What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-04 compared with 2024-08-01 · 324 added, 201 removed, 1227 unchanged (30% of the section changed)

1 unchanged sentence

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

9 unchanged sentences

Selling, administrative and general expenses 370 416 1,160 1,256

Goodwill impairment 1,058 — 1,058 —

Restructuring and related costs, net 56 10 107 35

4 unchanged sentences

Total Costs and Expenses 2,615 1,588 5,820 5,061

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

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

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

(Loss) Income before Income Taxes ( 1,087 ) 64 ( 1,212 ) 60

Income tax expense 118 15 88 1

Net (Loss) Income ( 1,205 ) 49 ( 1,300 ) 59

Preferred stock dividends, net ( 4 ) ( 4 ) ( 11 ) ( 11 )

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

Net (Loss) Income Attributable to Common Shareholders $ ( 1,209 ) $ 45 $ ( 1,311 ) $ 48

Basic (Loss) Earnings per Share $ ( 9.71 ) $ 0.29 $ ( 10.55 ) $ 0.31

Diluted (Loss) Earnings per Share $ ( 9.71 ) $ 0.28 $ ( 10.55 ) $ 0.30

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

1 unchanged sentence

XEROX HOLDINGS CORPORATION

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

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

Other Comprehensive (Loss) Income, Net (1)

Net (Loss) Income $ ( 1,205 ) $ 49 $ ( 1,300 ) $ 59

Other Comprehensive Income (Loss), Net (1)

Translation adjustments, net 192 ( 123 ) 140 19

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

Unrealized gains, net 5 1 4 —

Changes in defined benefit plans, net ( 24 ) 55 18 14

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

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

Other Comprehensive Income (Loss), Net 173 ( 67 ) 162 33

Comprehensive (Loss) Income, Net $ ( 1,032 ) $ ( 18 ) $ ( 1,138 ) $ 92

_____________

(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.

(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.

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,

2024 December 31,

41 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2024 2023

8 unchanged sentences

Stock-based compensation 38 40

Goodwill impairment 1,058 —

Restructuring and asset impairment charges 80 25

2 unchanged sentences

Contributions to retirement plans ( 114 ) ( 75 )

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

Decrease (increase) in accounts receivable and billed portion of finance receivables 18 ( 47 )

(Increase) decrease in inventories ( 136 ) 50

1 unchanged sentence

Decrease in finance receivables 496 490

Decrease in other current and long-term assets 14 15

Decrease (increase) in other current and long-term assets 16 ( 8 )

Decrease in accounts payable ( 143 ) ( 290 )

Decrease in accrued compensation ( 93 ) ( 7 )

(Decrease) increase in accrued compensation ( 78 ) 16

Decrease in other current and long-term liabilities ( 83 ) ( 159 )

8 unchanged sentences

Other investing, net ( 26 ) ( 3 )

Net cash used in investing activities ( 19 ) ( 22 )

Net cash (used in) provided by investing activities ( 26 ) 3

Cash Flows from Financing Activities

14 unchanged sentences

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

9 unchanged sentences

Selling, administrative and general expenses 369 416 1,158 1,256

Goodwill impairment 1,058 — 1,058 —

Restructuring and related costs, net 56 10 107 35

4 unchanged sentences

Total Costs and Expenses 2,614 1,588 5,818 5,061

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

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

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

(Loss) Income before Income Taxes ( 1,086 ) 64 ( 1,210 ) 60

Income tax expense 118 15 88 1

Net (Loss) Income $ ( 1,204 ) $ 49 $ ( 1,298 ) $ 59

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

1 unchanged sentence

XEROX CORPORATION

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

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

Other Comprehensive (Loss) Income, Net (1)

Net (Loss) Income $ ( 1,204 ) $ 49 $ ( 1,298 ) $ 59

Other Comprehensive Income (Loss), Net (1)

Translation adjustments, net 192 ( 123 ) 140 19

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

Unrealized gains, net 5 1 4 —

Changes in defined benefit plans, net ( 24 ) 55 18 14

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

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

Other Comprehensive Income (Loss), Net 173 ( 67 ) 162 33

Comprehensive (Loss) Income, Net $ ( 1,031 ) $ ( 18 ) $ ( 1,136 ) $ 92

_____________

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,

2024 December 31,

16 unchanged sentences

Short-term debt and current portion of long-term debt $ 131 $ 567

Short-term related party debt 388 —

Accounts payable 895 1,044

3 unchanged sentences

Long-term debt 1,119 1,213

Related party debt 2,020 1,497

Long-term related party debt 1,633 1,497

Pension and other benefit liabilities 1,126 1,216

15 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2024 2023

8 unchanged sentences

Stock-based compensation 38 40

Goodwill impairment 1,058 —

Restructuring and asset impairment charges 80 25

2 unchanged sentences

Contributions to retirement plans ( 114 ) ( 75 )

