What changed in this filing

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Item 1. Financial Statements

2023-10-30 compared with 2023-08-02 · 330 added, 225 removed, 1292 unchanged (30% of the section changed)

1 unchanged sentence

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per-share data) 2023 2022 2023 2022

9 unchanged sentences

Selling, administrative and general expenses 416 418 1,256 1,332

Goodwill impairment — 412 — 412

Restructuring and related costs, net 10 22 35 41

3 unchanged sentences

Total Costs and Expenses 1,589 2,131 5,062 5,640

Loss before Income Taxes and Equity Income ( 89 ) ( 5 ) ( 4 ) ( 94 )

Income tax (benefit) expense ( 28 ) 1 ( 14 ) ( 30 )

Income (Loss) before Income Taxes and Equity Income 63 ( 380 ) 59 ( 474 )

Income tax expense (benefit) 15 3 1 ( 27 )

Equity in net income of unconsolidated affiliates 1 1 2 3

Net (Loss) Income ( 60 ) ( 5 ) 11 ( 62 )

Net Income (Loss) 49 ( 382 ) 60 ( 444 )

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

Net (Loss) Income Attributable to Xerox Holdings $ ( 61 ) $ ( 4 ) $ 10 $ ( 60 )

Basic (Loss) Earnings per Share $ ( 0.41 ) $ ( 0.05 ) $ 0.02 $ ( 0.43 )

Diluted (Loss) Earnings per Share $ ( 0.41 ) $ ( 0.05 ) $ 0.02 $ ( 0.43 )

Net Income (Loss) Attributable to Xerox Holdings $ 49 $ ( 383 ) $ 59 $ ( 443 )

Basic Earnings (Loss) per Share $ 0.29 $ ( 2.48 ) $ 0.31 $ ( 2.91 )

Diluted Earnings (Loss) per Share $ 0.28 $ ( 2.48 ) $ 0.30 $ ( 2.91 )

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

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2023 2022 2023 2022

Net (Loss) Income $ ( 60 ) $ ( 5 ) $ 11 $ ( 62 )

Net Income (Loss) $ 49 $ ( 382 ) $ 60 $ ( 444 )

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

Net (Loss) Income Attributable to Xerox Holdings ( 61 ) ( 4 ) 10 ( 60 )

Other Comprehensive Income (Loss), Net (1)

Net Income (Loss) Attributable to Xerox Holdings 49 ( 383 ) 59 ( 443 )

Other Comprehensive (Loss) Income, Net (1)

Translation adjustments, net ( 122 ) ( 277 ) 19 ( 636 )

Unrealized losses, net ( 5 ) ( 14 ) ( 1 ) ( 25 )

Unrealized gains (losses), net 1 6 — ( 19 )

Changes in defined benefit plans, net 55 54 14 96

Other Comprehensive Income (Loss), Net 17 ( 298 ) 99 ( 342 )

Other comprehensive loss, net attributable to noncontrolling interests — — ( 1 ) —

Other Comprehensive Income (Loss), Net Attributable to Xerox Holdings 17 ( 298 ) 100 ( 342 )

Other Comprehensive (Loss) Income, Net ( 66 ) ( 217 ) 33 ( 559 )

Other comprehensive income, net attributable to noncontrolling interests 1 — — —

Other Comprehensive (Loss) Income, Net Attributable to Xerox Holdings ( 67 ) ( 217 ) 33 ( 559 )

Comprehensive (Loss) Income, Net ( 17 ) ( 599 ) 93 ( 1,003 )

2 unchanged sentences

_____________

(1) Refer to Note 19 - Other Comprehensive Income (Loss) for gross components of Other comprehensive income (loss), net, reclassification adjustments out of Accumulated other comprehensive loss and related tax effects.

(1) Refer to Note 19 - 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.

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,

2023 December 31,

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Additional paid-in capital 1,619 1,588

Treasury stock, at cost ( 553 ) —

Retained earnings 5,070 5,136

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Total Liabilities and Equity $ 10,444 $ 11,543

Shares of Common Stock Issued and Outstanding 157,105 155,781

Shares of common stock issued 157,151 155,781

Treasury stock ( 34,245 ) —

Shares of Common Stock Outstanding 122,906 155,781

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2023 2022

7 unchanged sentences

Stock-based compensation 40 63

Goodwill impairment — 412

Restructuring and asset impairment charges 25 44

5 unchanged sentences

Increase in equipment on operating leases ( 109 ) ( 74 )

Decrease in finance receivables 407 17

Decrease in other current and long-term assets 15 35

Decrease (increase) in finance receivables 490 ( 10 )

(Increase) decrease in other current and long-term assets ( 8 ) 36

(Decrease) increase in accounts payable ( 290 ) 198

(Decrease) increase in accrued compensation ( 7 ) 7

Increase in accrued compensation 16 29

Decrease in other current and long-term liabilities ( 159 ) ( 73 )

8 unchanged sentences

Other investing, net ( 3 ) ( 12 )

Net cash used in investing activities ( 22 ) ( 62 )

Net cash provided by (used in) investing activities 3 ( 95 )

Cash Flows from Financing Activities

13 unchanged sentences

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2023 2022 2023 2022

9 unchanged sentences

Selling, administrative and general expenses 416 418 1,256 1,332

Goodwill impairment — 412 — 412

Restructuring and related costs, net 10 22 35 41

3 unchanged sentences

Total Costs and Expenses 1,589 2,131 5,062 5,640

Loss before Income Taxes and Equity Income ( 89 ) ( 5 ) ( 4 ) ( 94 )

Income tax (benefit) expense ( 28 ) 1 ( 14 ) ( 30 )

Income (Loss) before Income Taxes and Equity Income 63 ( 380 ) 59 ( 474 )

Income tax expense (benefit) 15 3 1 ( 27 )

Equity in net income of unconsolidated affiliates 1 1 2 3

Net (Loss) Income ( 60 ) ( 5 ) 11 ( 62 )

Net Income (Loss) 49 ( 382 ) 60 ( 444 )

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

Net (Loss) Income Attributable to Xerox $ ( 61 ) $ ( 4 ) $ 10 $ ( 60 )

Net Income (Loss) Attributable to Xerox $ 49 $ ( 383 ) $ 59 $ ( 443 )

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

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2023 2022 2023 2022

Net (Loss) Income $ ( 60 ) $ ( 5 ) $ 11 $ ( 62 )

Net Income (Loss) $ 49 $ ( 382 ) $ 60 $ ( 444 )

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

Net (Loss) Income Attributable to Xerox ( 61 ) ( 4 ) 10 ( 60 )

Other Comprehensive Income (Loss), Net (1)

Net Income (Loss) Attributable to Xerox 49 ( 383 ) 59 ( 443 )

Other Comprehensive (Loss) Income, Net (1)

Translation adjustments, net ( 122 ) ( 277 ) 19 ( 636 )

Unrealized losses, net ( 5 ) ( 14 ) ( 1 ) ( 25 )

Unrealized gains (losses), net 1 6 — ( 19 )

