Development

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More broadly, Human Resources (HR) provides a forum for management to review the future needs of the organization, noting strengths, gaps and strategies to build strong teams for the next chapter at Xerox.

During our most recent organization and talent planning process, we identified the potential successors for critical roles.

We utilize a third-party, online learning platform that is available to all Xerox employees for self-directed learning, which supports skill and career growth.

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

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

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

Finally, we provide diversity training sessions to managers to reinforce the importance of a diverse workforce.

For example, Vista, our high-potential development program, recently completed its second year, and we are preparing to launch the third cohort in early 2023.

This is a one-year program that provides opportunities for our highest-potential employees across the globe, to accelerate their career development through education, experience, and exposure.

This program also includes individualized career coaching, mentorship, and networking opportunities with Executive Committee and Senior Leadership members, which accelerates our talent pipeline, retains early talent, and increases employee engagement.

Additionally, our leaders embrace and support the Wilson Rule, which requires that one out of every three final candidates for professional roles be diverse.

Finally, we provide ongoing diversity training sessions to managers to reinforce the importance of a diverse workforce.

Global Learning Innovation

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

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

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

Xerox 2021 Annual Report 8

and reskill employees across the globe.

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

We adopt a blended technology-led learning model to drive the Xerox business and talent strategies.

Learning is delivered to our staff using an appropriate modality to support professional development and build capabilities across the company, on time, and in a cost-effective manner.

Our Learning and Development (L&D) function is focused on business agility and driving digital transformation across our workforce.

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

Learning topics include critical job-specific information and technical upskilling, management development and professional effectiveness, productivity tools for project management, client service, negotiations, technology solutions, ethics, diversity and inclusion, and information security.

As our business evolves, we will continue to leverage technology and identify new skills or capabilities required to ensure we remain competitive in the global market.

As our business evolves, we will continue to leverage technology to identify new skills or capabilities required to ensure we remain competitive in the global market.

Our L&D function partners with Xerox business leaders to design capability-building programs and the Xerox senior leadership champions a long-term vision to continually develop the skills of our employees.

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Total Rewards

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

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

In 2022, Xerox employees volunteered for approximately 24,400 hours.

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

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

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

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

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

• Education and workforce preparedness:

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

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

• Science and technology:

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

We demonstrate our Board of Directors' and executive staff's commitment to ESG as follows:

• Investor outreach:

Each year Xerox conducts regular outreach with our investors to facilitate candid discussions about our business and strategy.

In 2022, the company hosted 25 calls and meetings with 12 different investors providing feedback about ESG reporting metrics, diversity, and executive compensation practices.

We include ESG metrics in the compensation criteria for all senior management, which covers climate change, a balanced workforce, succession planning, board refreshment and workplace safety.

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

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

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

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

Additionally, Xerox takes data protection very seriously.

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

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

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

• Investor Day:

Xerox hosted an Investor Day Event in February 2022 - Now & Next - with our investors and analysts.

During this event, Xerox executives provided an overview of the Company's strategic priorities, which included a discussion of ESG priorities such as our Roadmap to Net Zero, as well as discussed business solutions and financial services that make every day work better for clients.

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

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

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

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

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

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

Xerox takes data protection very seriously.

Xerox’s information security and privacy programs are designed to comply with applicable laws and regulations and are based on industry standards and best practices such as the National Institute of Technology (NIST) Cybersecurity Framework, ISO 27001.

Xerox Privacy Policy notice ensures that the processing of personal data is based on the subject’s consent, as individuals have a right to withdraw or alter consent at any time for future processing.

Please refer to Xerox’s privacy website at www.xerox.com/privacy for further information.

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

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

Material Government Regulations

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Marketing and Distribution

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

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

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

We go to market with a customer-centric, market-informed and services-led approach, selling workplace products and services that support the new hybrid and distributed workforce.

We sell directly to customers through our direct sales force or indirectly through distributors, independent agents, dealers, value-added resellers, systems integrators and e-commerce marketplaces.

In addition, we continue to focus on broadening our footprint to sell offerings to the small and mid-sized markets primarily in the U.S., U.K.

and Canada through XBS which is comprised of regional core companies that provide office technology and services, including Managed IT Services, to small and mid-sized markets clients, and through the acquisitions of dealers and IT Services providers internationally.

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

the Americas, comprised of the U.S.

and Canada along with Mexico, Central and South America;

and Canada along with Mexico, Brazil, Central and South America;

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

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

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

The Technology Agreement (TA) between FUJIFILM Business Innovation Corp.

(formerly Fuji Xerox Co.