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

Decrease (increase) in accounts receivable and billed portion of finance receivables 18 ( 47 )

(Increase) decrease in inventories ( 136 ) 50

1 unchanged sentence

Decrease in finance receivables 496 490

Decrease in other current and long-term assets 13 15

Decrease (increase) in other current and long-term assets 14 ( 8 )

Decrease in accounts payable ( 143 ) ( 290 )

Decrease in accrued compensation ( 93 ) ( 7 )

(Decrease) increase in accrued compensation ( 78 ) 16

Decrease in other current and long-term liabilities ( 83 ) ( 159 )

8 unchanged sentences

Other investing, net ( 10 ) —

Net cash used in investing activities ( 10 ) ( 19 )

Net cash (used in) provided by investing activities ( 10 ) 6

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

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

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 $ 2,719 and $ 2,747 at June 30, 2024 and December 31, 2023, respectively.

Quantitative Impairment Evaluation

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 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.

During the third quarter 2024, we identified events and conditions that required a quantitative assessment of Goodwill, as operating results for the quarter, as well as updated forecasts for the full year, were below previous forecasts.

In addition, during 2024, the Company experienced a decline in its stock price and market capitalization, which became significant and sustained during the third quarter.

After completing our quantitative impairment test, we concluded that the estimated fair value of the Print and Other reporting unit (the only reporting unit with Goodwill) had declined below its carrying value and we recognized an after-tax non-cash impairment charge of $ 1,015 ($ 1,058 pre-tax) related to our Goodwill in the third quarter 2024.

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

If the Company's future performance varies from current expectations, assumptions, or estimates, including those assumptions relating to 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 throughout the remainder of 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

Valuation Allowance

We record the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and the amounts reported, as well as net operating loss and tax credit carryforwards.

Deferred tax assets are assessed for realizability and, in each of the tax jurisdictions in which we operate, a valuation allowance is recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, be realized in the future.

We apply judgment in assessing the realizability of these deferred tax assets and the need for any valuation allowances.

In determining the amount of deferred tax assets that are more-likely-than-not to be realized, we considered objective evidence including historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies.

Due to the lower-than-expected actual results for the third quarter 2024 combined with the lower-than-expected forecast for full year results, a valuation allowance of approximately $ 161 was recorded, primarily related to certain deferred tax assets in a non-U.S.

tax jurisdiction, as we concluded that it is more-likely-than-not that those deferred tax assets will not be realized in the ordinary course of operations.

This assessment was based on the available positive and negative evidence at September 30, 2024, including scheduling of deferred tax liabilities and projected income from operating activities.

As of September 30, 2024, our total deferred tax asset balance was $ 635 , which is net of total valuation allowances of $ 491 .

The amount of the net deferred tax assets considered realizable, however, could change in the near term if additional objective information becomes available in the future including if income or income tax rates are higher or lower than currently estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences.

Xerox 2024 Form 10-Q 12

Note 2 – Recent Accounting Pronouncements

40 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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 $ 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.

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 $ 119 and $ 132 at September 30, 2024 and December 31, 2023, respectively.

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

Xerox 2024 Form 10-Q 14

16 unchanged sentences

Balance at June 30th, $ 131 $ 134

Customer contract costs deferred 17 16

Amortization of customer contract costs ( 16 ) ( 17 )

Balance at September 30th, $ 133 $ 133

_____________

19 unchanged sentences

Selected financial information for our reportable segments was as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Print and Other XFS Total Print and Other XFS Total

10 unchanged sentences

Xerox 2024 Form 10-Q 16

Six Months Ended June 30,

Nine Months Ended September 30,

Print and Other XFS Total Print and Other XFS Total

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Pre-tax (Loss) Income

Pre-tax Income (Loss)

Total reported segments $ 80 $ 68 $ 198 $ 293

Goodwill impairment (1)

