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Item 1. Financial Statements

2024-08-01 compared with 2024-05-01 · 338 added, 182 removed, 1090 unchanged (32% 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

(in millions, except per-share data) 2024 2023 2024 2023

12 unchanged sentences

Divestitures ( 3 ) — 51 —

PARC Donation — 132 — 132

Other expenses, net 33 31 77 51

Total Costs and Expenses 1,553 1,843 3,205 3,473

(Loss) Income before Income Taxes ( 150 ) 85

Income tax (benefit) expense ( 37 ) 14

Net (Loss) Income ( 113 ) 71

Income (Loss) before Income Taxes 25 ( 89 ) ( 125 ) ( 4 )

Income tax expense (benefit) 7 ( 28 ) ( 30 ) ( 14 )

Net Income (Loss) 18 ( 61 ) ( 95 ) 10

Preferred stock dividends, net ( 3 ) ( 3 ) ( 7 ) ( 7 )

Net (Loss) Income Attributable to Common Shareholders $ ( 117 ) $ 67

Basic (Loss) Earnings per Share $ ( 0.94 ) $ 0.43

Diluted (Loss) Earnings per Share $ ( 0.94 ) $ 0.43

Net Income (Loss) Attributable to Common Shareholders $ 15 $ ( 64 ) $ ( 102 ) $ 3

Basic Earnings (Loss) per Share $ 0.12 $ ( 0.41 ) $ ( 0.83 ) $ 0.02

Diluted Earnings (Loss) per Share $ 0.11 $ ( 0.41 ) $ ( 0.83 ) $ 0.02

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

1 unchanged sentence

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

(in millions) 2024 2023 2024 2023

Net (Loss) Income $ ( 113 ) $ 71

Net Income (Loss) $ 18 $ ( 61 ) $ ( 95 ) $ 10

Other Comprehensive (Loss) Income, Net (1)

Translation adjustments, net ( 20 ) 49 ( 52 ) 142

Unrealized (losses) gains, net ( 1 ) 4

Unrealized losses, net — ( 5 ) ( 1 ) ( 1 )

Changes in defined benefit plans, net 6 ( 27 ) 42 ( 41 )

Other Comprehensive Income, Net 3 83

Comprehensive (Loss) Income, Net $ ( 110 ) $ 154

Other Comprehensive (Loss) Income, Net ( 14 ) 17 ( 11 ) 100

Comprehensive Income (Loss), Net $ 4 $ ( 44 ) $ ( 106 ) $ 110

_____________

(1) Refer to Note 19 - Other Comprehensive Income for gross components of Other comprehensive income, 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) March 31,

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

2024 December 31,

41 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended

Six Months Ended

(in millions) 2024 2023

1 unchanged sentence

Net (Loss) Income $ ( 95 ) $ 10

Adjustments required to reconcile Net (loss) income to cash flows (used in) provided by operating activities

Adjustments to reconcile Net (loss) income to Net cash provided by operating activities

Depreciation and amortization 118 126

Provisions 79 21

Net gain on sales of businesses and assets ( 1 ) ( 2 )

Divestitures 51 —

PARC Donation — 132

Stock-based compensation 29 28

3 unchanged sentences

Contributions to retirement plans ( 58 ) ( 32 )

(Increase) decrease in accounts receivable and billed portion of finance receivables ( 19 ) 39

Increase in inventories ( 133 ) ( 64 )

Increase in accounts receivable and billed portion of finance receivables ( 32 ) ( 36 )

(Increase) decrease in inventories ( 148 ) 12

Increase in equipment on operating leases ( 50 ) ( 77 )

Decrease in finance receivables 399 407

(Increase) decrease in other current and long-term assets ( 2 ) 3

Increase (decrease) in accounts payable 17 ( 41 )

Decrease in other current and long-term assets 14 15

Decrease in accounts payable ( 88 ) ( 290 )

Decrease in accrued compensation ( 93 ) ( 7 )

3 unchanged sentences

Other operating, net ( 7 ) ( 10 )

Net cash (used in) provided by operating activities ( 79 ) 78

Net cash provided by operating activities 44 173

Cash Flows from Investing Activities

5 unchanged sentences

Cash Flows from Financing Activities

Net proceeds from short-term debt — 200

Proceeds from issuance of long-term debt 906 —

4 unchanged sentences

Other financing, net ( 13 ) ( 11 )

Net cash provided by (used in) financing activities 261 ( 505 )

Net cash used in financing activities ( 75 ) ( 725 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 16 ) 4

Increase (decrease) in cash, cash equivalents and restricted cash 155 ( 442 )

Decrease in cash, cash equivalents and restricted cash ( 66 ) ( 570 )

Cash, cash equivalents and restricted cash at beginning of period 617 1,139

3 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

(in millions) 2024 2023 2024 2023

12 unchanged sentences

Divestitures ( 3 ) — 51 —

PARC donation — 132 — 132

Other expenses, net 33 31 77 51

Total Costs and Expenses 1,552 1,843 3,204 3,473

(Loss) Income before Income Taxes ( 150 ) 85

Income tax (benefit) expense ( 37 ) 14

Net (Loss) Income $ ( 113 ) $ 71

Income (Loss) before Income Taxes 26 ( 89 ) ( 124 ) ( 4 )

Income tax expense (benefit) 7 ( 28 ) ( 30 ) ( 14 )

Net Income (Loss) $ 19 $ ( 61 ) $ ( 94 ) $ 10

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

1 unchanged sentence

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

(in millions) 2024 2023 2024 2023

Net (Loss) Income $ ( 113 ) $ 71

Net Income (Loss) $ 19 $ ( 61 ) $ ( 94 ) $ 10

Other Comprehensive (Loss) Income, Net (1)

Translation adjustments, net ( 20 ) 49 ( 52 ) 142

Unrealized (losses) gains, net ( 1 ) 4

Unrealized losses, net — ( 5 ) ( 1 ) ( 1 )

Changes in defined benefit plans, net 6 ( 27 ) 42 ( 41 )

Other Comprehensive Income, Net 3 83

Comprehensive (Loss) Income, Net $ ( 110 ) $ 154

Other Comprehensive (Loss) Income, Net ( 14 ) 17 ( 11 ) 100

Comprehensive Income (Loss), Net 5 ( 44 ) $ ( 105 ) $ 110

_____________

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

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions) March 31,

(in millions) June 30,

2024 December 31,

39 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended

Six Months Ended

(in millions) 2024 2023

1 unchanged sentence

Net (Loss) Income $ ( 94 ) $ 10

Adjustments required to reconcile Net (loss) income to cash flows (used in) provided by operating activities