Changes in defined benefit plans, net 55 54 14 96

Other Comprehensive Income (Loss), Net 17 ( 298 ) 99 ( 342 )

Other comprehensive loss, net attributable to noncontrolling interests — — ( 1 ) —

Other Comprehensive Income (Loss), Net Attributable to Xerox 17 ( 298 ) 100 ( 342 )

Other Comprehensive (Loss) Income, Net ( 66 ) ( 217 ) 33 ( 559 )

Other comprehensive income, net attributable to noncontrolling interests 1 — — —

Other Comprehensive (Loss) Income, Net Attributable to Xerox ( 67 ) ( 217 ) 33 ( 559 )

Comprehensive (Loss) Income, Net ( 17 ) ( 599 ) 93 ( 1,003 )

2 unchanged sentences

_____________

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,

2023 December 31,

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2023 2022

7 unchanged sentences

Stock-based compensation 40 63

Goodwill impairment — 412

Restructuring and asset impairment charges 25 44

5 unchanged sentences

Increase in equipment on operating leases ( 109 ) ( 74 )

Decrease in finance receivables 407 17

Decrease in other current and long-term assets 15 35

Decrease (increase) in finance receivables 490 ( 10 )

(Increase) decrease in other current and long-term assets ( 8 ) 36

(Decrease) increase in accounts payable ( 290 ) 198

(Decrease) increase in accrued compensation ( 7 ) 7

Increase in accrued compensation 16 29

Decrease in other current and long-term liabilities ( 159 ) ( 73 )

7 unchanged sentences

Acquisitions, net of cash acquired ( 7 ) ( 93 )

Net cash used in investing activities ( 19 ) ( 55 )

Other investing, net — 1

Net cash provided by (used in) investing activities 6 ( 82 )

Cash Flows from Financing Activities

28 unchanged sentences

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

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

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

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

Our Goodwill, net balance was $ 2,751 and $ 2,820 at June 30, 2023 and December 31, 2022, respectively.

Our Goodwill, net balance was $ 2,716 and $ 2,820 at September 30, 2023 and December 31, 2022, respectively.

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

The balance as of June 30, 2023 reflects the pre-tax write-off of $ 115 ($ 110 after-tax) of allocated Goodwill related to our donation of the Palo Alto Research Center (PARC) business during the quarter.

The balance as of September 30, 2023 reflects the pre-tax write-off of $ 115 ($ 110 after-tax) of allocated Goodwill related to our donation of the Palo Alto Research Center (PARC) business during the second quarter 2023.

Refer to Note 6 - Divestiture for additional information regarding the PARC donation.

The Company's actual results for the six months ended June 30, 2023 as well as its latest projections for the full year 2023 were in line with expectations reviewed as part of our fourth quarter 2022 Goodwill qualitative assessment.

In addition, discount rates and the Company’s market capitalization in the second quarter 2023 remained steady with the first quarter 2023 and year-end 2022.

Accordingly, based on our interim assessment as of June 30, 2023, we determined that we did not have a “triggering event” requiring a quantitative assessment of Goodwill.

The Company's actual results for the nine months ended September 30, 2023 as well as its latest projections for the full year 2023 are in line with expectations reviewed as part of our fourth quarter 2022 Goodwill qualitative assessment.

Accordingly, as of September 30, 2023, we determined that we did not have a “triggering event” requiring a quantitative assessment of Goodwill.

If the Company's future performance varies from current expectations, assumptions, or estimates, including assumptions related to current macro-economic uncertainties, 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.

32 unchanged sentences

Other Updates

In 2023 and 2022, the FASB also issued the following ASUs, which impact the Company but did not have, or are not expected to have, a material impact on our financial condition, results of operations or cash flows upon adoption.

In 2023 and 2022, the FASB also issued the following ASUs, which could impact the Company in the future but currently did not have, nor are expected to have, a material impact on our financial condition, results of operations or cash flows upon adoption.

Those updates are as follows:

• Disclosure Improvements:

ASU 2023-06 , Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.

Since the Company is already subject to SEC disclosure requirements, this update was effective upon issuance.

• Business Combinations:

ASU 2023-05 , Business Combinations - Joint Venture Formation (Topic 805-60):

Recognition and Initial Measurement.

This update is effective for our fiscal year beginning January 1, 2025.

Xerox 2023 Form 10-Q 12

• Liabilities:

ASU 2023-04 , Liabilities (Topic 405):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

The Company adopted this conforming guidance upon issuance in August 2023.

• Investments:

5 unchanged sentences

This update is effective for our fiscal year beginning January 1, 2024.

Xerox 2023 Form 10-Q 12

• Fair Value Measurement:

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

32 unchanged sentences

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

Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advance billings for maintenance and other services to be performed and were approximately $ 137 and $ 131 at June 30, 2023 and December 31, 2022, respectively.

The majority of the balance at June 30, 2023 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 $ 135 and $ 131 at September 30, 2023 and December 31, 2022, respectively.

The majority of the balance at September 30, 2023 will be amortized to revenue over the next 30 months.

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Contract Costs:

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

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

These costs are deferred and amortized on the straight-line basis over the estimated contract term.

We pay commensurate sales commissions upon customer renewals, therefore our amortization period is aligned to our initial contract term.

Xerox 2023 Form 10-Q 13

Incremental direct costs are as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

Amortization of incremental direct costs 16 17 48 51

The balance of deferred incremental direct costs net of accumulated amortization at June 30, 2023 and December 31, 2022 was $ 127 and $ 125 , respectively.

The balance of deferred incremental direct costs net of accumulated amortization at September 30, 2023 and December 31, 2022 was $ 126 and $ 125 , respectively.

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

2 unchanged sentences

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.

The balance of contract fulfillment costs and inducements net of accumulated amortization at June 30, 2023 and December 31, 2022 was $ 7 and $ 10 , respectively.

The related amortization was $ 2 and $ 2 for the three months ended June 30, 2023 and 2022, respectively, and $ 2 and $ 3 for the six months ended June 30, 2023 and 2022, respectively.

The balance of contract fulfillment costs and inducements net of accumulated amortization at September 30, 2023 and December 31, 2022 was $ 7 and $ 10 , respectively.

The related amortization was $ 3 and $ 4 for the nine months ended September 30, 2023 and 2022, 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.

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Note 4 – Segment Reporting

5 unchanged sentences

This segment also includes IT services and software.

Our product groupings range from:

The product groupings range from:

• “Entry” , which include A4 devices and desktop printers and multifunction devices that primarily serve small and medium workgroups/work teams.

5 unchanged sentences

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

The FITTLE segment provides global leasing solutions and currently offers lease 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.

The FITTLE segment provides global leasing solutions and currently offers lease financing for direct channel customer purchases of Xerox solutions through bundled lease agreements and lease financing to end-user customers who purchase Xerox solutions through our indirect channels.

Segment revenues primarily include financing income on sales-type leases (including month-to-month extensions) and leasing fees.

Segment revenues also include gains/losses from the sale of finance receivables including commissions, fees on the sales of underlying equipment residuals and servicing fees.