( 1,058 ) — ( 1,058 ) —

Restructuring and related costs, net ( 56 ) ( 10 ) ( 107 ) ( 35 )

3 unchanged sentences

Inventory-related impact - exit of certain production print manufacturing operations (2)

( 8 ) — ( 44 ) —

Other expenses, net ( 43 ) 18 ( 120 ) ( 33 )

Total Pre-tax (loss) income $ 25 $ ( 89 ) $ ( 125 ) $ ( 4 )

Total Pre-tax income (loss) $ ( 1,087 ) $ 64 $ ( 1,212 ) $ 60

Depreciation and Amortization

11 unchanged sentences

_____________

(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.

(1) During the third quarter 2024 we recognized an after-tax non-cash impairment charge of $ 1,015 ($ 1,058 pre-tax) related to our Print and Other reporting unit.

Refer to Note 1 - Basis of Presentation for additional information.

(2) Reflects the reduction of inventory of approximately $ 0 and $ 38 and the cancellation of related purchase contracts of approximately $ 0 and $ 6 , as a result of the exit of certain production print manufacturing operations during the three and nine months ended September 30, 2024, respectively.

Xerox 2024 Form 10-Q 17

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

4 unchanged sentences

Total Lease income $ 283 $ 311 $ 796 $ 1,000

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.

Profit at lease commencement on sales-type leases was estimated to be $ 56 and $ 79 for the three months ended September 30, 2024 and 2023, respectively, and $ 163 and $ 247 for the nine months ended September 30, 2024 and 2023, respectively.

Note 6 – Divestitures

12 unchanged sentences

Accounts receivable, net were as follows:

September 30,

2024 December 31,

14 unchanged sentences

Balance at June 30 th

Provision 8 5

Charge-offs ( 5 ) ( 4 )

Recoveries and other (1)

Balance at September 30 th

_____________

2 unchanged sentences

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.

Based on that assessment the allowance for doubtful accounts as a percent of gross accounts receivable was 8.0 % at September 30, 2024 and 7.0 % at December 31, 2023.

Accounts Receivable Sales Arrangements

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

Finance receivables, net were as follows:

September 30,

2024 December 31,

13 unchanged sentences

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.

Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.4 % at September 30, 2024 and 3.5 % at December 31, 2023.

Our allowance for doubtful credit losses is effectively determined by geography.

18 unchanged sentences

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

Provision ( 5 ) 5 1 1

Charge-offs ( 6 ) ( 1 ) ( 4 ) ( 11 )

Recoveries and other (2)

Balance at September 30, 2024 $ 32 $ 12 $ 27 $ 71

Balance at December 31, 2022

8 unchanged sentences

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

Finance receivables collectively evaluated for impairment

June 30, 2024 (2)

September 30, 2024 (2)

$ 815 $ 238 $ 1,007 $ 2,060

June 30, 2023 (2)

September 30, 2023 (2)

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

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 $ 79 and $ 103 at June 30, 2024 and 2023, respectively.

(2) Total Finance receivables exclude the allowance for credit losses of $ 71 and $ 99 at September 30, 2024 and 2023, respectively.

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

The primary categories are direct, which primarily includes leases originated directly with end-user customers through bundled lease arrangements, and indirect, which primarily includes leases originated through our XBS sales channel and lease financing to end-user customers who purchased equipment we sold to distributors or resellers.

We evaluate our customers based on the following credit quality indicators:

8 unchanged sentences

Loss rates in this category in the normal course are generally in the range of 2 % to 5 %.

Xerox 2024 Form 10-Q 21

• High Credit Risk:

5 unchanged sentences

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 2024 Form 10-Q 20

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

June 30, 2024

September 30, 2024

2024 2023 2022 2021 2020 Prior Total

66 unchanged sentences

The aging of our billed finance receivables is as follows:

June 30, 2024

September 30, 2024

Current 31-90

21 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 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 five years .

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

1 unchanged sentence

For the remaining funding activity, Xerox will continue to service the lease receivables for a specified fee.

In October 2024, the Company entered into a finance receivables funding agreement with De Lage Landen Financial Services Canada Inc.

(DLL) to sell certain eligible pools of finance receivables.

Refer to Note 22 - Subsequent Events for additional information related to this arrangement with DLL.