Adjustments to reconcile Net (loss) income to Net cash provided by operating activities

Depreciation and amortization 118 126

Provisions 79 21

Net gain on sales of businesses and assets ( 1 ) ( 2 )

Divestitures 51 —

PARC donation — 132

Stock-based compensation 29 28

3 unchanged sentences

Contributions to retirement plans ( 58 ) ( 32 )

(Increase) decrease in accounts receivable and billed portion of finance receivables ( 19 ) 39

Increase in inventories ( 133 ) ( 64 )

Increase in accounts receivable and billed portion of finance receivables ( 32 ) ( 36 )

(Increase) decrease in inventories ( 148 ) 12

Increase in equipment on operating leases ( 50 ) ( 77 )

Decrease in finance receivables 399 407

(Increase) decrease in other current and long-term assets ( 2 ) 3

Increase (decrease) in accounts payable 17 ( 41 )

Decrease in other current and long-term assets 13 15

Decrease in accounts payable ( 88 ) ( 290 )

Decrease in accrued compensation ( 93 ) ( 7 )

3 unchanged sentences

Other operating, net ( 7 ) ( 10 )

Net cash (used in) provided by operating activities ( 79 ) 78

Net cash provided by operating activities 44 173

Cash Flows from Investing Activities

5 unchanged sentences

Cash Flows from Financing Activities

Net proceeds from short-term debt — 200

Proceeds from issuance of long-term debt 906 —

2 unchanged sentences

Other financing, net ( 3 ) ( 4 )

Net cash provided by (used in) financing activities 258 ( 508 )

Net cash used in financing activities ( 86 ) ( 728 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 16 ) 4

Increase (decrease) in cash, cash equivalents and restricted cash 152 ( 442 )

Decrease in cash, cash equivalents and restricted cash ( 68 ) ( 570 )

Cash, cash equivalents and restricted cash at beginning of period 617 1,139

19 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) Income before Income Taxes” as “pre-tax (loss) income”.

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

Certain reclassifications have been made to the amounts for prior years in order to conform to the current year's presentation.

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 $ 2,720 and $ 2,747 at March 31, 2024 and December 31, 2023, respectively.

Our Goodwill, net balance was $ 2,719 and $ 2,747 at June 30, 2024 and December 31, 2023, 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 Company's actual results for the full year 2024 are in line with expectations reviewed as part of our fourth quarter 2023 Goodwill qualitative assessment.

Accordingly, as of March 31, 2024, 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.

We will continue to monitor developments throughout the remainder of 2024 including updates to our forecasts as well as discount rates and our market capitalization, and an update of our assessment and related estimates may be required in the future.

The Company's latest projections for the full year 2024 are in line with expectations reviewed as part of our fourth quarter 2023 Goodwill qualitative assessment.

Accordingly, as of June 30, 2024, we determined that we did not have a triggering event requiring a quantitative assessment of Goodwill.

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

We will continue to monitor developments in 2024 including updates to our forecasts as well as our market capitalization, and an update of our assessment and related estimates may be required in the future.

Xerox 2024 Form 10-Q 11

17 unchanged sentences

The amendments are effective for the Company's annual periods beginning January 1, 2024, and interim periods beginning January 1, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements.

We are currently evaluating the impact of the adoption of this standard to determine its impact on the Company's disclosures.

Since this ASU only requires additional disclosures, adoption of this ASU will not have an impact on the company’s financial condition, results of operations or cash flows.

Income Tax Disclosures

9 unchanged sentences

Refer to Note 12 - Supplementary Financial Information for the required disclosures.

Xerox 2024 Form 10-Q 12

Other Updates

In 2024, 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.

Xerox 2024 Form 10-Q 12

• Compensation - Stock Compensation:

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Primary geographical markets (1) :

7 unchanged sentences

Supplies, paper and other sales (2)

255 276 488 544

Maintenance agreements (3)

388 419 775 828

Service arrangements (4)

467 499 940 994

Rental and other 74 91 151 191

3 unchanged sentences

Direct equipment lease (5)

$ 163 $ 245 $ 325 $ 475

Distributors & resellers (6)

244 261 459 521

Customer direct 204 190 350 359

7 unchanged sentences

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

(7) Includes Equipment and Supplies, paper and other sales revenues.

Contract Assets and Liabilities:

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

Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advance billings for maintenance and other services to be performed and were approximately $ 121 and $ 132 at March 31, 2024 and December 31, 2023, respectively.

The majority of the balance at March 31, 2024 will be amortized to revenue over 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 $ 118 and $ 132 at June 30, 2024 and December 31, 2023, respectively.

The majority of the balance at June 30, 2024 will be amortized to revenue over the next 30 months.

Xerox 2024 Form 10-Q 13

13 unchanged sentences

Balance at March 31st, $ 134 $ 134

Customer contract costs deferred 13 18

Amortization of customer contract costs ( 16 ) ( 18 )

Balance at June 30th, $ 131 $ 134

_____________

1 unchanged sentence

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

Xerox 2024 Form 10-Q 14

Note 4 – Segment Reporting

Our reportable segments - Print and Other , and Xerox Financial Services (XFS) (formerly FITTLE) – are aligned to how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s key growth strategies and are consistent with how we manage the business and view the markets we serve.

Our reportable segments - Print and Other , and Xerox Financial Services (XFS) – are aligned to how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s key growth strategies and are consistent with how we manage the business and view the markets we serve.

Our Print and Other segment includes the sale of document systems, supplies and technical services and managed services.

11 unchanged sentences

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

Segment revenues also include gains/

Xerox 2024 Form 10-Q 14

losses from the sale of finance receivables including commissions, fees on the sales of underlying equipment residuals and servicing 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.

