What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2024-11-04 · 405 added, 652 removed, 899 unchanged (54% of the section changed)

1 unchanged sentence

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per-share data) 2025 2024

Sales $ 557 $ 523

Services, maintenance and rentals 902 962 2,768 2,975

Financing 38 46 118 147

Services, maintenance, rentals and other (1)

Total Revenues 1,457 1,502

1 unchanged sentence

Cost of sales 382 340

Cost of services, maintenance and rentals 617 651 1,951 1,987

Cost of financing 26 30 82 100

Cost of services, maintenance, rentals and other (1)

Research, development and engineering expenses 42 49

Selling, administrative and general expenses 378 397

Goodwill impairment 1,058 — 1,058 —

Restructuring and related costs, net ( 1 ) 39

1 unchanged sentence

Divestitures ( 4 ) 54

PARC Donation — — — 132

Other expenses, net 68 44

Total Costs and Expenses 1,524 1,652

(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

Loss before Income Taxes ( 67 ) ( 150 )

Income tax expense (benefit) 23 ( 37 )

Net Loss ( 90 ) ( 113 )

Preferred stock dividends, net ( 4 ) ( 4 )

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

Net Loss Attributable to Common Shareholders $ ( 94 ) $ ( 117 )

Basic Loss per Share $ ( 0.75 ) $ ( 0.94 )

Diluted Loss per Share $ ( 0.75 ) $ ( 0.94 )

_____________

(1) On January 1, 2025, the Company updated its determination of reportable segments, and as a result, made certain reclassifications within the Condensed Consolidated Statement of Loss to the prior periods in order to conform to the current period reporting.

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

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 LOSS (UNAUDITED)

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024

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

Net Loss $ ( 90 ) $ ( 113 )

Other Comprehensive Income (Loss), Net (1)

Translation adjustments, net 105 ( 32 )

Unrealized gains, net 5 1 4 —

Unrealized losses, net ( 2 ) ( 1 )

Changes in defined benefit plans, net ( 21 ) 36

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

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

Other Comprehensive Income, Net 82 3

Comprehensive Loss, Net $ ( 8 ) $ ( 110 )

_____________

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

(1) Refer to Note 18 - Other Comprehensive Income for gross components of Other comprehensive 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) September 30,

(in millions, except share data in thousands) March 31,

2025 December 31,

41 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

September 30,

Three Months Ended

(in millions) 2025 2024

Cash Flows from Operating Activities

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

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

Net Loss $ ( 90 ) $ ( 113 )

Adjustments to reconcile Net loss to Net cash used in operating activities

Depreciation and amortization 60 59

2 unchanged sentences

Divestitures ( 4 ) 54

PARC Donation — 132

Stock-based compensation 12 12

Goodwill impairment 1,058 —

Restructuring and asset impairment charges ( 1 ) 31

2 unchanged sentences

Contributions to retirement plans ( 34 ) ( 31 )

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

(Increase) decrease in inventories ( 136 ) 50

Increase in accounts receivable and billed portion of finance receivables ( 12 ) ( 19 )

Increase in inventories ( 137 ) ( 133 )

Increase in equipment on operating leases ( 30 ) ( 22 )

Decrease in finance receivables 128 210

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

Decrease in accounts payable ( 143 ) ( 290 )

(Decrease) increase in accrued compensation ( 78 ) 16

Increase in other current and long-term assets ( 16 ) ( 2 )

Increase in accounts payable 89 17

Decrease in accrued compensation ( 30 ) ( 86 )

Decrease in other current and long-term liabilities ( 48 ) ( 77 )

2 unchanged sentences

Other operating, net 11 ( 5 )

Net cash provided by operating activities 160 297

Net cash used in operating activities ( 89 ) ( 79 )

Cash Flows from Investing Activities

3 unchanged sentences

Other investing, net ( 2 ) ( 11 )

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

Net cash provided by (used in) investing activities 6 ( 17 )

Cash Flows from Financing Activities

Net proceeds from short-term debt — 220

Proceeds from issuance of long-term debt 3 905

4 unchanged sentences

Other financing, net ( 16 ) ( 11 )

Net cash used in financing activities ( 149 ) ( 819 )

Net cash (used in) provided by financing activities ( 159 ) 261

Effect of exchange rate changes on cash, cash equivalents and restricted cash 1 ( 10 )

Decrease in cash, cash equivalents and restricted cash ( 27 ) ( 522 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 241 ) 155

Cash, cash equivalents and restricted cash at beginning of period 631 617

3 unchanged sentences

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024

Sales $ 557 $ 523

Services, maintenance and rentals 902 962 2,768 2,975

Financing 38 46 118 147

Services, maintenance, rentals and other (1)

Total Revenues 1,457 1,502

1 unchanged sentence

Cost of sales 382 340

Cost of services, maintenance and rentals 617 651 1,951 1,987

Cost of financing 26 30 82 100

Cost of services, maintenance, rentals and other (1)

Research, development and engineering expenses 42 49

Selling, administrative and general expenses 377 397

Goodwill impairment 1,058 — 1,058 —

Restructuring and related costs, net ( 1 ) 39

1 unchanged sentence

Divestitures ( 4 ) 54

PARC donation — — — 132

Other expenses, net 66 44

Total Costs and Expenses 1,521 1,652

(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

Loss before Income Taxes ( 64 ) ( 150 )

Income tax expense (benefit) 23 ( 37 )

Net Loss $ ( 87 ) $ ( 113 )

_____________

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

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 LOSS (UNAUDITED)

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2025 2024

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

Net Loss $ ( 87 ) $ ( 113 )

Other Comprehensive Income (Loss), Net (1)

Translation adjustments, net 105 ( 32 )

Unrealized gains, net 5 1 4 —

Unrealized losses, net ( 2 ) ( 1 )

Changes in defined benefit plans, net ( 21 ) 36

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

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

Other Comprehensive Income, Net 82 3

Comprehensive Loss, Net $ ( 5 ) $ ( 110 )

_____________

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

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions) September 30,

(in millions) March 31,

2025 December 31,

40 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

September 30,

Three Months Ended

(in millions) 2025 2024

Cash Flows from Operating Activities

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

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

Net Loss $ ( 87 ) $ ( 113 )

Adjustments to reconcile Net loss to Net cash used in operating activities

Depreciation and amortization 60 59

2 unchanged sentences

Divestitures ( 4 ) 54

PARC Donation — 132

Stock-based compensation 12 12

Goodwill impairment 1,058 —

Restructuring and asset impairment charges ( 1 ) 31

2 unchanged sentences

Contributions to retirement plans ( 34 ) ( 31 )

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

(Increase) decrease in inventories ( 136 ) 50

Increase in accounts receivable and billed portion of finance receivables ( 12 ) ( 19 )

Increase in inventories ( 137 ) ( 133 )

Increase in equipment on operating leases ( 30 ) ( 22 )

Decrease in finance receivables 128 210

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

Decrease in accounts payable ( 143 ) ( 290 )

(Decrease) increase in accrued compensation ( 78 ) 16

Increase in other current and long-term assets ( 19 ) ( 2 )

Increase in accounts payable 89 17

Decrease in accrued compensation ( 30 ) ( 86 )

Decrease in other current and long-term liabilities ( 48 ) ( 77 )

2 unchanged sentences

Other operating, net 11 ( 5 )

Net cash provided by operating activities 160 297

Net cash used in operating activities ( 89 ) ( 79 )

Cash Flows from Investing Activities

3 unchanged sentences

Other investing, net — ( 11 )

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

Net cash provided by (used in) investing activities 8 ( 17 )

Cash Flows from Financing Activities

Net proceeds from short-term debt — 220

Proceeds from issuance of long-term debt 3 905

2 unchanged sentences

Other financing, net ( 9 ) ( 2 )

Net cash used in financing activities ( 165 ) ( 822 )

Net cash (used in) provided by financing activities ( 160 ) 258

Effect of exchange rate changes on cash, cash equivalents and restricted cash 1 ( 10 )

Decrease in cash, cash equivalents and restricted cash ( 27 ) ( 522 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 240 ) 152

Cash, cash equivalents and restricted cash at beginning of period 630 617

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”.

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

Refer to the Segments section below, and Note 3 - Revenue, for additional information.

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

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

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.

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.

During the first quarter of 2025, the Company updated its determination of reportable segments to align with a change in how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s key growth strategies.

As such, it was determined that there are two reportable segments - Print and Other, and IT Solutions.

Prior to this change, the company had two reportable segments - Print and Other, and Xerox Financial Services (XFS).

As a result of this change, prior period reportable segment results and related disclosures have been conformed to reflect the Company’s current reportable segments.

Refer to Note 4 - Segment Reporting for additional information regarding this change.