Xerox 2024 Form 10-Q 24

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

10 unchanged sentences

Secured Borrowings and Collateral

In 2022 and 2021, we sold certain finance receivables to consolidated special purpose entities included in our Condensed Consolidated Balance Sheet as collateral for secured loans.

We sold certain finance receivables to consolidated special purpose entities included in our Condensed Consolidated Balance Sheet as collateral for secured loans.

Refer to Note 13 - Debt for additional information related to these arrangements.

1 unchanged sentence

The following is a summary of Inventories by major category:

September 30,

2024 December 31,

4 unchanged sentences

_____________

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

(1) Raw materials at September 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.

1 unchanged sentence

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

September 30,

2024 December 31,

2 unchanged sentences

Equipment on operating leases, net $ 255 $ 265

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.

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 9 and $ 9 for the three months ended September 30, 2024 and 2023, respectively, and $ 32 and $ 42 for the nine months ended September 30, 2024 and 2023, respectively.

Xerox 2024 Form 10-Q 25

3 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 eleven years and a variety of renewal and/or termination options.

Our leases have remaining terms of up to ten 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,

2024 2023 2024 2023

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

As of September 30, 2024, we had no material operating leases 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,

2024 December 31,

3 unchanged sentences

Total Operating lease liabilities $ 177 $ 182

Finance Leases

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

As of September 30, 2024, we had approximately $ 60 of financing leases for vehicles that had not yet commenced.

Xerox 2024 Form 10-Q 26

Note 11 – Restructuring Programs

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

A summary of our restructuring program activity is as follows:

Xerox 2024 Form 10-Q 25

Severance and

12 unchanged sentences

Balance at June 30, 2024 92 — 92

Provision 46 — 46

Reversals — — —

Net current period charges (1)

Charges against reserve and currency ( 11 ) — ( 11 )

Balance at September 30, 2024 $ 127 $ — $ 127

_____________ _

2 unchanged sentences

(2) Primarily includes additional costs incurred upon the exit from our facilities including decommissioning costs and associated contractual termination costs.

At September 30, 2024, we expect to pay $ 107 of the restructuring reserve over the next twelve months.

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

Six Months Ended

Nine Months Ended

September 30,

Restructuring cash payments $ ( 58 ) $ ( 23 )

1 unchanged sentence

Charges against reserve and currency $ ( 58 ) $ ( 24 )

Xerox 2024 Form 10-Q 27

Asset Impairment Charges

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 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, 2024 reflects a change in estimate.

The credits in 2024 and 2023 reflect a change in estimate.

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

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

Cash paid for restructuring related costs were $ 29 and $ 12 for the nine months ended September 30, 2024 and 2023, respectively.

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

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

Note 12 – Supplementary Financial Information

4 unchanged sentences

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

September 30,

2024 December 31,

8 unchanged sentences

(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.

Xerox 2024 Form 10-Q 28

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

September 30,

2024 December 31,

4 unchanged sentences

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) 2024 2023

17 unchanged sentences

_____________

(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 Decrease (increase) 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 (increase) 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 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.

Spending associated with our supplier finance program was approximately $ 25 and $ 30 during the three months ended September 30, 2024 and 2023, respectively, and was approximately $ 85 and $ 90 during the nine months ended September 30, 2024 and 2023 respectively.

The amount due to vendors and suppliers participating in this program was approximately $ 20 and $ 40 as of September 30, 2024 and December 31, 2023, respectively.

Xerox 2024 Form 10-Q 29

Note 13 – Debt

4 unchanged sentences

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.

At September 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.

9 unchanged sentences

Refer to the Use of Aggregate Proceeds from Senior Notes section below for additional information regarding the use of net proceeds.

Xerox 2024 Form 10-Q 30

Holders of the 2030 Notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding December 15, 2029 only under the following circumstances:

5 unchanged sentences

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

As of September 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.

3 unchanged sentences

The indenture governing the 2030 Notes includes customary covenants, sets forth certain events of default after which the notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the notes become automatically due and payable.

Xerox 2024 Form 10-Q 31

The indenture governing the 2030 Notes does not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries.

3 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 June 30, 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 September 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.

9 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 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

At September 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 $ 2,021 and $ 1,497 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 32 and $ 30 , respectively.

Secured Borrowings and Collateral

Over the past three years, we entered into secured loan agreements with various financial institutions where we sold finance receivables and rights to payments under our equipment on operating leases.