Selected financial information for our reportable segments was as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Print and Other XFS Total Print and Other XFS Total

9 unchanged sentences

Interest expense — 29 29 — 34 34

Xerox 2024 Form 10-Q 15

Six Months Ended June 30,

Print and Other XFS Total Print and Other XFS Total

External revenue $ 2,900 $ 180 $ 3,080 $ 3,266 $ 203 $ 3,469

Intersegment revenue (1)

38 — 38 44 — 44

Total Segment revenue $ 2,938 $ 180 $ 3,118 $ 3,310 $ 203 $ 3,513

Segment profit $ 114 $ 4 $ 118 $ 207 $ 18 $ 225

Segment margin (2)

3.9 % 2.2 % 3.8 % 6.3 % 8.9 % 6.5 %

Depreciation and amortization $ 98 $ — $ 98 $ 105 $ — $ 105

Interest income — 80 80 — 101 101

Interest expense — 56 56 — 70 70

_____________

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Pre-tax (Loss) Income

2 unchanged sentences

Amortization of intangible assets ( 10 ) ( 10 ) ( 20 ) ( 21 )

Divestitures ( 54 ) —

Divestiture 3 — ( 51 ) —

PARC donation — ( 132 ) — ( 132 )

Inventory-related impact - exit of certain production print manufacturing operations (1)

( 8 ) — ( 44 ) —

Other expenses, net ( 33 ) ( 31 ) ( 77 ) ( 51 )

13 unchanged sentences

_____________

(1) Reflects the reduction of raw materials inventory of approximately $ 32 and the cancellation of related purchase contracts of approximately $ 4 , as a result of the exit of certain production print manufacturing operations during the three months ended March 31, 2024.

(1) Reflects the reduction of inventory of approximately $ 6 and $ 38 and the cancellation of related purchase contracts of approximately $ 2 and $ 6 , as a result of the exit of certain production print manufacturing operations during the three and six months ended June 30, 2024, respectively.

Xerox 2024 Form 10-Q 16

4 unchanged sentences

Three Months Ended

Location in Statements of (Loss) Income 2024 2023

June 30, Six Months Ended

Location in Statements of Income (Loss) 2024 2023 2024 2023

Revenue from sales type leases Sales $ 163 $ 245 $ 325 $ 475

3 unchanged sentences

Total Lease income $ 255 $ 350 $ 513 $ 689

Profit at lease commencement on sales-type leases was estimated to be $ 50 and $ 80 for the three months ended March 31, 2024 and 2023, respectively.

Profit at lease commencement on sales-type leases was estimated to be $ 57 and $ 88 for the three months ended June 30, 2024 and 2023, respectively, and $ 107 and $ 168 for the six months ended June 30, 2024 and 2023, respectively.

Note 6 – Divestitures

3 unchanged sentences

This transaction aligns with the Company's ongoing Reinvention.

The sales resulted in a net disposal loss of $ 54 in the first quarter 2024, which includes, a net currency translation loss of $ 40 , allocated Goodwill of $ 10 , and the carrying value of the net assets of $ 18 , as well as related fees of $ 2 .

The sales resulted in a net disposal loss of $ 51 , which includes, a net currency translation loss of $ 40 , allocated Goodwill of $ 10 , the carrying value of the net assets of $ 18 , and related fees of $ 2 .

During the second quarter of 2024 we recorded a purchase price adjustment credit of $ 3 .

The allocation of Goodwill was based on the relative fair value of the operations in Argentina and Chile to the total fair value for the Print and Other Segment Reporting Unit, which it was part of prior to the sales.

17 unchanged sentences

Balance at March 31 st

Provision 5 6

Charge-offs ( 3 ) ( 3 )

Recoveries and other (1)

Balance at June 30 th

_____________

1 unchanged sentence

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness.

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 7.1 % at March 31, 2024 and 7.0 % at December 31, 2023.

The allowance for doubtful 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 7.2 % at June 30, 2024 and 7.0 % at December 31, 2023.

Accounts Receivable Sales Arrangements

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Accounts receivable sales (1)

$ 106 $ 88 $ 197 $ 174

(1) Losses on sales were not material.

16 unchanged sentences

Our finance receivable portfolios are primarily in the U.S., Canada and EMEA.

We generally establish customer credit limits and estimate the allowance for credit losses on a country or geographic basis.

We generally establish customer credit limits and estimate the allowance for doubtful credit losses on a country or geographic basis.

Customer credit limits are based upon an initial evaluation of the customer's credit quality, and we adjust that limit accordingly based upon ongoing credit assessments of the customer, including payment history and changes in credit quality.

The allowance for doubtful credit losses is principally determined based on an assessment of origination year and past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends.

Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.8 % at March 31, 2024 and 3.5 % at December 31, 2023.

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.

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

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

The allowance for doubtful credit losses is 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, 2024 and 3.5 % at December 31, 2023.

Our allowance for doubtful credit losses 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.

5 unchanged sentences

Xerox 2024 Form 10-Q 19

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

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

United States Canada EMEA Total

5 unchanged sentences

Balance at March 31, 2024 $ 49 $ 11 $ 28 $ 88

Provision — 1 4 5

Charge-offs ( 6 ) ( 5 ) ( 3 ) ( 14 )

Recoveries and other (2)

Balance at June 30, 2024 $ 43 $ 7 $ 29 $ 79

Balance at December 31, 2022

4 unchanged sentences

Balance at March 31, 2023 $ 65 $ 7 $ 29 $ 101

Provision 5 1 3 9

Charge-offs ( 4 ) ( 1 ) ( 4 ) ( 9 )

Recoveries and other (2)

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

Finance receivables collectively evaluated for impairment

March 31, 2024 (2)

June 30, 2024 (2)

$ 898 $ 233 $ 1,008 $ 2,139

March 31, 2023 (2)

June 30, 2023 (2)

$ 1,444 $ 244 $ 1,122 $ 2,810

1 unchanged sentence

(1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

(2) Total Finance receivables exclude the allowance for credit losses of $ 88 and $ 101 at March 31, 2024 and 2023, respectively.

(2) Total Finance receivables exclude the allowance for credit losses of $ 79 and $ 103 at June 30, 2024 and 2023, respectively.

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

19 unchanged sentences

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

March 31, 2024

June 30, 2024

2024 2023 2022 2021 2020 Prior Total

66 unchanged sentences

The aging of our billed finance receivables is as follows:

March 31, 2024

June 30, 2024

Current 31-90

4 unchanged sentences

Canada 6 2 1 9 224 233 12

8 2 1 11 1,057 1,068 10

EMEA 9 2 2 13 995 1,008 13

Total $ 51 $ 13 $ 10 $ 74 $ 2,065 $ 2,139 $ 64

6 unchanged sentences

Canada 6 1 1 8 247 255 10

7 2 1 10 1,132 1,142 10

EMEA 7 2 1 10 1,132 1,142 10

Total $ 53 $ 12 $ 10 $ 75 $ 2,527 $ 2,602 $ 61

_____________

(1) Includes developing market countries.