Xerox 2023 Form 10-Q 14

In December 2022, the Company entered into a finance receivables funding agreement with an affiliate of HPS Investment Partners (HPS) pursuant to which the Company agreed to offer for sale, and HPS agreed to purchase, certain eligible pools of finance receivables on a monthly basis.

During the second quarter 2023, the finance receivables funding agreement with HPS was amended to expand the pools of finance receivables eligible for sale and to include the sale of the underlying leased equipment to HPS.

Refer to Note 9 - Finance Receivables, Net for additional information on the sale of receivables.

In the third quarter 2023, the Company entered into an agreement with PEAC Solutions (a subsidiary of HPS) that named PEAC as the provider of certain leasing and financial services programs for non-Xerox equipment in the U.S.

network of independent dealers and resellers.

Segment Policy

6 unchanged sentences

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

Xerox 2023 Form 10-Q 15

Selected financial information for our reportable segments was as follows:

Three Months Ended June 30,

Three Months Ended September 30,

2023 2022 (1)

10 unchanged sentences

Interest expense — 30 30 — 28 28

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 (1)

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_____________

(1) Amounts for 2022 have been recasted to conform to the current year's reporting presentation.

(1) Amounts for 2022 have been recast to conform to the current year's reporting presentation.

See the Segment Reporting Change section below.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

4 unchanged sentences

Total reported segments $ 68 $ 65 $ 293 $ 97

Goodwill impairment — ( 412 ) — ( 412 )

Restructuring and related costs, net ( 10 ) ( 22 ) ( 35 ) ( 41 )

3 unchanged sentences

Other expenses, net 17 ( 1 ) ( 34 ) ( 66 )

Total Pre-tax loss $ ( 89 ) $ ( 5 ) $ ( 4 ) $ ( 94 )

Total Pre-tax income (loss) $ 63 $ ( 380 ) $ 59 $ ( 474 )

Depreciation and Amortization

11 unchanged sentences

_____________

(1) Amounts for 2022 have been recasted to conform to the current year's reporting presentation.

(1) Amounts for 2022 have been recast to conform to the current year's reporting presentation.

See the Segment Reporting Change section below.

Segment Reporting Change

During the second quarter 2023, as a result of the recent strategic shift in the Company’s approach to funding FITTLE’s growth through finance receivables funding agreements that involve the sale of lease receivables, the measures for FITTLE’s segment revenues and profits used by our CODM were recasted as follows to correspond with this change in strategy:

During the second quarter 2023, as a result of the recent strategic shift in the Company’s approach to funding FITTLE’s growth through finance receivables funding agreements that involve the sale of lease receivables, the measures for FITTLE’s segment revenues and profits used by our CODM were recast as follows to correspond with this change in strategy:

• The management and oversight of the equipment on operating leases portion of our financing business was transferred from the FITTLE segment to the marketing and sales groups in the Print and Other segment since the finance receivable funding agreement currently exclude the sale of operating lease arrangements.

• The allocation of shared expenses as well as commissions and other payments made by the FITTLE segment to the Print and Other segment were recasted to better reflect the operations of FITTLE in line with the change in strategic direction.

The recasting of our segment measures align with the financial information used by our CODM in evaluating our reportable segments’ performance and allocating resources.

The prior period amounts have been recasted to reflect the change in segment measures of revenue and profits.

• The allocation of shared expenses as well as commissions and other payments made by the FITTLE segment to the Print and Other segment were recast to better reflect the operations of FITTLE in line with the change in strategic direction.

The recasting of our segment measures aligns with the financial information used by our CODM in evaluating our reportable segments’ performance and allocating resources.

The prior period amounts have been recast to reflect the change in segment measures of revenue and profits.

Xerox 2023 Form 10-Q 17

The following provides the segment revenues and profits for each of the quarters of 2022 and the full-year 2022, and the first quarter 2023 periods, recasted to conform to our new segment measurements:

The following provides the segment revenues and profits for each of the quarters of 2022 and the full-year 2022, and the first quarter 2023 periods, recast to conform to our new segment measurements:

Q1 Q2 Q3 Q4 Full Year Q1

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Three Months Ended

June 30, Six Months Ended

Location in Statements of (Loss) Income 2023 2022 2023 2022

September 30, Nine Months Ended

September 30,

Location in Statements of Income (Loss) 2023 2022 2023 2022

Revenue from sales type leases Sales $ 216 $ 146 $ 691 $ 425

3 unchanged sentences

Total Lease income $ 311 $ 253 $ 1,000 $ 760

Profit at lease commencement on sales-type leases was estimated to be $ 88 and $ 44 for the three months ended June 30, 2023 and 2022, respectively, and $ 168 and $ 88 for the six months ended June 30, 2023 and 2022, respectively.

Profit at lease commencement on sales-type leases was estimated to be $ 79 and $ 39 for the three months ended September 30, 2023 and 2022, respectively, and $ 247 and $ 127 for the nine months ended September 30, 2023 and 2022, respectively.

Note 6 – Divestiture

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

September 30,

2023 December 31,

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

September 30,

2023 December 31,

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Summarized cash flow information is as follows:

Location in Statement of Cash Flows Six Months Ended

Location in Statement of Cash Flows Nine Months Ended

September 30,

Source/(Use) 2023 2022

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_____________

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

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

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

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

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

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This program is generally available to all non-inventory vendors and suppliers.

Spending associated with this program during the three and six months ended June 30, 2023 was approximately $ 30 and $ 60 , respectively.

Spending associated with this program during the three and nine months ended September 30, 2023 was approximately $ 30 and $ 90 , respectively.

All outstanding amounts related to the program are recorded within Accounts payable in our Condensed Consolidated Balance Sheets, and the associated payments are included in operating activities within our Condensed Consolidated Statements of Cash Flows.

The amount due to vendors and suppliers participating in this program and included in Accounts payable was approximately $ 35 and $ 40 as of June 30, 2023 and December 31, 2022, respectively.

The amount due to vendors and suppliers participating in this program and included in Accounts payable was approximately $ 30 and $ 40 as of September 30, 2023 and December 31, 2022, respectively.

Note 8 – Accounts Receivable, Net

Accounts receivable, net were as follows:

September 30,

2023 December 31,

14 unchanged sentences

Balance at June 30 th

Provision 5 ( 1 )

Charge-offs ( 4 ) ( 5 )

Recoveries and other (1)

Balance at September 30 th

_____________

2 unchanged sentences

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 6.0 % at June 30, 2023 and 5.7 % at December 31, 2022.

Based on that assessment the allowance for doubtful accounts as a percent of gross accounts receivable was 6.5 % at September 30, 2023 and 5.7 % at December 31, 2022.

The increase is primarily the result of slight increase in receivables aging.

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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, $ 76 and $ 159 remained uncollected as of June 30, 2023 and December 31, 2022, respectively.

Xerox 2023 Form 10-Q 20

Of the accounts receivable sold and derecognized from our balance sheet, $ 79 and $ 159 remained uncollected as of September 30, 2023 and December 31, 2022, respectively.