We have entered into secured loan agreements with various financial institutions where we sold finance receivables and rights to payments under our equipment on operating leases.

In certain transactions, the sales were made to special purpose entities (SPEs), owned and controlled by Xerox where the SPEs funded the purchase through amortizing secured loans from the financial institutions.

5 unchanged sentences

Conversely, the credit holders of these SPEs do not have legal recourse to the Company’s general credit.

Xerox 2024 Form 10-Q 32

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

June 30, 2024

September 30, 2024

Finance Receivables, Net (1)

3 unchanged sentences

July 2023 (5)

$ 62 $ — $ 49 5.73 % 2026

November 2023 166 — 99 5.04 % 2026

13 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, 2024 and December 31, 2023.

(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.

(2) Represents the principal debt balance and excludes debt issuance costs of $ 0 and $ 1 as of September 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) Prior to entering the new finance receivable sales agreement with De Lage Landen Financial Services Canada Inc.

(DLL), in October 2024, the remaining balance of this secured debt was repaid.

Refer to Note 22 - Subsequent Events for additional information related to our arrangement with DLL.

(6) 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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

2 unchanged sentences

Interest income (3)

41 49 128 159

(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.

(2) Interest expense of Xerox Corporation included intercompany interest expense associated with the Xerox Holdings Corporation / Xerox Corporation Intercompany Loan of $ 30 and $ 20 for the three months ended September 30, 2024 and 2023, respectively, and $ 81 and $ 59 for the nine months ended September 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).

Xerox 2024 Form 10-Q 33

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 and six months ended June 30, 2024 and 2023, respectively.

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

Cash Flow Hedges

7 unchanged sentences

France Cap 44

In September 2024, we entered into two floating-to-fixed interest rate swaps to hedge against interest rate volatility associated with our Term Loan B Credit Agreement (TLB), which had an outstanding principal balance of $ 529 as of September 30, 2024.

The following is a summary of our swaps at September 30, 2024:

Counterparty Derivative Type Principal Debt

Notional Amount

Expected Maturity Fixed Rate Paid

Floating Rate Received

Net Fair Value

Mizuho Swap $ 175 $ 175 2027 3.271 % 5.247 % $ —

Credit Agricole Swap 125 125 2027 3.276 % 5.247 % —

Total $ 300 $ 300 $ —

The remaining portion of the TLB of $ 229 is not hedged, and is subject to interest rate fluctuations.

The impact of these interest rate swaps on interest expense was not material for the three months ended September 30, 2024.

Foreign Exchange Risk Management

3 unchanged sentences

• Forecasted purchases and sales in foreign currency

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.

At September 30, 2024 and December 31, 2023, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 869 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 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

At September 30, 2024, approximately 84 % of the contracts mature within three months, 14 % mature in three to six months and 2 % in six to twelve months.

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 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.

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

The net asset (liability) fair value of these contracts was $ 1 and $( 2 ) as of September 30, 2024 and December 31, 2023, respectively.

Xerox 2024 Form 10-Q 34

Summary of Derivative Instruments Gains (Losses)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Derivative Loss Recognized in OCI (Effective Portion)

Derivative Gain (Loss) Recognized in OCI (Effective Portion)

Foreign exchange contracts - forwards and options $ 5 $ ( 2 ) $ ( 3 ) $ ( 17 )

3 unchanged sentences

Total $ ( 1 ) $ ( 3 ) $ ( 8 ) $ ( 15 )

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.

As of September 30, 2024, a net after-tax gain of $ 2 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity.

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

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 $( 2 ) and $ 5 as of June 30, 2024 and December 31, 2023, respectively.

The net (liability) asset fair value of these contracts was $( 2 ) and $ 5 as of September 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 Loss Three Months Ended

June 30, Six Months Ended

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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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

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.

Foreign exchange contracts – forwards Other expenses, net – Currency (losses) gains, net $ ( 1 ) $ 8 $ ( 15 ) $ ( 25 )

Currency losses, net were $ 2 and $ 6 for the three months ended September 30, 2024 and 2023, respectively, and $ 15 and $ 22 for nine months ended September 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.