Sales of Receivables

4 unchanged sentences

The Company retains a first right of refusal to repurchase the underlying equipment at the end of the lease term, to the extent offered for sale by HPS, at its then fair value.

In January of 2024, we entered into a new agreement with HPS to transfer servicing of the majority of funding activity to HPS as well as extend the existing term to 5 years.

In January 2024, we entered into a new agreement with HPS to transfer servicing of the majority of funding activity to HPS as well as extend the existing term to 5 years.

This agreement automatically renews for a one year period unless terminated by either the Company or HPS.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Finance receivable sales - net proceeds (1)

$ 192 $ 381 $ 377 $ 642

Gain on sale/Commissions (2)

1 unchanged sentence

$ 5 $ 2 $ 7 $ 3

_____________

(1) Cash proceeds were reported in Net cash provided by operating activities.

1 unchanged sentence

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

(3) Revenues associated with the sale of the underlying leased equipment, which are expected to be paid over the term of the agreements were not material for the three months ended March 31, 2024 and 2023, respectively.

In addition to the sale activity above, in the second quarter 2024, we sold the finance receivable of an EMEA leasing subsidiary for net proceeds of $ 11 .

Secured Borrowings and Collateral

9 unchanged sentences

_____________

(1) Raw materials at March 31, 2024 reflects a reduction of approximately $ 32 , related to the exit of certain production print manufacturing operations.

(1) Raw materials at June 30, 2024 reflects a reduction of approximately $ 38 , related to the exit of certain production print manufacturing operations.

The transfer of equipment from our inventories to equipment subject to an operating lease is presented in our Condensed Consolidated Statements of Cash Flows in the operating activities section.

5 unchanged sentences

Equipment on operating leases, net $ 253 $ 265

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 13 and $ 17 for the three months ended March 31, 2024 and 2023, respectively.

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 10 and $ 16 for the three months ended June 30, 2024 and 2023, respectively, and $ 23 and $ 33 for the six months ended June 30, 2024 and 2023, respectively.

Xerox 2024 Form 10-Q 24

1 unchanged sentence

Operating Leases

We have operating leases for real estate and vehicles in our domestic and international operations, and for certain equipment in our domestic operations.

We have operating leases for real estate, vehicles and for certain equipment in our domestic and international operations.

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Operating lease expense $ 17 $ 22 $ 35 $ 45

5 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 March 31, 2024, we had no operating leases that were material that had not yet commenced.

As of June 30, 2024, 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:

5 unchanged sentences

The net assets and the liabilities related to our finance leases were immaterial for all periods presented.

Xerox 2024 Form 10-Q 24

Note 11 – Restructuring Programs

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Restructuring charges, net $ 5 $ 1 $ 10 $ 2

4 unchanged sentences

Restructuring charges, net primarily relate to the Print and Other segment as amounts related to the Xerox Financial Services segment were immaterial for all periods presented.

A summary of our restructuring program activity is summarized below:

A summary of our restructuring program activity is as follows:

Xerox 2024 Form 10-Q 25

Severance and

7 unchanged sentences

Balance at March 31, 2024 118 — 118

Provision 5 — 5

Reversals — — —

Net current period charges (1)

Charges against reserve and currency ( 31 ) — ( 31 )

Balance at June 30, 2024 $ 92 $ — $ 92

_____________ _

(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:

Three Months Ended

Six Months Ended

Restructuring cash payments $ ( 47 ) $ ( 14 )

4 unchanged sentences

Impairments are net of any potential sublease income or other recovery amounts.

First quarter 2024 activity includes impairments associated with strategic actions taken as a result of the Company's Project Reinvention, including geographic simplification.

Charges incurred during 2024 includes impairments associated with strategic actions taken as a result of the Company's Project Reinvention, including geographic simplification.

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Asset impairments (1)

$ — $ 12 $ 26 $ 12

Adjustments/Reversals ( 2 ) — ( 2 ) —

2 unchanged sentences

(1) Includes charges associated with strategic actions taken as a result of the Company's Reinvention, including geographic simplification.

Xerox 2024 Form 10-Q 25

Related Costs

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Retention related severance/bonuses (1)

$ — $ — $ ( 2 ) $ 1

Consulting and other costs (2)

2 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 three months ended March 31, 2024 reflects a change in estimate.

The credit for the six months ended June 30, 2024 reflects a change in estimate.

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

Cash paid for restructuring related costs were $ 10 and $ 1 for the three months ended March 31, 2024 and 2023, respectively.

The restructuring related costs reserve was $ 5 and $ 8 at March 31, 2024 and December 31, 2023, respectively.

The balance at March 31, 2024 is expected to be paid over the next twelve months.

Cash paid for restructuring related costs were $ 19 and $ 11 for the six months ended June 30, 2024 and 2023, respectively.

The restructuring related costs reserve was $ 5 and $ 8 at June 30, 2024 and December 31, 2023, respectively.

The balance at June 30, 2024 is expected to be paid over the next twelve months.

Xerox 2024 Form 10-Q 26

Note 12 – Supplementary Financial Information

13 unchanged sentences

_____________

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

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

(2) Xerox Corporation Cash, cash equivalents and restricted cash of $ 549 excludes $ 2 of cash held by Myriad Ventures Fund I LP.

4 unchanged sentences

Total Restricted cash $ 66 $ 98

Xerox 2024 Form 10-Q 26

Supplemental Cash Flow Information

Summarized cash flow information is as follows:

Location in Statement of Cash Flows Three Months Ended

Location in Statement of Cash Flows Six Months Ended

Source/(Use) 2024 2023

17 unchanged sentences

_____________

(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.

(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.

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

Xerox 2024 Form 10-Q 27

Supplier Finance Program

5 unchanged sentences

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

Spending associated with our supplier finance program during the three months ended March 31, 2024 and 2023 was approximately $ 30 and $ 30 , respectively.

The amount due to vendors and suppliers participating in this program was approximately $ 30 and $ 40 as of March 31, 2024 and December 31, 2023, respectively.