In line with these changes to our reportable segments, reclassifications have been made to the Condensed Consolidated Statement of Loss as follows:

Three Months Ended

March 31, 2024

Previously Reported Reclassification As Reported

Services, maintenance, rentals and other $ 937 $ 42 $ 979

Financing 42 ( 42 ) —

Cost of services, maintenance, rentals and other $ 692 $ 27 $ 719

Cost of financing 27 ( 27 ) —

Xerox 2025 Form 10-Q 11

Interim Impairment Evaluation

Our goodwill balance was $ 1,954 and $ 1,937 at March 31, 2025 and December 31, 2024, 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.

As noted above, during the first quarter 2025, the Company made a change to how it reports its operating and reportable segments, and as such is reporting two new operating and reportable segments - Print and Other, and IT Solutions.

As a result of the new operating and reportable segments, we also reassessed our reporting units for the evaluation of goodwill.

Prior to this change, consistent with the determination that we had two operating/reportable segments - Print and Other, and Xerox Financial Solutions (XFS), we had also determined that that the Print and Other, and XFS operating segments were also our reporting units for goodwill assessment purposes.

Our reassessment during the first quarter of 2025 determined similarly, consistent with the determination that we had two operating and reportable segments, we also have two reporting units – Print and Other, and IT Solutions.

The change in reporting units was also considered a triggering event indicating a test for goodwill impairment was required as of January 1, 2025 before and after the change in reporting units.

The Company performed those impairment tests, which did not result in the identification of an impairment loss as of January 1, 2025.

As a result of the change in reporting units, effective January 1, 2025, we estimated the fair value of our new reporting units.

Using a combination of both an Income Approach and a Market Approach, we assessed the relative fair values of our new reporting units, and we determined that approximately $ 1,567 of goodwill was allocable to the Print and Other segment, and approximately $ 370 of goodwill was allocable to the IT Solutions segment.

During the first quarter 2025, the Company's stock price and market capitalization experienced a decline.

However, the decline was not considered to be sustained due to the ongoing uncertainty in the capital markets, as a result of the uncertain nature of the federal government's tariff policy and rate proposals, and the associated potential macroeconomic impacts.

Despite ongoing uncertainty surrounding tariffs, management has evaluated these factors individually and, in the aggregate, concluded that we have sufficient plans to manage the uncertainty.

Through the first quarter of 2025, the Company's forecasted results for the full year 2025 remain in line with expectations reviewed as part of our January 1, 2025 Goodwill quantitative assessment.

Accordingly, as of March 31, 2025, 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, and estimates, including assumptions related to current macro-economic uncertainties, interest rates, inflationary pressure on product and labor costs, execution of Reinvention, and geopolitical uncertainty, the impairment analysis could be impacted and result in a reduction of the underlying cash flows used to estimate fair values resulting in a decline in fair value that may trigger future impairment charges.

We will continue to monitor developments throughout the remainder of 2025 including updates to our forecasts as well as discount rates and our market capitalization, and as a result, an update of our assessment and related estimates may be required in the future.

Valuation Allowance

2 unchanged sentences

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 .

Due to the change in certain tax planning strategies during the first quarter 2025, which were determined to no longer be prudent and feasible as a result of ongoing macroeconomic uncertainties, a valuation allowance of approximately $ 59 was recorded, primarily related to certain deferred tax assets in the U.S.

We have concluded that it is more-likely-than-not that those deferred tax assets will not be realized in the ordinary course of operations.

As of March 31, 2025, our total deferred tax asset balance was $ 607 , which is net of total valuation allowances of $ 579 .

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.

4 unchanged sentences

ASUs not listed below were assessed and determined to be not applicable to the Condensed Consolidated Financial Statements of either registrant.

Except for the Accounting Standard Updates (ASUs) discussed below, the new ASUs issued by the FASB during 2025 did not have any significant impact on the Company .

Accounting Standard Updates to be Adopted:

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04 , Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.

In January 2021, the FASB issued ASU 2021-01 , Reference Rate Reform (Topic 848), Scope, which provided clarification to ASU 2020-04.

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

In December 2022, the FASB issued ASU 2022-06 , Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848, which defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

There has been no material impact to date as a result of adopting these ASUs on reference rate reform.

However, we continue to evaluate potential future impacts that may result from the discontinuation of LIBOR or other reference rates as well as the accounting provided in this update on our financial condition, results of operations, and cash flows.

Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 , Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

The update will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within segment profit and loss.

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.

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 Statement

In November 2024, the FASB issued ASU 2024-03 , Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which is intended to improve disclosures related to certain income statement expenses of the Company.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and should be applied either prospectively or retrospectively.

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

In November 2024, the FASB issued ASU 2024-04 , Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments , which is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion.

This ASU is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted, and should be applied either prospectively or retrospectively.

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

Income Tax Disclosures

3 unchanged sentences

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

Accounting Standard Updates Recently Adopted:

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

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

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

The new standard’s requirements to disclose the key terms of the programs and information about obligations outstanding were effective for our fiscal year beginning on January 1, 2023, and the requirement to disclose a rollforward of obligations outstanding is effective for our annual reporting for the fiscal year beginning on January 1, 2024.

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

Xerox 2024 Form 10-Q 13

Other Updates

In 2025, 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.

• Compensation - Stock Compensation:

ASU 2024-01 , Compensation - Stock Compensation (Topic 718) - Scope Applications of Profits Interest and Similar Awards.

This update is effective for the annual period beginning after December 15, 2024, as well as interim periods within that period, with early adoption permitted.

• Codification Improvements:

ASU 2024-02 , Codification Improvements - Amendments to Remove References to the Concepts Statements.

This update is effective for our fiscal year beginning after December 15, 2024.

• Liabilities:

ASU 2025-02 , Liabilities (Topic 405) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

This update is effective for the annual period beginning after December 15, 2025, as well as interim periods within that period.

Xerox 2025 Form 10-Q 13

Note 3 – Revenue

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Primary geographical markets (1) :

7 unchanged sentences

Supplies, paper and other sales (2)

249 258 737 802

IT products (2)(3)

Maintenance agreements (4)

370 395 1,145 1,223

Service arrangements (5)

454 482 1,394 1,476

Rental and other 70 77

3 unchanged sentences

Direct equipment lease (6)

$ 195 $ 216 $ 520 $ 691

Distributors & resellers (7)

240 240 699 761

Customer direct 236 146

2 unchanged sentences

(1) Geographic area data is based upon the location of the subsidiary reporting the revenue.

(2) Other sales include revenues associated with IT hardware.

(3) Includes revenues from maintenance agreements on sold equipment as well as IT services and revenues associated with service agreements sold through our channel partners.

(4) Primarily includes revenues from our Print and digital services outsourcing arrangements, including revenues from embedded operating leases in those arrangements, which were not significant.

(2) Certain prior year amounts have been reclassified in order to conform to the current year's presentation.

(3) IT products include IT hardware and software solutions sold by the IT Solutions segment.

(4) Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through our channel partners, as well as services revenues related to our IT Solutions.

(5) Primarily includes revenues from our Print outsourcing arrangements including revenues from embedded operating leases in those arrangements.

(6) Primarily reflects sales through bundled lease arrangements.

2 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 $ 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

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 $ 152 and $ 130 at March 31, 2025 and December 31, 2024, respectively.

The majority of the balance at March 31, 2025 will be amortized to revenue over the next 30 months.

Contract Costs:

We incur the following contract costs as part of our revenue arrangements:

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

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

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

We pay commensurate sales commissions upon customer renewals;

therefore, our amortization period is aligned to our initial contract term.

• Contract fulfillment costs, which are costs incurred for resources and assets that will be used to satisfy our future performance obligations included in our service arrangements.

1 unchanged sentence

• Contract inducements, which are capitalized and amortized as a reduction of revenue over the term of the contract.

Xerox 2025 Form 10-Q 14

Changes in contract costs, net are as follows:

3 unchanged sentences

Balance at March 31st, $ 140 $ 134

Customer contract costs deferred 13 18

Amortization of customer contract costs ( 16 ) ( 18 )

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

_____________

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 15

Note 4 – Segment Reporting

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.

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

As such, it was determined that there are two reportable segments - Print and Other , and IT Solutions .

Prior to this change, the company had determined that there were two reportable segments - Print and Other, and Xerox Financial Solutions (XFS).

As a result of this change, prior period reportable segment results and related disclosures have been conformed to reflect the Company’s current reportable segments.

During 2024, the Company acquired ITSavvy Acquisition Company, Inc.

(ITSavvy), a technology infrastructure solutions provider.

As a result of this acquisition, during the first quarter of 2025, we reassessed our operating and reportable segments and determined that, based on the information provided to our CODM, as well as the CEO's management and assessment of the Company's operations, we had two operating and reportable segments - Print and Other , and IT Solutions .

We also determined that there were no other businesses that met the requirements to be considered separate operating segments, including our former operating/reporting segment, XFS, whose results are now included in the Print and Other operating/reporting segment.