3 unchanged sentences

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

September 30,

2024 December 31,

11 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 521 $ 521 $ 519 $ 519

$ 485 $ 485 $ 519 $ 519

Accounts receivable, net 821 821 850 850

6 unchanged sentences

Long-term debt $ 2,752 $ 2,395 $ 2,710 $ 2,550

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

(1) 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 June 30,

Three Months Ended September 30,

Pension Benefits

12 unchanged sentences

Net Periodic Benefit Cost (Credit) 19 17 23 2 ( 5 ) ( 4 )

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

Net actuarial loss (gain) (1)

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

Net actuarial gain (1)

( 15 ) ( 30 ) — ( 1 ) — —

2 unchanged sentences

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

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

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

( 26 ) ( 38 ) ( 17 ) ( 6 ) 7 7

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

Six Months Ended June 30,

Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive Income (Loss) $ ( 7 ) $ ( 21 ) $ 6 $ ( 4 ) $ 2 $ 3

Nine Months Ended September 30,

Pension Benefits

13 unchanged sentences

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

Net actuarial loss (gain) (1)

Net actuarial (gain) loss (1)

( 9 ) 7 — ( 49 ) ( 1 ) ( 5 )

2 unchanged sentences

Amortization of prior service (cost) credit — — ( 6 ) ( 5 ) 11 11

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

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

( 40 ) ( 20 ) ( 52 ) ( 26 ) 19 15

1 unchanged sentence

_____________

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

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

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

4 unchanged sentences

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.

(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.

Xerox 2024 Form 10-Q 37

5 unchanged sentences

Although the Company's risk has been mitigated, under U.S.

GAAP this CDC plan doesn't meet the definition of a defined contribution plan and therefore continues to be accounted for as a defined benefit plan.

GAAP this CDC plan does not meet the definition of a defined contribution plan and therefore continues to be accounted for as a defined benefit plan.

Contributions

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

2024 2023 Estimated 2024

12 unchanged sentences

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

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

Comprehensive (loss) income, net — — — ( 1,205 ) 173 ( 1,032 ) — ( 1,032 )

Cash dividends declared - common (3)

3 unchanged sentences

Stock option and incentive plans, net — 9 — — — 9 — 9

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

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

Balance at September 30, 2024 $ 124 $ 1,123 $ — $ 3,570 $ ( 3,514 ) $ 1,303 $ 4 $ 1,307

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 )

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

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

Cash dividends declared - common (3)

3 unchanged sentences

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

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

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

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

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

Comprehensive (loss) income, net — — — ( 1,300 ) 162 ( 1,138 ) — ( 1,138 )

Cash dividends declared - common (3)

7 unchanged sentences

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

Balance at June 30, 2024

Balance at September 30, 2024

$ 124 $ 1,123 $ — $ 3,570 $ ( 3,514 ) $ 1,303 $ 4 $ 1,307

10 unchanged sentences

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

Cancellation of treasury stock — — ( 553 ) — — ( 553 ) — ( 553 )

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

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

1 unchanged sentence

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

(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.

(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 nine months ended September 30, 2024 and 2023 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, 2024 and 2023 were $ 20.00 per share, respectively, and $ 60.00 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.

7 unchanged sentences

Balance at June 30, 2024 124,319 —

Stock based compensation plans, net 44 —

Balance at September 30, 2024 124,363 —

Xerox 2024 Form 10-Q 40

3 unchanged sentences

Xerox Shareholder's Equity Non- controlling Interests Total

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 — ( 1,204 ) 173 ( 1,031 ) — ( 1,031 )

1 unchanged sentence

Transfers from parent 4 — — 4 — 4

Balance at September 30, 2024 $ 3,477 $ 1,557 $ ( 3,514 ) $ 1,520 $ 4 $ 1,524

Additional Paid-in Capital Retained Earnings AOCL (1)

Xerox Shareholder's Equity Non-

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

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

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

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

Transactions with noncontrolling interests — — — — 1 1

Balance at September 30, 2023

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

2 unchanged sentences

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

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

Comprehensive (loss) income, net — ( 1,298 ) 162 ( 1,136 ) — ( 1,136 )

Dividends declared to parent — ( 104 ) — ( 104 ) — ( 104 )

2 unchanged sentences

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

Balance at June 30, 2024

Balance at September 30, 2024

$ 3,477 $ 1,557 $ ( 3,514 ) $ 1,520 $ 4 $ 1,524

4 unchanged sentences

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

Transfers from parent 15 — — 15 — 15

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

Transactions with noncontrolling interests — — — — 1 1

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

_____________

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

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

Xerox 2024 Form 10-Q 41

Note 19 – Other Comprehensive (Loss) Income

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

Note 19 – Other Comprehensive Income (Loss)