Xerox 2024 Form 10-Q 27

Spending associated with our supplier finance program was approximately $ 30 and $ 30 during the three months ended June 30, 2024 and 2023, respectively, and was approximately $ 60 and $ 60 during the six months ended June 30, 2024 and 2023 respectively.

The amount due to vendors and suppliers participating in this program was approximately $ 25 and $ 40 as of June 30, 2024 and December 31, 2023, respectively.

Note 13 – Debt

Revolving Credit Facility

In June 2024, Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation, entered into Amendment No.

2 to Credit Agreement (the Amendment) with Citibank, N.A., as administrative agent and collateral agent (the Agent), and the lenders party thereto.

The Amendment amended the Credit Agreement, dated as of May 22, 2023 (as previously amended, the ABL Credit Agreement), to (i) increase the commitments of the lenders under the ABL Credit Agreement from $ 300 to $ 425 and (ii) amend the excess availability used to trigger the fixed charge coverage ratio springing covenant from 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), to an amount equal to the greater of (A) $ 31.875 and (B) 10 % of the Line Cap.

Xerox Corporation’s borrowings under the ABL Credit Agreement are supported by a first-priority security interests in substantially all of the working capital assets of Xerox Corporation, Xerox Holdings Corporation, and such U.S., Canadian and English subsidiaries (subject to certain exceptions and limitations set forth in the ABL Credit Agreement) and a second-priority security interest in all assets of Xerox Corporation, Xerox Holdings Corporation and such U.S., Canadian and English subsidiaries (subject to certain exceptions and limitations set forth in the ABL Credit Agreement), and all finance lease receivables of such German and Belgian subsidiaries.

At June 30, 2024, there were no borrowings under the ABL Facility, and no letters of credits were issued under the facility.

In March 2024, Xerox Holdings Corporation issued $ 500 of 8.875 % Senior Notes due in 2029 (the 2029 Notes) at par, resulting in net proceeds (after fees and expenses) of approximately $ 495 .

5 unchanged sentences

Additionally, if Xerox Holdings Corporation experiences a Change of Control Triggering Event (as defined in the indenture governing the 2029 Notes), Xerox Holdings Corporation is required to offer to repurchase the 2029 Notes at 101 % of the principal amount of such notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

Xerox 2024 Form 10-Q 28

Debt issuance costs of approximately $ 5 were paid and deferred in connection with the issuance of the 2029 Notes, and will be amortized over the term of the 2029 Notes.

13 unchanged sentences

(iii) if the Company calls any, or all of the 2030 Notes for redemption, but only with respect to the Notes called (or deemed called) for redemption;

(iv) if the Company elects to distribute to all or substantially all holders of common stock any rights, options or warrants (other than in connection with a stockholder rights plan) entitling them, for a period of not more than 45 calendar days from the declaration date for such distribution, to subscribe for or purchase shares of Company's common stock at a price per share that is less than the average of the last reported sale price of common stock for the ten consecutive trading date period ending on, and including, the trading day immediately preceding the declaration date for such distribution or distribute to all, or substantially all holders of common stock, our assets, debt securities or rights to purchase our securities, which distribution has a per share value, as

Xerox 2024 Form 10-Q 28

reasonably determined by our Board of Directors or a committee thereof, exceeding 10 % of the last reported sale price of the Company's common stock on the trading day immediately preceding the declaration date for such distribution;

or (v) upon the occurrence of specified corporate events (as determined in accordance with the indenture governing the 2030 Notes).

On or after December 15, 2029, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2030 Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.

As of March 31, 2024, none of the conditions permitting the holders of the 2030 Notes to convert their notes early had been met.

As of June 30, 2024, none of the conditions permitting the holders of the 2030 Notes to convert their notes early had been met.

Therefore, the 2030 Notes are classified as long-term debt.

3 unchanged sentences

Upon conversion of the 2030 Notes, the Company must pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, shares of the Company's common stock, or a combination of cash and shares of the Company's common stock, at the Company's election in respect of the remainder, if any, of the Company's conversion obligation in excess of the aggregate principal amount of the notes being converted.

Xerox 2024 Form 10-Q 29

We may not redeem the notes prior to September 20, 2027.

8 unchanged sentences

The initial cap sale price of the Capped Calls was approximately $ 28.34 per share, which represents a premium of 70 % over the last reported sale price of our common stock of $ 16.67 on the NASDAQ Stock Exchange on March 6, 2024, and is subject to certain adjustments under the terms of the Capped Calls.

The Capped Calls were included in Additional paid-in capital in the Condensed Consolidated Balance Sheet as of March 31, 2024, with no remeasurement in subsequent periods as it meets the conditions for equity classification.

The Capped Calls were included in Additional paid-in capital in the Condensed Consolidated Balance Sheet as of June 30, 2024, with no remeasurement in subsequent periods as it meets the conditions for equity classification.

Refer to Note 17 - Shareholders' Equity of Xerox Holdings for additional information regarding the Capped Calls.

Xerox 2024 Form 10-Q 29

Use of Aggregate Proceeds from Senior Notes

1 unchanged sentence

Additionally, a portion of the aggregate net proceeds were used to repay, through a tender offer for Senior Notes, approximately $ 84 of the 3.80 % Xerox Corporation Senior Notes due in 2024 and approximately $ 362 of the 5.00 % Xerox Holdings Corporation Senior Notes due in 2025.

The Company plans to use the remaining aggregate net debt proceeds to repay debt including the remaining outstanding 3.80 % Senior Notes that were not redeemed as part of the Senior Notes tender offer, when they come due.

The remaining outstanding 3.80 % Senior Notes that were not redeemed as part of the Senior Notes tender offer were repaid in May 2024.

In connection with the repayment of the 2024 and 2025 Senior Notes, we recorded a gain on the extinguishment of the debt of approximately $ 4 , which was partially offset by a loss of approximately $ 1 on the write-off of deferred debt issuance costs.

4 unchanged sentences

The proceeds of the intercompany loan were used to pay down approximately $ 362 on the existing 2020 intercompany loan made by Xerox Holdings Corporation to Xerox Corporation.

At March 31, 2024 and December 31, 2023, the balance of the Xerox Holdings Corporation Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 2,022 and $ 1,497 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 10 and $ 30 , respectively.