Our Print and Other segment includes the design, development and sale of document management systems, supplies and services, as well as associated financing and technology-related offerings, digital and print-related software products and services.

The segment also includes the delivery of managed services that involve a continuum of solutions and services that help our customers optimize their print and communications infrastructure, apply automation and simplification to maximize productivity, and ensure the highest levels of security.

This segment also includes Digital and IT services and software.

This segment also includes Xerox Financial Services, a global financing solutions provider, primarily enabling the sale of our equipment and services (previously reported XFS segment), which includes commissions and other payments for the exclusive right to provide lease financing for Xerox products.

The product groupings range from:

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

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

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

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

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

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

Our IT Solutions segment provides clients with global infrastructure technology solutions, with a focus on delivering business outcomes through a frictionless sales and service delivery experience.

IT Solutions’ offerings include the provision of hardware, software and associated services as well as product lifecycle, deployment and network monitoring services, and other managed IT services.

It is comprised of our recent acquisition of ITsavvy, as well as our Canadian IT Services provider Powerland, and our legacy XBS IT solutions.

Xerox 2025 Form 10-Q 15

Segment Policy

We derive the results of our business segments directly from our internal management reporting system.

The accounting policies that the Company uses to derive its segment results are substantially the same as those used by the Company in preparing its consolidated financial statements.

The segment results include a significant level of management estimates regarding the allocation of expenses for shared selling, administrative and general services.

Certain administrative and general expenses, which primarily relate to corporate functions, as well as Xerox Holdings' investment in Myriad, are not allocated to either of our operating/reportable segments.

Accordingly, they are excluded from segment expenses and segment profit, and as such, the financial results for the segments may not be indicative of the results the businesses would have on a standalone basis or what might be presented for the businesses in stand-alone financial statements.

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

A segment expense is considered significant when it is material to the segment, is included in the measure of segment profit, and is included in information that is regularly provided to the CODM.

The CODM uses segment revenues, significant segment expenses, and segment profit, in part, to evaluate the performance of, and to allocate resources to each segment.

The CODM does not evaluate segment performance using discrete asset information, as a significant portion of the assets is managed at the total company level.

Segment profit is the only measure of profitability that is used by the CODM to evaluate the performance of, and to allocate resources to each segment.

Selected financial information for our reportable segments was as follows:

Three Months Ended September 30,

Print and Other XFS Total Print and Other XFS Total

Three months ended March 31,

Print and Other IT Solutions Corporate (1)

Total Print and Other IT Solutions Corporate (1)

External revenue $ 1,294 $ 163 $ — $ 1,457 $ 1,428 $ 74 $ — $ 1,502

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— 1 — 1 — — — —

Total Segment revenue $ 1,457 $ 88 $ 1,545 $ 1,575 $ 98 $ 1,673

Segment profit $ 67 $ 13 $ 80 $ 64 $ 4 $ 68

Segment margin (2)

Revenue $ 1,294 $ 164 $ — $ 1,458 $ 1,428 $ 74 $ — $ 1,502

Reconciliation to Segment Profit

Cost of sales (3)

$ 292 $ 85 $ — $ 377 $ 299 $ 41 $ — $ 340

Depreciation and amortization $ 49 $ — $ 49 $ 51 $ — $ 51

Interest income — 38 38 — 46 46

Interest expense — 26 26 — 30 30

Xerox 2024 Form 10-Q 16

Nine Months Ended September 30,

Print and Other XFS Total Print and Other XFS Total

External revenue $ 4,340 $ 268 $ 4,608 $ 4,820 $ 301 $ 5,121

Intersegment revenue (1)

Cost of services, maintenance, rentals and other (4)

597 50 — 647 661 22 — 683

Total Segment revenue $ 4,395 $ 268 $ 4,663 $ 4,885 $ 301 $ 5,186

Segment profit $ 181 $ 17 $ 198 $ 271 $ 22 $ 293

Segment margin (2)

Research, development and engineering expenses 42 — — 42 49 — — 49

Selling, administrative and general expenses (5)(6)

322 23 24 369 361 12 24 397

Depreciation and amortization $ 147 $ — $ 147 $ 156 $ — $ 156

Intersegment expense (7)

— 1 — 1 — — — —

Segment profit $ 41 $ 5 $ ( 24 ) $ 22 $ 58 $ ( 1 ) $ ( 24 ) $ 33

Depreciation $ 50 $ — $ — $ 50 $ 49 $ — $ — $ 49

Interest income (8)

33 — — 33 42 — — 42

Interest expense (4)

22 — — 22 27 — — 27

(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) Segment margin based on External revenue only.

_____________

(1) Certain administrative and general expenses, which primarily relate to corporate functions, are not allocated to either of our operating/reportable segments.

(2) Intersegment revenue is primarily revenue from IT hardware, software solutions and services, sold by the IT Solutions segment to the Print and Other segment.

(3) As a result of the exit of certain production print manufacturing operations, for the three months ended March 31, 2025 and 2024, Cost of sales and Cost of services, maintenance, rentals and other for the Print and Other Segment excludes $ 7 and $ 32 , respectively, of inventory-related charges, and $ 0 and $ 4 , respectively, from the cancellation of related purchase contracts.

(4) Includes equipment financing interest expense associated with financing debt of the Company, which is fully allocated to the Print and Other segment in support of its Finance assets.

No interest expense is allocated to the IT Solutions segment, as the segment has no financing debt.

(5) For the three months ended March 31, 2025 and 2024, Selling, administrative and general expenses include bad debt expense related to the Print and Other segment of $ 9 and $ 15 , respectively.

(6) For the three months ended March 31, 2025 and 2024, the Print and Other segment excludes Reinvention costs of $ 6 and $ 0 , respectively, and Transaction and related costs, net of $ 3 and $ 0 , respectively.

(7) Intersegment expense is primarily costs related to the sale of IT hardware, software solutions and services by the IT Solutions segment, to the Print and Other segment.

(8) Reflects financing income, which is included in Services, maintenance, rentals and other in the Condensed Consolidated Statements of Loss.

No interest income is allocated to the IT Solutions segment, as the segment has no finance assets.

Xerox 2025 Form 10-Q 16

Selected financial information for our reportable segments was as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Pre-tax Income (Loss)

Total reported segments $ 80 $ 68 $ 198 $ 293

Goodwill impairment (1)

( 1,058 ) — ( 1,058 ) —

Pre-tax (Loss)

Total Segment Profit $ 22 $ 33

Restructuring and related costs, net 1 ( 39 )

Amortization of intangible assets ( 10 ) ( 10 )

Divestiture — — ( 51 ) —

PARC donation — — — ( 132 )

Reinvention-related costs ( 6 ) —

Transaction-related costs ( 3 ) —

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

Divestiture 4 ( 54 )

Other expenses, net ( 68 ) ( 44 )

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

Total Pre-tax (loss) $ ( 67 ) $ ( 150 )

Depreciation and Amortization

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_____________

(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

(1) As a result of the exit of certain production print manufacturing operations, for the three months ended March 31, 2025 and 2024, reflects the inventory-related charges of approximately $ 7 and $ 32 , respectively, and the cancellation of related purchase contracts of approximately $ 0 and $ 4 , respectively.

Note 5 – Lessor

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Three Months Ended

September 30, Nine Months Ended

September 30,

Location in Statements of Income (Loss) 2025 2024

Revenue from sales type leases Sales $ 112 $ 162

Interest income on lease receivables Financing 38 46 118 147

Lease income - operating leases Services, maintenance and rentals 41 40 126 120

Variable lease income Services, maintenance and rentals 9 9 32 42

Interest income on lease receivables Services, maintenance, rentals and other 33 42

Lease income - operating leases Services, maintenance, rentals and other 41 41

Variable lease income Services, maintenance, rentals and other 9 13

Total Lease income $ 195 $ 258

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

Sales of Argentina and Chile

In March 2024, Xerox completed the sales of its direct business operations in Argentina and Chile to Grupo Datco, a technologies and fiber optic network service provider in Latin America for a total consideration of $ 19 .

Following the transfer of ownership, the new companies will operate as independent entities and Grupo Datco will continue to service Xerox devices previously sold in Argentina and Chile and will become the exclusive partner for Xerox in these markets.

This transaction aligns with the Company's ongoing Reinvention.

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.

The estimated fair values of the operations in Argentina and Chile as well as the Print and Other reporting unit are based on estimates and assumptions that are considered Level 3 inputs under the fair value hierarchy.

Xerox also recorded a net income tax benefit of $ 19 related to the sales, for a net after-tax loss on the sales of $ 32 .

The sales of the Argentina and Chile subsidiaries are not expected to materially impact current estimates of future projections with respect to results of operations or cash flows of the Company.

Profit at lease commencement on sales-type leases was estimated to be $ 31 and $ 50 for the three months ended March 31, 2025 and 2024, respectively .