Accounts receivable sales activity was as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

9 unchanged sentences

Finance receivables, net were as follows:

September 30,

2023 December 31,

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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 3.7 % at June 30, 2023 and 3.6 % at December 31, 2022.

Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.7 % at September 30, 2023 and 3.6 % at December 31, 2022.

Our finance receivable bad debt provision in the first quarter 2023 was a credit of $ 12 primarily related to a reserve release in the U.S.

of approximately $ 12 due to the favorable reassessment of the credit exposure on a large customer receivable balance after a contract amendment which improved our credit position as well as a reserve release of approximately $ 5 related to the sale of finance receivables.

The bad debt provision returned to normal trends in the second quarter 2023 and was slightly higher than the prior year primarily due to increased finance lease originations.

due to the favorable reassessment of the credit exposure on a large customer receivable balance after a contract amendment, which improved our credit position.

The bad debt provision followed normal trends in the second and third quarter 2023 and is slightly higher than the prior year primarily due to increased lease originations partially offset by sales of finance lease receivables.

Our allowance for doubtful finance receivables is effectively determined by geography.

The risk characteristics in our finance receivable portfolio segments are generally consistent with the risk factors associated with the economies of the countries/regions included in those geographies.

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

Since EMEA is comprised of various countries and regional

Xerox 2023 Form 10-Q 22

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

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.

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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 2023 Form 10-Q 21

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

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Balance at June 30, 2023 $ 66 $ 8 $ 29 $ 103

Provision 2 — 4 6

Charge-offs ( 6 ) ( 1 ) ( 1 ) ( 8 )

Recoveries and other (2)

— — ( 2 ) ( 2 )

Balance at September 30, 2023 $ 62 $ 7 $ 30 $ 99

Balance at December 31, 2021

9 unchanged sentences

Balance at June 30, 2022 $ 75 $ 11 $ 30 $ 116

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 collectively evaluated for impairment (3)

June 30, 2023 (3)

September 30, 2023 (3)

$ 1,343 $ 244 $ 1,103 $ 2,690

June 30, 2022 (3)

September 30, 2022 (3)

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

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 $ 103 and $ 116 at June 30, 2023 and 2022, respectively.

(3) Total Finance receivables exclude the allowance for credit losses of $ 99 and $ 117 at September 30, 2023 and 2022, respectively.

Xerox 2023 Form 10-Q 23

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

4 unchanged sentences

These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance.

The rating generally equates to a Standard & Poor's (S&P) rating of BBB- or better.

Loss rates in this category in the normal course are generally less than 1 %.

1 unchanged sentence

This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions.

This rating generally equates to a BB S&P rating.

Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base.

7 unchanged sentences

The loss rates in this category in the normal course are generally in the range of 7 % to 10 %.

Xerox 2023 Form 10-Q 22

Credit quality indicators are updated at least annually, or more frequently to the extent required by economic conditions, and the credit quality of any given customer can change during the life of the portfolio.

Xerox 2023 Form 10-Q 24

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

June 30, 2023

September 30, 2023

2023 2022 2021 2020 2019 Prior Total

63 unchanged sentences

The aging of our billed finance receivables is as follows:

June 30, 2023

September 30, 2023

Current 31-90

26 unchanged sentences

The amendments were retroactive to prior sales but the adjusted impact on net proceeds and the gain/loss on prior sales was immaterial.

Of the finance receivables sold and derecognized from our balance sheet, $ 653 and $ 60 remained uncollected as of June 30, 2023, and December 31, 2022, respectively.

Of the finance receivables sold and derecognized from our balance sheet, $ 809 and $ 60 remained uncollected as of September 30, 2023, and December 31, 2022, respectively.

Xerox 2023 Form 10-Q 27

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

8 unchanged sentences

Amounts include revenues associated with the sale of the underlying leased equipment.

(3) The three and six months ended June 30, 2023, includes $ 2 , respectively, of revenues associated with the sale of the underlying leased equipment and which are expected to be paid over the term of the agreements.

(3) The three and nine months ended September 30, 2023, includes $ 1 and $ 3 , respectively, of revenues associated with the sale of the underlying leased equipment and which are expected to be paid over the term of the agreements.

Secured Borrowings and Collateral

3 unchanged sentences

The following is a summary of Inventories by major category:

September 30,

2023 December 31,

6 unchanged sentences

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

September 30,

2023 December 31,

2 unchanged sentences

Equipment on operating leases, net $ 257 $ 235

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, 2023 and 2022, respectively, and $ 33 and $ 31 for the six months ended June 30, 2023 and 2022, respectively.

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 9 and $ 16 for the three months ended September 30, 2023 and 2022, respectively, and $ 42 and $ 47 for the nine months ended September 30, 2023 and 2022, respectively.

Secured Borrowings and Collateral

6 unchanged sentences

Additionally, we have identified embedded operating leases within certain supply chain contracts for warehouses, primarily within our domestic operations.

Our leases have remaining terms of up to twelve years and a variety of renewal and/or termination options.

Our leases have remaining terms of up to eleven years and a variety of renewal and/or termination options.

The components of lease expense are as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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, 2023, we had no operating leases that were material that had not yet commenced.

As of September 30, 2023, we had no operating leases that were material that had not yet commenced.

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

September 30,

2023 December 31,

8 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, 2023, we recorded Restructuring and related costs, net of $ 25 , which includes $ 2 of restructuring charges, $ 12 of asset impairment charges and $ 11 of related costs.

During the nine months ended September 30, 2023, we recorded Restructuring and related costs, net of $ 35 , which includes $ 5 of net restructuring charges, $ 20 of asset impairment charges and $ 10 of related costs.

Restructuring Charges

During the six months ended June 30, 2023, we recorded net restructuring charges of $ 2 , which included $ 8 of severance costs related to headcount reductions of approximately 150 employees worldwide.

During the nine months ended September 30, 2023, we recorded net restructuring charges of $ 5 , which included $ 13 of severance costs related to headcount reductions of approximately 180 employees worldwide.

These costs were partially offset by $ 8 of net reversals, which primarily reflect changes in estimated reserves from prior period initiatives.

15 unchanged sentences

Balance at June 30, 2023 28 3 31

Provision 5 — 5

Reversals ( 1 ) ( 1 ) ( 2 )

Net current period charges (1)

Charges against reserve and currency ( 10 ) — ( 10 )

Balance at September 30, 2023 $ 22 $ 2 $ 24

_____________ _

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

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

Reversals of prior charges primarily include net changes in estimated reserves from prior period initiatives.

1 unchanged sentence

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

Six Months Ended

Charges against reserve and currency $ ( 14 ) $ ( 21 )

Effects of foreign currency and other non-cash items — —

Nine Months Ended

September 30,

Restructuring cash payments $ ( 23 ) $ ( 38 )

Effects of foreign currency and other non-cash items ( 1 ) ( 2 )

Charges against reserve and currency $ ( 24 ) $ ( 40 )

Asset Impairment Charges

Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision.

Second quarter 2023 activity includes the impairment associated with the Company's sale of its Xerox Research Center of Canada (XRCC), the Canadian research division of Xerox, to Myant Capital Partners, which was completed in July 2023.