At June 30, 2024 and December 31, 2023, the balance of the Xerox Holdings Corporation Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 2,020 and $ 1,497 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 40 and $ 30 , respectively.

Xerox 2024 Form 10-Q 30

Secured Borrowings and Collateral

8 unchanged sentences

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

March 31, 2024

June 30, 2024

Finance Receivables, Net (1)

2 unchanged sentences

Expected Maturity

January 2022 $ 183 $ 2 $ 35 6.71 % 2024

September 2021 73 — 4 6.73 % 2024

July 2023 $ 66 $ — $ 56 6.14 % 2026

1 unchanged sentence

Total $ 246 $ — $ 176

Xerox 2024 Form 10-Q 30

December 31, 2023

4 unchanged sentences

January 2022 (5)

$ 209 $ — $ 77 6.82 % 2024

September 2021 (5)

89 2 25 6.76 % 2024

July 2023 86 — 77 6.74 % 2026

2 unchanged sentences

____________ _

(1) Includes (i) Billed portion of finance receivables, net (ii) Finance receivables, net and (iii) Finance receivables due after one year, net as included in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

(2) Represents the principal debt balance and excludes debt issuance costs of $ 1 and $ 1 as of March 31, 2024 and December 31, 2023, respectively.

(2) Represents the principal debt balance and excludes debt issuance costs of $ 0 and $ 1 as of June 30, 2024 and December 31, 2023, respectively.

(3) Represents the pre-hedged rate.

1 unchanged sentence

(4) Secured assets and obligations held by SPEs.

(5) In the second quarter of 2024, we repaid the remaining balances on these secured borrowings.

Xerox 2024 Form 10-Q 31

Interest Expense and Income

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Interest expense (1)(2)

$ 60 $ 46 $ 113 $ 96

Interest income (3)

(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 $ 22 and $ 20 for the three months ended March 31, 2024 and 2023, respectively.

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

Xerox 2024 Form 10-Q 31

(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 $ 29 and $ 19 for the three months ended June 30, 2024 and 2023, respectively, and $ 51 and $ 39 for the six months ended June 30, 2024 and 2023, respectively.

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

Note 14 – Financial Instruments

2 unchanged sentences

These derivatives may be designated as fair value hedges or cash flow hedges or non-designated hedges depending on the nature of the risk being hedged.

We had no fair value hedges for the three months ended March 31, 2024 and 2023, respectively.

We had no fair value hedges for the three and six months ended June 30, 2024 and 2023, respectively.

Cash Flow Hedges

4 unchanged sentences

Secured Borrowing Derivative Type Notional Amount

United States (September 2021) Cap 11

Canada Swap $ 56

6 unchanged sentences

• Forecasted purchases and sales in foreign currency

At March 31, 2024 and December 31, 2023, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 1,025 and $ 1,396 respectively, with terms of less than 12 months.

At June 30, 2024 and December 31, 2023, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 1,033 and $ 1,396 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 March 31, 2024, approximately 93 % of the contracts mature within three months, 4 % mature in three to six months and 3 % in six to twelve months.

At June 30, 2024, approximately 92 % of the contracts mature within three months, 4 % mature in three to six months and 4 % in six to twelve months.

Xerox 2024 Form 10-Q 32

Foreign Currency Cash Flow Hedges

1 unchanged sentence

All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

The amount of ineffectiveness recorded in the Condensed Consolidated Statements of (Loss) Income for these designated cash flow hedges was not material for the three months ended March 31, 2024 and 2023, respectively.

The net liability fair value of these contracts was $ 3 and $ 2 as of March 31, 2024 and December 31, 2023, respectively.

Xerox 2024 Form 10-Q 32

The amount of ineffectiveness recorded in the Condensed Consolidated Statements of Income (Loss) for these designated cash flow hedges was not material for the six months ended June 30, 2024 and 2023, respectively.

The net liability fair value of these contracts was $ 3 and $ 2 as of June 30, 2024 and December 31, 2023, respectively.

Summary of Derivative Instruments Gains (Losses)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Derivative Loss Recognized in OCI (Effective Portion)

Foreign exchange contracts - forwards and options $ ( 5 ) $ ( 13 ) $ ( 8 ) $ ( 15 )

Location of Derivative Losses Reclassified from AOCL to Income (Effective Portion)

Location of Derivative Losses (Gains) Reclassified from AOCL to Income (Effective Portion)

Cost of sales $ ( 4 ) $ ( 8 ) $ ( 8 ) $ ( 14 )

1 unchanged sentence

Total $ ( 4 ) $ ( 7 ) $ ( 7 ) $ ( 12 )

As of March 31, 2024, a net after-tax loss of $ 4 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.

As of June 30, 2024, a net after-tax loss of $ 4 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.

The entire balance is expected to be reclassified into Net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

2 unchanged sentences

They are not designated as hedges since there is a natural offset for the remeasurement of the underlying foreign currency-denominated asset or liability.

The net (liability) asset fair value of these contracts was $( 1 ) and $ 5 as of March 31, 2024 and December 31, 2023, respectively.

The net (liability) asset fair value of these contracts was $( 2 ) and $ 5 as of June 30, 2024 and December 31, 2023, respectively.

The following table provides a summary of gains and (losses) on non-designated derivative instruments:

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

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

June 30, Six Months Ended

2024 2023 2024 2023

Foreign exchange contracts – forwards Other expenses, net – Currency losses, net $ ( 6 ) $ ( 28 ) $ ( 14 ) $ ( 33 )

Currency losses, net were $ 11 and $ 11 for three months ended March 31, 2024 and 2023, respectively.

Currency losses, net were $ 2 and $ 5 for the three months ended June 30, 2024 and 2023, respectively, and $ 13 and $ 16 for six months ended June 30, 2024 and 2023, 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.

16 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents (1)

8 unchanged sentences

Long-term debt $ 3,174 $ 2,862 $ 2,710 $ 2,550

(1) Xerox Corporation Cash and cash equivalents $ 682 excludes $ 3 of cash held by Myriad Ventures Fund I LP.

(1) Xerox Corporation Cash and cash equivalents of $ 483 excludes $ 2 of cash held by Myriad Ventures Fund I LP.