Xerox 2025 Form 10-Q 17

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Accounts receivable, net were as follows:

September 30,

2025 December 31,

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Provision 4 6

Charge-offs ( 3 ) ( 5 )

Charge-offs, net ( 6 ) ( 3 )

Recoveries and other (1)

Balance at March 31 st

Provision 5 6

Charge-offs ( 3 ) ( 3 )

Recoveries and other (1)

Balance at June 30 th

Provision 8 5

Charge-offs ( 5 ) ( 4 )

Recoveries and other (1)

Balance at September 30 th

_____________

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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 8.0 % at September 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 7.7 % at March 31, 2025 and 8.0 % at December 31, 2024.

Accounts Receivable Sales Arrangements

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Accounts receivable sales (1)

$ 117 $ 103 $ 314 $ 277

(1) Losses on sales were not material.

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Note 7 – Finance Receivables, Net

Finance receivables include sales-type leases and installment loans arising from the marketing of our equipment.

These receivables are typically collateralized by a security interest in the underlying assets.

Finance receivables include sales-type leases and installment loans arising from the sales of our equipment.

These receivables are typically collateralized by a security interest in the underlying equipment.

Finance receivables, net were as follows:

September 30,

2025 December 31,

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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.

Customer credit limits are based upon an initial evaluation of the customer's credit quality, and are adjusted through ongoing credit assessments of the customer, which includes the past collections experience and changes in credit quality.

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 3.4 % at September 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.

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

Based on that assessment, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.1 % at March 31, 2025 and 3.2 % at December 31, 2024.

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

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Provision ( 1 ) 1 5 5

Charge-offs ( 7 ) ( 1 ) ( 4 ) ( 12 )

Recoveries and other (1)

Charge-offs, net ( 3 ) ( 1 ) ( 6 ) ( 10 )

Balance at March 31, 2025 $ 25 $ 5 $ 23 $ 53

Provision — 1 4 5

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

Recoveries and other (2)

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, 2023

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Provision ( 3 ) 5 6 8

Charge-offs ( 5 ) — ( 2 ) ( 7 )

Recoveries and other (1)

Charge-offs, net ( 7 ) ( 1 ) ( 4 ) ( 12 )

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

Provision 5 1 3 9

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

Recoveries and other (2)

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

September 30, 2024 (2)

March 31, 2025 (2)

$ 668 $ 143 $ 881 $ 1,692

September 30, 2023 (2)

March 31, 2024 (2)

$ 1,035 $ 243 $ 1,068 $ 2,346

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(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 $ 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.

(2) Total Finance receivables exclude the allowance for credit losses of $ 53 and $ 88 at March 31, 2025 and 2024, respectively.

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:

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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:

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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 2025 Form 10-Q 20

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

September 30, 2024

March 31, 2025

2025 2024 2023 2022 2021 Prior Total

66 unchanged sentences

The aging of our billed finance receivables is as follows:

September 30, 2024

March 31, 2025

Current 31-90

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Sales of Receivables

The Company has expanded the finance receivables funding agreement with an affiliate of HPS Investment Partners (HPS) pursuant to which the Company agreed to offer for sale, and HPS agreed to purchase, certain eligible pools of finance receivables, on a monthly basis, in transactions structured as "true sales at law," and bankruptcy remote transfers.

The Company has a finance receivables funding agreement with an affiliate of HPS Investment Partners (HPS) pursuant to which the Company agreed to offer for sale, and HPS agreed to purchase, certain eligible pools of finance receivables, on a monthly basis, in transactions structured as "true sales at law," and bankruptcy remote transfers.

We have received an opinion to that effect from outside legal counsel.

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In addition, the agreement provides for the sale of the underlying leased equipment to HPS, with the commission paid by HPS covering the value associated with the underlying equipment being sold to HPS.

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 five years .

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

Xerox will be required to pay a specified fee to service the Company’s retained receivables.

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.

The Company retains the 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 addition, HPS is responsible for servicing the majority of Xerox's customers' funding activity.

HPS pays a specified fee to Xerox for those lease receivables that Xerox continues to service on HPS's behalf.

The Company also has a finance receivables funding agreement with De Lage Landen Financial Services Canada Inc.

(DLL Canada), pursuant to which the Company can offer for sale, and DLL Canada may purchase on a non-recourse basis, 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.

During the first quarter 2025, the Company entered into a finance receivables funding agreement with De Lage Landen Financial Services France Inc.

(DLL France), pursuant to which the Company can offer for sale, and DLL France may purchase on a non-recourse basis, 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.

During the first quarter of 2025, the Company received proceeds of approximately $ 15 (EUR 13 million) related to the sales of lease receivables under this finance receivables funding arrangement.

Xerox 2025 Form 10-Q 23

Both DLL finance receivables funding agreements have initial terms of five years , with automatic one-year extensions thereafter, unless terminated by either the Company or DLL Canada or DLL France.

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.

Finance receivable sales activity was as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Finance receivable sales - net proceeds (1)

$ 134 $ 206 $ 511 $ 848

Gain on sale/Commissions (2)

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_____________

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

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

(2) Recorded in Services, maintenance and rentals as Other Revenue.

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

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

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.

Note 8 – Inventories and Equipment on Operating Leases, Net

The following is a summary of Inventories by major category:

September 30,

2025 December 31,

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Total Inventories $ 836 $ 695

_____________

(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,

2025 December 31,

2 unchanged sentences

Equipment on operating leases, net $ 248 $ 245

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.

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $ 9 and $ 13 for the three months ended March 31, 2025 and 2024, respectively .

Xerox 2025 Form 10-Q 24

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Operating Leases

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

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

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Operating lease expense $ 18 $ 18

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(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 September 30, 2024, we had no material operating leases that had not yet commenced.

As of March 31, 2025, 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,

2025 December 31,

3 unchanged sentences

Total Operating lease liabilities $ 196 $ 188

_____________

(1) During the first quarter 2025, the Company modified a lease agreement for electric vehicles, which resulted in a change in the lease classification from financing to operating.

Accordingly, we remeasured the right of use asset and the corresponding lease liability.

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 has finance leases for equipment in the U.S.

and Europe, as well as for vehicles and related infrastructure, within outsourced warehouse supply arrangements, in the U.S.

These leases have remaining maturities up to seven years .

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

2025 December 31,

Land, buildings and equipment, net (1)

Accrued expenses and other current liabilities $ 8 $ 15

Other long-term liabilities 6 38

Total Finance lease liabilities $ 14 $ 53

_____________

(1) During the first quarter 2025, the Company modified a lease agreement for electric vehicles, which resulted in a change in the lease classification from financing to operating.

Accordingly, we remeasured the right of use asset and the corresponding lease liability.

Xerox 2025 Form 10-Q 25

Note 10 – Restructuring Programs

In connection with our Reinvention and other transformative programs, we engage in restructuring actions in order to reduce our cost structure and realign it to the changing nature of our business.

In connection with our Reinvention and other transformation programs, we engage in restructuring actions in order to reduce our cost structure and realign it to the changing nature of our business.

As part of our efforts to reduce costs, our restructuring actions may also include the off-shoring and/or outsourcing of certain operations, services and other functions, exit from certain product lines and geographies, as well as reducing our real estate footprint.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Restructuring charges, net $ 5 $ 5

2 unchanged sentences

Total Restructuring and related costs, net $ ( 1 ) $ 39

Restructuring Charges

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.

Restructuring Charges, Net

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

A summary of our restructuring program activity is as follows:

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Balance at December 31, 2024 $ 109 $ — $ 109

Provision 9 — 9

Reversals ( 4 ) — ( 4 )

Restructuring provision 10 5 15

Reversals of prior charges ( 10 ) — ( 10 )

Net current period charges (1)

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Balance at March 31, 2025 $ 93 $ 5 $ 98

Provision 5 — 5

Reversals — — —

Net current period charges (1)

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

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

_____________ _

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

Reversals of prior charges primarily include net changes in estimated reserves from initiatives accrued for in prior periods, including Reinvention.

(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.

We expect that the majority of these costs will be paid upon the exercise of an early termination clause in 2027.

At March 31, 2025, we expect to pay $ 70 of the restructuring reserve over the next twelve months.

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

Nine Months Ended

September 30,

Three Months Ended

Restructuring cash payments $ ( 18 ) $ ( 16 )

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Xerox 2025 Form 10-Q 26

Asset Impairment Charges

Asset Impairment Charges, Net

Charges associated with asset impairments represent the write-down of the related assets to their new cost basis.

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

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

Asset impairment charges incurred during the first quarter 2025 related to the impairment of an operating lease ROU asset, which was exited during the quarter, as well as the sale of a facility.

Both the impairment and the sale are associated with strategic actions taken as a result of the Company's Reinvention.