The impairment reflects the held-for-sale write down of XRCC's net long-lived assets to their fair value.

Third quarter 2023 activity includes the impairment associated with the Company's sale of its Russian Subsidiary, which was completed in October 2023.

The impairment reflects the held-for-sale write down of Russia's net assets to their fair value.

The nine months ended September 30, 2023 activity also includes the second quarter 2023 impairment associated with the Company's sale of its Xerox Research Center of Canada (XRCC), the Canadian research division of Xerox, to Myant Capital Partners, which was completed in July 2023.

Xerox 2023 Form 10-Q 30

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

8 unchanged sentences

____________ _

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

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

(1) Includes charges associated with the exit and abandonment of leased and owned facilities, net of any potential sublease income and recoveries as well as impairments on the sales of certain asset groups.

(2) Reflect gains on the sales of exited surplus facilities and land.

Related Costs

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

6 unchanged sentences

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

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

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

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

Cash paid for restructuring related costs were $ 11 and $ 2 for the six months ended June 30, 2023 and 2022, respectively.

The restructuring related costs reserve was $ 11 and $ 12 at June 30, 2023 and December 31, 2022, respectively.

The balance at June 30, 2023 is expected to be paid over the next twelve months.

Cash paid for restructuring related costs were $ 12 and $ 4 for the nine months ended September 30, 2023 and 2022, respectively.

The restructuring related costs reserve was $ 9 and $ 12 at September 30, 2023 and December 31, 2022, respectively.

The balance at September 30, 2023 is expected to be paid over the next twelve months.

Note 13 – Debt

Credit Facility

Revolving Credit Facility

In May 2023, Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation, entered into a five-year asset-based revolving credit agreement (the ABL Facility) with Citibank, N.A., as administrative and collateral agent and several participating lending banks including Citibank N.A.

The ABL Facility has an initial maturity date of May 22, 2028.

Principal is payable in full at maturity on May 22, 2028, and there are no scheduled principal payments prior to maturity.

The ABL Principal is payable in full at maturity on May 22, 2028, and there are no scheduled principal payments prior to maturity.

We deferred approximately $ 7 of debt issuance costs in connection with the ABL Facility, which will be amortized over the five-year term.

3 unchanged sentences

The ABL Facility also includes a $ 100 letter of credit subfacility.

Xerox Corporation's borrowings under the ABL Facility are supported by guarantees from Xerox Holdings Corporation and certain of Xerox Corporation's Canadian and UK subsidiaries, and by security interests in substantially all of the working capital assets of Xerox Corporation, Xerox Holdings Corporation, and such Canadian and UK subsidiaries.

Xerox Corporation's borrowings under the ABL Facility are supported by guarantees from Xerox Holdings Corporation and certain of Xerox Corporation's Canadian and U.K.

subsidiaries, and by security interests in substantially all of the working capital assets of Xerox Corporation, Xerox Holdings Corporation, and such Canadian and U.K.

subsidiaries.

At Xerox Corporations’s election, the loans under the ABL Facility will bear interest at either:

(1) a fluctuating rate per annum equal to the highest of (A) Citibank’s base rate, (B) a rate of 0.5 % in excess of the “NYFRB” rate, and (C) a rate of 1.0 % in excess of one-month Term SOFR, provided that such fluctuating rate shall not be less than 0.0 %, in each case plus an applicable margin (the loans bearing interest at such fluctuating rate, “ABR Loans”);

Xerox 2023 Form 10-Q 31

shall not be less than 0.0 %, in each case plus an applicable margin (the loans bearing interest at such fluctuating rate, “ABR Loans”);

(2) the one-, three-, or six-month period or (as agreed to by the Agent and the Lenders) such other period, as selected by the Xerox Corporation, per annum Term SOFR (plus a 0.10 % credit spread adjustment), provided that such rate shall not be less than 0.0 %, plus an applicable margin (the loans bearing interest at such rate “Term SOFR Loans”).

1 unchanged sentence

The applicable margin for Term SOFR Loans from 1.5 % to 2.0 % depending on the Company’s average excess availability.

At June 30, 2023, borrowings under the ABL Facility were $ 200 and no letters of credits were issued under the facility.

The $ 200 borrowing at June 30, 2023 currently bears interest at an average of 7.19 % through July 31, 2023.

At September 30, 2023, borrowings under the ABL Facility were $ 220 and no letters of credits were issued under the facility.

The $ 220 borrowing at September 30, 2023 currently bears interest at an average of 7.61 % through October 30, 2023.

If the balance remains outstanding after that date, the rate will be reset through a new borrowing under the ABL Facility.

Based on management's intent to repay the amount borrowed over the next six months and not refinance it past one year, the $ 200 is included in short-term debt in the Balance Sheet at June 30, 2023.

Based on management's intent to repay the amount borrowed by the end of 2023 and not refinance it past one year, the $ 220 is included in short-term debt in the Balance Sheet at September 30, 2023.

The ABL Facility requires the Company to comply with a fixed charge coverage ratio of 1X, as defined in the ABL Facility Agreement, measured as of the end of each fiscal quarter during which excess availability is less than an amount equal to the greater of (A) $ 22.5 and (B) 10 % of the Line Cap (the lesser of the aggregate amount of Revolving Commitments and the then-applicable Borrowing Base).

Based on the excess availability at June 30, 2023, the fixed charge coverage ratio measurement was not applicable.

Based on the excess availability at September 30, 2023, the fixed charge coverage ratio measurement was not applicable.

The ABL Facility also contains negative covenants governing dividends, investments, indebtedness, and other matters customary for similar facilities.

As of June 30, 2023, we were in full compliance with all covenants under the ABL Facility and no Event of Default (as such term is defined in the ABL Facility) had occurred.

As of September 30, 2023, we were in full compliance with all covenants under the ABL Facility and no Event of Default (as such term is defined in the ABL Facility) had occurred.

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

Loan Facility

On September 28, 2023, Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation, and certain of Xerox’s subsidiaries, as guarantors, entered into a Credit Agreement with Jefferies Finance LLC (Jefferies Finance), as the Administrative Agent, Collateral Agent and Lender pursuant to which Jefferies Finance provided Xerox Corporation with a $ 555 loan facility, which was fully drawn at September 30, 2023.

$ 542 of the proceeds from that borrowing were used to finance the repurchase of an aggregate of approximately 34 million shares of the Company’s common stock from Carl C.

Icahn and certain of his affiliates pursuant to the terms of a related purchase agreement as disclosed in Note 17 – Shareholders’ Equity of Xerox Holdings .

The remainder of the proceeds were used to cover fees and expenses associated with this borrowing (approximately $ 6 , which will be deferred as debt issuance costs) and the repurchase transaction (approximately $ 11 , which will be recorded as a cost of treasury stock).

The Loan Facility is a 5-year agreement with a final maturity date of September 28, 2028 and bears interest at an annual rate of 8.50 %, which will be increased by 0.25 % every 90 days, subject to a Total Cap rate of 11.0 %.

Xerox anticipates refinancing amounts borrowed under the Loan Facility with permanent long-term financing instruments in the near term.