Ltd, or Fuji Xerox) and Xerox was terminated on March 31, 2021.

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

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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.

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

Xerox 2022 Annual Report 8

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

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

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

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

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

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

Customer Financing

With respect to our financing/FITTLE business, our main competitors vary considerably from equipment manufacturers with a captive leasing group to third-party independent leasing entities and financial institutions.

We generally compete based on relationships with dealers and partners and by offering a better service experience.

Customer Financing (FITTLE)

We finance a large portion of our direct channel customer purchases of Xerox equipment through bundled lease agreements.

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In both instances, financing facilitates customer acquisition of Xerox technology and enhances our value proposition, while providing Xerox a reasonable return on our investment in this business.

We also provide financing solutions for non-Xerox office equipment and IT services equipment.

Because our lease contracts allow customers to pay for equipment over time rather than upfront upon installation, we maintain a certain level of debt to support our investment in these lease contracts.

We fund our customer financing activity through a combination of cash generated from operations, cash on hand and proceeds from capital market offerings and securitizations.

We fund our customer financing activity through a combination of cash generated from operations, cash on hand and proceeds from capital market offerings and securitizations through secured borrowing arrangements and sales of receivables.

At December 31, 2022, we had approximately $3.1 billion of finance receivables and $235 million of Equipment on operating leases, net, or Total Finance assets of approximately $3.3 billion.

We maintain an assumed 7:1 leverage ratio of debt to equity as compared to our Finance assets, which results in approximately $2.9 billion of our $4.2 billion of debt being allocated to our financing business.

We maintain an assumed 7:1 leverage ratio of debt to equity as compared to our Finance assets, which results in approximately $2.9 billion of our $3.7 billion of debt being allocated to FITTLE.

In December 2022, the Company entered into a Receivables Funding Agreement pursuant to which the Company agreed to offer for sale, and the purchaser agreed to purchase certain eligible pools of finance receivables on a monthly basis in transactions intended to be true sales.

The Receivables Funding Agreement, which contemplates receivables sales totaling approximately $600 million, has an initial term through January 31, 2024, with automatic one-year extensions thereafter, unless terminated by either the Company or the purchaser.

The Receivables Funding Agreement provides a committed funding source for FITTLE to originate and service new lease originations without incurring additional debt.

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

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Our manufacturing and distribution facilities are located around the world.

Our largest manufacturing site is in Webster, N.Y., where we produce the Xerox iGen, Nuvera, and Baltoro production printing presses and new 3D printers as well as key components and consumables for our products, such as toner.

Our largest manufacturing site is in Webster, N.Y., where we produce the Xerox® iGen, Xerox® Nuvera, and Xerox® Baltoro production printing presses as well as key components and consumables for our products, such as toner.

We have manufacturing operations for materials and components in Dundalk, Ireland;

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and Jabil Inc., which are global contract manufacturers with whom we have long-standing relationships.

Xerox 2022 Annual Report 9

Our supply chain operations utilize a network of world-class logistics partners who offer warehousing and transportation services.

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The financial measures, by geographical area for 2022, 2021 and 2020, are included in Note 4 - Segment and Geographic Area Reporting in the Consolidated Financial Statements for additional information.

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

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See also the risk factor entitled “The international nature of our business subjects us to a number of risks, including foreign exchange and interest rate risk and unfavorable political, regulatory, and tax conditions in foreign countries.” in Part I, Item 1A Risk Factors of this combined report on Form 10-K.

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

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

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

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

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

Prior to 2021, backlog 1 had not been a meaningful indicator of future business prospects because a significant proportion of our revenue was fulfilled from existing inventories or within a short period of order signing.

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

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

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

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

However, starting in 2021, and continuing throughout the first three quarters of 2022, we experienced an unprecedented level of supply chain disruption, in part due the effects of the COVID-19 pandemic, which only began to meaningfully ease during the fourth quarter of 2022.

At December 31, 2022, our backlog of equipment and IT hardware remains elevated as compared to our historic levels and was $246 million.

In 2023, we expect backlog to continue to decline through the first half of the year as supply chain conditions further normalize.

_____________

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

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

(1) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be

installed, including orders with future installation dates.

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

Backlog at December 31, 2022 of $246 million excludes sales orders from Russia and Powerland Computers, Ltd., which was acquired in the first quarter of 2022.

Other Information

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

Xerox®, ConnectKey®, FreeFlow®, Gen3®, Xerox Nuvera®, Baltoro® and any other trademarks that are used here are trademarks of Xerox Corporation in the United States and/or other countries.

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

What changed 10-K

Item 1. Business