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Lease right of use assets (1)

Owned assets (1)

Asset impairments 13 26

$ 1 $ 11 $ 27 $ 23

Adjustments/Reversals ( 1 ) ( 3 ) ( 3 ) ( 3 )

Net asset impairment charge $ — $ 8 $ 24 $ 20

Proceeds from the sale of owned assets (2)

Net asset impairment (credit) charge $ ( 6 ) $ 26

____________ _

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

Related Costs

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

(2) Reflects net proceeds on the sale of exited surplus facilities and land.

Related Costs, Net

In connection with our restructuring programs, we also incurred certain related costs as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Retention related severance/bonuses (1)

$ — $ ( 1 ) $ ( 2 ) $ —

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 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 $ 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.

Cash paid for restructuring related costs were $ 0 and $ 10 for the three months ended March 31, 2025 and 2024, respectively.

The restructuring related costs reserve was $ 4 and $ 4 at March 31, 2025 and December 31, 2024, respectively.

The balance at March 31, 2025 is expected to be paid over the next twelve months.

Xerox 2025 Form 10-Q 27

Note 11 – Supplementary Financial Information

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Restricted cash primarily relates to escrow cash deposits made in Brazil associated with ongoing litigation as well as cash collections on finance receivables that were pledged for secured borrowings.

As more fully discussed in Note 21 - Contingencies and Litigation, various litigation matters in Brazil require us to make cash deposits to escrow as a condition of continuing the litigation.

As more fully discussed in Note 20 - Contingencies and Litigation, various litigation matters in Brazil require us to make cash deposits to escrow as a condition of the continuing litigation.

Restricted cash amounts are classified in our Condensed Consolidated Balance Sheets based on when the cash will be contractually or judicially released.

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

September 30,

2025 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.

Xerox 2024 Form 10-Q 28

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

September 30,

2025 December 31,

4 unchanged sentences

Summarized cash flow information is as follows:

Location in Statement of Cash Flows Nine Months Ended

September 30,

Location in Statement of Cash Flows Three Months Ended

Source/(Use) 2025 2024

Provision for receivables Operating $ 36 $ 23

Provision for receivables (1)

Operating $ 10 $ 14

Provision for inventory Operating 8 43

15 unchanged sentences

_____________

(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.

(1) Provision for receivables includes adjustments for customer accommodations and contract terminations of $ 1 and $( 1 ) for the three months ended March 31, 2025 and 2024, respectively.

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

(3) Amortization of customer contract costs is reported in 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 2025 Form 10-Q 28

Supplier Finance Program

The Company has a program through a financial institution that enables vendors and suppliers, at their option, to receive early payment for their invoices.

We have a program through a financial institution that enables vendors and suppliers, at their option, to receive early payment for their invoices.

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

The program operates in a similar manner to a purchasing card program, however with this program the Company receives invoices associated with those vendors and suppliers participating in the program and confirms and validates those invoices and amounts due before passing the invoices on to the financial institution for early payment at a discounted amount.

The program operates in a similar manner to a purchasing card program, however with this program we directly receive invoices associated with those vendors and suppliers participating in the program and confirm and validate those invoices and the amounts due before submitting the invoices to the financial institution for early payment at a discounted amount.

The financial institution subsequently invoices the Company for the stated or full amount of the invoices paid early and we are required to make payment within 45 days of the statement date.

The overall impact of the program generally results in the Company paying its supplier and vendor invoices consistent with their original terms.

The overall impact of the program generally results in paying our supplier and vendor invoices consistent with their original terms.

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

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

The Company's supplier finance program is as follows:

Balance at January 1st $ 30 $ 40

Amounts invoiced 22 30

Invoices paid ( 33 ) ( 40 )

Balance at March 31st $ 19 $ 30

Note 12 – 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 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 .

The 2029 Notes are senior unsecured obligations of Xerox Holdings Corporation and are fully and unconditionally guaranteed on a senior unsecured basis by Xerox Corporation and Xerox Business Services, LLC, as well as certain other wholly owned domestic restricted subsidiaries of the Company.

The 2029 Notes and the related guarantees were issued in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

Interest is payable semi-annually in arrears on May 30th and November 30th of each year, beginning on November 30, 2024.

Xerox Holdings Corporation may, at its option, redeem some or all of the 2029 Notes, at varying prices based on the timing of the redemption.

The indenture governing the 2029 Notes contains covenants that, among other things, limit the ability of Xerox Holdings Corporation and the ability of its restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, prepay, redeem or repurchase certain subordinated debt, issue certain preferred stock or similar equity securities, make loans and investments, sell or otherwise dispose of assets, incur liens, enter into transactions with affiliates, enter into agreements restricting its subsidiaries’ ability to pay dividends, and consolidate, merge or sell all or substantially all assets.

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.

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.

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

Convertible Senior Notes and Capped Call

Convertible Senior Notes

In March 2024, Xerox Holdings Corporation issued an aggregate $ 400 of 3.75 % Convertible Senior Notes due in 2030 (the 2030 Notes).

The 2030 Notes are senior unsecured obligations of Xerox Holdings Corporation and are fully and unconditionally guaranteed by Xerox Corporation and Xerox Business Solutions, LLC.

The 2030 Notes were issued in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

Interest is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024, and will mature on March 15, 2030, unless earlier converted, redeemed or repurchased.

The net proceeds from this offering were approximately $ 390 , after deducting the debt issuance costs.

Debt issuance costs of approximately $ 10 were paid and deferred in connection with the issuance of the 2030 Notes, and will be amortized over the term of the 2030 Notes.

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:

(i) during any calendar quarter commencing after the calendar quarter ending on March 31, 2024 (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(ii) during the five consecutive trading day period after any ten consecutive trading day period (the measurement period) in which the trading price (as determined in accordance with the indenture governing the 2030 Notes) per $1,000 principal amount of 2030 Notes, as determined following a request by a holder or holders of the 2030 Notes, for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company's common stock and the applicable conversion rate on each such trading day;

(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 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 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.

The initial conversion rate is 47.9904 shares of the common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $ 20.84 per share of the common stock.

The conversion rate will be subject to adjustment under certain circumstances.

In connection with certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their notes in connection with such corporate event or during the relevant redemption period.

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.

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

The Company may redeem for cash all or any portion of the notes, at our option, on or after September 20, 2027, if the last reported sale price of the Company's common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

No sinking fund for the notes has been provided.

If the Company undergoes a fundamental change (as defined in the indenture governing the 2030 Notes), holders may require the Company to repurchase for cash all or any portion of their 2030 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

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.

In connection with the issuance of the 2030 Notes (see Convertible Senior Notes above), the Company entered into privately negotiated capped call transactions (the Capped Calls) with certain of the initial purchasers of the 2030 Notes or their respective affiliates (the option counterparties) at a cost of approximately $ 23 .

The Capped Calls cover, subject to anti-dilution adjustments, the number of shares of the Company's common stock initially underlying the 2030 Notes.

By entering into the Capped Calls, we expect to reduce the potential dilution to the Company's common stock (or, in the event a conversion of the 2030 Notes is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion of the 2030 Notes the trading price of our common stock price exceeds the conversion price of the 2030 Notes.

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 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.

Use of Aggregate Proceeds from Senior Notes

A portion of the aggregate net proceeds from the Senior Note offerings was used to fund the cost of entering into the Capped Call transactions (see Convertible Senior Notes above).

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 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.

The net gain on the extinguishment of $ 3 was recorded in Other expenses, net.

Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation, have a revolving credit facility (the ABL Facility), with Citibank, N.A., as administrative agent and collateral agent (the ABL Agent) and several lenders including Citibank N.A.

The aggregate outstanding principal amount of the ABL Facility is payable in full at maturity on May 22, 2028, and there are no scheduled principal payments prior to maturity.

The ABL Facility has commitments from the lenders of $ 425 .

At March 31, 2025, there were no borrowings under the ABL Facility, and approximately $ 41 of letters of credit were issued under the facility.

During the three months ended March 31, 2025, the maximum borrowings under the ABL Facility were $ 25 .

Xerox Holdings Corporation/Xerox Corporation Intercompany Loan

In the first quarter 2024, Xerox Holdings Corporation and Xerox Corporation entered into two intercompany loan agreements which mirror the terms of Xerox Holdings Corporation’s 2029 and 2030 Senior Notes, including principal, interest rates, payment dates and debt issuance costs of approximately $ 15 (see the Senior Notes and the Convertible Senior Notes sections above).

As a result, Xerox Corporation recorded approximately $ 900 of Related party debt.

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 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.

At March 31, 2025 and December 31, 2024, the balance of the Xerox Holdings Corporation Intercompany Loan reported in Xerox Corporation’s Condensed Consolidated Balance Sheet was $ 2,023 and $ 2,022 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 23 and $ 31 , respectively.

Secured Borrowings and Collateral

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.

The loans have variable interest rates and expected lives of approximately 2.5 years, with half projected to be repaid within the first year based on collections of the underlying portfolio of receivables.