(2) Represents subsidiaries of Xerox Corporation

5 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Pension Benefits

12 unchanged sentences

Net Periodic Benefit Cost (Credit) 20 19 22 7 ( 4 ) ( 5 )

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

Net actuarial loss (gain) (1)

14 44 — ( 48 ) ( 1 ) ( 5 )

Prior service cost — — — 36 — —

Amortization of net actuarial (loss) gain ( 10 ) ( 11 ) ( 15 ) ( 4 ) 3 4

Amortization of net prior service (cost) credit — — ( 3 ) ( 2 ) 3 3

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

4 33 ( 18 ) ( 18 ) 5 2

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive (Loss) Income $ 24 $ 52 $ 4 $ ( 11 ) $ 1 $ ( 3 )

Six Months Ended June 30,

Pension Benefits

Plans Non-U.S.

Plans Retiree Health

Components of Net Periodic Benefit Costs:

2024 2023 2024 2023 2024 2023

Service cost $ — $ — $ 2 $ 2 $ — $ —

Interest cost 55 54 90 93 4 5

Expected return on plan assets ( 46 ) ( 49 ) ( 96 ) ( 107 ) — —

Recognized net actuarial loss (gain) 10 7 31 5 ( 6 ) ( 6 )

Amortization of prior service cost (credit) — — 4 3 ( 7 ) ( 7 )

Recognized settlement loss 10 12 — — — —

Defined benefit plans 29 24 31 ( 4 ) ( 9 ) ( 8 )

Defined contribution plans 8 9 11 10 n/a n/a

Net Periodic Benefit Cost (Credit) 37 33 42 6 ( 9 ) ( 8 )

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

Net actuarial gain (1)

Net actuarial loss (gain) (1)

6 37 — ( 48 ) ( 1 ) ( 5 )

Prior service cost — — — 36 — —

Amortization of net actuarial (loss) gain ( 20 ) ( 19 ) ( 31 ) ( 5 ) 6 6

Amortization of prior service (cost) credit — — ( 4 ) ( 3 ) 7 7

Total Recognized in Other Comprehensive Income (2)

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

( 14 ) 18 ( 35 ) ( 20 ) 12 8

1 unchanged sentence

_____________

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

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

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

pension plans as a result of the payment of periodic settlements.

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

The 2023 non-U.S.

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

in second quarter 2023.

The Retiree Health plan's net actuarial gain reflects adjustments for the actuarial valuation results based on the January 1st plan census data..

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

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

Xerox 2024 Form 10-Q 35

Pension Plan Amendment

7 unchanged sentences

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

Three Months Ended

March 31, Year Ended

Six Months Ended

June 30, Year Ended

2024 2023 Estimated 2024

10 unchanged sentences

The shareholders' equity information presented below reflects the consolidated activity of Xerox Holdings.

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

Xerox Holdings Shareholders’ Equity Non-controlling Interests Total

Balance at March 31, 2024 $ 124 $ 1,099 $ — $ 4,828 $ ( 3,673 ) $ 2,378 $ 3 $ 2,381

Comprehensive income (loss), net — — — 18 ( 14 ) 4 — 4

Cash dividends declared - common (3)

— — — ( 33 ) — ( 33 ) — ( 33 )

Cash dividends declared - preferred (4)

— — — ( 3 ) — ( 3 ) — ( 3 )

Stock option and incentive plans, net — 15 — — — 15 — 15

Transactions with noncontrolling interests — — — — — — 1 1

Balance at June 30, 2024 $ 124 $ 1,114 $ — $ 4,810 $ ( 3,687 ) $ 2,361 $ 4 $ 2,365

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

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 ) — ( 44 )

Cash dividends declared - common (3)

— — — ( 41 ) — ( 41 ) — ( 41 )

Cash dividends declared - preferred (4)

— — — ( 3 ) — ( 3 ) — ( 3 )

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

Transactions with noncontrolling interests — — — — — — 1 1

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

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

Treasury Stock Retained

3 unchanged sentences

Balance at December 31, 2023 $ 123 $ 1,114 $ — $ 4,977 $ ( 3,676 ) $ 2,538 $ 10 $ 2,548

Comprehensive (loss) income, net — — — ( 113 ) 3 ( 110 ) — ( 110 )

Comprehensive loss, net — — — ( 95 ) ( 11 ) ( 106 ) — ( 106 )

Cash dividends declared - common (3)

7 unchanged sentences

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

Balance at March 31, 2024

Balance at June 30, 2024

$ 124 $ 1,114 $ — $ 4,810 $ ( 3,687 ) $ 2,361 $ 4 $ 2,365

Xerox 2024 Form 10-Q 37

Treasury Stock Retained

8 unchanged sentences

Stock option and incentive plans, net 1 19 — — — 20 — 20

Transactions with noncontrolling interests — — — — — — ( 1 ) ( 1 )

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

Balance at March 31, 2023

Balance at June 30, 2023

$ 157 $ 1,607 $ — $ 5,057 $ ( 3,437 ) $ 3,384 $ 8 $ 3,392

1 unchanged sentence

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

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

(3) Cash dividends declared on common stock for the three months ended March 31, 2024 and 2023 were $ 0.25 per share, respectively.

(4) Cash dividends declared on preferred stock for the three months ended March 31, 2024 and 2023 were $ 20.00 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 six months ended June 30, 2024 and 2023 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, 2024 and 2023 were $ 20.00 per share, respectively, and $ 40.00 per share, respectively.

(5) Refer to Note 13 - Debt for additional information related to the purchases of capped calls in connection with the issuance of Xerox Holdings Corporation's $ 400 of 3.75 % Convertible Senior Notes due 2030.