If any of the amounts borrowed under the Loan Facility are outstanding on the “Bridge Loan Rollover Date” ( one year from closing or September 28, 2024) then the outstanding principal amount of such loans will automatically be converted into senior secured term loans (Extended Term Loans).

These loans will mature and are due on final maturity date of September 28, 2028 and will bear interest at the Total Cap rate of 11.0 %.

Xerox’s obligations under the Credit Agreement are initially unsecured obligations and are supported by guarantees from Xerox Holdings and its Canadian and U.K.

subsidiaries that guarantee Xerox’s obligations under the ABL Facility (ABL Foreign Guarantors).

On and after November 30, 2023, if any amounts under the Loan Facility remain outstanding, Xerox’s obligations under the Credit Agreement will also be guaranteed by each of its material domestic subsidiaries (subject to certain exclusions and exceptions) and secured by (i) a second priority lien on all working capital assets of Xerox, the ABL Foreign Guarantors and such additional domestic guarantors and (ii) a first priority lien on substantially all other assets of Xerox, the ABL Foreign Guarantors and such additional domestic guarantors.

The Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default substantially similar with such provisions contained in Xerox’s ABL Facility.

Xerox 2023 Form 10-Q 32

Xerox Holdings Corporation/Xerox Corporation Intercompany Loan

At June 30, 2023 and December 31, 2022, the balance of the Xerox Holdings Corporation Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 1,497 and $ 1,496 , 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, 2023 and 2022, respectively, and $ 39 and $ 39 for the six months ended June 30, 2023 and 2022, respectively.

At September 30, 2023 and December 31, 2022, the balance of the Xerox Holdings Corporation Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 1,497 and $ 1,496 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 10 and $ 30 , respectively.

Secured Borrowings and Collateral

11 unchanged sentences

As a result of the early extinguishment of this debt, we incurred a loss of approximately $ 3 related to the write-off of the deferred debt issuance costs partially offset by a gain on a dedesignated swap associated with this borrowing.

Xerox 2023 Form 10-Q 30

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

June 30, 2023

September 30, 2023

Finance Receivables, Net (1)

5 unchanged sentences

Total 456 3 264

April 2022 50 0 42 5.86 % 2025

Canada (4)(5)

July 2023 109 0 84 6.32 % 2026

December 2022 163 0 101 5.04 % 2025

Total $ 728 $ 3 $ 449

Xerox 2023 Form 10-Q 33

December 31, 2022

11 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, 2023 and December 31, 2022.

(2) Represents the principal debt balance and excludes debt issuance costs of $ 1 and $ 5 as of June 30, 2023 and December 31, 2022, respectively.

(2) Represents the principal debt balance and excludes debt issuance costs of $ 1 and $ 5 as of September 30, 2023 and December 31, 2022, respectively.

(3) Represents the pre-hedged rate.

1 unchanged sentence

(4) Secured assets and obligations held by SPEs.

(5) In July 2023.

the outstanding balance from the April 2022 loan was refinanced into a new loan, resulting in additional net proceeds of approximately $ 52 .

Interest Expense and Income

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

3 unchanged sentences

49 55 159 164

(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, 2023 and 2022, respectively, and $ 39 and $ 39 for the six months ended June 30, 2023 and 2022, 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.

(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 Income (Loss).

(2) Interest expense of Xerox Corporation included intercompany interest expense associated with the Xerox Holdings Corporation / Xerox Corporation Intercompany Loan of $ 20 and $ 20 for the three months ended September 30, 2023 and 2022, respectively, and $ 59 and $ 59 for the nine months ended September 30, 2023 and 2022, respectively.

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

Xerox 2023 Form 10-Q 34

6 unchanged sentences

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

At June 30, 2023 there were three interest rate derivatives outstanding as follows:

At September 30, 2023 there were three interest rate derivatives outstanding as follows:

Secured Borrowing Derivative Type Principal Debt (1)

7 unchanged sentences

_____________

(1) Excludes debt issuance costs of $ 1 at June 30, 2023.

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.

(1) Excludes debt issuance costs of $ 1 at September 30, 2023.

No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income (Loss) for these designated cash flow hedges and all components of each derivative's gain or loss were included in the assessment of hedge effectiveness.

A cash flow hedge of an interest rate cap with an asset value of $ 2 associated with the December 2022 U.S.

7 unchanged sentences

• Forecasted purchases and sales in foreign currency

At June 30, 2023 and December 31, 2022, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 1,285 and $ 1,541 respectively, with terms of less than 12 months.

At June 30, 2023, approximately 90 % of the contracts mature within three months, 6 % mature in three to six months and 4 % in six to twelve months.

At September 30, 2023 and December 31, 2022, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 951 and $ 1,541 respectively, with terms of less than 12 months.

The decrease in the notional value amount is largely due to a decrease in our YEN exposures as a result of a change in the currency terms included in a supplier inventory contract.

At September 30, 2023, approximately 92 % of the contracts mature within three months, 4 % mature in three to six months and 4 % in six to twelve months.

Foreign Currency Cash Flow Hedges

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

No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of (Loss) Income for these designated cash flow hedges for all periods presented, and all components of each derivative's gain or loss were included in the assessment of hedge effectiveness.

The net liability fair value of these contracts was $ 9 and $ 4 as of June 30, 2023 and December 31, 2022, respectively.

No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income (Loss) for these designated cash flow hedges for all periods presented, and all components of each derivative's gain or loss were included in the assessment of hedge effectiveness.

The net liability fair value of these contracts was $ 6 and $ 4 as of September 30, 2023 and December 31, 2022, respectively.

During second quarter 2023, as a result of a change in the currency terms included in a supplier inventory contract, forecasted purchases of inventory in YEN were no longer expected.

This change resulted in several YEN/USD designated cash flow hedges, with a liability value of approximately $ 2 , being dedesignated since the underlying forecasted purchases were no longer probable.

This change resulted in several YEN/USD and YEN/EUR designated cash flow hedges, with a liability value of approximately $ 2 , being dedesignated since the underlying forecasted purchases were no longer probable.

Accordingly, the $ 2 deferred loss in Accumulated Other Comprehensive Loss was reclassified to earnings and recorded in Currency losses, net in the second quarter 2023.

2 unchanged sentences

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,

2023 December 31,

19 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

Foreign exchange contracts - forwards and options $ ( 2 ) $ ( 3 ) $ ( 17 ) $ ( 41 )

Interest rate contracts — — — —

Total $ ( 2 ) $ ( 3 ) $ ( 17 ) $ ( 41 )

3 unchanged sentences

Total $ ( 3 ) $ ( 11 ) $ ( 15 ) $ ( 17 )

As of June 30, 2023, a net after-tax loss of $ 5 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.

As of September 30, 2023, a net after-tax loss of $ 4 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.

Non-Designated Derivative Instruments Gains (Losses)

3 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,

2023 2022 2023 2022

1 unchanged sentence

Xerox 2023 Form 10-Q 36

Currency losses, net were $ 5 and $ 1 for the three months ended June 30, 2023 and 2022, respectively, and were $ 16 and $ 1 for six months ended June 30, 2023 and 2022, respectively.