For certain loans, we entered into interest rate hedge agreements to either fix or cap the interest rate over the life of the loan.

The sales of the receivables to the SPEs were structured as "true sales at law," and we have received opinions to that effect from outside legal counsel.

However, the transactions were accounted for as secured borrowings as we fully consolidate the SPEs in our financial statements.

As a result, the assets of the SPEs are not available to satisfy any of our other obligations.

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

At December 31, 2024, we had secured borrowings of $ 70 with an interest rate of 4.62 %.

The borrowings were secured by $ 58 of Finance receivables, net, and were expected to mature in 2026.

During the first quarter 2025, the outstanding balance of $ 70 was repaid and there are no secured borrowings outstanding as of March 31, 2025.

Xerox 2025 Form 10-Q 29

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

September 30, 2024

Finance Receivables, Net (1)

Equipment on Operating Leases, Net Secured Debt (2)

Interest Rate (3)

Expected Maturity

July 2023 (5)

$ 62 $ — $ 49 5.73 % 2026

November 2023 166 — 99 5.04 % 2026

Total $ 228 $ — $ 148

December 31, 2023

Finance Receivables, Net (1)

Equipment on Operating Leases, Net Secured Debt (2)

Interest Rate (3)

Expected Maturity

January 2022 (6)

$ 209 $ — $ 77 6.82 % 2024

September 2021 (6)

89 2 25 6.76 % 2024

July 2023 86 — 77 6.74 % 2026

November 2023 235 — 182 5.42 % 2026

Total $ 619 $ 2 $ 361

____________ _

(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 September 30, 2024 and December 31, 2023.

(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.

Refer to Note 14 - Financial Instruments for additional information regarding hedging of these borrowings.

(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.

Interest Expense and Income

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Equipment financing interest (1)

Non-financing interest expense (1)(2)

Interest expense $ 55 $ 53

$ 57 $ 44 $ 170 $ 140

Financing income (3)

Other interest income (3)

Interest income $ 35 $ 45

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 $ 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

(1) Equipment financing interest, which is included in Cost of services, maintenance, rentals and other, and non-financing interest expense, which is included in Other expenses, net, in the Condensed Consolidated Statements of Loss.

(2) Interest expense of Xerox Corporation included intercompany interest expense associated with the Xerox Holdings Corporation / Xerox Corporation Intercompany Loan of $ 30 and $ 22 for the three months ended March 31, 2025 and 2024, respectively.

(3) Financing income, which is included in Services, maintenance, rentals and other, and other interest income, which is included in Other expenses, net, in the Condensed Consolidated Statements of Loss.

Note 13 – 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 nine months ended September 30, 2024 and 2023, respectively.

We had no fair value hedges for the three months ended March 31, 2025 and 2024, respectively.

Cash Flow Hedges

1 unchanged sentence

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

During first quarter 2024, the following derivatives were dedesignated as cash flow hedges.

The net fair value of these cash flow hedges, which was not material, was recorded in Accumulated Other Comprehensive Loss and then reclassified to earnings.

Secured Borrowing Derivative Type Notional Amount

Canada Swap $ 49

France Cap 62

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:

The following is a summary of our swaps at March 31, 2025:

Counterparty Derivative Type Principal Debt

7 unchanged sentences

The remaining portion of the TLB of $ 216 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.

The impact of these interest rate swaps on interest expense was a net reduction of $ 1 for the three months ended March 31, 2025.

Foreign Exchange Risk Management

3 unchanged sentences

• Forecasted purchases and sales in foreign currency

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 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.

At March 31, 2025 and December 31, 2024, we had outstanding forward exchange and purchased option contracts with gross notional values of $ 1,200 and $ 1,410 respectively, with terms of less than 12 months.

The decrease in the notional value is due to a reduction in foreign currency denominated intercompany balances.

At March 31, 2025, approximately 94 % of the contracts mature within three months, 3 % mature in three to six months and 3 % in six to twelve months.

Xerox 2025 Form 10-Q 30

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 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

The amount of ineffectiveness recorded in the Condensed Consolidated Statements of Loss for these designated cash flow hedges was not material for the three months ended March 31, 2025 and 2024, respectively.

The net liability fair value of these contracts was $ 1 and $ 1 as of March 31, 2025 and December 31, 2024, respectively.

Summary of Derivative Instruments Gains (Losses)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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

Derivative Loss Recognized in OCI (Effective Portion)

Foreign exchange contracts - forwards and options $ — $ ( 3 )

Interest rate contracts ( 3 ) —

Total $ ( 3 ) $ ( 3 )

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

2 unchanged sentences

Total $ — $ ( 3 )

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.

As of March 31, 2025, a net after-tax gain 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.

Credit Support Annex

The Company may enter into derivative contracts with derivative counterparties that contain a provision to post collateral to the counterparties when these contracts are in a net liability position.

At March 31, 2025, the Company had no collateral posted due to this provision.

Non-Designated Derivative Instruments Gains (Losses)

1 unchanged sentence

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 September 30, 2024 and December 31, 2023, respectively.

The net liability fair value of these contracts was $ 1 and $ 2 as of March 31, 2025 and December 31, 2024, 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) Gain Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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.

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

Foreign exchange contracts – forwards Other expenses, net – Currency gains (losses), net $ 6 $ ( 8 )

Currency losses, net were $ 0 and $ 11 for the three months ended March 31, 2025 and 2024, 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,

2025 December 31,

11 unchanged sentences

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 336 $ 336 $ 576 $ 576

1 unchanged sentence

Short-term debt and current portion of long-term debt (1)

599 608 585 592

Long-term Debt

2 unchanged sentences

Xerox - Other Subsidiaries (2)

40 40 117 117

Long-term debt $ 2,699 $ 1,889 $ 2,814 $ 2,383

(1) Includes $ 388 of Xerox Corporation related party debt.

(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 September 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 $ 1 $ — $ 1

Interest cost 27 28 46 47 2 2

Expected return on plan assets ( 23 ) ( 24 ) ( 49 ) ( 55 ) — —

Recognized net actuarial loss (gain) 4 4 16 3 ( 3 ) ( 3 )

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

Recognized settlement loss 7 4 — — — —

Defined benefit plans 15 12 17 ( 2 ) ( 5 ) ( 4 )

Defined contribution plans 4 5 6 4 n/a n/a

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

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

Net actuarial gain (1)

( 15 ) ( 30 ) — ( 1 ) — —

Prior service cost — — — — — —

Amortization of net actuarial (loss) gain ( 11 ) ( 8 ) ( 15 ) ( 3 ) 3 3

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

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 Income (Loss) $ ( 7 ) $ ( 21 ) $ 6 $ ( 4 ) $ 2 $ 3

Nine Months Ended September 30,

Three Months Ended March 31,

Pension Benefits

13 unchanged sentences

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

Net actuarial (gain) loss (1)

Net actuarial gain (1)

— ( 8 ) — — — —

2 unchanged sentences

Amortization of prior service (cost) credit — — ( 2 ) ( 1 ) 3 4

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

Total Recognized in Other Comprehensive Income (2)

( 5 ) ( 18 ) ( 15 ) ( 17 ) 6 7

1 unchanged sentence

_____________

(1) The net actuarial (gain) 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 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 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

Pension Plan Amendment

In January 2024, the pension board of our Netherlands benefit pension plan transferred the plan’s assets and projected benefit obligation (PBO) to a single general pension fund.

In addition to the transition, the indexation target was increased from 75 % of price inflation to 100 % of price inflation.

This plan amendment resulted in an increase of approximately $ 47 (approximately EUR 44 million) in the PBO for this Collective Defined Contribution (CDC) plan, approximately 6 % of the plan PBO as of December 31, 2023.

From a Company risk perspective, this CDC plan operates just like a frozen defined contribution plan.

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

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.

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

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

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

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

Refer to Note 18 - Other Comprehensive Income for related tax effects and the after-tax amounts.

Contributions

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

Nine Months Ended

September 30, Year Ended

Three Months Ended

March 31, Year Ended

2025 2024 Estimated 2025

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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 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)

— — — ( 31 ) — ( 31 ) — ( 31 )

Cash dividends declared - preferred (4)

— — — ( 4 ) — ( 4 ) — ( 4 )

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

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 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)

— — — ( 32 ) — ( 32 ) — ( 32 )

Cash dividends declared - preferred (4)

— — — ( 4 ) — ( 4 ) — ( 4 )

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

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

Treasury Stock Retained

Xerox Holdings

7 unchanged sentences

— — ( 4 ) — ( 4 ) — ( 4 )

Purchases of capped calls (5)

— ( 17 ) — — — ( 17 ) — ( 17 )

Stock option and incentive plans, net 2 4 — — 6 — 6

1 unchanged sentence

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

Balance at September 30, 2024

Balance at March 31, 2025

$ 126 $ 1,141 $ 3,403 $ ( 3,617 ) $ 1,053 $ 4 $ 1,057

Xerox 2024 Form 10-Q 39

Treasury Stock Retained

Xerox Holdings

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

Comprehensive income, net — — — 59 33 92 — 92

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

Cash dividends declared - common (3)

2 unchanged sentences

— — ( 4 ) — ( 4 ) — ( 4 )

Purchases of capped calls — ( 17 ) — — ( 17 ) — ( 17 )

Stock option and incentive plans, net 1 2 — — 3 — 3

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

Transactions with noncontrolling interests — — — — — ( 6 ) ( 6 )

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

Balance at September 30, 2023

Balance at March 31, 2024

$ 124 $ 1,099 $ 4,828 $ ( 3,673 ) $ 2,378 $ 3 $ 2,381

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

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

(3) Cash dividends declared on common stock for the three and 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.