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

Unrealized (Losses) Gains

Changes in fair value of cash flow hedges losses ( 5 ) ( 3 ) ( 13 ) ( 11 ) ( 8 ) ( 6 ) ( 15 ) ( 13 )

Translation Adjustments Gains (Losses) $ 197 $ 192 $ ( 123 ) $ ( 123 ) $ 145 $ 140 $ 19 $ 19

Unrealized Gains (Losses)

Changes in fair value of cash flow hedges gains (losses) 5 3 ( 2 ) ( 2 ) ( 3 ) ( 3 ) ( 17 ) ( 15 )

Changes in cash flow hedges reclassed to earnings (1)

1 2 3 3 8 7 15 15

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 )

Net Unrealized Gains (Losses) 6 5 1 1 5 4 ( 2 ) —

Defined Benefit Plans Gains (Losses)

Net actuarial/prior service gains 15 12 31 23 10 8 11 8

Prior service amortization (2)

4 unchanged sentences

( 60 ) ( 60 ) 27 27 ( 46 ) ( 46 ) ( 10 ) ( 10 )

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

Changes in Defined Benefit Plans (Losses) Gains ( 24 ) ( 24 ) 64 55 27 18 21 14

Other Comprehensive Income (Loss) 179 173 ( 58 ) ( 67 ) $ 177 $ 162 $ 38 $ 33

(1) Reclassified to Cost of sales and interest expense - 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,

2024 December 31,

Cumulative translation adjustments $ ( 1,906 ) $ ( 2,046 )

Other unrealized losses, net ( 4 ) ( 3 )

Other unrealized gains (losses), net 1 ( 3 )

Benefit plans net actuarial losses and prior service credits ( 1,609 ) ( 1,627 )

1 unchanged sentence

Xerox 2024 Form 10-Q 42

Note 20 – Earnings (Loss) per Share

Note 20 – (Loss) Earnings per Share

(shares in thousands)

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Basic Earnings (Loss) per Share

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

Basic (Loss) Earnings per Share

Net (Loss) Income $ ( 1,205 ) $ 49 $ ( 1,300 ) $ 59

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

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

Adjusted Net (loss) income available to common shareholders $ ( 1,209 ) $ 45 $ ( 1,311 ) $ 48

Weighted average common shares outstanding 124,344 157,132 124,149 156,914

Basic Earnings (Loss) per Share:

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

Diluted Earnings (Loss) per Share

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

Basic (Loss) Earnings per Share $ ( 9.71 ) $ 0.29 $ ( 10.55 ) $ 0.31

Diluted (Loss) Earnings per Share

Net (Loss) Income $ ( 1,205 ) $ 49 $ ( 1,300 ) $ 59

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

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

Adjusted Net (loss) income available to common shareholders $ ( 1,209 ) $ 45 $ ( 1,311 ) $ 48

Weighted average common shares outstanding 124,344 157,132 124,149 156,914

4 unchanged sentences

Adjusted weighted average common shares outstanding 124,344 158,893 124,149 158,219

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

Diluted (Loss) Earnings per Share $ ( 9.71 ) $ 0.28 $ ( 10.55 ) $ 0.30

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:

30 unchanged sentences

Below is a summary of our Brazilian tax contingencies:

September 30,

2024 December 31,

29 unchanged sentences

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

Xerox Holdings Corporation v.

Factory Mutual Insurance Company and Related Actions:

On March 10, 2021, Xerox Holdings Corporation (Xerox Holdings) filed a complaint for breach of contract and declaratory judgment against Factory Mutual Insurance Company (FM) in Rhode Island Superior Court, Providence County seeking insurance coverage for business interruption losses resulting from the coronavirus/COVID-19 pandemic.

Xerox Holdings alleges that FM agreed to provide Xerox Holdings with up to $ 1 billion in per-occurrence coverage for losses resulting from pandemic-related loss or damage to certain real and other property, including business interruption loss resulting from insured property damage;

that Xerox Holdings’ worldwide actual and projected losses through the end of 2020 totaled in excess of $ 300 ;

and that FM incorrectly denied coverage for those losses.

Xerox Holdings seeks full coverage of costs and losses under FM’s policy.

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

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;

We have issued or provided approximately $ 222 of guarantees as of September 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;

5 unchanged sentences

We believe that our capacity in the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support.