Currency losses, net were $ 6 and $ 1 for the three months ended September 30, 2023 and 2022, respectively, and were $ 22 and $ 2 for nine months ended September 30, 2023 and 2022, 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.

2 unchanged sentences

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

September 30,

2023 December 31,

13 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 532 $ 532 $ 1,045 $ 1,045

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

12 unchanged sentences

Net Periodic Benefit Cost (Credit) 17 20 2 ( 12 ) ( 4 ) ( 3 )

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

Net actuarial loss (gain) (1)

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

Net actuarial (gain) loss (1)

( 30 ) 27 ( 1 ) 1 — ( 13 )

Prior service cost — — 36 48 — —

Prior service credit — — — — — ( 10 )

Amortization of net actuarial (loss) gain ( 8 ) ( 13 ) ( 3 ) ( 6 ) 3 1

Amortization of net prior service (cost) credit — — ( 2 ) ( 1 ) 4 4

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

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

( 38 ) 14 ( 6 ) ( 6 ) 7 ( 18 )

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive Income (Loss) $ 52 $ ( 1 ) $ ( 11 ) $ 61 $ ( 3 ) $ 3

Six Months Ended June 30,

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive (Loss) Income $ ( 21 ) $ 34 $ ( 4 ) $ ( 18 ) $ 3 $ ( 21 )

Nine Months Ended September 30,

Pension Benefits

12 unchanged sentences

Net Periodic Benefit Cost (Credit) 50 64 8 ( 36 ) ( 12 ) ( 6 )

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

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

Net actuarial loss (gain) (1)

3 unchanged sentences

Amortization of prior service (cost) credit — — ( 5 ) ( 1 ) 11 11

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

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

( 20 ) ( 19 ) ( 26 ) 61 15 ( 40 )

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive Income (Loss) $ 51 $ 11 $ ( 14 ) $ 43 $ — $ ( 25 )

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive (Loss) Income $ 30 $ 45 $ ( 18 ) $ 25 $ 3 $ ( 46 )

_____________

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

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

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

1 unchanged sentence

net actuarial (gain) loss reflects remeasurements related to the Pension Plan amendments in the U.K.

in second quarter 2023 and 2022, respectively.

in 2023 and 2022, respectively.

The Retiree Health Plan's net actuarial gain reflects adjustments for the actuarial valuation results based on the January 1st plan census data in 2023, and remeasurements related to a Plan Amendment for our U.S.

Plan in 2022.

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

Refer to Note 19 - Other Comprehensive Income (Loss) for related tax effects and the after-tax amounts.

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

Refer to Note 19 - Other Comprehensive (Loss) Income for related tax effects and the after-tax amounts.

Xerox 2023 Form 10-Q 38

8 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

2023 2022 Estimated 2023

11 unchanged sentences

Xerox Holdings Shareholders’ Equity Non-controlling Interests Total

Balance at March 31, 2023 $ 157 $ 1,594 $ — $ 5,162 $ ( 3,454 ) $ 3,459 $ 8 $ 3,467

Comprehensive (loss) income, net — — — ( 61 ) 17 ( 44 ) 1 ( 43 )

Balance at June 30, 2023 $ 157 $ 1,607 $ — $ 5,057 $ ( 3,437 ) $ 3,384 $ 8 $ 3,392

Comprehensive income (loss), net — — — 49 ( 67 ) ( 18 ) 1 ( 17 )

Cash dividends declared - common (3)

3 unchanged sentences

Stock option and incentive plans, net — 12 — — — 12 — 12

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

Balance at June 30, 2023 $ 157 $ 1,607 $ — $ 5,057 $ ( 3,437 ) $ 3,384 $ 8 $ 3,392

Payments to acquire treasury stock, including fees — — ( 553 ) — — ( 553 ) — ( 553 )

Balance at September 30, 2023 $ 157 $ 1,619 $ ( 553 ) $ 5,070 $ ( 3,504 ) $ 2,789 $ 9 $ 2,798

Xerox 2023 Form 10-Q 39

1 unchanged sentence

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)

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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

Treasury Stock Retained

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Stock option and incentive plans, net 1 31 — — — 32 — 32

Payments to acquire treasury stock, including fees — — ( 553 ) — — ( 553 ) — ( 553 )

Distributions to noncontrolling interests — — — — — — ( 2 ) ( 2 )

Balance at June 30, 2023

Balance at September 30, 2023

$ 157 $ 1,619 $ ( 553 ) $ 5,070 $ ( 3,504 ) $ 2,789 $ 9 $ 2,798

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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

1 unchanged sentence

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

(2) Refer to Note 19 - Other Comprehensive Income (Loss) for the components of AOCL.

(3) Cash dividends declared on common stock for the three and six months ended June 30, 2023 and 2022 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, 2023 and 2022 were $ 20.00 per share, respectively, and $ 40.00 per share, respectively.

(2) Refer to Note 19 - Other Comprehensive (Loss) Income for the components of AOCL.

(3) Cash dividends declared on common stock for the three and nine months ended September 30, 2023 and 2022 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, 2023 and 2022 were $ 20.00 per share, respectively, and $ 60.00 per share, respectively.

Xerox 2023 Form 10-Q 40

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Balance at June 30, 2023 157,105 —

Stock based compensation plans, net 46 —

Acquisition of Treasury stock — 34,245

Balance at September 30, 2023 157,151 34,245

Icahn Share Repurchase

On September 28, 2023, Xerox Holdings Corporation entered into a share purchase agreement (the Purchase Agreement) with Carl C.

Icahn and certain of his affiliates (Icahn Parties) pursuant to which the Company agreed to purchase an aggregate of approximately 34 million shares of the Company’s Common Stock, at a price of $ 15.84 per share, the closing price on September 27, 2023, the last full trading day prior to the execution of the Purchase Agreement, for an aggregate purchase price of approximately $ 542 .

The purchase was completed and settled on September 28, 2023 and was funded by a $ 555 Credit Agreement with Jefferies Finance LLC (Jefferies Finance), as the Administrative Agent, Collateral Agent and Lender (Refer to Note 13 – Debt for additional information regarding the Loan Facility).

Aggregate fees associated with the repurchase were approximately $ 11 ($ 2 paid through the third quarter 2023) and include the 1% excise tax on net share repurchases as required by the Inflation Reduction Act of 2022.

The costs incurred are included as part of the cost of Treasury Stock.