(2) Refer to Note 18 - Other Comprehensive Income for the components of AOCL.

(3) Cash dividends declared on common stock for the three months ended March 31, 2025 and 2024 were $ 0.125 per share and $ 0.25 per share, respectively.

(4) Cash dividends declared on preferred stock for the three months ended March 31, 2025 and 2024 were $ 20.00 per share and $ 20.00 per share, respectively.

Common Stock and Treasury Stock

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Balance at March 31, 2025 125,780 —

Stock based compensation plans, net 134 —

Balance at June 30, 2024 124,319 —

Stock based compensation plans, net 44 —

Balance at September 30, 2024 124,363 —

Xerox 2025 Form 10-Q 34

3 unchanged sentences

Xerox Shareholder's Equity Non- controlling Interests Total

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

Comprehensive (loss) income, net — ( 1,204 ) 173 ( 1,031 ) — ( 1,031 )

Dividends declared to parent — ( 35 ) — ( 35 ) — ( 35 )

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

Additional Paid-in Capital Retained Earnings AOCL (1)

Xerox Shareholder's Equity Non- controlling Interests Total

Balance at December 31, 2024 $ 3,487 $ 1,504 $ ( 3,699 ) $ 1,292 $ 4 $ 1,296

4 unchanged sentences

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

Balance at September 30, 2024

Balance at March 31, 2025

$ 3,474 $ 1,397 $ ( 3,617 ) $ 1,254 $ 4 $ 1,258

2 unchanged sentences

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

Comprehensive income, net — 59 33 92 — 92

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

Dividends declared to parent — ( 35 ) — ( 35 ) — ( 35 )

2 unchanged sentences

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

Balance at September 30, 2023

Balance at March 31, 2024

$ 3,465 $ 2,811 $ ( 3,673 ) $ 2,603 $ 3 $ 2,606

_____________

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

(1) Refer to Note 18 - Other Comprehensive Income for the components of AOCL.

Xerox 2025 Form 10-Q 35

Note 19 – Other Comprehensive Income (Loss)

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

Note 18 – Other Comprehensive Income

Other Comprehensive Income is comprised of the following:

Three 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

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

Translation Adjustments Gains (Losses) $ 105 $ 105 $ ( 32 ) $ ( 32 )

Unrealized Gains (Losses)

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

Unrealized (Losses) Gains

Changes in fair value of cash flow hedges losses ( 3 ) ( 2 ) ( 3 ) ( 3 )

Changes in cash flow hedges reclassed to earnings (1)

1 2 3 3 8 7 15 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

Net Unrealized Losses ( 3 ) ( 2 ) — ( 1 )

Defined Benefit Plans (Losses) Gains

Net actuarial/prior service (losses) gains — ( 1 ) 8 6

Prior service amortization (2)

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Actuarial loss amortization/settlement (2)

23 26 8 7 68 60 26 20

Other (losses) gains (3)

1 unchanged sentence

Changes in Defined Benefit Plans (Losses) Gains ( 20 ) ( 21 ) 43 36

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

Other Comprehensive Income $ 82 $ 82 $ 11 $ 3

(1) Reclassified to Cost of sales and interest expense - refer to Note 13 - Financial Instruments for additional information regarding our cash flow hedges.

3 unchanged sentences

AOCL is comprised of the following:

September 30,

2025 December 31,

Cumulative translation adjustments $ ( 2,061 ) $ ( 2,166 )

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

Other unrealized gains, net 4 6

Benefit plans net actuarial losses and prior service credits ( 1,560 ) ( 1,539 )

1 unchanged sentence

Xerox 2025 Form 10-Q 36

Note 20 – (Loss) Earnings per Share

Note 19 – 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 loss per share of Xerox Holdings Corporation's common stock:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Basic (Loss) Earnings per Share

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

Loss per Share

Net Loss $ ( 90 ) $ ( 113 )

Accrued dividends on preferred stock ( 4 ) ( 4 )

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

Adjusted Net loss available to common shareholders $ ( 94 ) $ ( 117 )

Weighted average common shares outstanding 125,194 123,924

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

Basic Loss per Share $ ( 0.75 ) $ ( 0.94 )

Diluted Loss per Share

Net Loss $ ( 90 ) $ ( 113 )

Accrued dividends on preferred stock ( 4 ) ( 4 )

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

Adjusted Net loss available to common shareholders $ ( 94 ) $ ( 117 )

Weighted average common shares outstanding 125,194 123,924

4 unchanged sentences

Adjusted weighted average common shares outstanding 125,194 123,924

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

Diluted Loss per Share $ ( 0.75 ) $ ( 0.94 )

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:

3 unchanged sentences

Convertible notes 19,196 19,196

19,196 — 19,196 —

Total Anti-Dilutive Securities 42,500 32,104

Dividends per Common Share $ 0.125 $ 0.25

_____________

(1) Refer to Note 13 - Debt for additional information related to the issuance of Xerox Holdings Corporation's $ 400 of 3.75 % Convertible Senior Notes due 2030.

Xerox 2025 Form 10-Q 37

20 unchanged sentences

Below is a summary of our Brazilian tax contingencies:

September 30,

2025 December 31,

4 unchanged sentences

Liens on Brazilian assets — —

The decrease in the unreserved portion of the tax contingency, inclusive of any related interest, was primarily due to currency, partially offset by interest.

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

With respect to the unreserved tax contingency, the majority has been assessed by management as being remote as to the likelihood of ultimately resulting in a loss to the Company.

19 unchanged sentences

Claims asserted against the Directors were later dismissed.

In December 2021, the Xerox Holdings Board approved the formation of a Special Litigation Committee (SLC) to investigate and evaluate Miami Firefighters' claims and determine the course of action that would be in the best interests of the Company and its shareholders.

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

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;

We have issued or provided approximately $ 227 of guarantees as of March 31, 2025 in the form of letters of credit or surety bonds issued to i) support certain insurance programs;

ii) support our obligations related to the Brazil contingencies;

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Note 21 – 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

We have evaluated subsequent events through May 6, 2025, which is the date the financial statements were issued.

Debt Issuance

On April 11, 2025, Xerox Corporation and Xerox Issuer Corporation, a wholly-owned subsidiary of Xerox Corporation (Escrow Issuer), completed their previously announced private offering of (i) $ 400 aggregate principal amount of 10.250 % Senior Secured First Lien Notes due 2030 (the First Lien Notes) issued by Xerox Corporation at 99 % of par, and (ii) $ 400 aggregate principal amount of 13.500 % Senior Secured Second Lien Notes due 2031 at 98 % of par (the Second Lien Notes issued and together with the First Lien Notes, the Notes) issued by the Escrow Issuer.

We received net proceeds (after discount, fees and expenses) on the issuance of the First Lien Notes of $ 366 .

Additionally, $ 392 of net proceeds (after discount) was deposited into an escrow account upon the issuance of the Second Lien Notes.

On May 9, 2025, the Escrow Issuer issued an additional $ 100 of the 13.500 % Second Lien Notes at 95 % of par.

Also on May 9, 2025, $ 96 of the proceeds were deposited into the escrow account, which included $ 1 of accrued and unpaid interest.

Xerox Corporation made an additional deposit of $ 2 into the escrow account.

Net proceeds (after discounts, fees and expenses) were approximately $ 93 .

Aggregate net proceeds from both issuances of the Second Lien Notes was approximately $ 485 .

We expect to pay an additional $ 15 of commitment and underwriting fees upon the release of the proceeds from escrow to fund the Lexmark Acquisition (as defined below).

Xerox Corporation intends to use the net proceeds from the offering of the First Lien Notes, together with cash on hand, to redeem Xerox’s 5.000 % Senior Notes due 2025 (2025 Notes) in full on or prior to their maturity and to pay fees and expenses, including redemption premiums and accrued interest, in connection with the offering, the Lexmark Acquisition and the related transactions, including redemption premiums and accrued interest in connection with the related transactions.