5 unchanged sentences

Balance at March 31, 2024 124,185 —

Stock based compensation plans, net 134 —

Balance at June 30, 2024 124,319 —

Xerox 2024 Form 10-Q 38

3 unchanged sentences

Xerox Shareholder's Equity Non- controlling Interests Total

Balance at December 31, 2023 $ 3,485 $ 2,959 $ ( 3,676 ) $ 2,768 $ 10 $ 2,778

Balance at March 31, 2024 $ 3,465 $ 2,811 $ ( 3,673 ) $ 2,603 $ 3 $ 2,606

Comprehensive income (loss), net — 19 ( 14 ) 5 — 5

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

Transfers from parent 8 — — 8 — 8

Transactions with noncontrolling interests — — — — 1 1

Balance at June 30, 2024 $ 3,473 $ 2,796 $ ( 3,687 ) $ 2,582 $ 4 $ 2,586

Additional Paid-in Capital Retained Earnings AOCL (1)

Xerox Shareholder's Equity Non-

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

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

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

Transfers from parent 13 — — 13 — 13

Balance at June 30, 2023

$ 3,708 $ 3,351 $ ( 3,437 ) $ 3,622 $ 8 $ 3,630

Additional Paid-in Capital Retained Earnings AOCL (1)

Xerox Shareholder's Equity Non- controlling Interests Total

Balance at December 31, 2023 $ 3,485 $ 2,959 $ ( 3,676 ) $ 2,768 $ 10 $ 2,778

Comprehensive loss, net — ( 94 ) ( 11 ) ( 105 ) — ( 105 )

Dividends declared to parent — ( 69 ) — ( 69 ) — ( 69 )

Transfers to parent ( 12 ) — — ( 12 ) — ( 12 )

1 unchanged sentence

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

Balance at March 31, 2024

Balance at June 30, 2024

$ 3,473 $ 2,796 $ ( 3,687 ) $ 2,582 $ 4 $ 2,586

5 unchanged sentences

Transfers from parent 15 — — 15 — 15

Transactions with noncontrolling interests — — — — ( 1 ) ( 1 )

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

Balance at March 31, 2023

Balance at June 30, 2023

$ 3,708 $ 3,351 $ ( 3,437 ) $ 3,622 $ 8 $ 3,630

_____________

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

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

Xerox 2024 Form 10-Q 39

Note 19 – Other Comprehensive Income

Other Comprehensive Income is comprised of the following:

Note 19 – Other Comprehensive (Loss) Income

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

Three Months Ended

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

June 30, Six Months Ended

2024 2023 2024 2023

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

Translation Adjustments (Losses) Gains $ ( 20 ) $ ( 20 ) $ 49 $ 49 $ ( 52 ) $ ( 52 ) $ 142 $ 142

2 unchanged sentences

Changes in cash flow hedges reclassed to earnings (1)

Net Unrealized (Losses) Gains — ( 1 ) 3 4

Defined Benefit Plans Gains (Losses)

Net actuarial/prior service gains 8 6 7 5

4 3 7 6 7 5 12 12

Net Unrealized Losses ( 1 ) — ( 6 ) ( 5 ) ( 1 ) ( 1 ) ( 3 ) ( 1 )

Defined Benefit Plans (Losses) Gains

Net actuarial/prior service losses ( 13 ) ( 10 ) ( 27 ) ( 20 ) ( 5 ) ( 4 ) ( 20 ) ( 15 )

Prior service amortization (2)

1 unchanged sentence

Actuarial loss amortization/settlement (2)

Other gains (losses) (3)

22 17 11 8 45 34 18 13

Changes in Defined Benefit Plans Gains 43 36 ( 11 ) ( 14 )

Other Comprehensive Income $ 11 $ 3 $ 85 $ 83

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

Other (losses) gains (3)

( 1 ) ( 1 ) ( 15 ) ( 15 ) 14 14 ( 37 ) ( 37 )

Changes in Defined Benefit Plans Gains (Losses) 8 6 ( 32 ) ( 27 ) 51 42 ( 43 ) ( 41 )

Other Comprehensive (Loss) Income ( 13 ) ( 14 ) 11 17 $ ( 2 ) $ ( 11 ) $ 96 $ 100

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

(2) Reclassified to Total Net Periodic Benefit Cost - refer to Note 16 - Employee Benefit Plans for additional information.

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Xerox 2024 Form 10-Q 40

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

Basic (Loss) Earnings per Share

Net (Loss) Income Attributable to Xerox Holdings $ ( 113 ) $ 71

June 30, Six Months Ended

2024 2023 2024 2023

Basic Earnings (Loss) per Share

Net Income (Loss) Attributable to Xerox Holdings $ 18 $ ( 61 ) $ ( 95 ) $ 10

Accrued dividends on preferred stock ( 3 ) ( 3 ) ( 7 ) ( 7 )

Adjusted Net (loss) income available to common shareholders $ ( 117 ) $ 67

Adjusted Net income (loss) available to common shareholders $ 15 $ ( 64 ) $ ( 102 ) $ 3

Weighted average common shares outstanding 124,230 157,009 124,062 156,817

Basic (Loss) Earnings per Share:

Basic Earnings (Loss) per Share:

$ 0.12 $ ( 0.41 ) $ ( 0.83 ) $ 0.02

Diluted (Loss) Earnings per Share

Net (Loss) Income Attributable to Xerox Holdings $ ( 113 ) $ 71

Diluted Earnings (Loss) per Share

Net Income (Loss) Attributable to Xerox Holdings $ 18 $ ( 61 ) $ ( 95 ) $ 10

Accrued dividends on preferred stock ( 3 ) ( 3 ) ( 7 ) ( 7 )

Adjusted Net (loss) income available to common shareholders $ ( 117 ) $ 67

Adjusted Net income (loss) available to common shareholders $ 15 $ ( 64 ) $ ( 102 ) $ 3

Weighted average common shares outstanding 124,230 157,009 124,062 156,817

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Adjusted weighted average common shares outstanding 125,555 157,009 124,062 157,895

Diluted (Loss) Earnings per Share $ ( 0.94 ) $ 0.43

Diluted Earnings (Loss) per Share $ 0.11 $ ( 0.41 ) $ ( 0.83 ) $ 0.02

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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Convertible notes (1)

19,196 — 19,196 —

Total Anti-Dilutive Securities 32,815 14,203 34,140 13,125

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The SLC concluded that the claims were without merit and pursuing them would not be in the best interest of Xerox or its shareholders.

The SLC's request that those claims be dismissed is pending before a New York state appellate court.

The parties have reached a stipulation of settlement that has been preliminarily approved by the court.

Xerox Holdings Corporation v.

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Subsidiaries of Xerox Holdings filed similar complaints and related requests for arbitration in Toronto, London, and Amsterdam for Canadian, UK and European losses.

The parties have agreed to stay all non-U.S.

proceedings pending the outcome of the U.S.

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 $ 238 of guarantees as of March 31, 2024 in the form of letters of credit or surety bonds issued to i) support certain insurance programs;

These actions and proceedings have been discontinued.

We have issued or provided approximately $ 226 of guarantees as of June 30, 2024 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