Note 22 – Subsequent Events

We have evaluated subsequent events through November 4, 2024, which is the date the financial statements were issued.

Acquisition of ITsavvy

On October 15, 2024, Xerox Corporation (Xerox) entered into a Securities Purchase Agreement (the Purchase Agreement) with ITsavvy Holdings, LLC (the Seller) and ITsavvy Acquisition Company, Inc.

(the Company).

The Purchase Agreement provides, among other things, that, subject to the terms and conditions set forth therein, Xerox will purchase from the Seller all of the issued and outstanding equity securities of the Company.

The Purchase Agreement provides for a purchase price of $ 400 , consisting of (i) a $ 180 cash payment at closing, (ii) a $ 110 secured promissory note to be issued by Xerox to the Seller at closing (the 2025 Note), and (iii) another $ 110 secured promissory note to be issued by Xerox to the Seller at closing (the 2026 Note and, together with the 2025 Note, the Notes), all subject to certain customary pre- and post-closing adjustments and escrow arrangements.

Each of the Notes will have a principal amount of $ 110 .

The 2025 Note will have a maturity date of October 8, 2025 and the 2026 Note will have a maturity date of January 30, 2026.

Pursuant to the 2025 Note, Xerox shall pay to the Seller $ 27.5 within five business days of each of January 1, 2025, April 1, 2025, July 1, 2025, and October 1, 2025.

To the extent not previously paid, each of the Notes shall be paid in full in cash on their respective maturity date.

The Notes will not bear interest.

Notwithstanding the foregoing, the Notes will be subject to prepayment in the event of a “Disposition Event,” as defined in each of the Notes, and customary events of default.

Each of the Notes will be subordinated in lien priority to certain outstanding indebtedness of Xerox.

Each of the Notes will be secured by a security interest in substantially all of the assets of Xerox Holding Corporation (Holdings), Xerox and certain subsidiaries of Xerox.

Holdings and certain subsidiaries of Xerox will be guarantors under each of the Notes.

The Purchase Agreement contains certain representations, warranties, and covenants of each of the parties, including covenants by the Company relating to the operation of the Company’s business prior to the closing.

Xerox has obtained representation and warranty insurance, which provides coverage for certain breaches of representations and warranties, subject to certain terms and conditions.

The Seller has agreed to indemnify Xerox for losses arising out of specified matters, subject to certain limitations.

The consummation of the transaction is subject to the satisfaction of customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the absence of any law or judgment preventing the closing.

The obligation to consummate the transaction by Xerox, on the one hand, and by the Seller and the Company, on the other hand, is also subject to the accuracy of the other’s representations and warranties contained in the Purchase Agreement (subject, with specified exceptions, to

Xerox 2024 Form 10-Q 45

customary materiality standards) and the performance of the other’s covenants and agreements in all material respects.

Xerox’s obligation to consummate the transaction is further subject to a condition that, since the date of the Purchase Agreement, there has not been a “Material Adverse Effect,” as defined in the Purchase Agreement.

The parties have agreed to certain efforts obligations to promptly obtain the antitrust approvals required for the transaction.

Xerox expects to close the transaction in the fourth quarter of 2024.

The Purchase Agreement provides termination rights for Xerox and the Seller under certain circumstances, including, subject to certain conditions, an uncured material breach by the other party or if the transaction is not consummated by January 31, 2025, subject to an automatic extension to March 31, 2025 if the antitrust-related conditions have not been satisfied by such date.

Canadian Forward Flow Agreement

In October 2024, the Company entered into a finance receivables funding agreement with De Lage Landen Financial Services Canada Inc.

(DLL), pursuant to which the Company can offer for sale, and DLL may purchase, certain eligible pools of finance receivables structured as “true sales at law” and bankruptcy remote transfers and we have received an opinion to that effect from outside counsel.

The finance receivables funding agreement has an initial term of five years , with automatic one-year extensions thereafter, unless terminated by either the Company or DLL.

The Company will be paid a commission on lease receivables sold and will continue to service the lease receivables under the finance receivables funding agreement.

If the portfolio performs above a certain level of incremental service, a fee can be earned annually.

In October 2024, the Company sold approximately CAD 89 million in principal balances of lease receivables under this finance receivables funding agreement.

Xerox 2024 Form 10-Q 46

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