Xerox redeemed an aggregate principal amount of $ 90 of the 2025 Notes on April 11, 2025, with the balance to be redeemed on or prior to maturity.

On April 11, 2025, Xerox also repaid $ 95 aggregate principal amount of borrowings under Xerox Corporation’s first lien senior secured term loan credit facility (the TLB Facility) with a portion of the proceeds of the First Lien Notes.

The application of the remaining proceeds from the First Lien Notes will be used for general corporate purposes.

Xerox Corporation intends to use the net proceeds from the offering of the Second Lien Notes to (i) fund a portion of the purchase price for the Lexmark Acquisition and the repayment of substantially all of Lexmark’s outstanding debt (together with accrued interest and any applicable expenses, fees or premiums) and (ii) pay fees and expenses in connection with the offering, the Lexmark Acquisition and the related transactions.

The First Lien Notes are governed by an indenture, dated as of April 11, 2025 (the First Lien Indenture), among Xerox Corporation, Xerox Holdings Corporation (Xerox and, together with Xerox Corporation, the Company), certain of Xerox’s domestic and foreign subsidiaries and U.S.

Bank Trust Company, National Association, as trustee and collateral agent.

The Second Lien Notes are governed by an indenture, dated as of April 11, 2025 (the Second Lien

Xerox 2025 Form 10-Q 39

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.

Indenture and, together with the First Lien Indenture, the Indentures), between the Escrow Issuer and U.S.

Bank Trust Company, National Association, as trustee and collateral agent.

The First Lien Notes bear interest at a rate of 10.250 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2025.

The First Lien Notes are unconditionally guaranteed on a senior secured basis by Xerox and certain of Xerox’s domestic and foreign subsidiaries and, subject to certain exceptions and permitted liens, secured by security interests in substantially all of the assets of Xerox and such subsidiaries (the Xerox Collateral) on a first-priority basis by the Xerox Collateral that is Fixed Asset Collateral (as defined in the First Lien Indenture) and on a second-priority basis by the Xerox Collateral that is Current Asset Collateral (as defined in the First Lien Indenture).

The Second Lien Notes bear interest at a rate of 13.500 % per annum, payable semi-annually in arrears on April 15 and October 15, beginning on October 15, 2025.

The gross proceeds of the Second Lien Notes were deposited into an escrow account for the benefit of the holders of the Second Lien Notes until such date that certain escrow release conditions, including the consummation of the Lexmark Acquisition, have been satisfied.

The escrow account is pledged on a first priority basis in favor of the trustee for the Second Lien Notes for the benefit of holders of the Second Lien Notes.

If the Lexmark Acquisition is not consummated on or prior to December 22, 2025 (subject to extension) or upon the occurrence of certain other events, the Second Lien Notes will be subject to a special mandatory redemption at a price equal to 98 % of the aggregate principal amount of the Second Lien Notes, plus accrued and unpaid interest, if any, from, and including, the most recent interest payment date, or April 11, 2025, if no interest has been paid, to, but excluding, the special mandatory redemption date.

Upon the consummation of the Lexmark Acquisition, subject to certain escrow release conditions, the escrowed proceeds will be released (the Escrow Release) from the escrow account and the Escrow Issuer will be merged with and into Xerox Corporation.

Upon the Escrow Release, Xerox Corporation, Xerox and certain of Xerox’s domestic and foreign subsidiaries that guarantee the First Lien Notes will enter into one or more supplemental indentures to the Second Lien Indenture to provide for the assumption by Xerox Corporation of the obligations of the Escrow Issuer as issuer of the Second Lien Notes and for the guarantees of the Second Lien Notes by Xerox and such subsidiaries (the Assumption).

On the date of Escrow Release and upon consummation of the Assumption, the Second Lien Notes, subject to certain exceptions and permitted liens, will be secured on a second-priority basis by the Xerox Collateral that is Fixed Asset Collateral and on a third-priority basis by the Xerox Collateral that is Current Asset Collateral.

Within 90 business days following the completion of the Lexmark Acquisition, subject to certain agreed security principles, the Notes will be jointly and severally guaranteed on a senior secured basis by Lexmark and certain of its subsidiaries that become guarantors under the TLB Facility.

Subject to certain exceptions and permitted liens, the Notes will be further secured by security interests in substantially all of the assets of Lexmark and certain of its subsidiaries that will secure the TLB Facility (the Lexmark Collateral) on a first-priority basis, in respect of the First Lien Notes, and on a second-priority basis, in respect of the Second Lien Notes, by the Lexmark Collateral that is Fixed Asset Collateral and on a second-priority basis, in respect of the First Lien Notes, and on a third-priority basis, in respect of the Second Lien Notes by the Lexmark Collateral that is Current Asset Collateral.

At any time and from time to time prior to October 15, 2027, some or all of the First Lien Notes are redeemable for cash at a redemption price equal to 100 % of their principal amount, plus the applicable “make-whole” premium described in the First Lien Indenture and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

Beginning on October 15, 2027, some or all of the First Lien Notes are redeemable at any time and from time to time at the applicable redemption prices listed in the First Lien Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, at any time and from time to time prior to October 15, 2027, up to 40 % of the aggregate principal amount of the First Lien Notes are redeemable with funds from one or more equity offerings at a redemption price equal to 110.250 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, prior to October 15, 2027, during each 12-month period commencing with the issue date of the First Lien Notes, up to 10 % of the aggregate principal amount of the First Lien Notes outstanding are redeemable at a redemption price equal to 103 % of the principal amount of the First Lien Notes redeemed plus accrued and unpaid interest.

At any time and from time to time prior to April 15, 2028, some or all of the Second Lien Notes are redeemable for cash at a redemption price equal to 100 % of their principal amount, plus the applicable “make-whole” premium described in the Second Lien Indenture and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

Beginning on April 15, 2028, some or all of the Second Lien Notes are redeemable at any time and from time to time at the applicable redemption prices listed in the Second Lien Indenture, plus accrued and

Xerox 2025 Form 10-Q 40

unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, at any time and from time to time prior to April 15, 2028, up to 40 % of the aggregate principal amount of the Second Lien Notes are redeemable with funds from one or more equity offerings at a redemption price equal to 113.500 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, prior to April 15, 2028, during each 12-month period commencing with the issue date of the Second Lien Notes, up to 10 % of the aggregate principal amount of the Second Lien Notes outstanding are redeemable at a redemption price equal to 103 % of the principal amount of the Second Lien Notes redeemed plus accrued and unpaid interest.

If Xerox Corporation experiences a Change of Control Triggering Event (as defined in the Indentures), Xerox Corporation will be required to offer to repurchase the First Lien Notes, and, following the Escrow Release, the Second Lien Notes, at 101 % of the principal amount of such Notes, respectively, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Indentures contain covenants that, following the issue date for the First Lien Notes and the Escrow Release for the Second Lien Notes, among other things, limit the ability of Xerox, Xerox Corporation and Xerox Corporation’s restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, prepay, redeem or repurchase certain subordinated debt, issue certain preferred stock or similar equity securities, make loans and investments, sell or otherwise dispose of assets, incur liens, enter into transactions with affiliates, enter into agreements restricting its subsidiaries’ ability to pay dividends, and consolidate, merge or sell all or substantially all assets.

In addition, the notes include restrictions which limit the use of proceeds under certain sales of finance receivables.

The restrictions would require proceeds from certain sales to be used to repay existing first lien debt.

The Indentures provide for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in respect of the Notes, failure to pay certain other indebtedness, failure to pay certain final judgments, failure of certain guarantees to be enforceable and certain events of bankruptcy or insolvency.

Lexmark Committed Debt Financing

On May 2, 2025, we received a letter (the Notice Letter) from representatives of Christy 2017, LP (the Thompson Commitment Party), one of the commitment parties under the commitment letter, among Xerox, DCS Finance LLC (DCS Finance) and the Thompson Commitment Party, dated December 22, 2024 (the Commitment Letter), providing for the commitment from the Thompson Commitment Party to purchase $ 225 aggregate principal amount of the Private Senior Unsecured Notes.

The Notice Letter stated that the Thompson Commitment Party was considering its purported legal options with regard to terminating the Commitment Letter.

We believe that the Notice Letter has no merit and that upon satisfaction of the conditions precedent set forth in the Commitment Letter, the Thompson Commitment Party is obligated to purchase the applicable Private Senior Unsecured Notes.

Representatives of DCS Finance, who have provided a commitment to purchase $ 25 on aggregate principal amount of the Private Senior Unsecured Notes under the Commitment Letter, have informed us that they intend to fulfill their obligations under the Commitment Letter in full and that they do not believe that commitment parties to the Commitment Letter have any rights to terminate the Commitment Letter.

We are engaging in discussions with representatives of the Thompson Commitment Party in order to resolve this matter.

Xerox 2025 Form 10-Q 41

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

What changed 10-Q

Item 1. Financial Statements