Xerox 2023 Form 10-Q 41

Note 18 – Shareholder's Equity of Xerox

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Xerox Shareholder's Equity Non- controlling Interests Total

Balance at March 31, 2023 $ 3,695 $ 3,455 $ ( 3,454 ) $ 3,696 $ 8 $ 3,704

Comprehensive (loss) income, net — ( 61 ) 17 ( 44 ) 1 ( 43 )

Dividends declared to parent — ( 43 ) — ( 43 ) — ( 43 )

Transfers from parent 13 — — 13 — 13

Investment from noncontrolling interests — — — — ( 1 ) ( 1 )

Balance at June 30, 2023 $ 3,708 $ 3,351 $ ( 3,437 ) $ 3,622 $ 8 $ 3,630

Comprehensive income (loss), net — 49 ( 67 ) ( 18 ) 1 ( 17 )

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

Transfers to parent ( 550 ) — — ( 550 ) — ( 550 )

Balance at September 30, 2023 $ 3,158 $ 3,366 $ ( 3,504 ) $ 3,020 $ 9 $ 3,029

Additional Paid-in Capital Retained Earnings AOCL (1)

Xerox Shareholder's Equity Non-

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 )

1 unchanged sentence

Investment from 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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Dividends declared to parent — ( 120 ) — ( 120 ) — ( 120 )

Transfers from parent 15 — — 15 — 15

Transfers to parent ( 535 ) — — ( 535 ) — ( 535 )

Distributions to noncontrolling interests — — — — ( 2 ) ( 2 )

Balance at June 30, 2023

Balance at September 30, 2023

$ 3,158 $ 3,366 $ ( 3,504 ) $ 3,020 $ 9 $ 3,029

7 unchanged sentences

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

_____________

(1) Refer to Note 19 - Other Comprehensive Income (Loss) for the components of AOCL.

(1) Refer to Note 19 - Other Comprehensive (Loss) Income for the components of AOCL.

Xerox 2023 Form 10-Q 42

Note 19 – Other Comprehensive Income (Loss)

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

Note 19 – Other Comprehensive (Loss) Income

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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

Translation Adjustments Gains (Losses) $ 49 $ 49 $ ( 295 ) $ ( 287 ) $ 141 $ 141 $ ( 366 ) $ ( 359 )

Translation Adjustments (Losses) Gains $ ( 122 ) $ ( 122 ) $ ( 280 ) $ ( 277 ) $ 19 $ 19 $ ( 646 ) $ ( 636 )

Unrealized (Losses) Gains

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3 3 11 9 15 15 17 13

Net Unrealized Losses ( 6 ) ( 5 ) ( 19 ) ( 14 ) ( 3 ) ( 1 ) ( 32 ) ( 25 )

Defined Benefit Plans (Losses) Gains

Net actuarial/prior service losses ( 27 ) ( 20 ) ( 72 ) ( 55 ) ( 20 ) ( 15 ) ( 56 ) ( 43 )

Net Unrealized Gains (Losses) 1 1 8 6 ( 2 ) — ( 24 ) ( 19 )

Defined Benefit Plans Gains (Losses)

Net actuarial/prior service gains (losses) 31 23 ( 5 ) ( 4 ) 11 8 ( 61 ) ( 47 )

Prior service amortization (2)

2 unchanged sentences

8 7 18 14 26 20 69 52

Other (losses) gains (3)

Other gains (losses) (3)

27 27 47 47 ( 10 ) ( 10 ) 99 99

Changes in Defined Benefit Plans (Losses) Gains ( 32 ) ( 27 ) ( 9 ) 3 ( 43 ) ( 41 ) 40 42

Other Comprehensive Income (Loss) 11 17 ( 323 ) ( 298 ) 95 99 ( 358 ) ( 342 )

Other comprehensive loss attributable to noncontrolling interests — — — — ( 1 ) ( 1 ) — —

Other Comprehensive Income (Loss) Attributable to Xerox Holdings/Xerox $ 11 $ 17 $ ( 323 ) $ ( 298 ) $ 96 $ 100 $ ( 358 ) $ ( 342 )

Changes in Defined Benefit Plans Gains 64 55 57 54 21 14 97 96

Other Comprehensive (Loss) Income ( 57 ) ( 66 ) ( 215 ) ( 217 ) 38 33 ( 573 ) ( 559 )

Other comprehensive income attributable to noncontrolling interests 1 1 — — — — — —

Other Comprehensive (Loss) Income Attributable to Xerox Holdings/Xerox $ ( 58 ) $ ( 67 ) $ ( 215 ) $ ( 217 ) $ 38 $ 33 $ ( 573 ) $ ( 559 )

(1) Reclassified to Cost of sales - refer to Note 14 - Financial Instruments for additional information regarding our cash flow hedges.

3 unchanged sentences

AOCL is comprised of the following:

September 30,

2023 December 31,

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Xerox 2023 Form 10-Q 43

Note 20 – (Loss) Earnings per Share

Note 20 – Earnings (Loss) per Share

(shares in thousands)

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Basic (Loss) Earnings per Share

Net (Loss) Income Attributable to Xerox Holdings $ ( 61 ) $ ( 4 ) $ 10 $ ( 60 )

Basic Earnings (Loss) per Share

Net Income (Loss) Attributable to Xerox Holdings $ 49 $ ( 383 ) $ 59 $ ( 443 )

Accrued dividends on preferred stock ( 4 ) ( 4 ) ( 11 ) ( 11 )

Adjusted Net (loss) income available to common shareholders $ ( 64 ) $ ( 7 ) $ 3 $ ( 67 )

Adjusted Net income (loss) available to common shareholders $ 45 $ ( 387 ) $ 48 $ ( 454 )

Weighted average common shares outstanding 157,132 155,697 156,914 155,799

Basic (Loss) Earnings per Share $ ( 0.41 ) $ ( 0.05 ) $ 0.02 $ ( 0.43 )

Diluted (Loss) Earnings per Share

Net (Loss) Income Attributable to Xerox Holdings $ ( 61 ) $ ( 4 ) $ 10 $ ( 60 )

Basic Earnings (Loss) per Share $ 0.29 $ ( 2.48 ) $ 0.31 $ ( 2.91 )

Diluted Earnings (Loss) per Share

Net Income (Loss) Attributable to Xerox Holdings $ 49 $ ( 383 ) $ 59 $ ( 443 )

Accrued dividends on preferred stock ( 4 ) ( 4 ) ( 11 ) ( 11 )

Adjusted Net (loss) income available to common shareholders $ ( 64 ) $ ( 7 ) $ 3 $ ( 67 )

Adjusted Net income (loss) available to common shareholders $ 45 $ ( 387 ) $ 48 $ ( 454 )

Weighted average common shares outstanding 157,132 155,697 156,914 155,799

4 unchanged sentences

Adjusted weighted average common shares outstanding 158,893 155,697 158,219 155,799

Diluted (Loss) Earnings per Share $ ( 0.41 ) $ ( 0.05 ) $ 0.02 $ ( 0.43 )

Diluted Earnings (Loss) per Share $ 0.28 $ ( 2.48 ) $ 0.30 $ ( 2.91 )

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

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Below is a summary of our Brazilian tax contingencies:

September 30,

2023 December 31,

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litigation is in abeyance as the Rhode Island Supreme Court prepares to hear another COVID-19 insurance coverage case against a FM affiliate with overlapping legal issues.

We have issued or provided approximately $ 236 of guarantees as of June 30, 2023 in the form of letters of credit or surety bonds issued to i) support certain insurance programs;

We have issued or provided approximately $ 246 of guarantees as of September 30, 2023 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;

7 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements