Xerox Holdings Corp 10-K

Item 8. Financial Statements and Supplementary Data Xerox 2025 Annual Report 74 Table of Conten t s Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Xerox Holdings Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Xerox Holdings Corporation and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of (loss) income, of comprehensive loss, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Lexmark International II, LLC ("Lexmark") from its assessment of internal control over financial reporting as of December 31, 2025, because it was acquired by the Company in a purchase business combination during 2025. We have also excluded Lexmark from our audit of internal control over financial reporting. Lexmark is a wholly owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 13% and 14%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2025. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable Xerox 2025 Annual Report 75 Table of Conten t s assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Acquisition of Lexmark - Valuation of Customer Relationships As described in Note 6 to the consolidated financial statements, on July 1, 2025, the Company completed the acquisition of Lexmark for total consideration paid of $768 million. Of the acquired total identifiable intangible assets, $530 million of customer relationships were recorded. Customer relationships were valued using a multi-period excess earnings method which calculates the present value of the estimated revenues and net cash flows derived from it. The present value of these projected future cash flows included significant judgment and assumptions regarding projected annual revenues derived from estimates of customer attrition, projected operating margins, and the discount rate. The principal considerations for our determination that performing procedures relating to the valuation of customer relationships acquired in the acquisition of Lexmark is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projected annual revenues derived from estimates of customer attrition, projected operating margins, and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the customer relationships acquired; (iii) evaluating the appropriateness of the multi-period excess earnings method used by management; (iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings method; and (v) evaluating the reasonableness of the significant assumptions used by management related to projected annual revenues derived from estimates of customer attrition, projected operating margins, and the discount rate. Evaluating management’s assumption related to projected operating margins involved considering (i) the current and past performance of the Lexmark business and (ii) whether the assumption was consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method and (ii) the reasonableness of the projected annual revenues derived from estimates of customer attrition and discount rate assumptions. /s/ PricewaterhouseCoopers LLP Stamford, Connecticut March 16, 2026 We have served as the Company’s or its predecessor's auditor since 2001. Xerox 2025 Annual Report 76 Table of Conten t s Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholder of Xerox Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Xerox Corporation and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of (loss) income, of comprehensive loss, of shareholder’s equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Lexmark International II, LLC ("Lexmark") from its assessment of internal control over financial reporting as of December 31, 2025, because it was acquired by the Company in a purchase business combination during 2025. We have also excluded Lexmark from our audit of internal control over financial reporting. Lexmark is a wholly owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 13% and 14%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2025. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, Xerox 2025 Annual Report 77 Table of Conten t s accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Acquisition of Lexmark – Valuation of Customer Relationships As described in Note 6 to the consolidated financial statements, on July 1, 2025, the Company completed the acquisition of Lexmark for total consideration paid of $768 million. Of the acquired total identifiable intangible assets, $530 million of customer relationships were recorded. Customer relationships were valued using a multi-period excess earnings method which calculates the present value of the estimated revenues and net cash flows derived from it. The present value of these projected future cash flows included significant judgment and assumptions regarding projected annual revenues derived from estimates of customer attrition, projected operating margins, and the discount rate. The principal considerations for our determination that performing procedures relating to the valuation of customer relationships acquired in the acquisition of Lexmark is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projected annual revenues derived from estimates of customer attrition, projected operating margins, and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the customer relationships acquired; (iii) evaluating the appropriateness of the multi-period excess earnings method used by management; (iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings method; and (v) evaluating the reasonableness of the significant assumptions used by management related to projected annual revenues derived from estimates of customer attrition, projected operating margins, and the discount rate. Evaluating management’s assumption related to projected operating margins involved considering (i) the current and past performance of the Lexmark business and (ii) whether the assumption was consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method and (ii) the reasonableness of the projected annual revenues derived from estimates of customer attrition and discount rate assumptions. /s/ PricewaterhouseCoopers LLP Stamford, Connecticut March 16, 2026 We have served as the Company’s auditor since 2001. Xerox 2025 Annual Report 78 Table of Conten t s Xerox Holdings Corporation Consolidated Statements of (Loss) Income Year Ended December 31, (in millions, except per-share data) 2025 2024 2023 Revenues Sales $ 3,283 $ 2,378 $ 2,720 Services, maintenance, rentals and other (1) 3,739 3,843 4,166 Total Revenues 7,022 6,221 6,886 Costs and Expenses Cost of sales 2,367 1,562 1,778 Cost of services, maintenance , rentals and other (1) 2,754 2,699 2,794 Research, development and engineering expenses 230 191 229 Selling, administrative and general expenses 1,654 1,537 1,696 Goodwill impairment — 1,058 — Restructuring and related costs, net 66 112 167 Amortization of intangible assets 83 73 43 Divestitures ( 4 ) 47 — PARC donation — — 132 Other expenses, net 360 158 75 Total Costs and Expenses 7,510 7,437 6,914 Loss before Income Taxes ( 488 ) ( 1,216 ) ( 28 ) Income tax expense (benefit) 541 105 ( 29 ) Net (Loss) Income ( 1,029 ) ( 1,321 ) 1 Less: Preferred stock dividends, net ( 14 ) ( 14 ) ( 14 ) Net Loss Attributable to Common Shareholders $ ( 1,043 ) $ ( 1,335 ) $ ( 13 ) Basic Loss per Share $ ( 8.25 ) $ ( 10.75 ) $ ( 0.09 ) Diluted Loss per Share $ ( 8.25 ) $ ( 10.75 ) $ ( 0.09 ) _____________ (1) In 2025, certain reclassifications were made within the Consolidated Statements of (Loss) Income 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 Consolidated Financial Statements. Xerox 2025 Annual Report 79 Table of Conten t s Xerox Holdings Corporation Consolidated Statements of Comprehensive Loss Year Ended December 31, (in millions) 2025 2024 2023 Net (Loss) Income $ ( 1,029 ) $ ( 1,321 ) $ 1 Other Comprehensive Income (Loss), Net (1) Translation adjustments, net 305 ( 120 ) 191 Unrealized (losses) gains, net ( 10 ) 9 1 Changes in defined benefit plans, net 93 88 ( 331 ) Other Comprehensive Income (Loss), Net 388 ( 23 ) ( 139 ) Comprehensive Loss, Net $ ( 641 ) $ ( 1,344 ) $ ( 138 ) _____________ (1) Refer to Note 24 - Other Comprehensive Income (Loss) for gross components of Other Comprehensive Income ( Loss), reclassification adjustments out of Accumulated Other Comprehensive Loss and related tax effects. . The accompanying notes are an integral part of these Consolidated Financial Statements. Xerox 2025 Annual Report 80 Table of Conten t s Xerox Holdings Corporation Consolidated Balance Sheets December 31, (in millions, except share data in thousands) 2025 2024 Assets Cash and cash equivalents $ 512 $ 576 Accounts receivable (net of allowance of $ 73 and $ 69 , respectively) 1,122 796 Billed portion of finance receivables (net of allowance of $ 3 and $ 2 , respectively) 46 48 Finance receivables, net 510 608 Inventories 1,016 695 Other current assets 362 212 Total current assets 3,568 2,935 Finance receivables due after one year (net of allowance of $ 42 and $ 55 , respectively) 846 1,089 Equipment on operating leases, net 299 245 Land, buildings and equipment, net 390 251 Intangible assets, net 921 236 Goodwill, net 2,222 1,937 Deferred tax assets 98 615 Other long-term assets 1,479 1,057 Total Assets $ 9,823 $ 8,365 Liabilities and Equity Short-term debt and current portion of long-term debt $ 231 $ 585 Accounts payable 1,498 1,023 Accrued compensation and benefits costs 235 227 Accrued expenses and other current liabilities 1,258 784 Total current liabilities 3,222 2,619 Long-term debt 4,016 2,814 Pension and other benefit liabilities 1,068 1,088 Post-retirement medical benefits 159 154 Other long-term liabilities 685 386 Total Liabilities 9,150 7,061 Commitments and Contingencies (See Note 20) Noncontrolling Interests 10 10 Convertible Preferred Stock 214 214 Common stock 128 124 Additional paid-in capital 1,183 1,137 Retained earnings 2,444 3,514 Accumulated other comprehensive loss ( 3,311 ) ( 3,699 ) Xerox Holdings shareholders’ equity 444 1,076 Noncontrolling interests 5 4 Total Equity 449 1,080 Total Liabilities and Equity $ 9,823 $ 8,365 Shares of Common Stock Issued and Outstanding 128,044 124,435 The accompanying notes are an integral part of these Consolidated Financial Statements. Xerox 2025 Annual Report 81 Table of Conten t s Xerox Holdings Corporation Consolidated Statements of Cash Flows Year Ended December 31, (in millions) 2025 2024 2023 Cash Flows from Operating Activities Net (Loss) Income $ ( 1,029 ) $ ( 1,321 ) $ 1 Adjustments required to reconcile Net (loss) income to Net Cash provided by operating activities: Depreciation and amortization 331 274 251 Provisions 85 110 54 Inventory-related purchase accounting adjustment-noncash 102 — — Effective settlement of a pre-existing relationship between Lexmark and Xerox ( 43 ) — — Deferred tax benefit 502 90 ( 68 ) Net gain on sales of businesses and assets ( 5 ) ( 8 ) ( 39 ) Divestitures ( 4 ) 47 — PARC donation — — 132 Stock-based compensation 45 52 54 Goodwill impairment — 1,058 — Restructuring and asset impairment charges 67 87 146 Payments for restructurings ( 69 ) ( 78 ) ( 27 ) Non-service retirement-related costs 78 80 19 Contributions to retirement plans ( 161 ) ( 145 ) ( 102 ) (Increase) decrease in accounts receivable and billed portion of finance receivables ( 36 ) 71 ( 5 ) (Increase) decrease in inventories ( 12 ) ( 122 ) 123 Increase in equipment on operating leases ( 126 ) ( 107 ) ( 141 ) Decrease in finance receivables 489 663 614 Decrease (increase) in other current and long-term assets 9 ( 14 ) 16 Increase (decrease) in accounts payable 24 ( 48 ) ( 290 ) (Decrease) increase in accrued compensation ( 53 ) ( 78 ) 48 Increase (decrease) in other current and long-term liabilities 33 ( 47 ) ( 114 ) Net change in income tax assets and liabilities ( 26 ) ( 50 ) ( 12 ) Net change in derivative assets and liabilities ( 12 ) 10 13 Other operating, net 35 ( 13 ) 13 Net cash provided by operating activities 224 511 686 Cash Flows from Investing Activities Cost of additions to land, buildings, equipment and software ( 91 ) ( 44 ) ( 37 ) Proceeds from sales of businesses and assets 79 35 43 Acquisitions, net of cash acquired ( 674 ) ( 161 ) ( 7 ) Other investing, net ( 12 ) ( 28 ) ( 4 ) Net cash used in investing activities ( 698 ) ( 198 ) ( 5 ) Cash Flows from Financing Activities Net proceeds on short-term debt 119 — — Proceeds from issuance of long-term debt 1,140 907 1,396 Payments on long-term debt ( 755 ) ( 992 ) ( 1,874 ) Purchases of capped calls — ( 23 ) — Dividends ( 71 ) ( 141 ) ( 165 ) Payments to acquire treasury stock, including fees — ( 8 ) ( 544 ) Other financing, net ( 29 ) ( 14 ) ( 15 ) Net cash provided by (used in) financing activities 404 ( 271 ) ( 1,202 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 4 ( 28 ) ( 1 ) (Decrease) increase in cash, cash equivalents and restricted cash ( 66 ) 14 ( 522 ) Cash, cash equivalents and restricted cash at beginning of year 631 617 1,139 Cash, Cash Equivalents and Restricted Cash at End of Year $ 565 $ 631 $ 617 The accompanying notes are an integral part of these Consolidated Financial Statements. Xerox 2025 Annual Report 82 Table of Conten t s Xerox Holdings Corporation Consolidated Statements of Shareholders' Equity (in millions) Common Stock (1) Additional Paid-in Capital Treasury Stock Retained Earnings AOCL (2) Xerox Holdings Shareholders’ Equity Non- controlling Interests Total Equity Balance at December 31, 2022 $ 156 $ 1,588 $ — $ 5,136 $ ( 3,537 ) $ 3,343 $ 10 $ 3,353 Comprehensive income (loss), net — — — 1 ( 139 ) ( 138 ) — ( 138 ) Cash dividends declared-common (3) — — — ( 146 ) — ( 146 ) — ( 146 ) Cash dividends declared-preferred (4) — — — ( 14 ) — ( 14 ) — ( 14 ) Stock option and incentive plans, net 1 45 — — — 46 — 46 Common stock repurchased — — ( 553 ) — — ( 553 ) — ( 553 ) Cancellation of treasury stock ( 34 ) ( 519 ) 553 — — — — — Transactions with noncontrolling interests — — — — — — 2 2 Distributions to noncontrolling interests — — — — — — ( 2 ) ( 2 ) Balance at December 31, 2023 $ 123 $ 1,114 $ — $ 4,977 $ ( 3,676 ) $ 2,538 $ 10 $ 2,548 Comprehensive loss, net — — — ( 1,321 ) ( 23 ) ( 1,344 ) — ( 1,344 ) Cash dividends declared-common (3) — — — ( 128 ) — ( 128 ) — ( 128 ) Cash dividends declared-preferred (4) — — — ( 14 ) — ( 14 ) — ( 14 ) Purchases of capped calls (5) — ( 17 ) — — — ( 17 ) — ( 17 ) Stock option and incentive plans, net 1 40 — — — 41 — 41 Transactions with noncontrolling interests — — — — — — ( 4 ) ( 4 ) Distributions to noncontrolling interests — — — — — — ( 2 ) ( 2 ) Balance at December 31, 2024 $ 124 $ 1,137 $ — $ 3,514 $ ( 3,699 ) $ 1,076 $ 4 $ 1,080 Comprehensive (loss) income, net — — — ( 1,029 ) 388 ( 641 ) — ( 641 ) Cash dividends declared-common (3) — — — ( 27 ) — ( 27 ) — ( 27 ) Cash dividends declared-preferred (4) — — — ( 14 ) — ( 14 ) — ( 14 ) Proceeds from issuance of warrants (6) 2 9 — — — 11 — 11 Stock option and incentive plans, net 2 37 — — — 39 — 39 Transactions with noncontrolling interests — — — — — — 3 3 Distributions to noncontrolling interests — — — — — — ( 2 ) ( 2 ) Balance at December 31, 2025 $ 128 $ 1,183 $ — $ 2,444 $ ( 3,311 ) $ 444 $ 5 $ 449 _____________ (1) Common Stock has a par value of $ 1 per share. (2) AOCL - Accumulated other comprehensive loss. (3) During the first quarter of 2025, the annual cash dividend on common stock was reduced to $ 0.50 per share from $ 1.00 per share, and the quarterly cash dividend was reduced from $ 0.25 per share to $ 0.125 per share. In the second quarter of 2025, the annual cash dividend on common stock was further reduced to $ 0.10 per share from $ 0.50 per share, and the quarterly cash dividend from $ 0.125 per share to $ 0.025 per share. Cash dividends declared on common stock for 2024 and 2023 were $ 1.00 per share on an annual basis and $ 0.25 per share on a quarterly basis, respectively. (4) Cash dividends declared on preferred stock for 2025, 2024 and 2023 were $ 80 per share on an annual basis and $ 20 per share on a quarterly basis, respectively. (5) The purchases of the capped calls in 2024 resulted in a tax benefit of approximately $ 6 . Refer to Note 15 - 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. (6) Refer to the Unregistered Sales of Equity Securities section in Note 22 - Shareholders' Equity for additional information. The accompanying notes are an integral part of these Consolidated Financial Statements. Xerox 2025 Annual Report 83 Table of Conten t s Xerox Corporation Consolidated Statements of (Loss) Income Year Ended December 31, (in millions) 2025 2024 2023 Revenues Sales $ 3,283 $ 2,378 $ 2,720 Services, maintenance, rentals and other (1) 3,739 3,843 4,166 Total Revenues 7,022 6,221 6,886 Costs and Expenses Cost of sales 2,367 1,562 1,778 Cost of services, maintenance, rentals and other (1) 2,754 2,699 2,794 Research, development and engineering expenses 230 191 229 Selling, administrative and general expenses 1,650 1,535 1,696 Goodwill impairment — 1,058 — Restructuring and related costs, net 66 112 167 Amortization of intangible assets 83 73 43 Divestitures ( 4 ) 47 — PARC donation — — 132 Other expenses, net 352 155 75 Total Costs and Expenses 7,498 7,432 6,914 Loss before Income Taxes ( 476 ) ( 1,211 ) ( 28 ) Income tax expense (benefit) 541 105 ( 29 ) Net (Loss) Income $ ( 1,017 ) $ ( 1,316 ) $ 1 _____________ (1) In 2025, certain reclassifications were made within the Consolidated Statements of (Loss) Income 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 Consolidated Financial Statements. Xerox 2025 Annual Report 84 Table of Conten t s Xerox Corporation Consolidated Statements of Comprehensive Loss Year Ended December 31, (in millions) 2025 2024 2023 Net (Loss) Income $ ( 1,017 ) $ ( 1,316 ) $ 1 Other Comprehensive Income (Loss), Net (1) Translation adjustments, net 305 ( 120 ) 191 Unrealized (losses) gains, net ( 10 ) 9 1 Changes in defined benefit plans, net 93 88 ( 331 ) Other Comprehensive Income (Loss), Net 388 ( 23 ) ( 139 ) Comprehensive Loss, Net $ ( 629 ) $ ( 1,339 ) $ ( 138 ) _____________ (1) Refer to Note 24 - Other Comprehensive Income (Loss) for gross components of Other Comprehensive Income (Loss), reclassification adjustments out of Accumulated Other Comprehensive Loss and related tax effects. The accompanying notes are an integral part of these Consolidated Financial Statements. Xerox 2025 Annual Report 85 Table of Conten t s Xerox Corporation Consolidated Balance Sheets December 31, (in millions) 2025 2024 Assets Cash and cash equivalents $ 511 $ 575 Accounts receivable (net of allowance of $ 73 and $ 69 , respectively) 1,122 796 Billed portion of finance receivables (net of allowance of $ 3 and $ 2 , respectively) 46 48 Finance receivables, net 510 608 Inventories 1,016 695 Other current assets 362 212 Total current assets 3,567 2,934 Finance receivables due after one year (net of allowance of $ 42 and $ 55 , respectively) 846 1,089 Equipment on operating leases, net 299 245 Land, buildings and equipment, net 390 251 Intangible assets, net 921 236 Goodwill, net 2,222 1,937 Deferred tax assets 98 615 Other long-term assets 1,438 1,017 Total Assets $ 9,781 $ 8,324 Liabilities and Equity Short-term debt and current portion of long-term debt $ 110 $ 197 Short-term related party debt 121 388 Accounts payable 1,498 1,023 Accrued compensation and benefits costs 235 227 Accrued expenses and other current liabilities 1,245 741 Total current liabilities 3,209 2,576 Long-term debt 2,144 1,180 Long-term related party debt 1,872 1,634 Pension and other benefit liabilities 1,068 1,088 Post-retirement medical benefits 159 154 Other long-term liabilities 685 386 Total Liabilities 9,137 7,018 Commitments and Contingencies (See Note 20) Noncontrolling Interests 10 10 Additional paid-in capital 3,492 3,487 Retained earnings 448 1,504 Accumulated other comprehensive loss ( 3,311 ) ( 3,699 ) Xerox shareholder's equity 629 1,292 Noncontrolling interests 5 4 Total Equity 634 1,296 Total Liabilities and Equity $ 9,781 $ 8,324 The accompanying notes are an integral part of these Consolidated Financial Statements. Xerox 2025 Annual Report 86 Table of Conten t s Xerox Corporation Consolidated Statements of Cash Flows Year Ended December 31, (in millions) 2025 2024 2023 Cash Flows from Operating Activities Net (Loss) Income $ ( 1,017 ) $ ( 1,316 ) $ 1 Adjustments required to reconcile Net (loss) income to Net Cash provided by operating activities: Depreciation and amortization 331 274 251 Provisions 85 110 54 Inventory-related purchase accounting adjustment-noncash 102 — — Effective settlement of a pre-existing relationship between Lexmark and Xerox ( 43 ) — — Deferred tax benefit 502 90 ( 68 ) Net gain on sales of businesses and assets ( 5 ) ( 8 ) ( 39 ) Divestitures ( 4 ) 47 — PARC donation — — 132 Stock-based compensation 45 52 54 Goodwill impairment — 1,058 — Restructuring and asset impairment charges 67 87 146 Payments for restructurings ( 69 ) ( 78 ) ( 27 ) Non-service retirement-related costs 78 80 19 Contributions to retirement plans ( 161 ) ( 145 ) ( 102 ) (Increase) decrease in accounts receivable and billed portion of finance receivables ( 36 ) 71 ( 5 ) (Increase) decrease in inventories ( 12 ) ( 122 ) 123 Increase in equipment on operating leases ( 126 ) ( 107 ) ( 141 ) Decrease in finance receivables 489 663 614 (Increase) decrease in other current and long-term assets ( 3 ) ( 19 ) 16 Increase (decrease) in accounts payable 24 ( 48 ) ( 290 ) Decrease (increase) in accrued compensation ( 53 ) ( 78 ) 48 Increase (decrease) in other current and long-term liabilities 33 ( 47 ) ( 114 ) Net change in income tax assets and liabilities ( 26 ) ( 50 ) ( 12 ) Net change in derivative assets and liabilities ( 12 ) 10 13 Other operating, net 35 ( 13 ) 13 Net cash provided by operating activities 224 511 686 Cash Flows from Investing Activities Cost of additions to land, buildings, equipment and software ( 91 ) ( 44 ) ( 37 ) Proceeds from sales of businesses and assets 79 35 43 Acquisitions, net of cash acquired ( 674 ) ( 161 ) ( 7 ) Other investing, net 1 ( 9 ) 1 Net cash used in investing activities ( 685 ) ( 179 ) — Cash Flows from Financing Activities Net proceeds on short-term debt 119 — — Proceeds from issuance of long-term debt 1,140 907 1,396 Payments on long-term debt ( 755 ) ( 992 ) ( 1,874 ) Distributions to parent ( 79 ) ( 202 ) ( 722 ) Other financing, net ( 34 ) ( 4 ) ( 7 ) Net cash provided by (used in) financing activities 391 ( 291 ) ( 1,207 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 4 ( 28 ) ( 1 ) (Decrease) increase in cash, cash equivalents and restricted cash ( 66 ) 13 ( 522 ) Cash, cash equivalents and restricted cash at beginning of year 630 617 1,139 Cash, Cash Equivalents and Restricted Cash at End of Year $ 564 $ 630 $ 617 The accompanying notes are an integral part of these Consolidated Financial Statements. Xerox 2025 Annual Report 87 Table of Conten t s Xerox Corporation Consolidated Statements of Shareholder's Equity (in millions) Additional Paid-in Capital Retained Earnings AOCL (1) Xerox Shareholder's Equity Non- controlling Interests Total Equity Balance at December 31, 2022 $ 3,693 $ 3,427 $ ( 3,537 ) $ 3,583 $ 10 $ 3,593 Comprehensive income (loss), net — 1 ( 139 ) ( 138 ) — ( 138 ) Dividends declared to parent — ( 469 ) — ( 469 ) — ( 469 ) Transfers to parent ( 208 ) — — ( 208 ) — ( 208 ) Transactions with noncontrolling interests — — — — 2 2 Distributions to noncontrolling interests — — — — ( 2 ) ( 2 ) Balance at December 31, 2023 $ 3,485 $ 2,959 $ ( 3,676 ) $ 2,768 $ 10 $ 2,778 Comprehensive loss, net — ( 1,316 ) ( 23 ) ( 1,339 ) — ( 1,339 ) Dividends declared to parent — ( 139 ) — ( 139 ) — ( 139 ) Transfers from parent 2 — — 2 — 2 Transactions with noncontrolling interests — — — — ( 4 ) ( 4 ) Distributions to noncontrolling interests — — — — ( 2 ) ( 2 ) Balance at December 31, 2024 $ 3,487 $ 1,504 $ ( 3,699 ) $ 1,292 $ 4 $ 1,296 Comprehensive (loss) income, net — ( 1,017 ) 388 ( 629 ) — ( 629 ) Dividends declared to parent — ( 39 ) — ( 39 ) — ( 39 ) Transfers from parent 5 — — 5 — 5 Transactions with noncontrolling interests — — — — 3 3 Distributions to noncontrolling interests — — — — ( 2 ) ( 2 ) Balance at December 31, 2025 $ 3,492 $ 448 $ ( 3,311 ) $ 629 $ 5 $ 634 _____________ (1) AOCL - Accumulated other comprehensive loss. The accompanying notes are an integral part of these Consolidated Financial Statements. Xerox 2025 Annual Report 88 Table of Conten t s Xerox Holdings Corporation Xerox Corporation Notes to Consolidated Financial Statements (in millions, except per-share data and where otherwise noted) Note 1 – Basis of Presentation References to “Xerox Holdings” refer to Xerox Holdings Corporation and its consolidated subsidiaries while references to “Xerox” refer to Xerox Corporation and its consolidated subsidiaries or Xerox Holdings Corporation and its consolidated subsidiaries, as determined by the context. References herein to “we,” “us,” “our,” and the “Company” refer collectively to both Xerox Holdings and Xerox unless the context suggests otherwise. References to “Xerox Holdings Corporation” refer to the stand-alone parent company and do not include its subsidiaries. References to “Xerox Corporation” refer to the stand-alone company and do not include its subsidiaries. The accompanying Consolidated Financial Statements and footnotes represent the respective consolidated results and financial results of Xerox Holdings and Xerox and all respective companies that each registrant directly or indirectly controls, either through majority ownership or otherwise. This is a combined report of Xerox Holdings and Xerox, which includes separate Consolidated Financial Statements for each registrant. The accompanying Consolidated Financial Statements of both Xerox Holdings and Xerox have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). For convenience and ease of reference, we refer to the financial statement caption “Loss before Income Taxes” as “pre-tax loss”. Notes to the Consolidated Financial Statements reflect the activity for both Xerox Holdings and Xerox for all periods presented, unless otherwise noted. Description of Business Currently, Xerox Holdings' primary direct operating subsidiary is Xerox and therefore Xerox represents nearly all of Xerox Holdings' operations. Xerox is a workplace technology company, building and integrating services-led, software-enabled, workplace solutions for enterprises large and small. As customers seek to manage information and document workflows across digital and physical platforms, we deliver a seamless, secure, and sustainable experience. We provide advanced document technology, services, software, and integrated IT infrastructure solutions for a range of customers including small and mid-sized businesses, large enterprises, governments and graphic communications providers, and for our partners who serve them. Xerox serves customers globally in North America, Europe, Latin America, Brazil, Asia Pacific (APAC), the Middle East, Africa, and India. Xerox Holdings' other direct subsidiary, Xerox Ventures LLC, which was established solely to invest in startups and early/mid-stage growth companies aligned with the Company’s innovation focus areas and targeted adjacencies. In January 2024, Myriad Ventures Fund I LP (Myriad) was established, and the investments held by Xerox Ventures LLC were transferred to Myriad, which will continue to be fully consolidated by Xerox Holdings. The investments are primarily equity or equity-linked and for less than 20% ownership. Since the investments normally do not have readily determinable fair values, they are accounted for under the measurement alternative per ASC Topic 321-10-35-2. At December 31, 2025 and 2024, Xerox's investment in Myriad was $ 41 and $ 40 , respectively. Basis of Consolidation All significant intercompany accounts and transactions have been eliminated. Investments in business entities in which we do not have control, but we have the ability to exercise significant influence over operating and financial policies (generally 20 % to 50 % ownership) are accounted for using the equity method of accounting. Operating results of acquired businesses are included in the Consolidated Statements of (Loss) Income from the date of acquisition. We consolidate variable interest entities if we are deemed to be the primary beneficiary of the entity. Operating results for variable interest entities in which we are determined to be the primary beneficiary are included in the Consolidated Statements of (Loss) Income from the date such determination is made. The Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. Currently, we are not aware of any other trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. Xerox 2025 Annual Report 89 Table of Conten t s Our liquidity is primarily dependent on our ability to generate positive cash flows from operations. Additional liquidity is also provided through access to the financial capital markets and a committed asset-based revolving credit agreement (the ABL Facility), as well as the sales and assignment of finance lease receivables. Our access to financial capital markets may be limited from time to time due to a number of factors, including our credit ratings, the level of our outstanding indebtedness, and prevailing market conditions, including the trading levels of our existing debt securities. Based on our current level of operations, we do not expect our near term liquidity needs to be dependent on access to the financial capital markets and we believe that our available sources will be adequate to meet our liquidity needs for at least the next 12 months. Use of Estimates The preparation of our Consolidated Financial Statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be predicted with certainty; accordingly, our accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of our Consolidated Financial Statements will change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Our estimates are based on management's best available information including current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. In the ordinary course of accounting for the items discussed above, we make changes in estimates as appropriate and as we become aware of new or revised circumstances surrounding those estimates. Such changes and refinements in estimation methodologies are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the Notes to the Consolidated Financial Statements and in Management's Discussion and Analysis of Financial Condition and Results of Operations. Lexmark Acquisition On July 1, 2025, Xerox Corporation completed its previously announced acquisition of all of the issued and outstanding equity of Lexmark International II, LLC (Lexmark) from Ninestar Group Company Limited (the Seller) (the Lexmark Acquisition). Refer to Note 6 - Acquisition and Divestitures for additional information. Segments 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 and Geographic Area Reporting for additional information regarding this change. In connection with these changes to our reportable segments, certain reclassifications were made to the Consolidated Statements of (Loss) Income as follows: Year Ended December 31, 2024 Year Ended December 31, 2023 Previously Reported Reclassification As Reported Previously Reported Reclassification As Reported Services, maintenance, rentals and other $ 3,692 $ 151 $ 3,843 $ 3,975 $ 191 $ 4,166 Financing 151 ( 151 ) — 191 ( 191 ) — Cost of services, maintenance, rentals and other $ 2,593 $ 106 $ 2,699 $ 2,664 $ 130 $ 2,794 Cost of financing 106 ( 106 ) — 130 ( 130 ) — Xerox 2025 Annual Report 90 Table of Conten t s Note 2 – Recent Accounting Pronouncements and Summary of Significant Accounting Policies New Accounting Standards and Accounting Changes Xerox Holdings and Xerox consider the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB). The ASUs listed below apply to both registrants. Except for the Accounting Standard Updates (ASUs) discussed below, the new ASUs issued by the FASB during the last two years did not have any significant impact on the Company. Accounting Standard Updates to be Adopted: Interim Reporting - Narrow-Scope Improvements In December 2025, the FASB issued ASU 2025-11 , Interim Reporting (Topic 270): Narrow-Scope Improvements, which amends existing guidance to clarify and improve certain interim reporting requirements, including disclosures and the application of interim period accounting principles in specific circumstances. The amendments in this update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments are effective for interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its interim disclosures and consolidated financial statements. Derivatives and Hedging (Topic 815): Hedge Accounting Improvements In November 2025, the FASB issued ASU 2025-09 , Derivatives and Hedging (Topic 815): Hedge Accounting Improvements , which provides targeted improvements intended to simplify the application of hedge accounting, reduce complexity and cost, and enhance the transparency of hedge-related disclosures. The amendments in this update address certain hedge designation requirements and related documentation, provides targeted relief and clarity regarding methods and timing for assessing effectiveness, improves guidance related to accounting for modifications, and refines and eliminates certain disclosure requirements. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods therein. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its hedge accounting policies and consolidated financial statements. Intangibles - Goodwill and Other - Internal Use Software In September 2025, the FASB issued ASU 2025‑06 , Intangibles—Goodwill and Other—Internal-Use Software (Topic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . The amendments are intended to modernize the recognition and capitalization framework to reflect current software development practices, including iterative and agile methodologies, by removing references to "development stages". It also clarifies the criteria for capitalization, which begins when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. The ASU permits companies to elect one of the following adoption methods to apply its amendments: a prospective transition approach, a retrospective transition approach, or a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual reporting period. We are currently evaluating the adoption of this standard and its impact to the Company's consolidated financial statements and related disclosures. Financial Instruments - Credit Losses In July 2025, the FASB issued ASU 2025‑05 , Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides new optional guidance relating to the estimation of expected credit losses on current accounts receivable and current contract assets under Accounting Standards Codification 326. This ASU permits entities to apply a practical expedient when estimating credit losses and 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 prospectively. We are currently evaluating the adoption of this standard and its impact to the Company's consolidated financial statements and related disclosures. 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 Xerox 2025 Annual Report 91 Table of Conten t s beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted and may 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. Debt 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. 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: Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09 , Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning January 1, 2025 and should be applied either prospectively or retrospectively. The Company has adopted this standard on a prospective basis for the year ended December 31, 2025. Refer to Note 19 - Income and Other Taxes for additional information. 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 deferred 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. This ASU did not have an impact 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 requires 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 amendment was effective for the Company's annual periods beginning January 1, 2024, and interim periods beginning January 1, 2025, with early adoption permitted, and are applied retrospectively to all prior periods presented in the financial statements. This ASU only requires additional disclosures, and did not have an impact on the Company’s financial condition, results of operations or cash flows. Refer to Note 4 - Segment and Geographic Area Reporting for the required disclosures effective January 1, 2024. Liabilities 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 roll forward 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 was effective for our fiscal year beginning on January 1, 2023. The new standard’s requirement to disclose a roll forward of obligations outstanding was effective for our fiscal year beginning on January 1, 2024. Refer to Note 14 - Supplementary Financial Information for the required disclosures. Xerox 2025 Annual Report 92 Table of Conten t s Other Updates In 2025 , 2024 and 2023 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, cash flows or related disclosures upon adoption. Those updates are as follows: • Codification Improvements: ASU 2025-12 , Codification Improvements. This update is effective for our fiscal year beginning after December 15, 2026, as well as interim periods within that period. Early adoption is permitted. • Government Grants: ASU 2025-10 , Accounting for Government Grants Received by Business Entities. This update is effective for our fiscal year beginning after December 15, 2028, as well as interim periods within that period. Early adoption is permitted. • Derivatives and Hedging and Revenue from Contracts with Customers: ASU 2025-07 , Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) - Derivative Scope Refinements and Scope Clarifications for Share-Based Consideration from a Customer in a Revenue Contract. This update is effective for the annual period beginning after December 15, 2026, as well as interim periods within that period. Early adoption is permitted. • Compensation — Stock Compensation and Revenue from Contracts with Customers: ASU 2025-04 , Compensation (Topic 718) and Revenue (Topic 606) - Amendments to SEC Paragraphs Pursuant to Clarifications to Share-Based Consideration Payable to a Customer. This update is effective for the annual period beginning after December 15, 2026, as well as interim periods within that period. • Business Combinations and Consolidation: ASU 2025-03 , Business Combinations (Topic 805) and Consolidation (Topic 810) - Amendments to SEC Paragraphs Pursuant to Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. This update is effective for the annual period beginning after December 15, 2026, as well as interim periods within that period. • 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. • 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. • Disclosure Improvements: ASU 2023-06 , Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. Since the Company is already subject to SEC disclosure requirements, this update was effective upon issuance. • Business Combinations: ASU 2023-05 , Business Combinations - Joint Venture Formation (Topic 805-60): Recognition and Initial Measurement. This update is effective for our fiscal year beginning January 1, 2025. • Liabilities: ASU 2023-04 , Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121. The Company adopted this conforming guidance upon issuance in August 2023. • Investments: ASU 2023-02 , Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force). This update is effective for our fiscal year beginning January 1, 2024. • Leases: ASU 2023-01 , Leases (Topic 842): Common Control Arrangements. This update is effective for our fiscal year beginning January 1, 2024. Xerox 2025 Annual Report 93 Table of Conten t s Summary of Accounting Policies Revenue Recognition Certain disclosures within the Company’s revenue recognition policies have been expanded in the current year to reflect the broader mix of customer arrangements following recent business combinations. These updates primarily relate to variations in bundled service arrangements where certain components may be separately contracted or billed. The underlying revenue recognition principles applied by the Company remain unchanged, and prior period disclosures appropriately reflected the structure of arrangements existing at that time. We generate revenue through the sale of Print equipment, IT hardware, software and supplies and from providing maintenance, managed Print, Digital, and IT services. Revenue is measured based on the consideration specified in a contract with a customer and is recognized when we satisfy a performance obligation by transferring control of a product to a customer or in the period the customer benefits from the service. With the exception of our sales-type lease arrangements and service-type warranties, our invoices to the customer, which normally have short-term payment terms, are typically aligned to the transfer of goods or as services are rendered to our customers and therefore in most cases, we recognize revenue based on our right to invoice customers. As a result of the application of this practical expedient, historically, our revenue was not included in the disclosures of unsatisfied performance obligations other than the amounts recorded as contract liabilities. Certain service arrangements do not qualify for the right-to-invoice practical expedient and therefore require disclosure of unsatisfied performance obligations. These obligations primarily relate to multi-year managed services arrangements and extended warranty contracts where revenue is recognized over time. Unsatisfied performance obligations related to MPS contracts and multi-year service-type warranties are disclosed in Note 3 - Revenue. Significant judgments primarily include the identification of performance obligations in our Document management services arrangements as well as the pattern of delivery for those services. More specifically, revenue related to our products and services is generally recognized as follows: Equipment and Hardware: Revenues from the sale of equipment and IT hardware directly to end-user customers, including those from sales-type leases (see below), are recognized when obligations under the terms of a contract with our customer are satisfied and control has been transferred to the customer. For equipment placements that require us to install the product at the customer location, revenue is normally recognized when the equipment has been delivered and installed at the customer location. Sales of customer installable products and hardware are recognized upon shipment or receipt by the customer according to the customer's shipping terms. Revenue from the equipment performance obligation also includes certain analyst training services performed in connection with the installation or delivery of the equipment. When training is essential to the functionality of the related equipment the equipment revenue is recorded when the obligation is satisfied. Maintenance services: We provide maintenance agreements on our equipment that include service and supplies for which the customer may pay a base minimum plus a price-per-page charge for usage. In arrangements that include minimums, those minimums are normally set below the customer’s estimated page volumes and are not considered substantive. These agreements are normally sold as part of a bundled lease arrangement, either sales-type or operating lease or through distributors and resellers. In certain managed print services (MPS) arrangements, some components such as supplies may be separately contracted and billed, while the remaining components are billed through a negotiated fixed monthly payment. Revenue allocations between the various deliverables in these MPS contracts are based upon standalone sales prices (SSP). When appropriate, we account for these maintenance agreements as a single performance obligation for maintenance services being delivered in a series with delivery being measured by usage as billed to the customer. Accordingly, revenue on these types of agreements is normally recognized as billed to the customer over the term of the agreements based on page volumes. Maintenance and support associated with our IT Solutions are recorded as our performance obligations are satisfied, or the fixed monthly payment. A substantial portion of our products are sold with full-service maintenance agreements. Accordingly, other than the product warranty obligations associated with certain of our entry level products, we do not have any significant assurance-type warranty obligations, including any obligations under customer satisfaction programs. Historically, service type warranties have not been significant for the Company. Service type warranties, typically extended warranty agreements, provide customer protection beyond the latent defects existing at the time of the equipment sale. Most service-type warranties involve fixed consideration and are often paid up front resulting in a contract liability, with revenue recognized on a straight-line basis over the service period, which is typically one to four years . Service offerings: The Company’s primary service offerings include Managed Print Services, Digital Services and IT Solutions. In our services arrangements, the Company typically satisfies the performance obligations and recognizes revenue over time as the services are rendered. We generally account for these service arrangements Xerox 2025 Annual Report 94 Table of Conten t s as single performance obligations since they primarily involve the delivery of an integrated service to the customer with services being delivered in a series. Delivery is measured on an output basis such as usage or on a fixed monthly amount and is normally consistent with the billing or invoicing to the customer. Revenues on unit-price or time-based contracts are recognized as services are performed. Sales to distributors and resellers: We utilize distributors and resellers to sell our equipment, supplies, parts, and maintenance services to end-user customers. We refer to our distributor and reseller network as our two-tier distribution model. Revenues on sales to distributors and resellers are generally recognized when products are shipped to such distributors and resellers. However, revenue is only recognized when the distributor or reseller has economic substance apart from the Company such that collectability is probable and we have no further obligations related to bringing about the resale, delivery or installation of the product that would impact transfer of control. Revenues associated with maintenance agreements sold through distributors and resellers to end-user customers are recognized in a consistent manner for maintenance services. Revenue that may be subject to a reversal of revenue due to contractual terms or uncertainties is not recorded as revenue until the contractual provisions lapse or the uncertainties are resolved. Distributors and resellers participate in various rebate, price-protection, cooperative marketing and other programs. We estimate the variable consideration associated with these programs and record those amounts as a reduction to revenue when sales occur. Similarly, we account for our estimates of sales returns and other allowances when sales occur based on our historical experience. In certain instances, we may provide lease financing to end-user customers who purchased equipment that we sold to distributors or resellers. We are not obligated to provide financing and we compete with other third-party leasing companies with respect to the lease financing provided to these end-user customers. These financing arrangements are separate from the original equipment sale, and revenue on the sale to the distributor or reseller is recognized when control transfers and is not affected by any subsequent financing provided to the end-user customer. Software: Most of our equipment within our Print and Other segment has both software and non-software components that function together to deliver the equipment's essential functionality and are therefore accounted for together as part of Equipment sales revenues. Software accessories sold in connection with our Equipment sales, as well as free-standing software sales, are accounted for as separate performance obligations if determined to be material in relation to the overall arrangement, which are recognized as our obligations are fulfilled. Software related revenue within our IT Solutions segment is recognized on a gross basis when we control the software prior to transfer to the customer and act as principal in the arrangement. In certain arrangements, including SaaS, cloud, security software, and software support provided directly by third-party suppliers, we do not control the software or service before it is transferred or provided to the customer and therefore act as an agent. In such arrangements, revenue is recognized on a net basis. Supplies: Supplies revenue is recognized upon transfer of control to the customer, generally upon utilization or shipment to the customer in accordance with the sales contract terms. Financing: Finance income attributable to sales-type leases, direct financing leases and installment loans is recognized on the accrual basis using the effective interest method. Bundled Lease Arrangements: A portion of our direct sales of equipment to end-user customers are made through bundled lease arrangements which typically include equipment, services (maintenance and managed services) and financing components, where the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term. These arrangements also typically include an incremental, variable component for page volumes in excess of the contractual page volume minimums, which are often expressed in terms of price-per-image or page. In certain arrangements, some components such as supplies may be separately contracted and billed, while the remaining components are billed through a negotiated fixed monthly payment. Consistent with the guidance in ASC 842 and ASC 606, the transaction price is allocated between the lease and non-lease deliverables based on SSP. In certain managed print services (MPS) arrangements, some components such as supplies may be separately contracted and billed, while the remaining components are billed at a negotiated fixed monthly payment. Revenue allocations between the various deliverables in these contracts are based upon SSP. Lease deliverables include the equipment and financing, while the non-lease deliverables generally consist of supplies and services. With respect to the allocation of fixed and variable consideration, we only consider the fixed payments for purposes of allocation to the lease elements of the contract. The revenue associated with the lease element is typically recognized at a point-in-time upon transfer of control as a sales-type lease, unless the lease is accounted for as an operating lease, which will normally result in recognition over the term of the lease. The revenue associated with the non-lease elements are normally accounted for as a single performance obligation being delivered in a series, with delivery being measured as the usage is billed to the Xerox 2025 Annual Report 95 Table of Conten t s customer. Accordingly, revenue from these agreements is recognized in a manner consistent with the guidance for Maintenance or Managed Print services agreements. We establish SSP using observable inputs from standalone sales of products and services as well as observable market information, including pricing for similar transactions. Based on historical sales practices and policies together with a periodic analysis, we have determined that there is not a material difference between standalone selling price and recorded sales price. Leases: The two primary accounting provisions we use to classify transactions as sales-type or operating leases are: (i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than 75%); and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease (defined as greater than 90%). Equipment placements included in arrangements meeting these conditions are accounted for as sales-type leases and revenue is recognized in a manner consistent with Equipment sales. Equipment placements included in arrangements that do not meet these conditions are accounted for as operating leases and revenue is recognized over the term of the lease. We consider the economic life of most of our products to be five years , since this represents the most frequent contractual lease term for our principal products and only a small percentage of our leases are for original terms longer than five years . There is no significant after-market for our used equipment. We believe five years is representative of the period during which the equipment is expected to be economically usable, with normal service, for the purpose for which it is intended. Our lease pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon a variety of factors including local prevailing rates in the marketplace, cost of funds and the customer’s credit history, industry and credit class. We reassess our pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace. The pricing interest rates generally equal the implicit rates within the leases, as corroborated by our comparisons of cash to lease selling prices and other analyses as noted above. Additional Lease Payments: Certain leases may require the customer to pay property taxes and insurance on the equipment. In these instances, the amounts for property taxes and insurance that we invoice to customers and pay to third parties are considered variable payments and are recorded as other revenues and other cost of revenues, respectively. Amounts related to property taxes and insurance are not material. We exclude from variable payments all lessor costs that are explicitly required to be paid directly by a lessee on behalf of the lessor to a third party. Other Revenue Recognition Policies Revenue-based Taxes: Revenue-based taxes assessed by governmental authorities that are both imposed on and concurrent with specific revenue-producing transactions, and that are collected by the Company from a customer, are excluded from revenue. The primary revenue-based taxes are sales tax and value-added tax (VAT). Shipping and Handling: Shipping and handling costs are accounted for as a fulfillment cost and are included in Cost of sales in the Consolidated Statements of (Loss) Income. Refer to Note 3 - Revenue for additional information regarding revenue recognition policies with respect to contract assets and liabilities as well as contract costs. Other Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, including money market funds, and investments with original maturities of three months or less. Allowance for Doubtful Accounts and Credit Losses The allowance for doubtful accounts and provision for credit losses represents an estimate of the losses expected to be incurred from the Company's trade and finance receivable portfolio. The measurement and recognition of expected credit losses is based on an expected loss model and incorporates an assessment of past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends. The allowance for finance receivables is determined on a collective basis by year of origination through the application of projected loss rates to our different portfolios by geography, which represent our portfolio segments. This is the level at which we develop and document our methodology to determine the allowance for credit losses. These projected loss rates are primarily based upon historical experience adjusted for judgments about the probable effects of relevant observable data including current and future economic conditions as well as Xerox 2025 Annual Report 96 Table of Conten t s delinquency trends, resolution rates, the aging of receivables, credit quality indicators and the financial health of specific customer classes or groups. The allowance for finance receivables is inherently more difficult to estimate than the allowance for trade accounts receivable because the underlying lease portfolio has an average maturity, at any time, of approximately two to three years and contains past due billed amounts, as well as unbilled amounts. We consider all available information in our quarterly assessments of the adequacy of the allowance for doubtful accounts. We believe our estimates, including any qualitative adjustments, are reasonable and have considered all reasonably available information about past events, current conditions, and reasonable and supportable forecasts of future events and economic conditions. The identification of account-specific exposure is not a significant factor in establishing the allowance for doubtful finance receivables. Receivable Sales and Securitization The Company securitizes certain finance lease receivables by transferring them to Special Purpose Entities (SPEs) that meet the definition of a Variable Interest Entity (VIE) and are consolidated into our financial statements. These SPEs are bankruptcy-remote legal entities with separate assets and liabilities. The purpose of the SPEs is to facilitate the funding of customer loan and lease payments and associated equipment in the capital markets. These securitizations qualify as collateral for secured borrowings and no gains or losses are recognized at the time of securitization. The receivables remain on the balance sheet and are classified as Finance receivables, net. The Company continues to recognize finance income over the lives of these receivables. We also transfer certain portions of our finance receivable portfolios to third parties and account for those transfers of financial assets as sales when we have surrendered control over the related assets. Whether control has been relinquished requires, among other things, an evaluation of relevant legal considerations and an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred. Gains and losses stemming from transfers reported as sales are normally included in revenue in the accompanying Statements of (Loss) Income. Gains or losses on the sale of finance receivables depend, in part, on both (a) the cash proceeds and (b) the net non-cash proceeds received or paid. Assets obtained and liabilities incurred in connection with transfers reported as sales are initially recognized in the balance sheet at fair value. Refer to Note 8 – Finance Receivables, Net for additional information on our finance receivable sales. Inventories Inventories are carried at the lower of average cost or net realizable value. Inventories also include equipment that is returned at the end of the lease term. Returned equipment is recorded at the lower of remaining net book value or salvage value, which is normally not significant. We regularly review inventory quantities and record a provision for excess and/or obsolete inventory based primarily on our estimated forecast of product demand, production requirements and servicing commitments. Several factors may influence the realizability of our inventories, including our decision to exit a product line, technological changes and new product development. The provision for excess and/or obsolete raw materials and equipment inventories is based primarily on near-term forecasts of product demand and include consideration of new product introductions, as well as changes in remanufacturing strategies. The provision for excess and/or obsolete service parts inventory is based primarily on projected servicing requirements over the life of the related equipment populations. Refer to Note 9 - Inventories and Equipment on Operating Leases, Net for further discussion. Land, Buildings and Equipment on Operating Leases Land, buildings and equipment are recorded at cost. Buildings and equipment are depreciated over their estimated useful lives. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life. Equipment on operating leases is depreciated to estimated salvage value over the lease term. Depreciation is computed using the straight-line method. Significant leasehold improvements are capitalized, and maintenance and repairs are expensed. Refer to Note 9 - Inventories and Equipment on Operating Leases, Net and Note 10 - Land, Buildings, Equipment and Software, Net for further discussion. Leased Assets We determine at inception whether an arrangement is a lease. Our leases do not include assets of a specialized nature, or the transfer of ownership at the end of the lease, and the exercise of end-of-lease purchase options, which are primarily in our equipment leases, is not reasonably assured at lease inception. Accordingly, the two primary criteria we use to classify transactions as operating leases or finance leases are: (i) a review of the lease term to determine if it is equal to or greater than 75% of the economic life of the asset, and (ii) a review of the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the asset at the inception of the lease. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising Xerox 2025 Annual Report 97 Table of Conten t s from the lease. We also assess arrangements for goods or services to determine if the arrangement contains a lease at its inception. This assessment first considers whether there is an implicitly or explicitly identified asset in the arrangement and then whether there is a right to control the use of the asset. If there is an embedded lease within a contract, the Company determines the classification of the lease at the lease inception date consistent with standalone leases of assets. Operating leases are included in Other long-term assets, Accrued expenses and other current liabilities, and Other long-term liabilities in our Consolidated Balance Sheets. Finance leases are included in Land, buildings and equipment, net, Accrued expenses and other current liabilities, and Other long-term liabilities in our Consolidated Balance Sheets. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the implicit rate for almost all of our leases is not readily determinable, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that we would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term. The rate is dependent on several factors, including the lease term and currency of the lease payments. Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as we do not have reasonable certainty at lease inception that these options will be exercised. We generally consider the economic life of our operating lease ROU assets to be comparable to the useful life of similar owned assets. We have elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Our leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components. These components are accounted for separately for vehicle and equipment leases. We account for the lease and non-lease components as a single lease component for real estate leases of offices and warehouses. We review the potential impairment of our ROU assets consistent with the approach applied for our other long-lived assets. We review the recoverability of our long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. We have elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows. Software - Internal Use and Product We capitalize direct costs associated with developing, purchasing or otherwise acquiring software for internal use and amortize these costs on a straight-line basis over the expected useful life of the software, beginning when the software is implemented (Internal Use Software). Costs incurred for upgrades and enhancements that will not result in additional functionality are expensed as incurred. Amounts expended for Internal Use Software are included in Cash Flows from Investing activities. We also capitalize certain costs related to the development of software solutions to be sold to our customers upon reaching technological feasibility (Product Software). These costs are amortized on a straight-line basis over the estimated economic life of the software. Amounts expended for Product Software are included in Cash Flows from Operations. We perform periodic reviews to ensure that unamortized Product Software costs remain recoverable from estimated future operating profits (net realizable value or NRV). Costs to support or service licensed software are charged to Costs of services as incurred. Refer to Note 10 - Land, Buildings, Equipment and Software, Net for further information. Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the fair value of acquired net assets in a business combination, including the amount assigned to identifiable intangible assets. The primary drivers that generate Goodwill are the value of synergies between the acquired entities and the Company and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. Goodwill is not amortized, but rather is tested for impairment annually, or more frequently whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable and an impairment loss may have been incurred. Xerox 2025 Annual Report 98 Table of Conten t s We assess Goodwill for impairment at least annually, or more frequently if indicators of impairment exist or if a decision is made to sell or exit a business. Impairment testing for Goodwill is done at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (a component) if the component constitutes a business for which discrete financial information is available, and segment management regularly reviews the operating results of that component. 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). Refer to Note 4 - Segment and Geographic Area Reporting for additional information regarding this change. We perform an assessment of Goodwill, utilizing either a qualitative or quantitative impairment test. The qualitative impairment test assesses several factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount. If we conclude it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, a quantitative fair value test is performed. In certain circumstances, we may also bypass the qualitative test and proceed directly to a quantitative impairment test. In a quantitative impairment test, we assess Goodwill by comparing the carrying amount of the reporting unit to its fair value. Fair value of the reporting unit is determined by using a weighted combination of an income approach and a market approach. If the fair value exceeds the carrying value, Goodwill is not considered impaired. If the carrying value exceeds the fair value, Goodwill is considered impaired, and we would recognize an impairment loss for the excess. Other intangible assets primarily consist of assets obtained in connection with business acquisitions, including installed customer base and distribution network relationships, existing technology, trademarks and non-compete agreements. We apply an impairment evaluation whenever events or changes in business circumstances indicate that the carrying value of our intangible assets may not be recoverable. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. We believe that the straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained annually by the Company. Refer to Note 12 - Goodwill, Net and Intangible Assets, Net for further information. Impairment of Long-Lived Assets We review the recoverability of our long-lived assets, including buildings, equipment, right-of-use leased assets, internal use software and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset group from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset group, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. Long-lived assets to be disposed of by sale are reported at the lower of carrying amount or fair value less costs to sell. Long-lived assets to be disposed of other than by sale (e.g., by abandonment, cease-use) would continue to be classified as held and used until the long-lived asset is disposed of (e.g., abandoned or when the asset ceases to be used). Refer to Note 13 - Restructuring Programs for additional information regarding the impairment of long-lived assets in connection with our restructuring programs and initiatives. Pension and Post-Retirement Benefit Obligations We sponsor various forms of defined benefit pension plans in several countries covering employees who meet eligibility requirements. Retiree health benefit plans cover a portion of our U.S. and Canadian employees for retiree medical costs. We employ a delayed recognition feature in measuring the costs of pension and post-retirement benefit plans. This requires changes in the benefit obligations and changes in the value of assets set aside to meet those obligations to be recognized not as they occur, but systematically and gradually over subsequent periods. All changes are ultimately recognized as components of net periodic benefit cost, except to the extent they may be offset by subsequent changes. At any point, changes that have been identified and quantified but not recognized as components of net periodic benefit cost are recognized in Accumulated other comprehensive loss, net of tax. Several statistical and other factors that attempt to anticipate future events are used in calculating the expense, liability and asset values related to our pension and retiree health benefit plans. These factors include assumptions we make about the applicable discount rate, expected return on plan assets, cash balance interest-crediting rate, rate of increase in healthcare costs, the rate of future compensation increases and mortality. Actual returns on plan assets are not immediately recognized in our income statement due to the delayed recognition requirement. In calculating the expected return on the plan asset component of our net periodic pension cost, we apply our estimate Xerox 2025 Annual Report 99 Table of Conten t s of the long-term rate of return on the plan assets that support our pension obligations, after deducting assets that are specifically allocated to Transitional Retirement Accounts (which are accounted for based on specific plan terms). For purposes of determining the expected return on plan assets, we utilize a market-related value approach in determining the value of the pension plan assets, rather than a fair market value approach. The primary difference between the two methods relates to systematic recognition of changes in fair value over time (generally two years ) versus immediate recognition of changes in fair value. Our expected rate of return on plan assets is applied to the market-related asset value to determine the amount of the expected return on plan assets to be used in the determination of the net periodic pension cost. The market-related value approach reduces the volatility in net periodic pension cost that would result from using the fair market value approach. The discount rate is used to determine the present value our future anticipated benefit obligations. The discount rate reflects the current rate at which benefit liabilities could be effectively settled considering the timing of expected payments for plan participants. In estimating our discount rate, we consider rates of return on high-quality fixed-income investments adjusted to eliminate the effects of call provisions, as well as the expected timing of pension and other benefit payments. Each year, the difference between the actual return on plan assets and the expected return on plan assets, as well as increases or decreases in the benefit obligation as a result of changes in the discount rate and other actuarial assumptions, are added to or subtracted from any cumulative actuarial gain or loss from prior years. This amount is the net actuarial gain or loss recognized in Accumulated other comprehensive loss. We amortize net actuarial gains and losses as a component of net pension cost for a year if, as of the beginning of the year, that net gain or loss (excluding asset gains or losses that have not been recognized in market-related value) exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets (the corridor method). This determination is made on a plan-by-plan basis. If amortization is required for a particular plan, we amortize the applicable net gain or loss in excess of the 10% threshold on a straight-line basis in net periodic pension cost over the remaining service period of the employees participating in that pension plan. In plans where substantially all participants are inactive, the amortization period for the excess is the average remaining life expectancy of the plan participants. Our primary domestic plans allow participants the option of settling their vested benefits through the receipt of a lump-sum payment. The participant's vested benefit is considered fully settled upon payment of the lump sum. We have elected to apply settlement accounting and therefore we recognize the losses associated with settlements in this plan immediately upon the settlement of the vested benefits. Settlement accounting requires us to recognize a pro rata portion of the aggregate unamortized net actuarial losses upon settlement. The pro rata factor is computed as the percentage reduction in the projected benefit obligation due to the settlement of the participant's vested benefit. During 2024, the legacy Xerox US pension plans became subject to restrictions on the portion of the benefit that can be paid as a lump sum (limited to 50%). Since the portion of the benefit that cannot be paid as a lump sum is paid as an annuity, the payment of 50% of the lump sum does not relieve the pension plans of the full obligation for benefits for each respective participant electing a lump sum therefore, and no settlement accounting was applied. These restrictions did not apply for all of 2024 and there is settlement accounting for full lump sums paid early in 2024, prior to restrictions. Settlement accounting will not apply in future years for which restrictions apply. Refer to Note 18 - Employee Benefit Plans for further information regarding our Pension and Post-Retirement Benefit Obligations. Research, Development and Engineering (RD&E) Research, development and engineering costs are expensed as incurred. Sustaining engineering costs are incurred with respect to on-going product improvements or environmental compliance after initial product launch. Sustaining engineering costs were $ 52 , $ 49 and $ 55 in for the years ended December 31, 2025, 2024 and 2023, respectively. Foreign Currency Translation and Remeasurement The functional currency for most of our foreign operations is the local currency. Net assets are translated at current rates of exchange and income, expense and cash flow items are translated at average exchange rates for the applicable period. The translation adjustments are recorded in Accumulated other comprehensive loss. The U.S. Dollar is used as the functional currency for certain foreign subsidiaries that conduct their business in U.S. Dollars as well as foreign subsidiaries operating in highly inflationary economies. For these subsidiaries, non-monetary foreign currency assets and liabilities are translated using historical rates, while monetary assets and liabilities are translated at current rates, with the U.S. dollar effects of rate changes recorded in Currency (gains) and losses within Other expenses, net together with other foreign currency remeasurements. Xerox 2025 Annual Report 100 Table of Conten t s Note 3 – Revenue Revenues disaggregated by primary geographic markets, major product lines, and sales channels are as follows: Year Ended December 31, 2025 2024 2023 Primary geographical markets (1) United States $ 3,985 $ 3,437 $ 3,826 Europe 1,952 1,843 1,951 Canada 464 487 554 Latin America 274 199 246 Asia Pacific 154 54 55 Other 193 201 254 Total Revenues $ 7,022 $ 6,221 $ 6,886 Major product and services lines Equipment $ 1,488 $ 1,378 $ 1,655 Supplies, paper and other sales (2) 1,272 768 809 Maintenance agreements (4) 1,628 1,516 1,631 IT Products (2)(3) 523 232 256 Service arrangements (5) 1,731 1,853 1,984 Rental and other 254 323 360 Financing 126 151 191 Total Revenues $ 7,022 $ 6,221 $ 6,886 Sales channels: Direct equipment lease (6) $ 454 $ 706 $ 920 Distributors & resellers (7) 1,249 973 1,044 Customer direct 1,580 699 756 Total Sales $ 3,283 $ 2,378 $ 2,720 _____________ (1) Geographic area data is based upon the location of the subsidiary reporting the revenue. (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. (7) Primarily reflects sales through our two-tier distribution channels. Contract assets and liabilities: Our contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time and were $ 34 and $ 0 at December 31, 2025 and 2024, respectively. Prior to the Lexmark Acquisition, we did not have contract assets, which are short-term in nature based on the frequency of the Company's billing cycle. Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advanced billings for maintenance and other services to be performed and were $ 279 and $ 130 at December 31, 2025 and 2024, respectively. The majority of the balance at December 31, 2025 will be amortized to revenue over approximately the next 30 months. The following table summarizes our contract liabilities activity: 2025 2024 2023 Balance at January 1 st $ 130 $ 132 $ 131 Revenue recognized (1) ( 299 ) ( 189 ) ( 183 ) Billings and customer advances 287 177 187 Foreign currency and other ( 6 ) ( 3 ) ( 3 ) Acquisition (2) 167 13 — Balance at December 31 st $ 279 $ 130 $ 132 __________ (1) Revenue recognized related to contract liabilities included in the January 1st beginning balance was $ 111 , $ 109 , $ 107 for the years ended December 31, 2025, 2024, and 2023, respectively. (2) Refer to Note 6 - Acquisition and Divestitures for additional information regarding the Lexmark Acquisition in 2025 and the ITsavvy Acquisition in 2024. Xerox 2025 Annual Report 101 Table of Conten t s Historically, with the exception of our sales-type lease arrangements, our invoices to the customer, which normally had short-term payment terms, were typically aligned to the transfer of goods or as services were rendered to our customers and therefore in most cases we recognized revenue based on our right to invoice customers. As a result of the application of this practical expedient for the substantial portion of our revenue, the disclosure of the value of unsatisfied performance obligations for our services was not required. Certain service arrangements do not qualify for the right-to-invoice practical expedient and therefore require disclosure of unsatisfied performance obligations. These obligations primarily relate to multi-year managed services arrangements and extended warranty contracts where revenue is recognized over time. The aggregate amount of the transaction price allocated to unsatisfied performance obligations including the amounts included in contract liabilities for committed customers was $ 644 at December 31, 2025. The Company expects to recognize revenues over the next one to five years based upon the nature of the associated agreements. Estimated amounts are subject to change due to various factors including, but not limited to the following: contract terminations, changes in contract scope, revised estimates, unrealized revenue adjustments, and currency fluctuations. Contract Costs: We incur the following contract costs as part of our revenue 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 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 five years . • Contract fulfillment costs are costs incurred for resources and assets that will be used to satisfy our future performance obligations included in our service arrangements. These costs are amortized over the contractual service period of the arrangement to cost of services. • Contract inducements are capitalized and amortized as a reduction of revenue over the term of the contract. Changes in contract costs, net are as follows: 2025 2024 2023 Balance at January 1st, $ 138 $ 136 $ 135 Customer contract costs deferred 75 69 70 Amortization of customer contract costs ( 67 ) ( 64 ) ( 69 ) Other (1) — ( 3 ) — Acquisition (2) 17 — — Balance at December 31st, $ 163 $ 138 $ 136 _____________ (1) Includes currency. (2) Includes customer contract costs related to the Lexmark Acquisition. Refer to Note 6 - Acquisitions and Divestitures for additional information 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 2025 Annual Report 102 Table of Conten t s Note 4 – Segment and Geographic Area Reporting Our reportable segments are aligned with how we manage the business and view the markets we serve. 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 and Reinvention 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 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 the Lexmark Acquisition. In addition, the segment 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. Refer to Note 6 - Acquisition and Divestitures, for additional information regarding the Lexmark Acquisition. The product groupings range from: • “Entry” , which include A4 devices and desktop printers and multifunction devices that primarily serve small and medium workgroups/work teams. • “Mid-Range” , which include A3 devices that generally serve large workgroup/work team environments as well as products in the Light Production product groups serving centralized print centers, print for pay and low volume production print establishments. • “High-End” , which include production printing and publishing systems that generally serve the graphic communications marketplace and print centers in large enterprises. Customers range from small and mid-sized businesses to large enterprises. Customers also include graphic communication enterprises as well as channel partners including distributors and resellers. Our IT Solutions segment provides clients of all sizes integrated IT infrastructure solutions, delivering business outcomes through its suite of Device Lifecycle Solutions, and Managed IT Services. The IT Solutions business leverages its professional services and engineering capabilities, along with an extensive partner ecosystem to design, develop and deliver comprehensive Network and Security Solutions, and Infrastructure and Cloud Solutions. This segment provides services to clients in the U.S., Canada, the U.K., and Western Europe. 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 to evaluate the performance of, and to allocate resources to each Xerox 2025 Annual Report 103 Table of Conten t s 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. Segment revenue, significant segment expenses, segment profit, and other selected financial information for our reportable segments was as follows: Year Ended December 31, 2025 Print and Other IT Solutions Corporate Other (1) Total External revenue $ 6,272 $ 750 $ — $ 7,022 Intersegment net revenue (2) — 11 — 11 Total Segment net revenue $ 6,272 $ 761 $ — $ 7,033 Reconciliation to Segment Profit Cost of sales (3)(4) $ 1,820 $ 421 $ — $ 2,241 Cost of services, maintenance, rentals and other (4)(5)(6) 2,540 189 — 2,729 Research, development and engineering expenses 228 — — 228 Selling, administrative and general expenses (7)(8) 1,402 101 73 1,576 Intersegment expense (9) 3 8 — $ 11 Segment profit $ 279 $ 42 $ ( 73 ) $ 248 Interest income (10) $ 126 $ — $ — $ 126 Interest expense (4) 86 — — 86 Depreciation and amortization 246 2 — 248 Capital expenditures 90 1 — 91 Total Assets 9,132 691 — 9,823 Year Ended December 31, 2024 Print and Other IT Solutions Corporate Other (1) Total External revenue $ 5,864 $ 357 $ — $ 6,221 Intersegment net revenue (2) — 1 — 1 Total Segment net revenue $ 5,864 $ 358 $ — $ 6,222 Reconciliation to Segment Profit Cost of sales (3)(4) $ 1,357 $ 197 $ — $ 1,554 Cost of services, maintenance, rentals and other (4)(5)(6) 2,553 103 — 2,656 Research, development and engineering expenses 191 — — 191 Selling, administrative and general expenses (7)(8) 1,366 58 94 1,518 Intersegment expense (9) 1 — — 1 Segment profit $ 396 $ — $ ( 94 ) $ 302 Interest income (10) $ 151 $ — $ — $ 151 Interest expense (4) 106 — — 106 Depreciation and amortization 201 — — 201 Capital expenditures 44 — — 44 Total Assets $ 7,649 $ 716 $ — $ 8,365 Xerox 2025 Annual Report 104 Table of Conten t s Year Ended December 31, 2023 Print and Other IT Solutions Corporate Other (1) Total External net revenue $ 6,523 $ 363 $ — $ 6,886 Intersegment revenue — — — — Total Segment net revenue $ 6,523 $ 363 $ — $ 6,886 Reconciliation to Segment Profit Cost of sales $ 1,556 $ 222 $ — $ 1,778 Cost of services, maintenance, rentals and other 2,706 88 — 2,794 Research, development and engineering expenses 229 — — 229 Selling, administrative and general expenses (7) 1,547 48 101 1,696 Intersegment expense — — — — Segment profit $ 485 $ 5 $ ( 101 ) $ 389 Interest income (10) $ 191 $ — $ — $ 191 Interest expense (6) 130 — — 130 Depreciation and amortization 208 — — 208 Capital expenditures 37 — — 37 Total Assets $ 9,782 $ 226 $ — $ 10,008 _____________ (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) Excludes the impact of a charge made for inventory purchase accounting adjustments related to the Lexmark Acquisition of $ 102 year ended December 31, 2025. Refer to Note 6 - Acquisition and Divestitures for additional information regarding the Lexmark Acquisition. (4) As a result of the exit of certain production print manufacturing operations, Cost of sales and Cost of services, maintenance, rentals and other for the Print and Other Segment excludes inventory-related charges of $ 24 and $ 8 for the years ended December 31, 2025 and 2024, respectively, as well as the cancellation of related purchase contracts $ — and $ 43 for the years ended December 31, 2025 and 2024, respectively. (5) Excludes the impact of fixed asset purchase accounting adjustments related to the Lexmark Acquisition of $ 29 for year ended December 31, 2025. Refer to Note 6 - Acquisition and Divestitures for additional information regarding the Lexmark Acquisition (6) Includes equipment financing interest expense associated with Company's financing debt, 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. (7) Includes bad debt expense for the Print and Other segment of $ 39 , $ 42 , $ 28 for the three years ended December 31, 2025, 2024 and 2023, respectively. Bad debt expense for the IT Solutions segment was nil for the three years ended December 31, 2025, 2024 and 2023, respectively. (8) The Print and Other segment excludes Reinvention Costs of $ 17 and $ 12 , and Transaction and related costs, net of $ 33 and $ 5 , for the years ended December 31, 2025 and 2024, respectively. Additionally, the Print and Other segment excludes $ 25 for the year ended December 31, 2025 related to the settlement of pre-existing employment agreements as a result of the Lexmark Acquisition. The IT Solutions segment excludes Transaction and related costs, net of $ 1 and $ 2 , for the years ended December 31, 2025 and 2024, respectively. Refer to Note 6 - Acquisition and Divestitures for additional information regarding the Lexmark Acquisition and ITsavvy. (9) Intersegment expense primarily consists of costs related to the sale of IT hardware, software solutions and services by the IT Solutions segment, to the Print and Other segment. (10) Reflects financing income, which is included in Services, maintenance, rentals and other in the Consolidated Statements of (Loss) Income. No interest income is allocated to the IT Solutions segment, as the segment has no finance assets. Xerox 2025 Annual Report 105 Table of Conten t s Selected financial information for our reportable segments was as follows: Year Ended December 31, 2025 2024 2023 Pre-tax (Loss) Total Segment profit $ 248 $ 302 $ 389 Goodwill impairment (1) — ( 1,058 ) — Restructuring and related costs, net ( 66 ) ( 112 ) ( 167 ) Amortization of intangible assets ( 83 ) ( 73 ) ( 43 ) Reinvention-related costs ( 17 ) ( 12 ) — Purchase Accounting Adjustment - Fixed Assets ( 29 ) — — Purchase Accounting Adjustment - Inventory ( 102 ) — — Settlement of pre-existing employment agreements ( 25 ) — — Transaction-related costs ( 34 ) ( 7 ) — Inventory-related impact - exit of certain production print manufacturing operations (2) ( 24 ) ( 51 ) — Divestitures 4 ( 47 ) — PARC Donation — — ( 132 ) Other expenses, net ( 360 ) ( 158 ) ( 75 ) Total Pre-tax loss $ ( 488 ) $ ( 1,216 ) $ ( 28 ) Depreciation and Amortization Total reported segments $ 248 $ 201 $ 208 Amortization of intangible assets 83 73 43 Total Depreciation and amortization $ 331 $ 274 $ 251 Interest Expense Total reported segments $ 86 $ 106 $ 130 Corporate 248 119 68 Total Interest expense $ 334 $ 225 $ 198 Interest Income Total reported segments $ 126 $ 151 $ 191 Corporate 14 14 16 Total Interest income $ 140 $ 165 $ 207 __________ (1) For the year ended December 31, 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. (2) Includes certain charges resulting from the exit of certain production print manufacturing operations, including inventory-related charges of approximately $ 24 and $ 8 for the years ended December 31, 2025 and 2024 respectively, as well as charges for the cancellation of related purchase contracts of $ — and $ 43 for the years ended December 31, 2025 and 2024, respectively. Geographic Area Data Geographic area data is based upon the location of the subsidiary reporting the revenue or long-lived assets and is as follows: Revenues Long-Lived Assets (1) Year Ended December 31, As of December 31, 2025 2024 2023 2025 2024 United States $ 3,985 $ 3,437 $ 3,826 $ 761 $ 488 Europe 1,952 1,843 1,951 178 194 Canada 464 487 554 49 39 Latin America 274 199 246 106 10 Asia Pacific 154 54 55 51 2 Other areas 193 201 254 2 2 Total $ 7,022 $ 6,221 $ 6,886 $ 1,147 $ 735 _____________ (1) Long-lived assets are comprised of (i) Land, buildings and equipment, net, (ii) Equipment on operating leases, net, (iii) Leased right-of-use (ROU) assets, net, (iv) Internal use software, net, and (v) Capitalized product software, net. Xerox 2025 Annual Report 106 Table of Conten t s Note 5 – Lessor Revenue from sales-type leases is presented on a gross basis when the Company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business, whereas in transactions where the Company enters into a lease for the purpose of generating revenue by providing financing, the profit or loss, if any, is presented on a net basis. In addition, we have elected to account for sales tax and other similar taxes collected from a lessee as lessee costs and therefore we exclude these costs from contract consideration and variable consideration. The components of lease income are as follows: Location in Statements of (Loss) Income Year Ended December 31, 2025 2024 2023 Revenue from sales type leases Sales $ 454 $ 706 $ 920 Interest income on lease receivables Services, maintenance, rentals and other 126 151 191 Lease income - operating leases Services, maintenance, rentals and other 171 168 161 Variable lease income Services, maintenance, rentals and other 38 46 62 Total Lease income $ 789 $ 1,071 $ 1,334 Profit at lease commencement on sales type leases was estimated to be approximately $ 109 , $ 213 and $ 332 for the three years ended December 31, 2025, 2024 and 2023, respectively. Note 6 – Acquisitions and Divestitures Acquisitions The following table summarizes the purchase price allocations for our acquisitions as of the acquisition dates. There were no acquisitions for the year ended 2023. Year Ended December 31, 2025 Year Ended December 31, 2024 Weighted-Average Life Acquisitions (1) Weighted-Average Life Acquisitions (1) Accounts/finance receivables $ 346 $ 58 Inventories 422 4 Equipment on operating leases, net 65 — Land, Buildings and Equipments, net 243 5 Intangible assets: Customer relationships 10 years 530 10 years 134 Trademarks 7 years 110 1 year 2 Technology 7 years 123 — Goodwill (2) 248 286 Other assets 441 6 Total Assets acquired 2,528 495 Liabilities assumed ( 1,531 ) ( 124 ) Acquisition-related debt ( 323 ) ( 210 ) Total Acquisition, net of cash acquired $ 674 $ 161 _____________ (1) For additional details related to our 2025 and 2024 acquisition activity, see below. (2) Our 2025 and 2024 acquisitions included approximately $ 2 and $ 42 , respectively, of goodwill that is expected to be deductible for tax purposes. Goodwill resulting from our 2025 acquisition is allocated to the Print and Other Segment. 2025 Acquisition Lexmark Acquisition On July 1, 2025, Xerox Corporation completed the acquisition of all of the issued and outstanding equity of Lexmark International II, LLC (Lexmark), a leading developer, manufacturer and supplier of printing, imaging, device management, managed print services (MPS), cloud services, document workflow, and technology solutions (the Lexmark Acquisition). Xerox 2025 Annual Report 107 Table of Conten t s Total Purchase Consideration Total consideration paid to the Seller for the net assets acquired from Lexmark was $ 768 , which included Cash and cash equivalents acquired of $ 93 . As part of the Lexmark Acquisition we effectively settled a pre-existing net payable of $ 43 with Lexmark. The settlement is presented as an operating cash outflow to reflect the nature of the underlying net liability. Assets Acquired and Liabilities Assumed The transaction has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) 805 — Business Combinations (ASC 805), which requires among other things, that assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date. No contingent consideration was recorded by Xerox. The preliminary application of acquisition accounting to the assets acquired, and liabilities assumed, as well as the pro forma results of operations are presented below. The following table summarizes the preliminary allocation of total purchase consideration to the assets acquired and the liabilities assumed as of the date of the acquisition. Certain amounts have been updated to reflect working capital and measurement period adjustments, the impacts of which were not material to the Consolidated Statements of (Loss) Income: July 1, 2025 Assets acquired Cash and cash equivalents $ 93 Accounts receivable, net 280 Finance receivables, net (1) 22 Inventories 422 Other current assets 131 Finance receivables due after one year, net (1) 44 Equipment on operating lease, net 65 Land, buildings and equipment, net 243 Intangible assets, net 763 Goodwill 246 Deferred tax assets 25 Other long-term assets 266 Total Assets acquired $ 2,600 Liabilities assumed Accounts payable $ 476 Accrued compensation and benefits costs 56 Accrued expenses and other current liabilities (2) 518 Long-term debt 323 Pension and other benefit liabilities 118 Post-retirement medical benefits 6 Other long-term liabilities (2) 335 Total Liabilities assumed $ 1,832 Net Assets acquired $ 768 _____________ (1) Comprised of sales-type lease receivables. (2) Includes Deferred revenue accounted for in accordance with ASC 606, Revenue from Contracts with Customers . Our estimates and assumptions are subject to change, and have already changed, within the measurement period, which is up to 12 months after the acquisition date. During the fourth quarter 2025, adjustments were recorded to correct certain errors in the Lexmark Acquisition preliminary purchase price allocation that existed as of the acquisition date. The errors resulted from misstated balances of accounts receivable, contract assets, and contract liabilities in Lexmark's opening balance sheet as of July 1, 2025, and were subsequently reflected in the Company's Consolidated Balance Sheet as of September 30, 2025. Accordingly, Accounts receivable, net decreased by $ 73 , Other current assets increased by $ 20 , Deferred tax assets increased by $ 7 , Accrued expenses and other current liabilities decreased by $ 11 , and Other long-term liabilities decreased $ 7 . The identified errors had an immaterial impact on the Lexmark preliminary purchase accounting through September 30, 2025. As a result of the correction, an increase of $ 28 was recorded to Goodwill. In addition, immaterial measurement period adjustments were also recorded which resulted in a further increase of $ 11 to Goodwill associated with the Lexmark Acquisition. Xerox 2025 Annual Report 108 Table of Conten t s The allocation of the purchase price for this acquisition has been prepared on a preliminary basis, and adjustments may continue to be required as additional information becomes available. Additionally, as required by the Lexmark Agreement, Xerox provided its determination of the Closing Statement (as defined in the Lexmark Agreement) to the Lexmark Seller. The final purchase price is subject to a final working capital adjustment, which we are still finalizing. Transaction-related expense for the Lexmark Acquisition was approximately $ 33 for the year ended December 31, 2025 and were recorded within Selling, administrative and general expenses. Our Consolidated Statements of (Loss) Income includes revenue of $ 962 , and net loss of $ 119 for the year ended December 31, 2025, attributable to the Lexmark Acquisition since the date of acquisition. Intangible Assets The following table is a summary of the fair value estimates of the identifiable intangible assets and their estimated average useful lives: July 1, 2025 Estimated Useful Life Customer relationships $ 530 10 years Developed technology 123 7 years Trademarks 110 7 years Total Identifiable intangible assets $ 763 The customer-related intangible assets relates to customer contracts and related relationships. The customer contracts and related relationships intangible asset represents the fair value of future projected cash flows that will be derived from sales of products and services to existing customers of Lexmark. The asset was valued using a multi-period excess earnings method which estimates the present value of the after-tax cash flows attributable to the customer relationships. The present value of projected future cash flows included significant judgment and assumptions regarding projected annual revenues based on estimated customer attrition rates, projected operating margins, and the discount rate. Developed technology represents the estimated fair value of Lexmark’s proprietary technology and is valued using the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted cash flows that are expected to be generated by the developed technology, which included judgment and assumptions regarding projected future revenues, projected expenses, and the discount rate. Trade name and trademarks represents the estimated fair value of Lexmark’s trade name and trademarks. The fair value was determined by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted cash flows that are expected to be generated by the trade name and trademarks, which included judgment and assumptions regarding projected future revenues, projected expenses, and the discount rate. Intangible assets of approximately $ 4 are deductible for tax purposes as a result of previous taxable acquisitions made by Lexmark. Goodwill Goodwill in the amount of $ 246 was recognized for this acquisition and is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized, primarily expected synergies. Goodwill of approximately $ 2 is deductible for tax purposes as a result of previous taxable acquisitions made by Lexmark. All of the goodwill associated with the Lexmark Acquisition is allocated to our Print and Other Segment. Debt In conjunction with the acquisition, Xerox assumed approximately $ 323 of Lexmark debt that, concurrent with the closing date, was included in the renegotiated terms of Xerox's Term Loan B. The assumed debt is included in Long-term debt in the Consolidated Balance Sheet. It was determined that the fair value of the assumed debt approximated its book value and that the conversion of this debt within the Term Loan B represented a modification. Refer to Note 15 - Debt for additional information regarding debt related to the Lexmark Acquisition. Deferred Taxes We provided deferred taxes and recorded other tax adjustments as part of the accounting for the acquisition primarily related to the estimated fair value adjustments for acquired intangible assets, as well as the elimination of a previously recorded deferred tax liability associated with Lexmark's historical tax deductible goodwill. Xerox 2025 Annual Report 109 Table of Conten t s 2024 Acquisition ITsavvy On November 20, 2024, we completed the acquisition of ITsavvy Acquisition Company, Inc. (ITsavvy), a technology infrastructure solutions provider for total consideration of $ 404 , which resulted in 100 % ownership of ITsavvy. Total Purchase Consideration The table below details the total fair value of consideration paid for the ITsavvy Acquisition: November 20, 2024 Cash $ 194 Secured promissory notes due in 2025, net of $ 3 discount 107 Secured promissory notes due in 2026, net of $ 7 discount 103 Total Fair value of consideration transferred $ 404 The secured promissory notes due in 2025 (the 2025 Note), as well as the secured promissory notes due in 2026 (the 2026 Note and, together with the 2025 Note, the Notes), were issued by Xerox to the Seller at closing, net of total unamortized debt discounts of $ 10 . For additional information related to the Notes issued in connection with the acquisition of ITsavvy, refer to Note 15 - Debt. Assets Acquired and Liabilities Assumed The transaction has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) 805 — Business Combinations (ASC 805), which requires among other things, that most assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date. No change-in-control or contingent consideration liabilities were recorded by Xerox. The following table summarizes the final allocation of total purchase consideration to the assets acquired and the liabilities assumed as of the date of the acquisition. Certain amounts have been updated to reflect working capital and measurement period adjustments, the impacts of which were not material to the Consolidated Statements of (Loss) Income and resulted in a final allocation to Goodwill of $ 288 , as compared to the original allocation of Goodwill of $ 286 at the time of acquisition: November 20, 2024 Assets acquired Cash and cash equivalents $ 34 Accounts receivable, net 58 Inventories 4 Other current assets 15 Land, buildings and equipment, net 5 Intangible assets, net 136 Goodwill 288 Other long-term assets 10 Total Assets acquired $ 550 Liabilities assumed Accounts payable $ 57 Accrued compensation and benefits costs 7 Accrued expenses and other current liabilities (1) 30 Deferred tax liability 18 Other long-term liabilities (1) 34 Total Liabilities assumed $ 146 Net Assets acquired $ 404 ____________ (1) Includes Deferred revenue accounted for in accordance with ASC 606 Revenue . Transaction-related expense for the ITsavvy Acquisition were not material for the year ended December 31, 2024. For the years ended December 31, 2025 and 2024, our Consolidated Statements of (Loss) Income include revenue of $ 451 and $ 48 , respectively, and net income of $ 16 and $ 2 , respectively, attributable to the ITsavvy Acquisition. Amounts for 2024 are from the date of acquisition on November 20, 2024. Xerox 2025 Annual Report 110 Table of Conten t s Intangible Assets The following table is a summary of the fair value estimates of the identifiable intangible assets and their estimated average useful lives: November 20, 2024 Estimated Useful Life Customer relationships $ 134 10 years Trademarks 2 1 year Total consideration transferred $ 136 The majority of customer-related intangible assets relates to customer contracts and related relationships. The customer contracts and related relationships intangible asset represents the fair value of future projected cash flows that will be derived from sales of products to existing customers of ITsavvy. The asset was valued using a multi-period excess earnings method which estimates the present value of the after-tax cash flows attributable to the customer relationships. The present value of projected future cash flows included significant judgment and assumptions regarding projected annual revenues based on estimated customer attrition rates, projected operating margins, and the discount rate. Trademark represents the preliminary estimated fair value of the ITsavvy trade name. The fair value was determined by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue under the trade name. Intangible assets of approximately $ 59 is deductible for tax purposes as a result of previous taxable acquisitions made by ITsavvy. Goodwill Goodwill in the amount of $ 288 was recognized for this acquisition and is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized, primarily expected synergies. Goodwill of approximately $ 42 is deductible for tax purposes as a result of previous taxable acquisitions made by ITsavvy. As a result of the ITsavvy Acquisition, we reassessed our operating and reportable segments on January 1, 2025. Accordingly, all of the goodwill associated with the ITsavvy Acquisition is allocated to our IT Solutions Segment. Deferred Taxes We provided deferred taxes and recorded other tax adjustments as part of the accounting for the acquisition primarily related to the estimated fair value adjustments for acquired intangible assets, as well as the elimination of a previously recorded deferred tax liability associated with ITsavvy’s historical tax deductible goodwill. Unaudited Pro Forma Information The unaudited pro forma results presented below are calculated in accordance with ASC 805 - Business Combinations, and include the effects of the Lexmark Acquisition and related financing transactions, as if it had been consummated as of January 1, 2024, as well as the acquisition of ITsavvy, as if it had been consummated as of January 1, 2023. ITsavvy is included in our 2025 reported results as the effective date of the acquisition was November 20, 2024. Lexmark is included in our 2025 results beginning July 1, 2025, the effective date of acquisition. Pro forma results for all periods presented below includes adjustments to align historical accounting policies and purchase accounting adjustments for amortization of intangible assets and real and personal property, the expensing of the step up of inventory to fair value, the elimination of historical goodwill impairment charges recorded by Lexmark of approximately $ 681 pre-tax, transaction expenses, the expense related to compensation to various employees resulting from the acquisition as well as interest expense related to debt financing. The following table summarizes the pro forma financial information: Year Ended December 31, 2025 2024 Total revenue $ 7,962 $ 8,620 Net loss ( 968 ) ( 1,680 ) The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions and the cost of financing the acquisitions had taken place on January 1, 2024. Xerox 2025 Annual Report 111 Table of Conten t s 2023 Acquisitions There were no material business acquisitions during 2023. 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 operate as independent entities and Grupo Datco will continue to service Xerox devices previously sold in Argentina and Chile and is 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 included, 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 . Donation of Palo Alto Research Center (PARC) In April 2023, Xerox completed the donation of its Palo Alto Research Center (PARC) subsidiary to Stanford Research Institute International (SRI), a nonprofit research institute. The donation enables Xerox to focus on its core businesses and prioritize growth through its business technology solutions for customers in Print, as well as Digital Services and IT Services. The donation also allows PARC to reach its full potential through SRI’s resources and deep-tech expertise that will enable PARC to focus exclusively on the development of pioneering innovative technologies. The majority of patents held by PARC were retained by Xerox with a perpetual license to use those patents being provided to SRI. Xerox, at its option, will also continue to receive certain research services from SRI. The donation resulted in a net charge of $ 132 in the second quarter 2023, which includes allocated Goodwill of $ 115 , the carrying value of the net assets associated with PARC being donated of $ 13 , and approximately $ 4 of other costs and expenses related to the donation. The allocation of Goodwill was based on the relative fair value of the PARC business to the total fair value for the Print and Other Segment/Reporting Unit, which it was part of prior to the donation. The estimated fair values of the PARC business 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. At the time of divestiture, Xerox also recorded a net income tax benefit of $ 40 related to the donation for a net after-tax loss on the donation of $ 92 . In 2025, we concluded that certain deferred tax assets in the U.S. were not more-likely-than-not to be realized, including the benefits associated with the charitable contribution of PARC in 2023. Accordingly, a valuation allowance for the remaining deferred tax assets of $ 20 was recorded. Other Divestitures During 2025 and 2024 we sold the rights to sell paper in certain European countries. The sales resulted in a net disposal gain of $ 4 and $ 4 for the years ended December 31, 2025 and 2024, respectively. Xerox 2025 Annual Report 112 Table of Conten t s Note 7 – Accounts Receivable, Net Accounts receivable, net were as follows: December 31, 2025 2024 Invoiced $ 1,024 $ 692 Accrued (1) 171 173 Allowance for doubtful accounts ( 73 ) ( 69 ) Accounts receivable, net $ 1,122 $ 796 ____________ (1) Accrued receivables includes amounts to be invoiced in the subsequent quarter for current products and services provided. The allowance for doubtful accounts was as follows: Balance at December 31, 2023 $ 64 Provision 25 Charge-offs, net ( 20 ) Recoveries and Other (1) — Balance at December 31, 2024 $ 69 Provision 23 Charge-offs, net ( 23 ) Acquisition (2) 3 Recoveries and Other (1) 1 Balance at December 31, 2025 $ 73 _____________ (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) Reflects the Lexmark Acquisition on July 1, 2025. Refer to Note 6 - Acquisitions and Divestitures for additional information regarding the Lexmark acquisition. We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. The allowance for uncollectible accounts receivable is determined based on an assessment of past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends. Based on that assessment the allowance for doubtful accounts as a percentage of gross receivables was 6.1 % at December 31, 2025 and 8.0 % at December 31, 2024. Accounts Receivable Sale Arrangements We have two facilities in Europe that enable us to sell accounts receivable without recourse on an ongoing basis. Under these arrangements, we sell our entire interest in the related accounts receivable for cash. Our arrangements are associated with our European distributor network as well as domestic sales in UK, France, Germany and Italy. Accounts receivable sales activity was as follows: Year Ended December 31, 2025 2024 2023 Accounts receivable sales (1) $ 427 $ 450 $ 399 _____________ (1) Losses on sales were not material. Xerox 2025 Annual Report 113 Table of Conten t s Note 8 – Finance Receivables, Net 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: December 31, 2025 2024 Gross receivables $ 1,643 $ 2,032 Unearned income ( 196 ) ( 230 ) Subtotal 1,447 1,802 Residual values — — Allowance for doubtful accounts ( 45 ) ( 57 ) Finance Receivables, Net 1,402 1,745 Less: Billed portion of finance receivables, net 46 48 Less: Current portion of finance receivables not billed, net 510 608 Finance Receivables Due After One Year, Net $ 846 $ 1,089 A summary of our gross finance receivables' future contractual maturities, including those previously billed, is as follows: December 31, 2025 12 months $ 661 24 months 454 36 months 297 48 months 166 60 months 59 Thereafter 6 Total $ 1,643 Finance Receivables - Allowance for Credit Losses and Credit Quality Our finance receivable portfolios are primarily in the U.S., Canada and EMEA. 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 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. 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 those countries. The net bad debt provision was $ 16 for the year ended December 31, 2025. This compares to the net bad debt provision of $ 17 for the year ended December 31, 2024. The allowance for credit losses as a percentage of net finance receivables before allowance was 3.1 % at December 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. Our assessment also included a review of current portfolio credit metrics and the level of write-offs incurred over the past year. We believe our current reserve position remains sufficient to cover expected future losses that may result from current and future macroeconomic conditions including higher inflation, interest rates and the potential for recessions in the geographic areas of our customers. We continue to monitor developments in future economic conditions and trends, and as a result, our reserves may need to be updated in future periods. Xerox 2025 Annual Report 114 Table of Conten t s The allowance for credit losses as well as the related investment in finance receivables were as follows: Allowance for Credit Losses: United States Canada EMEA Other Total Balance at December 31, 2023 $ 58 $ 7 $ 27 $ — $ 92 Provision ( 7 ) 10 14 — 17 Charge-offs, net ( 23 ) ( 11 ) ( 17 ) — ( 51 ) Other (1) 1 ( 1 ) ( 1 ) — ( 1 ) Balance at December 31, 2024 $ 29 $ 5 $ 23 $ — $ 57 Provision 7 2 7 — 16 Charge-offs, net ( 12 ) ( 3 ) ( 16 ) — ( 31 ) Other (1) — 1 2 — 3 Balance at December 31, 2025 $ 24 $ 5 $ 16 $ — $ 45 Finance Receivables Collectively Evaluated for Impairment: December 31, 2024 (2)(3) $ 749 $ 144 $ 909 $ — $ 1,802 December 31, 2025 (2)(3) $ 616 $ 151 $ 663 $ 17 $ 1,447 _____________ (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) As a result of the Lexmark Acquisition on July 1, 2025, Other includes amounts for Latin America, Asia Pacific and South Africa. Allowance for doubtful credit losses in Other for the year ended December 31, 2025 was nil . Refer to Note 6 - Acquisitions and Divestitures for additional information regarding the Lexmark acquisition. (3) Total Finance receivables exclude the allowance for credit losses of $ 45 and $ 57 at December 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: • Low Credit Risk: This rating includes accounts with excellent to good business credit, asset quality and capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance. Loss rates in this category in the normal course are generally in the range of 1 % to 2 % • Average Credit Risk: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the higher loss rates are largely offset by the higher rates of return we obtain with such leases. Loss rates in this category in the normal course are generally in the range of 3 % to 5 %. • High Credit Risk: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include customers who were downgraded during the term of the lease from low and average credit risk evaluation when the lease was originated. Accordingly, there is a distinct possibility for a loss of principal and interest or customer default. The loss rates in this category in the normal course are generally in the range of 6 % to 7 %. 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 Annual Report 115 Table of Conten t s Details about our finance receivables portfolio based on geography, origination year and credit quality indicators are as follows: December 31, 2025 2025 2024 2023 2022 2021 Prior Total Finance Receivables United States (Direct): Low Credit Risk $ 102 $ 66 $ 48 $ 19 $ 7 $ 1 $ 243 Average Credit Risk 49 31 41 14 13 2 150 High Credit Risk 24 23 18 13 5 2 85 Total $ 175 $ 120 $ 107 $ 46 $ 25 $ 5 $ 478 Charge-offs $ — $ 1 $ 3 $ 2 $ 1 $ 2 $ 9 United States (Indirect): Low Credit Risk $ 2 $ 4 $ 10 $ 15 $ 6 $ — $ 37 Average Credit Risk 12 7 25 22 6 1 73 High Credit Risk — 8 13 5 2 — 28 Total $ 14 $ 19 $ 48 $ 42 $ 14 $ 1 $ 138 Charge-offs $ — $ — $ 4 $ 4 $ 2 $ 1 $ 11 Canada Low Credit Risk $ 31 $ 20 $ 13 $ 4 $ 1 $ — $ 69 Average Credit Risk 29 20 13 7 2 — 71 High Credit Risk 4 3 2 1 1 — 11 Total $ 64 $ 43 $ 28 $ 12 $ 4 $ — $ 151 Charge-offs $ — $ 1 $ 1 $ 1 $ — $ — $ 3 EMEA Low Credit Risk $ 135 $ 76 $ 96 $ 51 $ 14 $ 4 $ 376 Average Credit Risk 68 45 79 49 13 3 257 High Credit Risk 8 5 10 4 2 1 30 Total $ 211 $ 126 $ 185 $ 104 $ 29 $ 8 $ 663 Charge-offs $ 5 $ 3 $ 7 $ 4 $ 1 $ — $ 20 Other (1) Low Credit Risk 7 4 3 1 — — 15 Average Credit Risk — 1 1 — — — 2 High Credit Risk — — — — — — — Total $ 7 $ 5 $ 4 $ 1 $ — $ — $ 17 Charge-offs $ — $ — $ — $ — $ — $ — $ — Total Finance Receivables Low Credit Risk $ 277 $ 170 $ 170 $ 90 $ 28 $ 5 $ 740 Average Credit Risk 158 104 159 92 34 6 553 High Credit Risk 36 39 43 23 10 3 154 Total $ 471 $ 313 $ 372 $ 205 $ 72 $ 14 $ 1,447 Total Charge-offs $ 5 $ 5 $ 15 $ 11 $ 4 $ 3 $ 43 _____________ (1) As a result of the Lexmark Acquisition on July 1, 2025, includes amounts for Latin America, Asia Pacific and South Africa. Xerox 2025 Annual Report 116 Table of Conten t s December 31, 2024 2024 2023 2022 2021 2020 Prior Total Finance Receivables United States (Direct): Low Credit Risk $ 93 $ 69 $ 34 $ 23 $ 10 $ 1 $ 230 Average Credit Risk 51 61 23 27 9 2 173 High Credit Risk 28 24 23 14 7 3 99 Total $ 172 $ 154 $ 80 $ 64 $ 26 $ 6 $ 502 Charge-offs $ 1 $ — $ 1 $ 1 $ 2 $ 2 $ 7 United States (Indirect): Low Credit Risk $ 40 $ 48 $ 25 $ 13 $ 3 $ — $ 129 Average Credit Risk 29 42 22 11 3 — 107 High Credit Risk 3 5 2 1 — — 11 Total $ 72 $ 95 $ 49 $ 25 $ 6 $ — $ 247 Charge-offs $ 1 $ 7 $ 3 $ 4 $ 2 $ 4 $ 21 Canada Low Credit Risk $ 33 $ 18 $ 7 $ 5 $ 1 $ — $ 64 Average Credit Risk 32 17 11 5 2 1 68 High Credit Risk 5 2 2 2 1 — 12 Total $ 70 $ 37 $ 20 $ 12 $ 4 $ 1 $ 144 Charge-offs $ — $ 9 $ 1 $ — $ — $ 1 $ 11 EMEA Low Credit Risk $ 131 $ 175 $ 116 $ 55 $ 20 $ 3 $ 500 Average Credit Risk 75 130 92 45 19 5 366 High Credit Risk 8 14 11 6 3 1 43 Total $ 214 $ 319 $ 219 $ 106 $ 42 $ 9 $ 909 Charge-offs $ — $ 7 $ 6 $ 3 $ 1 $ — $ 17 Total Finance Receivables Low Credit Risk $ 297 $ 310 $ 182 $ 96 $ 34 $ 4 $ 923 Average Credit Risk 187 250 148 88 33 8 714 High Credit Risk 44 45 38 23 11 4 165 Total $ 528 $ 605 $ 368 $ 207 $ 78 $ 16 $ 1,802 Total Charge-offs $ 2 $ 23 $ 11 $ 8 $ 5 $ 7 $ 56 The aging of our receivables portfolio is based upon the number of days an invoice is past due. Receivables that are more than 90 days past due are considered delinquent. Receivable losses are charged against the allowance when management believes the uncollectability of the receivable is confirmed and is generally based on individual credit evaluations, results of collection efforts and specific circumstances of the customer. Subsequent recoveries, if any, are credited to the allowance. We generally continue to maintain equipment on lease and provide services to customers that have invoices for finance receivables that are 90 days or more past due and, as a result of the bundled nature of billings, we also continue to accrue interest on those receivables. However, interest revenue for such billings is only recognized if collectability is deemed probable. Xerox 2025 Annual Report 117 Table of Conten t s The aging of our billed finance receivables is as follows: December 31, 2025 Current 31-90 Days Past Due >90 Days Past Due Total Billed Unbilled Total Finance Receivables >90 Days and Accruing Direct $ 18 $ 5 $ 4 $ 27 $ 451 $ 478 $ 35 Indirect 4 2 2 8 130 138 — Total United States 22 7 6 35 581 616 35 Canada 3 1 — 4 147 151 4 EMEA 8 1 1 10 653 663 17 Other (1) — — — — 17 17 — Total $ 33 $ 9 $ 7 $ 49 $ 1,398 $ 1,447 $ 56 December 31, 2024 Current 31-90 Days Past Due >90 Days Past Due Total Billed Unbilled Total Finance Receivables >90 Days and Accruing Direct $ 19 $ 5 $ 4 $ 28 $ 474 $ 502 $ 35 Indirect 6 1 1 8 239 247 — Total United States 25 6 5 36 713 749 35 Canada 5 1 1 7 137 144 5 EMEA 5 1 1 7 902 909 15 Total $ 35 $ 8 $ 7 $ 50 $ 1,752 $ 1,802 $ 55 ___________ (1) As a result of the Lexmark Acquisition on July 1, 2025, includes amounts for Latin America, Asia Pacific and South Africa . Sales of Finance Receivables The Company has finance receivables funding arrangements with third-party funding partners in the U.S., Canada, and in EMEA. Under these arrangements, the Company sells certain eligible pools of finance receivables. The transfers are structured to qualify for sale accounting treatment and the related receivables are derecognized from the Company's consolidated financial statements. The Company's funding partners generally do not have recourse to the Company for credit losses on the transferred receivables. In addition, under certain arrangements, the Company may transfer servicing responsibilities for funded receivables to a funding partner. In such cases, the Company pays a servicing fee related to certain retained finance receivables and may continue to service certain finance receivables under prior servicing arrangements with that funding partner for an agreed-upon fee. Finance receivable sales activity was as follows: Year Ended December 31, 2025 2024 2023 Finance receivable sales - net proceeds (1) $ 357 $ 752 $ 1,102 Gain on sale/Commissions (2) 2 30 25 Servicing revenue (2) $ 6 $ 17 $ 9 _____________ (1) Cash proceeds were reported in Net cash provided by operating activities. (2) Recorded in Services, maintenance, rentals and other as Other Revenue. Amounts include revenues associated with the sale of the underlying leased equipment. Secured Borrowings and Collateral Prior to 2025, we sold certain finance receivables to consolidated special purpose entities included in our Consolidated Balance Sheet as collateral for secured loans. During 2025, we fully repaid the outstanding balance related to these secured borrowings. Refer to Note 15 - Debt, for additional information related to these arrangements. Xerox 2025 Annual Report 118 Table of Conten t s Note 9 – Inventories and Equipment on Operating Leases, Net The following is a summary of Inventories by major category: December 31, 2025 2024 Finished goods $ 802 $ 609 Work-in-process 142 36 Raw materials 72 50 Total Inventories $ 1,016 $ 695 The transfer of equipment from our inventories to equipment subject to an operating lease is presented in our Consolidated Statements of Cash Flows in the operating activities section. Equipment on operating lease and similar arrangements consists of our equipment rented to customers and is depreciated to estimated salvage value at the end of the lease term. Equipment on operating leases and the related accumulated depreciation were as follows: December 31, 2025 2024 Equipment on operating leases $ 979 $ 931 Accumulated depreciation ( 680 ) ( 686 ) Equipment on operating leases, net $ 299 $ 245 Depreciable lives generally vary from four to five years consistent with our planned and historical usage of the equipment subject to operating leases. Estimated minimum future revenues associated with Equipment on operating leases are as follows: December 31, 2025 12 months $ 135 24 months 82 36 months 52 48 months 25 60 months 6 Thereafter 2 Total $ 302 Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, for the years ended December 31, 2025, 2024 and 2023 amounted to $ 38 , $ 46 and $ 62 , respectively. Xerox 2025 Annual Report 119 Table of Conten t s Note 10 - Land, Buildings, Equipment and Software, Net Land, buildings and equipment, net were as follows: December 31, Estimated Useful Lives (Years) 2025 2024 Land $ 24 $ 8 Building and building equipment 25 to 50 541 669 Leasehold improvements 1 to 12 92 72 Plant machinery 5 to 12 687 771 Office furniture and equipment 3 to 15 416 411 Finance leased assets 1 to 12 29 79 Other 4 to 20 27 35 Construction in progress 38 11 Subtotal 1,854 2,056 Accumulated depreciation (1) ( 1,464 ) ( 1,805 ) Land, buildings and equipment, net $ 390 $ 251 _____________ (1) Depreciation expense was $ 75 , $ 57 and $ 60 for the three years ended December 31, 2025, 2024 and 2023, respectively. We lease buildings, vehicles, and equipment, substantially all of which are accounted for as operating leases. Refer to Note 11 - Lessee for additional information regarding leased assets. Internal Use Software Additions to internal use software were $ 54 , $ 17 , and $ 8 for the three years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025 and 2024, capitalized costs related to internal use software, net of accumulated amortization, were $ 146 and $ 60 , respectively, and are included in Other long-term assets. Useful lives of our internal use software generally vary from three to seven years . Refer to Note 14 - Supplementary Financial Information for additional information. Xerox 2025 Annual Report 120 Table of Conten t s Note 11 – Lessee Operating Leases We have operating leases for real estate and vehicles in our domestic and international operations, and for certain equipment in our domestic operations. Additionally, we have identified embedded operating leases within certain supply chain contracts for warehouses, primarily within our domestic operations. Our leases have remaining terms of up to thirty-three years and a variety of renewal and/or termination options. The components of lease expense are as follows: Year Ended December 31, 2025 2024 2023 Operating lease expense $ 113 $ 70 $ 83 Short-term lease expense 16 14 16 Variable lease expense (1) 61 57 53 Sublease income ( 1 ) ( 1 ) ( 1 ) Total Lease expense $ 189 $ 140 $ 151 _____________ (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 December 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 Consolidated Balance Sheets as follows: December 31, 2025 2024 Other long-term assets (1) $ 311 $ 179 Accrued expenses and other current liabilities $ 64 $ 45 Other long-term liabilities 263 143 Total Operating lease liabilities $ 327 $ 188 _____________ (1) During 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 . Supplemental information related to operating leases is as follows: Year Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows $ 113 $ 72 $ 91 Right-of-use assets obtained in exchange for new lease liabilities (1) $ 60 $ 65 $ 23 Weighted-average remaining lease term 7 years 4 years 4 years Weighted-average discount rate (2) 19.29 % 7.70 % 6.07 % _____________ (1) Includes the impact of new leases as well as remeasurements and modifications to existing leases. (2) Increase in 2025 rate reflects the increase in the Company's incremental borrowing rate, as well as the remeasurement of the leases associated with the Lexmark Acquisition. Maturities and additional information related to operating lease liabilities are as follows: December 31, 2025 12 months $ 122 24 months 96 36 months 77 48 months 60 60 months 45 Thereafter 296 Total Lease payments 696 Less: Imputed interest 369 Total Operating lease liabilities $ 327 Xerox 2025 Annual Report 121 Table of Conten t s Finance Leases 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 six years . The lease expense associated with our finance leases was $ 13 , $ 13 , and $ 8 for the three years ended December 31, 2025, 2024 or 2023, respectively. As of December 31, 2025, we had no additional financing leases that had not yet commenced. Finance lease ROU assets, net and operating lease liabilities were reported in the Consolidated Balance Sheets as follows: December 31, 2025 2024 Land, buildings and equipment, net (1) $ 11 $ 55 Accrued expenses and other current liabilities $ 5 $ 15 Other long-term liabilities 3 38 Total Finance lease liabilities $ 8 $ 53 ____________ (1) During 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. Supplemental information related to finance leases is as follows: Year Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities $ 13 $ 12 $ 8 Finance lease assets obtained in exchange for new lease liabilities (1) $ — $ 42 $ 7 Weighted-average remaining lease term 2 years 4 Years 2 Years Weighted-average discount rate 9.45 % 10.53 % 7.28 % _____________ (1) Includes the impact of new leases as well as remeasurements and modifications to existing leases. Maturities and additional information related to finance lease liabilities are as follows: December 31, 2025 12 months $ 6 24 months 2 36 months 1 48 months — 60 months — Thereafter — Total Lease payments 9 Less: Imputed interest 1 Total Finance Lease Liabilities $ 8 Xerox 2025 Annual Report 122 Table of Conten t s Note 12 - Goodwill, Net and Intangible Assets, Net Goodwill, Net On January 1, 2025, we reassessed our operating and reportable segments and determined that the Company's operations 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 or reportable segments. As a result of this change, the carrying amount of Goodwill, net was reassessed and was allocated to our two reporting units - Print and Other and IT Solutions , based on the relative fair value of each reporting unit. As part of the reassessment it was determined that Goodwill was not impaired either before or after the resegmentation. Prior to this reassessment, all Goodwill was allocated to our Print and Other reporting unit. T he following presents the changes in the carrying amount of Goodwill, net: Print and Other 2025 Gross Goodwill - January 1st $ 3,808 Foreign currency translation 91 Lexmark (1) 246 Other 1 Gross Goodwill - December 31st $ 4,146 Accumulated impairment - January 1st $ ( 2,245 ) Impairment loss — Currency ( 57 ) Accumulated impairment - December 31st $ ( 2,302 ) Goodwill, net - December 31 st $ 1,844 IT Solutions 2025 Gross Goodwill - January 1st $ 374 Foreign currency translation 2 ITsavvy (1) 2 Gross Goodwill - December 31st $ 378 Accumulated impairment - January 1st $ — Impairment loss — Accumulated impairment - December 31st $ — Goodwill, net - December 31 st $ 378 Total Xerox 2025 2024 2023 Gross Goodwill - January 1st $ 4,182 $ 3,940 $ 4,013 Foreign currency translation - Gross 93 ( 29 ) 47 Acquisitions (1) : Lexmark 246 — — ITsavvy 2 286 — U.K. Acquisitions — — 5 Other 1 1 — Dispositions (2) — ( 16 ) ( 125 ) Gross Goodwill - December 31st $ 4,524 $ 4,182 $ 3,940 Accumulated impairment - January 1st $ ( 2,245 ) $ ( 1,193 ) $ ( 1,193 ) Impairment loss — ( 1,058 ) — Foreign currency translation - Impairment ( 57 ) 6 — Accumulated impairment - December 31st $ ( 2,302 ) $ ( 2,245 ) $ ( 1,193 ) Goodwill, net - December 31 st $ 2,222 $ 1,937 $ 2,747 _____________ (1) 2025 activity reflects the acquisition of Lexmark, as well as measurement period adjustments for ITsavvy. Refer to Note 6 - Acquisitions and Divestitures for additional information related to acquisitions of Lexmark and ITsavvy. (2) Reflects the write off of $ 10 of Goodwill associated with the sales of our business operations in Argentina and Chile, as well as other immaterial dispositions during 2024, and the write-off of $ 115 of Goodwill associated with the donation of our Palo Alto Research Center (PARC) during 2023. Refer to Note 6 - Acquisitions and Divestitures for additional information related to these dispositions. Xerox 2025 Annual Report 123 Table of Conten t s During 2024, we concluded that a quantitative test of Goodwill was required. Based on that test, we determined 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, as a result, we recognized an after-tax non-cash impairment charge of $ 1,015 ($ 1,058 pre-tax) related to our Goodwill for the year ended December 31, 2024. The estimated fair value of the Print and Other and IT Solutions reporting units, for all periods discussed above, is based on estimates and assumptions that are considered Level 3 inputs under the fair value hierarchy. Intangible Assets, Net Intangible assets, net were $ 921 at December 31, 2025. Approximately, $ 778 related to our Print and Other segment and $ 143 related to our IT Solutions segment. Approximately $ 163 of Intangible assets, net were allocated to the IT Solutions segment on January 1, 2025, the date that we reassessed our operating and reportable segments. Intangible assets were comprised of the following: December 31, 2025 December 31, 2024 Weighted Average Amortization Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount Customer relationships (1) 10 years $ 856 $ 163 $ 693 $ 324 $ 106 $ 218 Distribution network (1) 25 years 123 123 — 123 123 — Trademarks (1) 8 years 142 28 114 38 20 18 Technology and non-compete 7 years 135 21 114 12 12 — Total Intangible Assets $ 1,256 $ 335 $ 921 $ 497 $ 261 $ 236 ____________ (1) 2025 and 2024 balances reflect the acquisitions of Lexmark and ITsavvy, respectively. Refer to Note 6 - Acquisitions and Divestitures for additional information related to acquisitions of Lexmark and ITsavvy. Excluding the impact of future acquisitions, amortization expense is expected to approximate $ 123 in 2026, 2027, 2028, 2029 and 2030, respectively . Note 13 – Restructuring Programs In connection with our Reinvention we engage in restructuring actions in order to reduce our cost structure and realign it to the changing nature of our business. Additionally, as a result of the Lexmark Acquisition, we have begun efforts to integrate and consolidate certain operations of the legacy Xerox and Lexmark businesses. 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. Refer to Note 6 - Acquisitions and Divestitures for additional information related to the Lexmark Acquisition. Restructuring and related costs, net reflect the following components for the three years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 2024 2023 Restructuring charges, net $ 82 $ 62 $ 114 Asset impairment charges, net (1) ( 15 ) 25 32 Related costs, net ( 1 ) 25 21 Total Restructuring and related costs, net $ 66 $ 112 $ 167 _____________ (1) Impairments are net of cash receipts. Restructuring charges, net primarily include employee severance costs and other contractual termination costs resulting from restructuring actions and initiatives. In those geographies where the Company has a formal severance plan or a history of consistently providing severance benefits representing a substantive on-going benefit arrangement, employee severance and related costs are accounted for in accordance with ASC 712 and are recognized when the obligation is both probable and reasonably estimable. Severance payments provided under one-time benefit arrangements related to restructuring activities are accounted for in accordance with ASC 420 and are recognized when the Company has communicated the termination plan to the affected employees, the benefits are fixed or determinable, and the Company does not have the ability to withdraw the offer. To the extent employees are required to render future service beyond a minimum retention period, severance costs are recognized ratably over the future service period as restructuring related costs. Contractual termination costs, including facility exit Xerox 2025 Annual Report 124 Table of Conten t s costs and other contract termination costs, are recognized when a liability has been incurred in accordance with applicable accounting guidance. Asset impairment charges, net primarily include impairments that may result from employee reductions, migration of facilities from higher-cost to lower-cost countries, and the consolidation of facilities, and is net of any gains we may realize on the disposal of those assets. Restructuring activities may also include the disposal or abandonment of assets, including leased right-of-use assets, that require an acceleration of depreciation or an impairment charge reflecting the excess of an asset's book value over fair value or other recoveries. Restructuring related costs include severance costs paid in connection with contractual outsourcing arrangements as well as professional support services associated with our business transformation initiatives. The recognition of restructuring and related costs requires the Company to make certain judgments and estimates regarding the nature, timing and amount of costs associated with planned initiatives. To the extent our actual results differ from our estimates and assumptions, we may be required to revise the estimated liabilities, requiring the recognition of additional restructuring costs or the reduction of liabilities already recognized. At the end of each reporting period, we evaluate the remaining accrued balances to ensure they are properly stated, and the utilization of the reserves are for their intended purpose in accordance with developed exit plans. 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 for the three years ended December 31, 2025, 2024 and 2023 is as follows: Severance Cost Prior Actions Severance Costs Reinvention Severance Costs Integration Other Contractual Termination Costs (2) Total Balance at December 31, 2022 $ 39 $ — $ — $ 4 $ 43 Restructuring provision 21 104 — — 125 Reversals of prior charges ( 11 ) — — — ( 11 ) Net Current Period Charges (1) 10 104 — — 114 Charges against reserve and currency ( 24 ) — — ( 4 ) ( 28 ) Balance at December 31, 2023 $ 25 $ 104 $ — $ — $ 129 Restructuring provision 2 66 — 4 72 Reversals of prior charges ( 6 ) ( 3 ) — ( 1 ) ( 10 ) Net Current Period Charges (1) ( 4 ) 63 — 3 62 Charges against reserve and currency ( 16 ) ( 63 ) — ( 3 ) ( 82 ) Balance at December 31, 2024 $ 5 $ 104 $ — $ — $ 109 Restructuring provision — 27 92 5 124 Reversals of prior charges ( 3 ) ( 36 ) ( 3 ) — ( 42 ) Net Current Period Charges (1) ( 3 ) ( 9 ) 89 5 82 Charges against reserve and currency ( 1 ) ( 52 ) ( 12 ) — ( 65 ) Balance at December 31, 2025 $ 1 $ 43 $ 77 $ 5 $ 126 _____________ (1) Represents net amount recognized within the Consolidated Statements of (Loss) Income for the years shown for restructuring charges. Reversals of prior charges primarily include net changes in estimated reserves from prior period initiatives accrued for in prior periods, including Reinvention and Integration. (2) Primarily includes additional costs incurred upon the exit from our facilities including decommissioning costs and associated contractual termination costs. We expect that the majority of these costs reserved for in 2025 will be paid upon the exercise of an early termination clause in 2027 . At December 31, 2025, we expect to pay $ 67 of the restructuring reserve over the next twelve months. The following table summarizes the reconciliation to the Consolidated Statements of Cash Flows: Year Ended December 31, 2025 2024 2023 Restructuring cash payments $ ( 69 ) $ ( 78 ) $ ( 27 ) Effects of foreign currency and other non-cash items 4 ( 4 ) ( 1 ) Charges against reserve and currency $ ( 65 ) $ ( 82 ) $ ( 28 ) Xerox 2025 Annual Report 125 Table of Conten t s 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. In connection with strategic actions taken as a result of the Company's Reinvention, 2025 activity included the impairment of an operating lease ROU asset, as well as the sales of facilities in the U.S. and Europe, while 2024 primarily related to impairments associated with geographic simplification. 2023 activity includes the impairment associated with the Company's sale of its Russian Subsidiary, which was completed in October 2023 and the impairment associated with the Company's sale of its Xerox Research Center of Canada (XRCC), the Canadian research division of Xerox, to Myant Capital Partners, which was completed in July 2023. 2023 also includes impairments associated with strategic actions taken as a result of the Company's Reinvention, including the outsourcing of certain back-office functions and geographic simplification. Year Ended December 31, 2025 2024 2023 Lease right of use assets (1) $ 4 $ — $ — Owned assets (2) 23 27 36 Asset impairments 27 27 36 Adjustments/Reversals (3) 9 ( 2 ) ( 4 ) Less: Proceeds from the sales of owned assets (4) ( 51 ) — — Net asset impairment (credit) charge $ ( 15 ) $ 25 $ 32 _____________ _ (1) Primarily related to the exit and abandonment of leased facilities, net of recoveries and any potential sublease income. (2) Primarily related to the exit and abandonment of owned facilities. (3) Reflects adjustment and reversals of impairments taken in prior periods. (4) Reflects proceeds on the sales of exited surplus facilities and land. Related Cost, Net In connection with our restructuring programs, we also incurred certain related costs as follows: Year Ended December 31, 2025 2024 2023 Retention-related severance/bonuses (1) $ — $ ( 2 ) $ ( 2 ) Contractual severance costs ( 1 ) ( 1 ) — Consulting and other costs (2) — 28 23 Total $ ( 1 ) $ 25 $ 21 _____________ (1) Includes retention related severance and bonuses for employees expected to continue working beyond their minimum retention period before termination. (2) Represents professional support services associated with our business transformation initiatives. For the years ended December 31, 2025, 2024 and 2023, cash payments for restructuring related costs were approximately $ 0 , $ 28 and $ 26 , respectively, while the reserve was $ 4 and $ 4 at December 31, 2025 and 2024, respectively. The balance at December 31, 2025 is expected to be paid over the next twelve months. Xerox 2025 Annual Report 126 Table of Conten t s Note 14 - Supplementary Financial Information The components of Other assets and liabilities are as follows: December 31, 2025 2024 Other Current Assets Income taxes receivable $ 44 $ 22 Royalties, license fees and software maintenance 30 19 Restricted cash 31 33 Prepaid expenses 112 39 Advances and deposits 14 17 Contract assets and other deferred contract costs 47 2 Other 84 80 Total Other Current Assets $ 362 $ 212 Other Long-term Assets Income taxes receivable $ 54 $ 45 Prepaid pension costs 578 421 Internal use software, net 146 60 Restricted cash 22 22 Customer contract costs, net 163 139 Operating lease right-of-use assets 311 179 Deferred compensation plan investments 12 13 Investments in affiliates, at equity (1) 55 49 Investments at cost - Xerox Holdings 41 40 Other 97 89 Total Other Long-term Assets (2) $ 1,479 $ 1,057 Accrued Expenses and Other Current Liabilities Income taxes payable $ 75 $ 33 Other taxes payable 79 46 Operating lease obligations 64 45 Interest payable 69 37 Restructuring reserves 67 86 Dividends payable - Xerox Holdings (3) 13 43 Distributor and reseller rebates/commissions 447 118 Unearned income and other revenue deferrals 190 133 Administration and overhead 41 44 Other 213 199 Total Accrued Expenses and Other Current Liabilities (4) $ 1,258 $ 784 Other Long-term Liabilities Deferred taxes $ 138 $ 85 Income taxes payable 26 4 Operating lease obligations 263 143 Environmental reserves 12 12 Restructuring reserves 59 23 Unearned income 109 19 Other 78 100 Total Other Long-term Liabilities $ 685 $ 386 _____________ (1) Investments in affiliates, at equity largely consists of several minor investments in entities in the Middle East region. Xerox's ownership interest in investments in corporate joint ventures and other companies is generally between 20% and 50%. (2) Xerox's balances of $ 1,438 and $ 1,017 at December 31, 2025 and 2024, respectively, excludes Investments at cost. (3) Represents dividends payable by Xerox Holdings Corporation on Common and Preferred Stock. (4) Xerox's balances of $ 1,245 and $ 741 at December 31, 2025 and 2024, respectively, excludes dividends payable of $ 13 and $ 43 , respectively. Xerox 2025 Annual Report 127 Table of Conten t s Cash, Cash Equivalents and Restricted Cash Restricted cash primarily relates to escrow cash deposits made in Brazil associated with ongoing 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 Consolidated Balance Sheets based on when the cash will be contractually or judicially released. Cash, cash equivalents and restricted cash amounts are as follows: December 31, 2025 2024 Cash and cash equivalents $ 512 $ 576 Restricted cash Litigation deposits in Brazil 21 20 Escrow and cash collections related to secured borrowings and receivable sales — 13 Other restricted cash 32 22 Total Restricted cash 53 55 Cash, cash equivalents and restricted cash $ 565 $ 631 Restricted cash is reported in the Consolidated Balance Sheets as follows: December 31, 2025 2024 Other current assets $ 31 $ 33 Other long-term assets 22 22 Total Restricted cash $ 53 $ 55 Supplemental Cash Flow Information Summarized cash flow information is as follows: Source/(Use) Location in Statement of Cash Flows Year Ended December 31, 2025 2024 2023 Provision for receivables (1) Operating $ 40 $ 44 $ 36 Provision for inventory Operating 45 66 18 Depreciation of buildings and equipment Operating 75 57 60 Depreciation and obsolescence of equipment on operating leases Operating 143 117 111 Amortization of internal use software Operating 30 27 37 Amortization of acquired intangible assets Operating 83 73 43 Amortization of patents (2) Operating 6 9 9 Amortization of customer contract costs (3) Operating 67 64 69 Cost of additions to land, buildings and equipment Investing ( 37 ) ( 27 ) ( 29 ) Cost of additions to internal use software Investing ( 54 ) ( 17 ) ( 8 ) Payments to acquire noncontrolling interests - Xerox Holdings Investing ( 13 ) ( 30 ) ( 5 ) Common stock dividends - Xerox Holdings Financing ( 57 ) ( 127 ) ( 151 ) Preferred stock dividends - Xerox Holdings Financing ( 14 ) ( 14 ) ( 14 ) Repurchases related to stock-based compensation - Xerox Holdings Financing ( 6 ) ( 10 ) ( 8 ) Payments to noncontrolling interests Financing ( 2 ) ( 2 ) ( 2 ) Proceeds from issuance of warrants Financing 11 — — Commitment fees Financing ( 22 ) — — Finance lease obligations payment Financing ( 10 ) ( 10 ) ( 7 ) __________________________ (1) Provision for receivables includes adjustments for customer accommodations and contract terminations of $ 1 , $ 2 , and $ 8 for the three years ended December 31, 2025, 2024 and 2023, respectively. (2) Amortization of patents is reported in Decrease (increase) in other current and long-term assets on the Consolidated Statements of Cash Flows. (3) Amortization of customer contract costs is reported in Decrease (increase) in other current and long-term assets on the Consolidated Statements of Cash Flows. Refer to Note 3 - Revenue - Contract Costs for additional information. Xerox 2025 Annual Report 128 Table of Conten t s Supplier Finance Programs 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 Consolidated Balance Sheets, and the associated payments are included in operating activities within our Consolidated Statements of Cash Flows. 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 us 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 paying our supplier and vendor invoices consistent with their original terms. This program is generally available to all non-inventory vendors and suppliers. Activity related to the Company's supplier finance program is as follows: 2025 2024 2023 Balance at January 1st, $ 30 $ 40 $ 40 Amounts invoiced 86 110 125 Invoices paid ( 98 ) ( 120 ) ( 125 ) Balance at December 31st, $ 18 $ 30 $ 40 Note 15 – Debt Short-term borrowings were as follows: December 31, 2025 2024 Short-term debt and current portion of long-term debt Xerox Holdings Corporation $ 121 $ 388 Xerox Corporation 109 130 Xerox - Other Subsidiaries (1) 1 67 Total $ 231 $ 585 _____________ (1) Represents subsidiaries of Xerox Corporation. We classify our debt based on the contractual maturity dates of the underlying debt instruments or as of the earliest put date available to the debt holders. We defer costs associated with debt issuance over the applicable term, or to the first put date in the case of convertible debt or debt with a put feature. These costs are amortized as interest expense in our Consolidated Statements of (Loss) Income. Xerox 2025 Annual Report 129 Table of Conten t s Long-term debt was as follows: December 31, Stated Rate Weighted Average Interest Rates at December 31, 2025 (1) 2025 2024 Xerox Holdings Corporation Senior Notes due 2025 5.00 % — % $ — $ 388 Senior Notes due 2026 13.00 % 18.61 % 125 — Senior Notes due 2028 5.50 % 5.40 % 750 750 Senior Notes due 2029 8.88 % 8.88 % 500 500 Senior Notes due 2030 13.00 % 13.00 % 250 — Convertible Senior Notes due 2030 3.75 % 3.75 % 400 400 Subtotal - Xerox Holdings Corporation $ 2,025 $ 2,038 Xerox Corporation Term Loan B due 2029 (2)(3) 7.71 % 7.71 % $ 706 $ 523 Secured Promissory Note due 2025 (2) — % — % — 110 Secured Promissory Note due 2026 (2) — % 5.53 % 110 110 Senior Secured Notes due 2030 (2) 10.25 % 10.50 % 400 — Senior Secured Notes due 2031 (2) 13.50 % 14.16 % 500 — Senior Notes due 2035 4.80 % 4.84 % 250 250 Senior Notes due 2039 6.75 % 6.78 % 350 350 Subtotal - Xerox Corporation $ 2,316 $ 1,343 Xerox - Other Subsidiaries (2) France — 70 Lexmark 3 — Subtotal Xerox - Other Subsidiaries $ 3 $ 70 Principal debt balance $ 4,344 $ 3,451 Xerox Holdings Corporation - Debt issuance costs ( 20 ) ( 19 ) Xerox Corporation - Debt issuance costs ( 39 ) ( 11 ) Xerox - Other subsidiaries - Debt issuance costs — — Subtotal - Debt issuance costs $ ( 59 ) $ ( 30 ) Unamortized (discount) premium ( 38 ) ( 22 ) Less: current maturities ( 231 ) ( 585 ) Total Long-term Debt $ 4,016 $ 2,814 _____________ (1) Represents the weighted average effective interest rate, which includes the effect of discounts, premiums and imputed interest on issued debt. (2) Represent secured borrowings of Xerox Corporation and its Other subsidiaries. Refer to the Secured Borrowings and Collateral section below for additional information regarding the secured borrowings of Other subsidiaries, which are secured by finance receivables. (3) The stated rate and the weighted average interest rate for the TLB is SOFR plus a margin of 4.00 %, which is the option selected by Xerox per the terms of the agreement. Refer to the Term Loan B Credit Facility discussion below for additional information on the TLB. Scheduled principal payments due on our long-term debt for the next five years and thereafter are as follows: 2026 (1) 2027 2028 2029 2030 Thereafter Total Xerox Holdings Corporation $ 125 $ 25 $ 775 $ 531 $ 569 $ — $ 2,025 Xerox Corporation 110 51 90 565 400 1,100 2,316 Xerox - Other Subsidiaries (2) 1 1 1 — — — 3 Total $ 236 $ 77 $ 866 $ 1,096 $ 969 $ 1,100 $ 4,344 _____________ (1) Current portion of long-term debt maturities for 2026 are $ 110 , $ 125 , $ 1 and $ 0 for the first, second, third and fourth quarters, respectively. (2) Represents subsidiaries of Xerox Corporation. We have entered into transactions, and continue to seek opportunities to reduce our borrowings in a cost and cash efficient manner, including strategies to retire debt that has recently traded at significant discounts. Refer to Note 26 - Subsequent Events, for additional information. Xerox 2025 Annual Report 130 Table of Conten t s Senior Secured and Unsecured Notes Xerox Corporation On April 11, 2025, Xerox Corporation and Xerox Issuer Corporation, a wholly-owned subsidiary of Xerox Corporation (Escrow Issuer), completed a private offering of (i) $ 400 aggregate principal amount of 10.250 % Senior Secured First Lien Notes due 2030 at 99 % of par (the First Lien Notes) issued by Xerox Corporation, 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. The Company received net proceeds (after discount, fees and expenses) on the issuance of the First Lien Notes of $ 366 , and net proceeds of $ 392 (after discount) on the issuance of the Second Lien Notes. The net proceeds of the Second Lien Notes were deposited into an escrow account upon the issuance of the Second Lien Notes and were released upon the consummation of the Lexmark Acquisition. On May 9, 2025, the Escrow Issuer issued an additional $ 100 of the Second Lien Notes at 95 % of par. Net proceeds (after discounts, fees and expenses) were approximately $ 93 . The net proceeds were deposited into the escrow account, as well as $ 1 of accrued and unpaid interest, and a deposit of $ 2 by Xerox Corporation. On July 1, 2025, approximately $ 494 was released from escrow (including accrued interest) to fund a portion of the Lexmark Acquisition. An additional $ 15 of commitment and underwriting fees were paid upon the release of the proceeds from escrow. Upon consummation of the Lexmark Acquisition, the Escrow issuer was merged into Xerox Corporation and Xerox Corporation assumed the Second Lien Notes. Net proceeds from the offering of the First Lien Notes, together with cash on hand, were used to redeem Xerox Holdings Corporation’s 5.000 % Senior Notes due 2025 (2025 Notes) and to pay fees and expenses, including redemption premiums and accrued interest, in connection with the First Lien Notes offering, the Lexmark Acquisition and the related transactions. Net proceeds from the offering of the Second Lien Notes were used to (i) fund a portion of the purchase price for the Lexmark Acquisition and the repayment of a portion 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 Second Lien Notes 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 Holdings Corporation and, together with Xerox Corporation, the Company), certain of Xerox Corporation's domestic and foreign subsidiaries and U.S. Bank Trust Company, National Association, as trustee and collateral agent (the First Lien Notes Agent). The Second Lien Notes are governed by an indenture, dated as of April 11, 2025 (the Second Lien Indenture and, together with the First Lien Indenture, the Indentures), between the Xerox Holdings Corporation, Xerox Corporation (as successor to the Escrow Issuer), certain of Xerox Corporation’s domestic and foreign subsidiaries and U.S. Bank Trust Company, National Association, as trustee and collateral agent (the Second Lien Notes Agent). The First Lien Notes mature on October 15, 2030 and bear interest at a rate of 10.250 % per annum. The Second Lien Notes bear interest at a rate of 13.500 % per annum. The First Lien Notes are unconditionally guaranteed on a senior secured basis by Xerox Holdings Corporation and certain of Xerox Corporation’s domestic and foreign subsidiaries (including, following the completion of the Lexmark Acquisition, Lexmark and certain of its domestic and foreign subsidiaries). Subject to certain exceptions and permitted liens, the First Lien Notes are secured by security interests in substantially all of the assets of the guarantors of the First Lien Notes (the Collateral) on a first-priority basis by the Collateral that is Fixed Asset Collateral (as defined in the First Lien Indenture) and on a second-priority basis by the Collateral that is Current Asset Collateral (as defined in the First Lien Indenture). Subject to certain exceptions and permitted liens, the Second Lien Notes are secured by security interests in the same Collateral as the First Lien Notes, but on a second-priority basis by the Collateral that is Fixed Asset Collateral (as defined in the Second Lien Indenture) and on a third-priority basis by the Collateral that is Current Asset Collateral (as defined in the Second Lien Indenture). The Indentures contain customary affirmative and negative covenants governing dividends, investments, debt, liens, and other matters of default. Xerox Holdings Corporation On July 1, 2025, Xerox Holdings Corporation completed an offering of (i) $ 125 aggregate principal amount of 13.00 % Senior Unsecured Notes due June 2026 (the 2026 Notes), and ii) $ 250 aggregate principal amount of 13.00 % Senior Notes due July 2030 (the 2030 Notes). Xerox Holdings Corporation received net proceeds (after discount, fees and expenses) on issuance of the 2026 Notes of approximately $ 116 , and net proceeds on the Xerox 2025 Annual Report 131 Table of Conten t s issuance of the 2030 Notes of approximately $ 245 . In connection with the issuance of the 2030 Notes, Xerox Holdings Corporation issued a pre-funded warrant with a fair value of approximately $ 11 (as of the date of the issuance). Refer to Note 22 - Shareholders' Equity for additional information regarding the issuance of the pre-funded warrant. The 2026 Notes mature on June 30, 2026 and provide the option for Xerox Holdings Corporation (at its sole discretion) to extend the maturity of approximately $ 62.5 of the 2026 Notes for an additional six-month period (for a 2 % fee on the amount of 2026 Notes outstanding after the payment on the scheduled maturity date). The 2026 Notes bear interest at a rate of 13.00 % per annum. During the extension period, the 2026 Notes will continue to bear interest at 13.00 % per annum. The 2026 Notes are governed by an indenture, dated as of July 1, 2025 (the 2026 Notes Indenture), among Xerox, Xerox Holdings Corporation, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2026 Notes are unconditionally guaranteed on an unsecured basis by Xerox Corporation and certain of Xerox’s domestic and foreign subsidiaries. Xerox used the net proceeds of the 2030 Notes to fund a portion of the purchase price for the Lexmark Acquisition and to repay a portion of Lexmark’s outstanding debt (together with accrued interest and any applicable expenses, fees or premiums) and to pay fees and expenses in connection with the Lexmark Acquisition. The net proceeds of the 2026 Notes are being used for general corporate purposes including, without limitation, funding the realization of synergies associated with the Lexmark Acquisition. The 2030 Notes mature on July 31, 2030 and initially bear interest at a rate equal to 13.00 % per annum. The initial interest rate on the 2030 Notes will increase (Interest Rate Step-Up) to the rates (on a per annum basis) set forth below for the period from and including the dates indicated below (each a Step-Up Date) to but excluding the next succeeding Step-up Date, or the stated maturity of the 2030 Notes, as applicable. Step-Up Date Interest Rate Step-Up July 1, 2026 13.500 % July 1, 2027 14.000 % October 1, 2027 14.125 % January 1, 2028 14.250 % April 1, 2028 14.500 % July 1, 2028 14.750 % October 1, 2028 15.000 % January 1, 2029 15.250 % April 1, 2029 15.500 % July 1, 2029 15.750 % October 1, 2029 16.000 % January 1, 2030 16.250 % April 1, 2030 16.500 % July 1, 2030 16.750 % The 2030 Notes are governed by an Indenture, dated as of July 1, 2025 (the 2030 Notes Indenture), among Xerox Corporation, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2030 Notes are unconditionally guaranteed on an unsecured basis by Xerox Corporation and certain of Xerox Corporation’s domestic and foreign subsidiaries (including, following the completion of the Lexmark Acquisition, Lexmark and certain of its domestic and foreign subsidiaries). Each of the 2026 Notes Indenture and the 2030 Notes Indenture contains customary affirmative and negative covenants governing dividends, investments, debt, liens, and other matters and events of default. Net proceeds of the 2030 Notes offering were used to (i) fund a portion of the purchase price for the Lexmark Acquisition and the repayment of a portion 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 Second Lien Notes offering, the Lexmark Acquisition and the related transactions. Net proceeds of the 2026 Notes offering are being used for general corporate purposes including, without limitation, funding the realization of synergies associated with the Lexmark Acquisition. Refer to the Debt section of Note 6 - Acquisitions and Divestitures, for additional information regarding the Lexmark Acquisition. Xerox 2025 Annual Report 132 Table of Conten t s Term Loan B Credit Facility In November 2023, Xerox Corporation, as borrower, Xerox Holdings Corporation, and certain of Xerox Corporation’s subsidiaries, as guarantors, entered into a first lien term loan credit agreement with Jefferies Finance LLC, as administrative agent and collateral agent (the TLB Agent), and a syndicate of lenders providing for a first lien senior secured term loan credit facility (the TLB Facility) to Xerox Corporation of $ 550 , which was fully extended as term loans to Xerox Corporation at closing. The term loans under this facility included an aggregate original issue discount (OID) of $ 17 and debt issuance costs of $ 9 resulting in net proceeds of approximately $ 524 . The OID and debt issuance costs were accordingly deferred and are amortized over the term of the Loans. On July 1, 2025, Xerox Corporation made an incremental term loan borrowing of approximately $ 327 (Incremental Term Loans) under the TLB Facility. Substantially all of the net proceeds of the Incremental Term Loans were used to repay (through a cashless settlement) a portion of Lexmark’s assumed debt of $ 323 . Debt issuance costs of approximately $ 1 were paid and deferred in connection with the issuance of the Incremental Term Loans, and will be amortized over the remaining term. Refer to the Debt section of Note 6 - Acquisitions and Divestitures, for additional information regarding the Lexmark Acquisition and the TLB Facility. As a result of sales of finance receivables during the third quarter 2025, approximately $ 41 of the TLB Facility was repaid in October 2025. Refer to Note 8 - Finance Receivables, Net for additional information regarding our sales of finance receivables. Xerox Corporation’s obligations under the TLB Facility are supported by, guarantees from the Company and certain of Xerox Corporation’s U.S., Canadian, German, Belgium, and English subsidiaries, and security interests in substantially all of the assets of the Company, and such U.S., Canadian and English subsidiaries (subject to certain exceptions and limitations set forth in the TLB Facility), and security interests in the finance lease receivables of such German and Belgium subsidiaries. Liens in favor of the lenders or holders, as applicable, under the TLB, the ABL, the First Lien Notes, the Second Lien Notes and the ITsavvy Notes are subject to intercreditor agreements with the TLB Agent, ABL Agent, the First Lien Notes Agent, the Second Lien Notes Agent and ITsavvy Holdings, LLC, as the representative for the holders of the ITsavvy Notes. At Xerox Corporation’s election, the term loans will bear interest at a per annum rate of either: (1) a fluctuating rate equal to the highest of (A) a rate of 0.5 % in excess of the “NYFRB” rate, (B) the “prime rate” and (C) a rate of 1.0 % in excess of one-month Term SOFR, plus an applicable margin of 3.00 %, or (2) Term SOFR for a one-, three- or six-month interest period or (as agreed to by the Agent and the Lenders) such other period, as selected by the Company (provided that such rate shall not be less than 0.50 %), plus an applicable margin of 4.00 %, for Term SOFR term loans, or 3.00 % for ABR term loans. There are $ 706 of term loans outstanding at December 31, 2025. Currently, $ 406 of the term loans bears interest at an average rate of 7.73 %, $ 175 bears interest at an average rate of 7.67 % through Mar 31, 2026, and the remaining $ 125 of the term loans bears interest at an average rate of 7.72 % through January 31, 2026, at which time the interest rate will reset based on Xerox Corporation’s elections. The remaining term loans are repayable in full at maturity in November 2029 and amortize at a quarterly rate of 7.50 % per annum in 2026 and 10 % per annum thereafter. If an event of default occurs under the TLB Facility, the entire principal amount outstanding thereunder, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable, subject, in certain instances, to the expiration of applicable cure periods. The TLB Facility also contains customary excess cash flow and asset sale mandatory prepayments, reporting covenants and negative covenants governing dividends, investments, debt, liens, and other matters that are customary for similar term loan B facilities. In October 2025, Lexmark and certain of its domestic and foreign subsidiaries became guarantors under the TLB Facility. Refer to the Debt section of Note 6 – Acquisitions and Divestitures, for additional information regarding the Lexmark Acquisition. Revolving Credit Facility In May 2023, Xerox Corporation, as borrower, Xerox Holdings Corporation and certain subsidiaries of Xerox Corporation, as guarantors, entered into a five-year asset-based revolving credit agreement (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 the earlier of May 22, 2028, and date that is 91 days prior to the final scheduled maturity date of any Material Springer Debt (as defined in the ABL Facility), and there are no scheduled principal payments prior to maturity. We deferred Xerox 2025 Annual Report 133 Table of Conten t s approximately $ 7 of debt issuance costs in connection with the ABL Facility, which are being amortized over the five-year term. In February 2024, the Company, Xerox Holdings Corporation and the Administrative Agent entered into an amendment in connection with the delivery of additional guarantees and collateral under the ABL Facility as a result of the Company’s execution of the TLB Facility, which constituted Material Springer Debt (as defined in the ABL Facility), and the execution of certain guarantees by subsidiaries of the Company in connection with the TLB. In June 2024, Xerox Corporation and Xerox Holdings Corporation, entered into Amendment No. 2 to Credit Agreement (the Amendment) with the ABL agent, and the lenders party thereto. The Amendment amended the ABL Facility, 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. Under the amended ABL Facility, Xerox Corporation may borrow up to the lesser of (x) $ 425 and (y) a borrowing base calculated based on accounts receivable and inventories of the loan parties thereunder as set forth in the ABL Facility. The ABL Facility includes an uncommitted accordion feature that allows Xerox Corporation to increase the facility by a total of up to $ 250 , subject to obtaining additional commitments from existing lenders or new lending institutions. The ABL Facility also includes a $ 100 letter of credit subfacility. Xerox Corporation's borrowings under the ABL Facility are supported by guarantees from Xerox Holdings Corporation and certain of Xerox Corporation's U.S., Canadian, German, Belgian and English subsidiaries, and by security interests in substantially all of the 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 TLB Facility), and all finance lease receivables of such German and Belgian subsidiaries. At Xerox Corporation’s election, the loans under the amended ABL Facility will bear interest at either: (1) a fluctuating rate per annum equal to the highest of (A) Citibank’s base rate, (B) a rate of 0.5 % in excess of the “NYFRB” rate, and (C) a rate of 1.0 % in excess of one-month Term SOFR, provided that such fluctuating rate shall not be less than 0.0 %, in each case plus an applicable margin (the loans bearing interest at such fluctuating rate, ABR Loans); or (2) the one-, three-, or six-month period or (as agreed to by the Agent and the Lenders) such other period, as selected by the Xerox Corporation, per annum Term SOFR (plus a 0.10 % credit spread adjustment), provided that such rate shall not be less than 0.0 %, plus an applicable margin (the loans bearing interest at such rate Term SOFR Loans). The applicable margin for ABR loans ranges from 0.5 % to 1.0 % depending on the Company’s average daily excess availability. The applicable margin for Term SOFR loans from 1.5 % to 2.0 % depending on the Company’s average daily excess availability. The amended ABL Facility requires the Company to comply with a fixed charge coverage ratio of 1x, as defined in the ABL Facility, measured as of the last day of each fiscal quarter during which excess availability is less than an amount equal to the greater of (A) $ 31.875 and (B) 10 % of the Line Cap (the lesser of the aggregate amount of revolving commitments and the then-applicable borrowing base). Based on the excess availability at December 31, 2025, the fixed charge coverage ratio measurement was not applicable. The amended ABL Facility also contains negative covenants governing dividends, investments, debt, liens, and other matters customary for similar facilities. As of March 16, 2026 and based on our January availability calculation, we have availability of $ 382 before letters of credit issued under the ABL Facility of approximately $ 93 . There are no current borrowings outstanding. Accordingly, our net availability is approximately $ 289 . As discussed above, certain debt covenants limit our total amount of secured debt outstanding. As of the date of our filing, our capacity under the ABL was not limited by any debt covenants. Our capacity to borrow under the ABL Facility may be adversely impacted by the terms of the ABL Facility and certain other agreements that govern our debt. If an event of default occurs under the amended ABL Facility, the entire principal amount outstanding, together with all accrued unpaid interest and other amounts owed in respect thereof, may be declared immediately due and payable, subject, in certain instances, to the expiration of applicable cure periods. In October 2025, Lexmark and certain of its domestic and foreign subsidiaries became guarantors under the ABL. Refer to the Debt section of Note 6 - Acquisitions and Divestitures, for additional information regarding the Lexmark Acquisition. Xerox 2025 Annual Report 134 Table of Conten t s Secured Promissory Notes In connection with Xerox Corporation's acquisition of ITsavvy Acquisition Company, Inc. (ITsavvy), Xerox Corporation issued two , non-interest bearing, secured promissory notes (the 2025 ITsavvy Note and the 2026 ITsavvy Note, or the ITsavvy Notes). Each of the ITsavvy Notes had a principal amount of $ 110 . The 2025 ITsavvy Note had a maturity date of October 8, 2025, and the 2026 ITsavvy Note had a maturity date of January 30, 2026. The 2025 ITsavvy Note has been paid in full in cash as of its maturity date. Refer to the Debt section of Note 6 - Acquisitions and Divestitures, for additional information regarding the ITsavvy and the ITsavvy Notes. In October 2025, the U.S. Lexmark and certain of its domestic and foreign subsidiaries became guarantors under the TLB Facility. Refer to the Debt section of Note 6 - Acquisitions and Divestitures, for additional information regarding the Lexmark Acquisition. Capped Calls In connection with the issuance of the 2030 3.75 % Convertible Senior Notes in 2024 (the 2030 Convertible Notes), the Company entered into privately negotiated capped call transactions (the Capped Calls) with certain of the initial purchasers of the 2030 Convertible 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 Convertible 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 Convertible Notes is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion of the 2030 Convertible Notes the trading price of our common stock price exceeds the conversion price of the 2030 Convertible Notes. The initial cap 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. Under the terms of the Capped Call, a dividend payment below the Company’s $ 1.00 annual dividend at the time of the purchase of the Capped Call could result in an adjustment to the cap price. This adjustment is intended to preserve the original economics of the Capped Call and is permissible under ASC 815-40, and therefore, the Capped Call continues to meet the conditions for equity classification. The Capped Call cap price was reduced to $ 27.51 per share as a result of the reduction of our annual dividend from $ 1.00 to $ .50 in the first quarter of 2025. In the second quarter of 2025, the annual dividend was reduced to $ .10 per share. The current Capped Call cap price was reduced to $ 20.84 per share, which is the same as the conversion price of the 2030 Convertible Notes. Xerox Holdings Corporation/Xerox Corporation Intercompany Loan In March 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 . As a result, Xerox Corporation recorded approximately $ 900 of related party debt. The proceeds of this new intercompany loan were used to partially pay down approximately $ 362 on the existing 2020 intercompany loan made by Xerox Holdings Corporation to Xerox Corporation. At December 31, 2025 and 2024, the balance of the Intercompany Loan reported in Xerox Corporation’s Consolidated Balance Sheet was $ 1,993 and $ 2,022 , respectively, which is net of related debt issuance costs, and the intercompany interest payable was $ 36 and $ 31 , respectively. Secured Borrowings and Collateral In prior years, we had 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 had 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 received opinions to that effect from outside legal counsel. However, the transactions were accounted for as secured borrowings as we fully consolidated the SPEs in our financial statements. As a result, the assets of the SPEs were not available to satisfy any of our other obligations. Conversely, the credit holders of these SPEs did not have legal recourse to the Company’s general credit. Xerox 2025 Annual Report 135 Table of Conten t s At December 31, 2024, we had borrowings of $ 70 , which were secured by finance receivables of $ 58 . These borrowings had an interest rate of 4.62 %, and were expected to mature in 2026. During the first quarter 2025, the outstanding balance of $ 70 was repaid. Accordingly, there are no borrowings secured by finance receivables that are outstanding as of December 31, 2025. Interest Interest paid on our short-term and long-term debt amounted to $ 272 , $ 214 and $ 201 for the years ended December 31, 2025, 2024 and 2023, respectively. Interest expense and interest income was as follows: Year Ended December 31, 2025 2024 2023 Equipment financing interest (1) $ 86 $ 106 $ 130 Non-financing interest expense (1)(2) 248 119 68 Interest expense $ 334 $ 225 $ 198 Financing income (3) $ 126 $ 151 $ 191 Other interest income (3) 14 14 16 Interest income $ 140 $ 165 $ 207 _____________ (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 Consolidated Statements of (Loss) Income. (2) Interest expense of Xerox Corporation included intercompany expense associated with the Xerox Holdings Corporation/Xerox Corporation Intercompany Loan of $ 136 , $ 111 and $ 80 for the three years ended December 31, 2025, 2024 and 2023, 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 Consolidated Statements of (Loss) Income. Equipment financing interest is determined based on an estimated cost of funds, applied against the estimated level of debt required to support our net finance receivables. The estimated cost of funds is based on the interest cost associated with actual borrowings determined to be in support of the leasing business. The estimated level of debt continues to be based on an assumed 7 to 1 leverage ratio of debt/equity as compared to our average finance receivable balance during the applicable period. Note 16 – Financial Instruments We are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. These derivative financial instruments are utilized to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates. We enter into limited types of derivative contracts, including interest rate swap agreements, interest rate caps, foreign currency spot, forward and swap contracts and net purchased foreign currency options to manage interest rate and foreign currency exposures. Our primary foreign currency market exposures include the Euro, U.K. Pound Sterling, Japanese Yen, Philippine Peso, Mexican Peso, and Chinese Yuan .The fair market values of all our derivative contracts change with fluctuations in interest rates and/or currency exchange rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes. The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities. We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated with our derivative instruments because these transactions are executed with a diversified group of major financial institutions. Further, our policy is to deal only with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties. Interest Rate Risk Management We use interest rate swap and interest rate cap agreements to manage our interest rate exposure and to achieve a desired proportion of variable and fixed rate debt. 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-year period ended December 31, 2025, 2024, and 2023, respectively. Cash Flow Hedges We use interest rate swaps and caps to manage the exposure to variability in the interest rate payments on our finance receivable secured loan borrowings. 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. Xerox 2025 Annual Report 136 Table of Conten t s During 2024, certain derivatives were de-designated 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. In 2024, we entered into two floating-to-fixed interest rate swaps to hedge against interest rate volatility associated with any of our floating rate debt which was primarily under our Term Loan B Credit Agreement (TLB). During the third quarter 2025, the Company voluntarily de-designated certain interest rate swaps with a notional value of $ 300 , which were previously accounted for as cash flow hedges of variable-rate debt. The de-designation was made because the Company may, from time to time, prepay portions of the underlying debt, resulting in forecasted interest payments that are no longer considered highly probable. Following the de-designation, the swaps continue to be carried at fair value on the balance sheet. Changes in fair value are recognized in earnings in interest expense were not material during 2025. Amounts previously recorded in accumulated other comprehensive loss related to the hedged cash flows was immaterial and was reclassified to earnings during the third quarter 2025. During the fourth quarter 2025, a $ 125 interest rate swap was terminated. Accordingly, the notional value of the remaining swap at December 31, 2025 was $ 175 . Foreign Exchange Risk Management We are a global company, and we are exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts and purchased option contracts, to hedge the following foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities: • Foreign currency-denominated assets and liabilities, and • Forecasted purchases, and sales in foreign currency. At December 31, 2025, we had outstanding forward exchange and purchased option contracts with terms of less than 12 months. At December 31, 2025, approximately 97 % of these contracts mature within three months, 1 % in three to six months and 2 % in six to twelve months. There have not been any other material changes in our hedging strategy during 2025. The following is a summary of the primary hedging positions and corresponding fair values as of December 31, 2025: Year Ended December 31, 2025 2024 Currencies Hedged (Buy/Sell) Gross Notional Value Fair Value Asset (Liability) (1) Gross Notional Value Fair Value Asset (Liability) (1) Euro/U.S. Dollar $ 1,195 $ 1 $ 212 $ ( 1 ) U.S. Dollar/Euro 289 — 342 3 Euro/U.K Pound Sterling 134 — 337 1 Chinese Yuan/U.S. Dollar 134 — — — Mexican Peso/U.S. Dollar 121 — — — Philippine Peso/U.S Dollar 115 — — — Japanese Yen/U.S. Dollar 100 ( 3 ) 104 ( 5 ) U.K Pound Sterling/U.S. Dollar 67 — — — Swiss Franc/U.S. Dollar 62 — — — U.S Dollar/Canadian Dollar 52 — 194 — Hong Kong Dollar/ U.S. Dollar 51 — — — Swiss Franc /Euro 30 — 19 — Japanese Yen/Euro 24 ( 1 ) 52 ( 1 ) U.K. Pound Sterling/Euro 14 — 67 — Canadian Dollar/Euro 21 — 19 — All Other 247 — 64 — Total Foreign exchange hedging $ 2,656 $ ( 3 ) $ 1,410 $ ( 3 ) _____________ (1) Represents the net receivable (payable) amount included in the Consolidated Balance Sheet at December 31, 2025 and 2024. The change in the gross notional value of our hedging positions since December 31, 2024 resulted from the acquisition of Lexmark. Xerox 2025 Annual Report 137 Table of Conten t s Foreign Currency Cash Flow Hedges We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. The amount of ineffectiveness recorded in the Consolidated Statements of (Loss) Income for these designated cash flow hedges was not material for the three years ended December 31, 2025. The net liability fair value of these contracts was $ 4 and $ 1 as of December 31, 2025 and 2024, respectively. Summary of Derivative Instruments Gains (Losses) Derivative gains and (losses) affect the income statement based on whether such derivatives are designated as hedges of underlying exposures. The following is a summary of derivative gains and (losses). Designated Derivative Instruments Gains (Losses) The following table provide a summary of gains (losses) on derivative instruments: Derivative (Loss) Gain Recognized in OCI (Effective Portion) (Loss) Gain Reclassified from AOCL to Income (Effective Portion) Derivatives in Cash Flow Hedging Relationships Year Ended December 31, Location of Derivative (Loss) Gain Reclassified from AOCL into Income (Effective Portion) Year Ended December 31, 2025 2024 2023 2025 2024 2023 Foreign exchange contracts – forwards/options $ ( 11 ) $ ( 6 ) $ ( 17 ) Cost of sales $ ( 4 ) $ ( 9 ) $ ( 22 ) Interest rate contracts ( 4 ) 6 ( 1 ) Interest expense — ( 1 ) 4 Total $ ( 15 ) $ — $ ( 18 ) $ ( 4 ) $ ( 10 ) $ ( 18 ) For the three years ended December 31, 2025, 2024 and 2023 no amount of ineffectiveness was recorded in the Consolidated Statements of (Loss) Income for these designated cash flow hedges. All components of each derivative’s gain or (loss) were included in the assessment of hedge effectiveness. At December 31, 2025, a net after-tax loss of $ 4 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity. The entire balance is expected to be reclassified into Net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions. 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 December 31 2025, the Company had no collateral posted due to this provision. Non-Designated Derivative Instruments Gains (Losses) Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets and liabilities. 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 asset/liability fair value of these contracts was $ 2 and $( 2 ) as of December 31, 2025 and 2024, respectively. The following table provides a summary of gains (losses) on non-designated derivative instruments: Year Ended December 31, Derivatives NOT Designated as Hedging Instruments Location of Derivative Gain 2025 2024 2023 Foreign exchange contracts – forwards Other expense – Currency gains (losses), net $ ( 8 ) $ 24 $ 26 For the three years ended December 31, 2025, 2024 and 2023, we recorded net currency losses of $ 12 , $ 15 and $ 28 , 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. Xerox 2025 Annual Report 138 Table of Conten t s Note 17 – Fair Value of Financial Assets and Liabilities The following table represents assets and liabilities' fair value measured on a recurring basis. The basis for the measurement at fair value in all cases is Level 2 – Significant Other Observable Inputs. As of December 31, 2025 2024 Assets Derivatives $ 8 $ 11 Deferred compensation investments in mutual funds 12 13 Total $ 20 $ 24 Liabilities Derivatives $ 10 $ 8 Deferred compensation plan liabilities 11 11 Total $ 21 $ 19 We utilize the income approach to measure the fair value for our derivative assets and liabilities. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices, and therefore are classified as Level 2. Fair value for our deferred compensation plan investments in mutual funds is based on quoted market prices for those funds. Fair value for deferred compensation plan liabilities is based on the fair value of investments corresponding to employees’ investment selections. Summary of Other Financial Assets and Liabilities The estimated fair values of our other financial assets and liabilities were as follows: December 31, 2025 December 31, 2024 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 512 $ 512 $ 576 $ 576 Accounts receivable, net 1,122 1,122 796 796 Short-term debt and current portion of long-term debt (1) 231 236 585 592 Long-term debt Xerox Holdings Corporation $ 1,872 $ 800 $ 1,634 $ 1,391 Xerox Corporation 2,142 1,676 1,177 989 Xerox - Other Subsidiaries (2) 2 2 3 3 Total Long-term debt $ 4,016 $ 2,478 $ 2,814 $ 2,383 _____________ (1) Includes $ 121 and $ 388 of Xerox Corporation related party debt for the years ended December 31, 2025 and 2024 , respectively. (2) Represents subsidiaries of Xerox Corporation. The fair value amounts for Cash and cash equivalents and Accounts receivable, net, approximate carrying amounts due to the short maturities of these instruments. The fair value of Short-term debt, including the current portion of long-term debt, and Long-term debt was estimated based on the current rates offered to us for debt of similar maturities (Level 2). The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at such date. Xerox 2025 Annual Report 139 Table of Conten t s Note 18 – Employee Benefit Plans We sponsor numerous defined benefit and defined contribution pension and other post-retirement benefit plans, primarily retiree health care, in our domestic and international operations. December 31 is the measurement date for all of our post-retirement benefit plans. Where legally possible, we have amended our major defined benefit pension plans to freeze current benefits and eliminate benefit accruals for future service, including our U.S. defined benefit plans, the Canadian Salary Pension Plan and the U.K. pension plan. In certain non-U.S. plans, we are required to continue to consider salary increases and inflation in determining the benefit obligation related to prior service. In December 2023, the Trustees for the U.K. pension plan entered a second insurance buy-in contract, in accordance with U.K. pension regulations. Insurance buy-in contracts are group annuity contracts that are expected to provide an income stream to cover a significant majority of the cash flows arising for the plan population with future contracted payments. However, the benefit obligation remains with the plan and the Company. This contract is issued by a third-party insurance company with no affiliation to the Company or the plan. The contract was funded through existing plan assets, with a portion of the premium payments for the policy being deferred. In February 2026, the remaining portion of the premium was paid in full using proceeds from the sale of certain assets that were previously illiquid. The insurance buy-in contract is valued on an insurer pricing basis, which reflects the purchase price adjusted for changes in discount rates and other actuarial assumptions, which approximates fair value. The insurance buy-in contract is classified as a Level 3 investment in the Plan Asset tables below. This buy-in contract was similar to a contract purchased in 2022 that covered a portion of member benefit payments. The buy-in arrangement also allows for the possible future conversion into a buy-out arrangement where the insurance company would assume full responsibility for the U.K. pension plan pension obligations, at which time the Company would derecognize the assets and liabilities of the pension plan and realize a settlement gain or loss as a component of the net periodic pension cost. In May 2023, the Dutch Parliament enacted the Future Pensions Act (Wet toekomst pensioenen), which became effective on July 1, 2023. The legislation requires employers to transition existing pension arrangements in the Netherlands that are structured as defined benefit plans or age-dependent defined contribution plans to defined contribution plans. All affected pension plans must be converted to compliant plans by January 1, 2028. The Company sponsors pension plans for certain employees in the Netherlands that are subject to this legislation, and is in the process of evaluating the required transition. The transition is expected to be completed within the statutory timeframe. The conversion of the Company’s Dutch retirement plan may result in changes to the nature of the pension obligations and could give rise to plan amendments, or settlements under ASC 715, Compensation—Retirement Benefits, depending on the final structure of the transitioned plans and the treatment of accrued benefits. Such events could require remeasurement of pension obligations and plan assets and may result in the recognition of settlement gains or losses in the period in which the transition is finalized or implemented. At December 31, 2025, the Company has not yet finalized the design of the plans and, accordingly, has not recorded any impacts related to the conversion. The Company will recognize any resulting effects on its pension obligations, net periodic pension cost, or accumulated other comprehensive income in accordance with ASC 715 when the transition is substantively enacted and the amounts are reasonably estimable. Xerox 2025 Annual Report 140 Table of Conten t s Pension Benefits U.S. Plans Non-U.S. Plans Retiree Health 2025 2024 2025 2024 2025 2024 Change in Benefit Obligation: Benefit obligation, January 1 $ 2,176 $ 2,389 $ 4,097 $ 4,567 $ 173 $ 193 Service cost — — 6 5 1 1 Interest cost 138 88 195 182 8 8 Plan participants' contributions — — 2 1 5 5 Actuarial loss (gain) (1) 38 ( 136 ) ( 114 ) ( 281 ) 6 ( 3 ) Currency exchange rate changes — — 350 ( 157 ) 5 ( 8 ) Plan amendment — — 3 54 — — Benefits paid/settlements ( 189 ) ( 165 ) ( 346 ) ( 274 ) ( 26 ) ( 23 ) Acquisition (2) 399 — 155 — 7 — Other 1 — ( 2 ) — — — Benefit Obligation, December 31 $ 2,563 $ 2,176 $ 4,346 $ 4,097 $ 179 $ 173 Change in Plan Assets: Fair value of plan assets, January 1 $ 1,407 $ 1,528 $ 4,220 $ 4,662 $ — $ — Actual return on plan assets 189 ( 56 ) 209 ( 42 ) — — Employer contributions 112 100 28 27 21 18 Plan participants' contributions — — 2 1 5 5 Currency exchange rate changes — — 355 ( 154 ) — — Benefits paid/settlements ( 189 ) ( 165 ) ( 346 ) ( 274 ) ( 26 ) ( 23 ) Acquisition (2) 326 — 122 — — — Other — — ( 2 ) — — — Fair Value of Plan Assets, December 31 $ 1,845 $ 1,407 $ 4,588 $ 4,220 $ — $ — Net Funded Status at December 31 (3) $ ( 718 ) $ ( 769 ) $ 242 $ 123 $ ( 179 ) $ ( 173 ) Amounts Recognized in the Consolidated Balance Sheets: Other long-term assets $ — $ — $ 578 $ 421 $ — $ — Accrued compensation and benefit costs ( 24 ) ( 22 ) ( 20 ) ( 18 ) ( 20 ) ( 19 ) Pension and other benefit liabilities ( 694 ) ( 747 ) ( 316 ) ( 280 ) — — Post-retirement medical benefits — — — — ( 159 ) ( 154 ) Net Amounts Recognized $ ( 718 ) $ ( 769 ) $ 242 $ 123 $ ( 179 ) $ ( 173 ) Accumulated Benefit Obligation $ 2,563 $ 2,176 $ 4,320 $ 4,049 _____________ (1) Changes in actuarial losses (gains) are due to actual returns in excess of expected returns, as well as changes in discount rates. (2) Reflects the Lexmark Acquisition on July 1, 2025. Refer to Note 6 - Acquisitions and Divestitures for additional information regarding the Lexmark acquisition. (3) Includes under-funded and unfunded plans. Pension and other benefit liabilities include the following additional accounts at December 31st: December 31, 2025 2024 Pension liabilities (1) $ 1,010 $ 1,027 Accrued compensation liabilities 45 48 Deferred compensation liabilities (2) 13 13 Pension and other benefit liabilities $ 1,068 $ 1,088 __________________________ (1) Reflects pension net funded status liability for both U.S. and non-U.S. plans. (2) Includes amounts measured at fair value on a recurring basis at December 31, 2025 and 2024 of $ 11 and $ 11 , respectively. Refer to Note 17 - Fair Value of Financial Assets and Liabilities for additional information regarding deferred compensation liabilities. Xerox 2025 Annual Report 141 Table of Conten t s Benefit plans pre-tax amounts recognized in AOCL at December 31st: Pension Benefits U.S. Plans Non-U.S. Plans Retiree Health 2025 2024 2025 2024 2025 2024 Net actuarial loss (gain) $ 640 $ 700 $ 1,344 $ 1,405 $ ( 46 ) $ ( 63 ) Prior service cost (credit) — — 186 177 ( 53 ) ( 66 ) Total loss (gain) - Pre-tax $ 640 $ 700 $ 1,530 $ 1,582 $ ( 99 ) $ ( 129 ) Aggregate information for pension plans with an accumulated benefit obligation in excess of plan assets is presented below. Information for Retiree Health plans with an accumulated post-retirement benefit obligation in excess of plan assets has been disclosed in the preceding table on Benefit obligations and Net funded status as all Retiree Health plans are unfunded. December 31, 2025 December 31, 2024 Accumulated Benefit Obligation Fair Value of Plan Assets Accumulated Benefit Obligation Fair Value of Plan Assets Underfunded Plans: U.S. $ 2,338 $ 1,845 $ 1,956 $ 1,407 Non-U.S. 212 165 13 39 Unfunded Plans: U.S. $ 225 $ — $ 220 $ — Non-U.S. 263 — 286 — Total Underfunded and Unfunded Plans: U.S. $ 2,563 $ 1,845 $ 2,176 $ 1,407 Non-U.S. 475 165 299 39 Total $ 3,038 $ 2,010 $ 2,475 $ 1,446 Aggregate information for pension plans with a projected benefit obligation in excess of plan assets is presented below: December 31, 2025 December 31, 2024 Projected Benefit Obligation Fair Value of Plan Assets Projected Benefit Obligation Fair Value of Plan Assets Underfunded Plans: U.S. $ 2,338 $ 1,845 $ 1,956 $ 1,407 Non-U.S. 225 165 45 39 Unfunded Plans: U.S. $ 225 $ — $ 220 $ — Non-U.S. 267 — 292 — Total Underfunded and Unfunded Plans: U.S. $ 2,563 $ 1,845 $ 2,176 $ 1,407 Non-U.S. 492 165 337 39 Total $ 3,055 $ 2,010 $ 2,513 $ 1,446 Xerox 2025 Annual Report 142 Table of Conten t s Pension plan assets and benefit obligations by country were as follows: December 31, 2025 December 31, 2024 Fair Value of Pension Plan Assets Projected Benefit Obligation Net Funded Status Fair Value of Pension Plan Assets Projected Benefit Obligation Net Funded Status U.S. funded $ 1,845 $ 2,338 $ ( 493 ) $ 1,407 $ 1,956 $ ( 549 ) U.S. unfunded — 225 ( 225 ) — 220 ( 220 ) Total U.S. 1,845 2,563 ( 718 ) 1,407 2,176 ( 769 ) U.K. 2,779 2,502 277 2,528 2,310 218 Netherlands 872 720 152 808 732 76 Canada 547 505 42 535 503 32 Germany 4 241 ( 237 ) — 220 ( 220 ) Other 386 378 8 349 332 17 Total $ 6,433 $ 6,909 $ ( 476 ) $ 5,627 $ 6,273 $ ( 646 ) The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows: Year Ended December 31, Pension Benefits U.S. Plans Non-U.S. Plans Retiree Health 2025 2024 2023 2025 2024 2023 2025 2024 2023 Components of Net Periodic Benefit Costs: Service cost $ — $ — $ — $ 6 $ 5 $ 5 $ 1 $ 1 $ 1 Interest cost (1)(2) 138 88 116 195 182 188 8 8 10 Expected return on plan assets (1)(3) ( 111 ) ( 71 ) ( 103 ) ( 209 ) ( 193 ) ( 217 ) — — — Recognized net actuarial loss (gain) (1) 19 18 16 53 62 11 ( 11 ) ( 12 ) ( 12 ) Amortization of prior service cost (credit) (1) — — — 9 8 5 ( 13 ) ( 15 ) ( 15 ) Recognized settlement loss (1) — 5 19 — — 1 — — — Defined Benefit Plans 46 40 48 54 64 ( 7 ) ( 15 ) ( 18 ) ( 16 ) Defined contribution plans 3 17 19 23 23 21 n/a n/a n/a Net Periodic Benefit Cost (Credit) $ 49 $ 57 $ 67 $ 77 $ 87 $ 14 $ ( 15 ) $ ( 18 ) $ ( 16 ) Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income (Loss): Net actuarial (gain) loss $ ( 41 ) $ ( 8 ) $ 74 $ ( 113 ) $ ( 44 ) $ 298 $ 6 $ ( 3 ) $ ( 5 ) Prior service cost (credit) — — — — 52 36 — — ( 3 ) Amortization of net actuarial (loss) gain ( 19 ) ( 23 ) ( 35 ) ( 53 ) ( 62 ) ( 12 ) 11 12 12 Amortization of net prior service (cost) credit — — — ( 9 ) ( 8 ) ( 5 ) 13 15 15 Total Recognized in Other Comprehensive Income (Loss) (4) ( 60 ) ( 31 ) 39 ( 175 ) ( 62 ) 317 30 24 19 Total Recognized in Net Periodic Benefit Cost (Credit) and Other Comprehensive Income (Loss) $ ( 11 ) $ 26 $ 106 $ ( 98 ) $ 25 $ 331 $ 15 $ 6 $ 3 _____________ (1) Included in Other expenses, net in the Statements of (Loss) Income. (2) Interest cost for Pension Benefits includes interest expense on non-TRA obligations of $ 358 , $ 279 and $ 284 and interest (income)/expense directly allocated to TRA participant accounts of $( 25 ), $( 9 ) and $ 20 for the years ended December 31, 2025, 2024 and 2023, respectively. (3) Expected return on plan assets includes expected investment income on non-TRA assets of $ 295 , $ 273 and $ 300 and actual investment income/(loss) on TRA assets of $ 25 , $( 9 ) and $ 20 for the years ended December 31, 2025, 2024 and 2023, respectively. (4) Amounts represent the pre-tax effect included in Other comprehensive income (loss). Refer to Note 24 - Other Comprehensive Income (Loss) for the related tax effects and the net of tax amounts. Xerox 2025 Annual Report 143 Table of Conten t s Plan Amendments Pension: Netherlands In January 2024, the pension board of our Netherlands pension plan transferred the plan’s assets and projected benefit obligation (PBO) to a single client section in a general pension fund. In addition to this transfer, the indexation target was increased from 75 % of price inflation to 100 % of price inflation. This plan amendment increasing the indexation target resulted in an increase of approximately $ 48 (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. United Kingdom In December 2025, April 2024, and April 2023, our U.K. defined benefit pension plan was amended, at the sole discretion of the Plan Trustees as legally allowed, to increase the capped inflation indexation for the April 2026, 2024 and 2023 pension increase award to 4.0 %, 5.0 % and 6.5 %, respectively. The December 2025 plan amendment resulted in an increase of $ 3 in the projected benefit obligation (PBO) for this plan, the April 2024 plan amendment resulted in an increase of $ 6 in the PBO for this plan, and the April 2023 plan amendment resulted in an increase of $ 36 in the PBO for this plan, with all amounts inclusive of other remeasurement adjustments for changes in actuarial assumptions. In October 2018, the High Court of Justice in the United Kingdom (the High Court) ruled that Lloyds Bank PLC was required to equalize benefits payable to men and women under its U.K. defined benefit pension plans by amending those plans to increase the pension benefits payable to participants that accrued such benefits during the period from 1990 to 1997. The inequalities arose from statutory differences in the retirement ages and rates of accrual of benefits for men and women related to Guaranteed Minimum Pension (GMP) benefits that are included in U.K. defined benefit pension plans. At December 31, 2025, the aggregate cost for this matter was estimated to be approximately GBP 15 million (approximately USD $ 20 ). This latest estimate is consistent with the prior year, adjusted for market conditions at December 31, 2025. The equalization method was agreed between the Company and Trustee and is in the process of being implemented. Xerox 2025 Annual Report 144 Table of Conten t s Plan Assets Current Allocation As of the 2025 and 2024 measurement dates, the global pension plan assets were $ 6,433 and $ 5,627 , respectively. These assets were invested among several asset classes. The following tables present the defined benefit plans assets measured at fair value and the basis for that measurement. December 31, 2025 U.S. Plans Non-U.S. Plans Asset Class Level 1 Level 2 Level 3 Assets measured at NAV (1) Total Level 1 Level 2 Level 3 Assets measured at NAV (1) Total Cash and cash equivalents $ 4 $ — $ — $ — $ 4 $ 445 $ — $ — $ — $ 445 Equity Securities: U.S. (2) 74 — — 74 148 12 19 — — 31 International (2) 99 — — 181 280 372 18 — 21 411 Fixed Income Securities: U.S. treasury securities (2) — 84 — 69 153 — 2 — — 2 Debt security issued by government agency — 163 — — 163 — 661 — 2 663 Corporate bonds (2) — 623 — 116 739 — 266 — — 266 Asset backed securities — — — — — — 4 — — 4 Derivatives — 2 — — 2 — ( 11 ) — — ( 11 ) Real estate — — 23 32 55 — — 70 44 114 Private equity/venture capital — — — 158 158 — 3 — 42 45 Guaranteed insurance contracts — — — — — — — 2,498 — 2,498 Other (3)(4)(5) — 1 — 142 143 28 5 — 87 120 Total Fair Value of Plan Assets $ 177 $ 873 $ 23 $ 772 $ 1,845 $ 857 $ 967 $ 2,568 $ 196 $ 4,588 _____________ (1) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. (2) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient include investments in common collective trusts. (3) Other Level 1 includes net non-financial assets, such as due to/from broker, interest receivables and accrued expenses. The U.S. Plans had no net assets, while the non-U.S. plans had net assets of $ 28 . (4) Other NAV for U.S. Plans (measured at NAV) includes common collective trust funds of $ 104 , which are invested approximately 30 % in fixed income securities and approximately 70 % in equity securities. (5) Other NAV for the non-U.S. Plans (measured at NAV) includes mortgage funds of approximately $ 87 in our Netherlands plans. Xerox 2025 Annual Report 145 Table of Conten t s December 31, 2024 U.S. Plans Non-U.S. Plans Asset Class Level 1 Level 2 Level 3 Assets measured at NAV (1) Total Level 1 Level 2 Level 3 Assets measured at NAV (1) Total Cash and cash equivalents $ 1 $ — $ — $ — $ 1 $ 246 $ — $ — $ — $ 246 Equity Securities: U.S. 72 — — — 72 15 19 — — 34 International 72 — — 125 197 314 — — 18 332 Fixed Income Securities: U.S. treasury securities — 67 — — 67 — 2 — — 2 Debt security issued by government agency — 139 — — 139 — 670 — — 670 Corporate bonds — 599 — — 599 — 236 — — 236 Derivatives — ( 30 ) — — ( 30 ) — 13 — — 13 Real estate — — 24 11 35 — — 87 31 118 Private equity/venture capital — — — 167 167 — — — 258 258 Guaranteed insurance contracts — — — — — — — 2,184 — 2,184 Other (2)(3)(4) ( 3 ) — — 163 160 51 12 — 64 127 Total Fair Value of Plan Assets $ 142 $ 775 $ 24 $ 466 $ 1,407 $ 626 $ 952 $ 2,271 $ 371 $ 4,220 _____________ (1) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. (2) Other Level 1 includes net non-financial (liabilities)/assets, such as due to/from broker, interest receivables and accrued expenses. The U.S. Plans had net liabilities of $( 3 ) , while the non-U.S. plans had net assets of $ 51 . (3) Other NAV for the U.S. Plans includes common collective trust funds of $ 116 (measured at NAV) which are invested approximately 70 % in fixed income securities and approximately 30 % in equity securities. (4) Other NAV for the non-U.S. Plans (measured at NAV) includes mortgage funds of approximately $ 64 in our Netherlands plans. The following tables represents a roll forward of the defined benefit plans assets measured at fair value using significant unobservable inputs (Level 3 assets): U.S. Non-U.S. Real Estate Real Estate Private Equity/Venture Capital Guaranteed Insurance Contracts Total Balance at December 31, 2023 $ 47 $ 106 $ 4 $ 2,481 $ 2,591 Purchases — — — 1 1 Sales ( 22 ) — — ( 3 ) ( 3 ) Unrealized losses ( 1 ) ( 12 ) ( 4 ) ( 253 ) ( 269 ) Currency translation — ( 7 ) — ( 42 ) ( 49 ) Balance at December 31, 2024 $ 24 $ 87 $ — $ 2,184 $ 2,271 Purchases — — — — — Sales ( 2 ) — — — — Unrealized gains (losses) 1 ( 31 ) — 20 ( 11 ) Acquisition (1) — — — 131 131 Currency translation — 14 — 163 177 Balance at December 31, 2025 $ 23 $ 70 $ — $ 2,498 $ 2,568 _____________ (1) Reflects the Lexmark Acquisition on July 1, 2025. Refer to Note 6 - Acquisitions and Divestitures for additional information regarding the Lexmark acquisition. Level 3 Valuation Method Our primary Level 3 assets are Real Estate, Private Equity/Venture Capital investments, and Guaranteed Insurance Contracts. The fair value of our real estate investment funds is based on the Net Asset Value (NAV) of our ownership interest in the funds. NAV information is received from the investment advisers and is primarily derived from third-party real estate appraisals for the properties owned. The fair value for our private equity/venture capital partnership investments are based on our share of the estimated fair values of the underlying investments held by these partnerships as reported (or expected to be reported) in their audited financial statements. Purchases of Guaranteed Insurance Contracts (GICs) include the purchases of buy-in annuity contracts, which have been valued based on the member benefits covered by the contracts adjusted for current market factors. The valuation techniques and inputs for our Level 3 assets have been consistently applied for all periods presented. Xerox 2025 Annual Report 146 Table of Conten t s Investment Strategy The target asset allocations for our worldwide defined benefit pension plans were: 2025 2024 U.S. Non-U.S. U.S. Non-U.S. Equity investments (1) 26 % 10 % 27 % 9 % Fixed income investments 60 % 20 % 60 % 22 % Real estate 6 % 3 % 4 % 3 % Private equity/venture capital 5 % 1 % 7 % 7 % Other (1) 3 % 66 % 2 % 59 % Total Investment Strategy 100 % 100 % 100 % 100 % _____________ (1) Target allows for an additional allocation to synthetic equity which is offset by cash, which resulted in a negative cash position in Other. We employ a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. The intent of this strategy is to minimize plan expenses by exceeding the interest growth in long-term plan liabilities. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and corporate financial condition. This consideration involves the use of long-term measures that address both return and risk. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value and small and large capitalizations. Other assets such as real estate, private equity, and hedge funds are used to improve portfolio diversification. Derivatives may be used to hedge market exposure in an efficient, timely and cost-effective manner; however, derivatives may not be used to speculate or leverage the portfolio beyond the market value of the underlying investments. Investment risks and returns are measured and monitored on an ongoing basis through annual liability measurements and quarterly investment portfolio reviews. Expected Long-term Rate of Return We employ a “building block” approach in determining the long-term rate of return for plan assets. Historical markets are studied and long-term relationships between equities and fixed income are assessed. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established giving consideration to investment diversification and rebalancing. Peer data and historical returns are reviewed periodically to assess reasonableness and appropriateness. Contributions Disclosure The following table summarizes cash contributions to our defined benefit pension plans and retiree health benefit plans. Year Ended December 31, 2025 Estimated 2026 U.S. Plans $ 112 $ 115 Non-U.S. Plans 28 30 Total Pension Plans $ 140 $ 145 Retiree Health 21 20 Total Retirement Plans $ 161 $ 165 Approximately $ 89 of the 2025 contributions for our U.S. plans were for our tax-qualified defined benefit plans. Approximately $ 95 of estimated contributions for 2026 are for our U.S. tax-qualified defined benefit plans. However, once the next actuarial valuations and projected results are available, actual contributions required to meet minimum funding requirements will be determined and finalized and may change from the current estimate. Xerox 2025 Annual Report 147 Table of Conten t s Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid during the following years: Pension Benefits U.S. Non-U.S. Total Retiree Health 2026 $ 239 $ 313 $ 552 $ 20 2027 221 318 539 18 2028 222 325 547 17 2029 221 333 554 15 2030 250 341 591 14 Years 2031-2035 1,072 1,801 2,873 58 Assumptions Weighted-average assumptions used to determine benefit obligations at the plan measurement dates: Pension Benefits 2025 2024 2023 U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Discount rate 5.3 % 4.8 % 5.6 % 4.5 % 4.9 % 4.1 % Rate of compensation increase — % 2.2 % — % 2.3 % — % 2.7 % Interest crediting rate 4.5 % 2.4 % 4.6 % 2.5 % 4.5 % 1.5 % Retiree Health 2025 2024 2023 Discount rate 4.8 % 4.9 % 4.7 % Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31: Pension Benefits 2026 2025 2024 2023 U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Discount rate 5.3 % 4.8 % 5.6 % 4.5 % 4.9 % 4.1 % 5.1 % 4.5 % Expected return on plan assets 7.5 % 5.0 % 7.8 % 4.8 % 8.1 % 4.3 % 8.1 % 4.3 % Rate of compensation increase — % 2.2 % — % 2.3 % — % 2.7 % — % 2.9 % Interest crediting rate 4.5 % 2.4 % 4.6 % 2.6 % 4.5 % 2.5 % 4.5 % 2.1 % Retiree Health 2026 2025 2024 2023 Discount rate 4.8 % 4.9 % 4.7 % 5.0 % _____________ Note: Expected return on plan assets is not applicable to retiree health benefits as these plans are not funded. Rate of compensation increase is not applicable to retiree health benefits as compensation levels do not impact earned benefits. Assumed health care cost trend rates were as follows: December 31, 2025 2024 Health care cost trend rate assumed for next year 6.5 % 6.0 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.2 % 4.2 % Year that the rate reaches the ultimate trend rate 2029 2028 Defined Contribution Plans We have defined contribution savings and investment plans in several countries, including the U.S., the U.K. and Canada. In many instances, employees who participated in the defined benefit pension plans that have been amended to freeze future service accruals were transitioned to an enhanced defined contribution plan. In these plans, employees are allowed to contribute a portion of their salaries and bonuses to the plans, and we match a portion of the employee contributions. We recorded charges related to our defined contribution plans of $ 26 in 2025, $ 40 in 2024 and $ 40 in 2023. During 2025, the Company suspended its full year employer matching contribution for its legacy Xerox U.S. based 401(k) plan for salaried (non-union) employees. The employer matching contribution was reinstated for 2026 and began to be paid on a per-pay-period basis. Xerox 2025 Annual Report 148 Table of Conten t s Note 19 - Income and Other Taxes Loss before income taxes was as follows: Year Ended December 31, 2025 2024 2023 Domestic loss $ ( 396 ) $ ( 877 ) $ ( 89 ) Foreign (loss) income ( 92 ) ( 339 ) 61 Loss before Income taxes $ ( 488 ) $ ( 1,216 ) $ ( 28 ) The components of Income tax expense (benefit) were as follows: Year Ended December 31, 2025 2024 2023 Federal Income Taxes Current $ ( 3 ) $ ( 15 ) $ 21 Deferred 424 ( 44 ) ( 65 ) Foreign Income Taxes Current 42 34 18 Deferred ( 23 ) 149 21 State Income Taxes Current — ( 4 ) — Deferred 101 ( 15 ) ( 24 ) Income tax expense (benefit) $ 541 $ 105 $ ( 29 ) A reconciliation of the U.S. federal statutory income tax rate to the consolidated income tax rate pursuant to the disclosure requirements of ASU 2023-09 was as follows: Year Ended December 31, 2025 Amount Percent Loss before Income Taxes $ ( 488 ) U.S. federal statutory income tax rate ( 102 ) 21.0 % State and local income taxes, net of federal (national) income tax effect (1) 80 ( 16.4 ) % Foreign tax effects Brazil Changes in valuation allowances ( 6 ) 1.2 % Other 3 ( 0.6 ) % Germany 6 ( 1.2 ) % Switzerland Effect of rates different than statutory 10 ( 2.1 ) % Other ( 5 ) 1.0 % United Kingdom Changes in valuation allowances 27 ( 5.5 ) % Other ( 6 ) 1.2 % Other foreign jurisdictions 2 ( 0.4 ) % Effect of cross-border tax laws Subpart F 10 ( 2.1 ) % GILTI 30 ( 6.2 ) % Other 4 ( 0.8 ) % Tax credits Other ( 3 ) 0.6 % Changes in valuation allowances 483 ( 99.0 ) % Non-taxable or non-deductible items Stock-based compensation 7 ( 1.4 ) % Other 7 ( 1.4 ) % Other Adjustments ( 3 ) 0.6 % Changes in unrecognized tax benefits ( 3 ) 0.6 % Effective Tax Rate $ 541 ( 110.9 ) % _____________ (1) State Taxes in Illinois, New Jersey, New York, Connecticut, Florida, Maryland, Georgia and Alabama make up the majority (greater than 50%) of the tax effect in this category. Xerox 2025 Annual Report 149 Table of Conten t s A reconciliation of the U.S. federal statutory income tax rate to the consolidated effective income tax rate for the years ended December 31, 2024, and 2023 was as follows: Year Ended December 31, 2024 2023 U.S. federal statutory income tax rate 21.0 % 21.0 % Nondeductible expenses ( 0.8 ) % ( 32.2 ) % Effect of tax law changes — % — % Change in valuation allowance for deferred tax assets ( 16.0 ) % 15.6 % State taxes, net of federal benefit 1.0 % ( 21.9 ) % Audit and other tax return adjustments 0.6 % 83.0 % Tax-exempt income, credits and incentives 1.1 % 59.0 % Foreign rate differential adjusted for U.S. taxation of foreign profits (1) ( 0.5 ) % ( 32.3 ) % Stock-based compensation ( 0.2 ) % ( 13.0 ) % Goodwill impairment ( 15.3 ) % — % Divestitures 0.2 % 25.3 % Other 0.3 % ( 0.9 ) % Effective income tax rate ( 8.6 ) % 103.6 % _____________ (1) The “U.S. taxation of foreign profits” represents the U.S. tax, net of foreign tax credits, associated with actual and deemed repatriations of earnings from our non-U.S. subsidiaries. A summary of income taxes paid by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 was as follows: Year Ended December 31, 2025 Federal $ 1 State and local 2 Foreign Canada 21 France 8 Ireland 5 Germany 4 Switzerland 4 Other foreign 20 Total foreign 62 Total cash paid for income taxes (net of refunds) $ 65 On a consolidated basis, we paid a total of $ 65 , $ 65 and $ 51 in income taxes to federal, foreign and state jurisdictions during the three years ended December 31, 2025 , 2024 and 2023, respectively. Income taxes were allocated to the following items: Year Ended December 31, 2025 2024 2023 Income tax expense (benefit) on Loss before income taxes $ 541 $ 105 $ ( 29 ) Income tax (expense) benefit Common shareholders' equity: Changes in defined benefit plans ( 23 ) ( 10 ) 93 Cash flow hedges 1 ( 1 ) 1 Translation adjustments — ( 8 ) — Additional paid-in capital — 6 — Xerox 2025 Annual Report 150 Table of Conten t s Unrecognized Tax Benefits and Audit Resolutions We recognize tax liabilities when, despite our belief that our tax return positions are supportable, we believe that certain positions may not be fully sustained upon review by tax authorities. Each period, we assess uncertain tax positions for recognition, measurement and effective settlement. Benefits from uncertain tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement - the more-likely-than-not recognition threshold. Where we have determined that our tax return filing position does not satisfy the more-likely-than not recognition threshold, we have recorded no tax benefits. These assessments require the use of considerable estimates and judgments and can increase or decrease our effective tax rate, as well as impact our operating results. A difference in the ultimate resolution of uncertain tax positions from what is currently estimated could have a material impact on our results of operations and financial condition. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a variety of jurisdictions. We are also subject to ongoing tax examinations in numerous jurisdictions due to the extensive geographical scope of our operations. As a result, we have received, and may in the future receive, proposed tax adjustments and tax assessments in multiple jurisdictions. We regularly assess the likelihood of the outcomes resulting from these ongoing tax examinations as part of our continuing assessment of uncertain tax positions to determine our provision for income taxes. The specific timing of when the resolution of each tax position will be reached is uncertain. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2025 2024 2023 Balance at January 1 $ 95 $ 140 $ 110 Additions related to current year 2 1 1 Additions related to prior years positions — — 57 Additions related to business acquisitions 20 — — Reductions related to prior years positions ( 1 ) — ( 14 ) Settlements with taxing authorities (1) — ( 29 ) ( 13 ) Reductions related to lapse of statute of limitations ( 80 ) ( 18 ) ( 2 ) Currency ( 1 ) 1 1 Balance at December 31 $ 35 $ 95 $ 140 _____________ (1) The majority of settlements did not result in the utilization of cash. Included in the balances at December 31, 2025, 2024 and 2023 are $( 2 ), $( 2 ) and $( 31 ), respectively, of tax positions that are highly certain of realizability but for which there is uncertainty about the timing or that they may be reduced through an indirect benefit from other taxing jurisdictions. Because of the impact of deferred tax accounting, other than for the possible incurrence of interest and penalties, the disallowance of these positions would not affect the annual effective tax rate. Within income tax expense, we recognize interest and penalties accrued on unrecognized tax benefits, as well as interest received from favorable settlements. We had $ 6 , $ 0 and $( 2 ) accrued for the payment of interest and penalties associated with unrecognized tax benefits at December 31, 2025, 2024 and 2023, respectively. In the U.S., we are no longer subject to U.S. federal income tax examinations for years before 2022. With respect to our major foreign jurisdictions, we are no longer subject to tax examinations by tax authorities for years before 2017. Deferred Income Taxes At December 31, 2025 we have not provided deferred taxes on our undistributed pre-1987 Earnings & Profits as such undistributed earnings have been determined to be indefinitely reinvested and we currently do not plan to initiate any action that would precipitate a deferred tax impact. Further, post-1986 earnings and profits associated with those foreign subsidiaries acquired in the Lexmark Acquisition have been determined to be indefinitely reinvested. Additionally, we have also not provided deferred taxes on the outside basis differences in our investments in foreign subsidiaries that are unrelated to undistributed earnings. These basis differences are also indefinitely reinvested. A determination of the unrecognized deferred taxes related to these components is not practicable. Xerox 2025 Annual Report 151 Table of Conten t s The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows: December 31, 2025 2024 Deferred Tax Assets Research and development $ 249 $ 227 Post-retirement medical benefits 44 43 Net operating losses 1,131 322 Operating reserves, accruals and deferrals 183 232 Tax credit carryforwards 90 80 Disallowed interest expense carryforward (1) 173 23 Deferred and share-based compensation 24 22 Pension 83 122 Finance lease and installment sales 127 64 Operating lease liabilities 75 33 Other (1) 63 45 Subtotal 2,242 1,213 Valuation allowance ( 1,933 ) ( 511 ) Total $ 309 $ 702 Deferred Tax Liabilities Intangibles and goodwill 180 84 Depreciation 33 — Unremitted earnings of foreign subsidiaries 29 26 Operating lease ROU assets 72 41 Other 35 21 Total $ 349 $ 172 Total Deferred tax (liability) asset, net $ ( 40 ) $ 530 Reconciliation to the Consolidated Balance Sheets Deferred tax assets $ 98 $ 615 Deferred tax liabilities (2) ( 138 ) ( 85 ) Total Deferred tax (liability) asset, net $ ( 40 ) $ 530 _____________ (1) Prior year amounts have been reclassified to conform to the current year presentation. (2) Represents the deferred tax liabilities recorded in Other long-term liabilities - refer to Note 14 - Supplementary Financial Information. We record the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and the amounts reported, as well as net operating loss and tax credit carryforwards. Deferred tax assets are assessed for realizability and, where applicable, a valuation allowance is recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, be realized in the future. We apply judgment in assessing the realizability of these deferred tax assets and the need for any valuation allowances. In determining the amount of deferred tax assets that are more-likely-than-not to be realized, we considered historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The net change in the total valuation allowance for the three years ended December 31, 2025, 2024 and 2023 was an increase of $ 1,422 , $ 136 and $ 9 , respectively. The valuation allowance relates primarily to certain net operating loss carryforwards, tax credit carryforwards and deductible temporary differences for which we have concluded it is more-likely-than-not that these items will not be realized in the ordinary course of operations. At December 31, 2025, we had tax credit carryforwards of $ 90 available to offset future income taxes, of which $ 1 is available to carryforward indefinitely while the majority of the remaining $ 89 will expire in 2026, if not utilized. We also had net operating loss carryforwards for income tax purposes of $ 6.5 billion that will begin to expire in 2026 through 2045, if not utilized, and $ 1.6 billion available to offset future taxable income indefinitely. Xerox 2025 Annual Report 152 Table of Conten t s Note 20 – Contingencies and Litigation Legal Matters We are involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; governmental entity contracting, servicing and procurement law; intellectual property law; environmental law; employment law; the Employee Retirement Income Security Act (ERISA); and other laws and regulations. We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing our litigation and regulatory matters using available information. We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs. Additionally, guarantees, indemnifications and claims may arise during the ordinary course of business from relationships with suppliers, customers and nonconsolidated affiliates, as well as through divestitures and sales of businesses, when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur. Nonperformance under a contract could trigger an obligation of the Company. These potential claims include actions based upon alleged exposures to products, real estate, intellectual property such as patents, environmental matters, and other indemnifications. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these claims. However, while the ultimate liabilities resulting from such claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the Company's consolidated financial position or liquidity. As of December 31, 2025, we have accrued our estimate of liability incurred under our indemnification arrangements and guarantees. Brazil Contingencies Our Brazilian operations have received or been the subject of numerous governmental assessments related to indirect and other taxes. These tax matters principally relate to claims for taxes on the internal transfer of inventory, municipal service taxes on rentals and gross revenue taxes. We are disputing these tax matters and intend to vigorously defend our positions. Based on the opinion of legal counsel and current reserves for those matters deemed probable of loss, we do not believe that the ultimate resolution of these matters will materially impact our results of operations, financial position or cash flows. Below is a summary of our Brazilian tax contingencies: December 31, 2025 December 31, 2024 Tax contingency - unreserved $ 338 $ 305 Escrow cash deposits 20 18 Surety bonds 115 88 Letters of credit 1 10 Liens on Brazilian assets — — The increase in the unreserved portion of the tax contingency was primarily due to currency, as well as interest, partially offset by closed 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. In connection with the above proceedings, customary local regulations may require us to make escrow cash deposits or post other security of up to half of the total amount in dispute, as well as additional surety bonds and letters of credit, which include associated indexation. Generally, any escrowed amounts would be refundable and any liens on assets would be removed to the extent the matters are resolved in our favor. We are also involved in certain disputes with contract and former employees. Exposures related to labor matters are not material to the financial statements as of December 31, 2025 and 2024. We routinely assess all these matters as to probability of ultimately incurring a liability against our Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable. Xerox 2025 Annual Report 153 Table of Conten t s Litigation We are engaged in numerous legal actions arising in the ordinary course of our business. While there can be no assurance, as of December 31, 2025, we believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows. Guarantees, Indemnifications and Other Agreement Indemnifications Provided as Part of Contracts and Agreements Acquisitions/Divestitures: We have indemnified, subject to certain deductibles and limits, the purchasers of businesses or divested assets for the occurrence of specified events under certain of our divestiture agreements. In addition, we customarily agree to hold the other party harmless against losses arising from a breach of representations and covenants, including such matters as adequate title to assets sold, intellectual property rights, specified environmental matters and certain income taxes arising prior to the date of acquisition. Where appropriate, an obligation for such indemnifications is recorded as a liability at the time of the acquisition or divestiture. Since the obligated amounts of these types of indemnifications are often not explicitly stated and/or are contingent on the occurrence of future events, the overall maximum amount of the obligation under such indemnifications cannot be reasonably estimated. Other than obligations recorded as liabilities at the time of divestiture, we have not historically made significant payments for these indemnifications. Additionally, under certain of our acquisition agreements, we have provided for additional consideration to be paid to the sellers if established financial targets are achieved post-closing. We have recognized liabilities for these contingent obligations based on an estimate of the fair value of these contingencies at the time of acquisition. Contingent obligations related to indemnifications arising from our divestitures and contingent consideration provided for by our acquisitions are not expected to be material to our financial position, results of operations or cash flows. Other Agreements: We are also party to the following types of agreements pursuant to which we may be obligated to indemnify the other party with respect to certain matters: • Guarantees on behalf of our subsidiaries with respect to real estate leases. These lease guarantees may remain in effect subsequent to the sale of the subsidiary. • Agreements to indemnify various service providers, trustees and bank agents from any third-party claims related to their performance on our behalf, with the exception of claims that result from a third-party's own willful misconduct or gross negligence. • Guarantees of our performance in certain sales and services contracts to our customers and indirectly the performance of third parties with whom we have subcontracted for their services. This includes indemnifications to customers for losses that may be sustained as a result of the use of our equipment at a customer's location. In each of these circumstances, our payment is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract and such procedures also typically allow us to challenge the other party's claims. In the case of lease guarantees, we may contest the liabilities asserted under the lease. Further, our obligations under these agreements and guarantees may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments we made. Patent Indemnifications In most sales transactions to resellers of our products, we indemnify against possible claims of patent infringement caused by our products or solutions. In addition, we indemnify certain software providers against claims that may arise as a result of our use or our subsidiaries', customers' or resellers' use of their software in our products and solutions. These indemnities usually do not include limits on the claims, provided the claim is made pursuant to the procedures required in the sales contract. Indemnification of Officers and Directors The corporate by-laws of Xerox Holdings Corporation and Xerox Corporation require that, except to the extent expressly prohibited by law, we must indemnify Xerox Holdings Corporation's and Xerox Corporation's officers and directors, respectively, against judgments, fines, penalties and amounts paid in settlement, including legal fees and all appeals, incurred in connection with civil or criminal action or proceedings, as it relates to their services to Xerox Holdings Corporation and/or Xerox Corporation and their subsidiaries. Although the by-laws provide no limit on the amount of indemnification, Xerox Holdings Corporation or Xerox Corporation may have recourse against our insurance carriers for certain payments made by Xerox Holdings Corporation or Xerox Corporation. However, Xerox 2025 Annual Report 154 Table of Conten t s certain indemnification payments (such as those related to "clawback" provisions in certain compensation arrangements) may not be covered under Xerox Holdings Corporation's and Xerox Corporation's directors' and officers' insurance coverage. Xerox Holdings Corporation and Xerox Corporation also indemnify certain fiduciaries of our employee benefit plans for liabilities incurred in their service as fiduciary whether or not they are officers of Xerox Holdings Corporation or Xerox Corporation. Finally, in connection with Xerox Holdings Corporation's and/or Xerox Corporation's acquisition of businesses, we may become contractually obligated to indemnify certain former and current directors, officers and employees of those businesses in accordance with pre-acquisition by-laws and/or indemnification agreements and/or applicable state law. Guarantees We have issued or provided approximately $ 279 of guarantees as of December 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 tax contingencies (see Brazil Contingencies ); iii) support our obligations related to our U.K. pension plans; and iv) support certain contracts, primarily with public sector customers, which require us to provide a surety bond as a guarantee of our performance of contractual obligations. In general, we would only be liable for the amount of these guarantees in the event we, or one of our direct or indirect subsidiaries whose obligations we have guaranteed, defaulted in performing our obligations under each contract; the probability of which we believe is remote. We believe that our capacity in the surety markets as well as under various credit arrangements (including our ABL Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support. Note 21 - Preferred Stock Series A Convertible Perpetual Voting Preferred Stock As of December 31, 2025, Xerox Holdings Corporation had one class of preferred stock outstanding. Xerox Holdings Corporation has issued 180,000 shares of Series A Preferred Stock that have an aggregate liquidation value of $ 180 and a carrying value of $ 214 . The Series A Preferred Stock pays quarterly cash dividends at a rate of 8 % per year ($ 14 per year), on a cumulative basis. Each share of Series A Preferred Stock is convertible at any time, at the option of the holder, into 37.4532 shares of common stock of Xerox Holdings Corporation for a total of 6,742 thousand shares (reflecting an initial conversion price of approximately $ 26.70 per share of common stock), subject to customary anti-dilution adjustments. At December 31, 2025, 6,742 thousand shares of Common Stock were reserved for conversion of the Series A Preferred Stock. If the closing price of Xerox Holdings Corporation common stock exceeds $ 39.00 or 146.1 % of the initial conversion price of $ 26.70 per share of common stock for 20 out of 30 consecutive trading days, Xerox Holdings Corporation will have the right to cause any or all of the Series A Preferred Stock to be converted into shares of common stock at the then applicable conversion rate. The Series A Preferred Stock is also convertible, at the option of the holder, upon a change in control, at the applicable conversion rate plus an additional number of shares determined by reference to the price paid for our common stock upon such change in control. In addition, upon the occurrence of certain fundamental change events, including a change in control or the delisting of Xerox Holdings Corporation's common stock, a holder of Series A Preferred Stock has the right to require Xerox Holdings Corporation to redeem any or all of the preferred stock in cash at a redemption price per share equal to the liquidation preference and any accrued and unpaid dividends up to, but not including, the redemption date. The Series A Preferred Stock is classified as temporary equity (i.e., apart from permanent equity) as a result of the contingent redemption feature. Series A Preferred Stock Voting Rights The Xerox Holdings Corporation Series A Preferred Stock votes together with the Xerox Holdings Corporation common stock, as a single class, on all matters submitted to the shareholders of Xerox Holdings Corporation, but the Xerox Holdings Corporation Series A Voting Preferred Stock is only entitled to one vote for every ten shares of Xerox Holdings Corporation common stock into which the Xerox Holdings Corporation Series A Preferred Stock is convertible ( 674,157 votes at December 31, 2025). Xerox 2025 Annual Report 155 Table of Conten t s Note 22 – Shareholders’ Equity Xerox Holdings Preferred Stock Xerox Holdings Corporation is authorized to issue approximately 22 million shares of cumulative Preferred stock, $ 1.00 par value per share. Refer to Note 21 - Preferred Stock for additional information. Common Stock Xerox Holdings Corporation is authorized to issue 437.5 million shares of Common stock, $ 1.00 par value per share. At December 31, 2025, 23 million shares were reserved for issuance under our incentive compensation plans and 7 million shares were reserved for conversion of the Series A Convertible Perpetual Preferred Voting Stock. Treasury Stock Xerox Holdings Corporation accounts for the repurchased Common stock under the cost method and includes such Treasury stock as a component of our Common shareholders' equity. Retirement of Treasury stock is recorded as a reduction of Common stock and Additional paid-in capital at the time such retirement is approved by our Board of Directors. Icahn Share Repurchase On September 28, 2023, Xerox Holdings Corporation entered into a share purchase agreement (the Purchase Agreement) with Carl C. Icahn and certain of his affiliates (Icahn Parties) pursuant to which the Company agreed to purchase an aggregate of approximately 34 million shares of the Company’s Common Stock, at a price of $ 15.84 per share, the closing price on September 27, 2023, the last full trading day prior to the execution of the Purchase Agreement, for an aggregate purchase price of approximately $ 542 . The purchase was completed and settled on September 28, 2023 and was funded by a $ 555 Credit Agreement with Jefferies Finance LLC (Jefferies Finance), as the Administrative Agent, Collateral Agent and Lender. This loan was subsequently repaid in November 2023 with the proceeds from a Term Loan B Credit Facility (Refer to Note 15 – Debt for additional information regarding the Term Loan B Credit Facility). Aggregate fees associated with the share repurchase were approximately $ 11 and include the 1% excise tax on net share repurchases as required by the Inflation Reduction Act of 2022. The costs incurred are included as part of the cost of Treasury Stock. The following table reflects the changes in Common and Treasury stock shares (shares in thousands). The Treasury stock repurchases in the table below include the repurchases under the current Xerox Holdings Corporation authorized share repurchase program. Common Stock Shares Treasury Stock Shares Balance at December 31, 2022 155,781 — Stock based compensation plans, net 1,608 — Acquisition of Treasury stock — 34,245 Cancellation of Treasury stock ( 34,245 ) ( 34,245 ) Balance at December 31, 2023 123,144 — Stock based compensation plans, net 1,291 — Balance at December 31, 2024 124,435 — Stock based compensation plans, net 1,453 — Exercise of warrants 2,156 — Balance at December 31, 2025 128,044 — Unregistered Sales of Equity Securities In connection with the issuance of the 2030 Note, Xerox Holdings issued a pre-funded warrant (the Warrant), exercisable for 2,160,256 shares of Xerox Holdings Corporation’s common stock (Common Stock), at an exercise price of $ 1.00 per share, of which $ 0.99 was prefunded, to one of the purchasers of the 2030 Notes. The exercise price and the number of shares of common stock issuable upon exercise of the Warrant were subject to appropriate adjustment in the event of certain stock dividends, stock splits, stock combinations, or similar events effecting the Common Stock. The Warrant was exercised during the third quarter 2025. Refer to Note 15 - Debt for additional information regarding the issuance of the 2030 No te. Xerox At December 31, 2025, Xerox Corporation has 1,000 authorized shares of Common stock, $ 1.00 par value per share, of which 100 shares are issued and outstanding and held by Xerox Holdings Corporation. Xerox 2025 Annual Report 156 Table of Conten t s Note 23 – Stock-Based Compensation (shares in thousands, unless otherwise noted) We have a long-term incentive plan whereby eligible employees may be granted restricted stock units (RSUs), performance share units (PSUs) and stock options (SOs). We grant stock-based compensation awards in order to continue to attract and retain qualified employees and to better align employees' interests with those of our shareholders. Each of these awards is subject to settlement with newly issued shares of Xerox Holdings Corporation's common stock. At December 31, 2025 and 2024, 3 million and 5 million shares, respectively, were available for grant of awards. Stock-based compensation expense was as follows: Year Ended December 31, 2025 2024 2023 Stock-based compensation expense, pre-tax $ 45 $ 52 $ 54 Income tax benefit recognized in earnings 9 8 10 Restricted Stock Units Compensation expense for RSUs is based upon the grant-date market price and is recognized on a straight-line basis over the vesting period, based on management's estimate of the number of shares expected to vest. RSUs granted in 2025 vest one-third on the first anniversary of the grant date, with the remainder vesting in equal quarterly installments over the subsequent two years of service. RSUs granted in 2024 and 2023 vest ratably over three years , with one-third vesting on each anniversary of the grant date. Performance Share Units PSU awards are comprised of a performance-based component (Operating income) as well as a market-based component (Relative Total Shareholder Return (RTSR)). PSUs granted in 2025 and 2024 are entirely performance-based with an RTSR modifier - see Market-Based Component below. PSUs granted in 2023 are entirely market-based. The metrics and weightings are as follows: Award Year (Metric Weighting) Performance Metric 2025 2024 2023 Operating income (1) 100 % — % — % Operating income improvement (1) — % 100 % — % Relative total shareholder return — % — % 100 % 100 % 100 % 100 % ____________ (1) PSUs granted in 2025 and 2024 are performance-based and subject to an operating income metric and an RTSR modifier that may increase or decrease the number of shares that vest by up to 15 % and 25 %, respectively. The measures are independent of each other and depending on the achievement of these metrics, a recipient of a PSU award is entitled to receive a number of shares equal to a percentage, ranging from 0 % to 200 % of the PSU award granted. All PSUs granted have a three-year cliff vesting from the date of grant. In August 2025, the Board of Directors of Xerox Holdings Corporation approved a modification to the 2025 PSUs that increased the threshold, target, and maximum operating income performance levels to reflect the inclusion of Lexmark’s estimated operating income from the July 1, 2025 acquisition date through December 31, 2025. Performance-Based Component: This PSU component vests contingent upon meeting predetermined annual and/or cumulative performance metrics. The 2025 PSU metric vests based on the achievement of a one-year predetermined operating income goal for fiscal year 2025. The 2024 PSU metric vests contingent upon meeting predetermined annual, as well as cumulative, operating income improvement goals established for four discrete performance periods (2024, 2025 and 2026) weighted 20 %, respectively, and a three-year cumulative goal (2024-2026) weighted 40 %. The fair value of this PSU component is determined using the grant-date market price for the underlying stock. Compensation expense is recognized on a straight-line basis over the three-year vesting period, based on management's estimate of the number of shares expected to vest and based on achievement of the applicable performance targets. If actual results exceed the stated targets, all plan participants have the potential to earn additional shares of common stock up to a maximum over-achievement of 100 % of the original grant. If the stated targets are not met, any recognized compensation cost would be reversed. Xerox 2025 Annual Report 157 Table of Conten t s Market-Based Component : The RTSR metric, included as part of the 2025 PSU, is based on Xerox Holdings Corporation's stock price appreciation, inclusive of dividends paid, measured over a three-year performance period (2025-2027). RTSR will be determined by ranking Xerox Holdings Corporation and the companies within the S&P 600 Information Technology Index, as approved by the Compensation and Human Capital Committee of the Board, from highest to lowest according to their respective TSRs, for the three-year performance period. Payout for this portion of the 2025 PSU will be determined based on the RTSR for the three-year measurement period, and based on this result, the RTSR modifier can increase or decrease the number of shares that ultimately vest by 15 %. Final payout will be determined based on Xerox’s Operating income metric, and depending on the RTSR performance, a potential increase or decrease of 15 %, with a maximum over-achievement of 100 % of the original grant. The RTSR metric, included as part of the 2024 PSU, is based on Xerox Holdings Corporation's stock price appreciation, inclusive of dividends paid, measured over three equally weighted performance periods (2024, 2024-2025, and 2024-2026). RTSR will be determined by ranking Xerox Holdings Corporation and the companies within the S&P 600 Information Technology Index, as approved by the Compensation and Human Capital Committee of the Board, from highest to lowest according to their respective TSRs, for each of the three performance periods. Payout for this portion of the 2024 PSU will be determined based on the average RTSR of the three measurement periods, and based on these results, the RTSR modifier can increase or decrease the number of shares that ultimately vest by 25 %. Final payout will be determined based on the cumulative results of the four individually weighted measurement periods of Xerox’s Operating income improvement metric, and depending on the RTSR performance, a potential increase or decrease of 25 %, with a maximum over-achievement of 100 % of the original grant. The RTSR metric, included as part of the 2023 PSU, is based on Xerox Holdings Corporation's stock price appreciation, inclusive of dividends paid, measured over three equally weighted performance periods (2023, 2023-2024, and 2023-2025). RTSR will be determined by ranking Xerox Holdings Corporation and the companies within two distinct market indices, as approved by the Compensation and Human Capital Committee of the Board, from highest to lowest according to their respective TSRs, for each of the three performance periods. Payout for the 2023 PSU will be determined based on the weighted average of Xerox Holdings Corporation's payout for each of the three performance periods. Payout for these portions of the PSU metrics will be determined based on total return targets. Since these metrics represent market conditions, Monte Carlo simulations were used to determine their respective grant-date fair values. A summary of Xerox Holding's key valuation input assumptions used in the Monte Carlo simulation relative to awards granted were as follows: 2025 Award 2024 Award 2023 Award Term 3 years 3 years 3 years Risk-free interest rate (1) 3.92 % 4.20 % 3.80 % Volatility (2) 47.92 % 42.88 % 52.21 % Weighted average fair value (3) $ 5.15 $ 18.29 $ 23.00 ____________ (1) The risk-free interest rate was based on the zero-coupon U.S. Treasury yield curve on the valuation date, with a maturity matched to the performance period. (2) Volatility is derived from historical stock prices as well as implied volatility when appropriate and available. (3) The weighted average of fair values used to record compensation expense as determined by the Monte Carlo simulation. Our RTSR metrics are compared against total return targets to determine the payout as follows: 2025 2024 2023 Payout Percentage Percentile Ranking Return Targets (1) Percentile Ranking Return Targets (1) Percentile Ranking Return Targets (1) 200 % n/a n/a 75th and above 100 % n/a n/a 50th 50 % n/a n/a 25th 25 % n/a 75th and above n/a 15 % 75th and above n/a n/a 0 % 50th 50th Below 25th ( 15 )% 25th and below n/a n/a ( 25 )% n/a 25th and below n/a ____________ (1) For performance between the levels described above, the degree of vesting is interpolated on a linear basis. Xerox 2025 Annual Report 158 Table of Conten t s Compensation expense for the market-based component of the PSU awards is recognized on a straight-line basis over the vesting period based on the fair value determined by the Monte Carlo simulation and, except in cases of employee forfeiture, cannot be reversed regardless of performance. Note: With respect to all stock-based compensation programs, Management’s estimate of the number of shares expected to vest at the time of grant reflects an estimate for forfeitures based on our historical forfeiture rate to date. Should actual forfeitures differ from management’s estimate, the activity will be reflected in a subsequent period. In addition, RSUs, PSUs and SOs awarded to employees who are retirement-eligible at the date of grant, become retirement-eligible during the vesting period, or are terminated not-for-cause (e.g., as part of a restructuring initiative), vest based on service provided from the date of grant to the date of separation. Summary of Stock-based Compensation Activity 2025 2024 2023 Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Restricted Stock Units Outstanding at January 1 6,314 $ 15.48 4,672 $ 18.46 3,221 $ 23.16 Granted (1) 8,951 5.51 4,159 14.09 3,382 16.56 Vested ( 2,370 ) 17.78 ( 2,030 ) 19.04 ( 1,593 ) 23.73 Forfeited ( 973 ) 8.20 ( 487 ) 17.27 ( 338 ) 19.27 Outstanding at December 31 11,922 8.13 6,314 15.48 4,672 18.46 Performance Shares Outstanding at January 1 2,066 $ 21.59 2,039 $ 24.18 1,729 $ 28.38 Granted (1) 1,912 4.46 1,243 13.89 940 22.97 Vested — — — — — — Forfeited/Expired ( 1,560 ) 15.67 ( 1,216 ) 17.67 ( 630 ) 33.86 Outstanding at December 31 2,418 11.87 2,066 21.59 2,039 24.18 ____________ (1) RSUs and PSUs granted in 2025 reflect a higher number of shares granted, primarily due to a lower average grant-date fair value of the Company’s common stock. Unrecognized compensation cost related to non-vested stock-based awards at December 31, 2025 was as follows: Awards Unrecognized Compensation Remaining Weighted-Average Vesting Period (Years) Restricted Stock Units $ 50 1.8 Performance Shares 5 2.0 Stock Options (1) 2 1.0 Total $ 57 ____________ (1) Reflects CareAR SOs granted in May 2022. The aggregate intrinsic value of outstanding stock-based awards was as follows: Awards December 31, 2025 Restricted Stock Units $ 28 Performance Shares 6 The intrinsic value and actual tax benefit realized for all vested and exercised stock-based awards was as follows: December 31, 2025 December 31, 2024 December 31, 2023 Awards Total Intrinsic Value Tax Benefit Total Intrinsic Value Tax Benefit Total Intrinsic Value Tax Benefit Restricted Stock Units $ 18 $ 3 $ 31 $ 4 $ 25 $ 5 Performance Share Units — — — — — — Xerox 2025 Annual Report 159 Table of Conten t s Note 24 – Other Comprehensive Income (Loss) Other Comprehensive Income (Loss) is comprised of the following: Year Ended December 31, 2025 2024 2023 Pre-tax Net of Tax Pre-tax Net of Tax Pre-tax Net of Tax Net Translation Adjustments Gains (Losses) $ 305 $ 305 $ ( 112 ) $ ( 120 ) $ 191 $ 191 Unrealized (Losses) Gains Changes in fair value of cash flow hedges losses ( 15 ) ( 14 ) — — ( 18 ) ( 16 ) Changes in cash flow hedges reclassed to earnings (1) 4 4 10 9 18 17 Net Unrealized (Losses) Gains ( 11 ) ( 10 ) 10 9 — 1 Defined Benefit Plans Gains (Losses) Net actuarial/prior service gains (losses) 148 129 3 ( 3 ) ( 400 ) ( 300 ) Prior service amortization/curtailment (2) ( 4 ) ( 4 ) ( 7 ) ( 3 ) ( 10 ) ( 8 ) Actuarial loss amortization/settlement (2) 61 57 73 65 35 26 Other (losses) gains (3) ( 89 ) ( 89 ) 29 29 ( 49 ) ( 49 ) Changes in Defined Benefit Plans Gains (Losses) 116 93 98 88 ( 424 ) ( 331 ) Other Comprehensive Income (Loss) $ 410 $ 388 $ ( 4 ) $ ( 23 ) $ ( 233 ) $ ( 139 ) _____________ (1) Reclassified to Cost of sales and interest expense- refer to Note 16 - Financial Instruments for additional information regarding our cash flow hedges. (2) Reclassified to Total Net Periodic Benefit Cost - refer to Note 18 - Employee Benefit Plans for additional information. (3) Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits in AOCL. Accumulated Other Comprehensive Loss (AOCL) AOCL is comprised of the following: December 31, 2025 2024 2023 Cumulative translation adjustments $ ( 1,861 ) $ ( 2,166 ) $ ( 2,046 ) Other unrealized (losses) gains, net ( 4 ) 6 ( 3 ) Benefit plans net actuarial losses and prior service credits ( 1,446 ) ( 1,539 ) ( 1,627 ) Total Accumulated Other Comprehensive Loss $ ( 3,311 ) $ ( 3,699 ) $ ( 3,676 ) We utilize the aggregate portfolio approach for releasing disproportionate income tax effects from AOCL. Xerox 2025 Annual Report 160 Table of Conten t s Note 25 – Loss per Share The following table sets forth the computation of basic and diluted loss per share of Xerox Holdings Corporation's Common stock (shares in thousands): Year Ended December 31, 2025 2024 2023 Basic Loss per Share: Net (Loss) Income $ ( 1,029 ) $ ( 1,321 ) $ 1 Accrued dividends on preferred stock ( 14 ) ( 14 ) ( 14 ) Adjusted Net Loss attributable to common shareholders $ ( 1,043 ) $ ( 1,335 ) $ ( 13 ) Weighted average common shares outstanding 126,473 124,210 149,116 Basic Loss per Share: $ ( 8.25 ) $ ( 10.75 ) $ ( 0.09 ) Diluted Loss per Share: Net (Loss) Income $ ( 1,029 ) $ ( 1,321 ) $ 1 Accrued dividends on preferred stock ( 14 ) ( 14 ) ( 14 ) Adjusted Net Loss attributable to common shareholders $ ( 1,043 ) $ ( 1,335 ) $ ( 13 ) Weighted average common shares outstanding 126,473 124,210 149,116 Common shares issuable with respect to: Stock options — — — Restricted stock and performance shares — — — Convertible preferred stock — — — Adjusted Weighted average common shares outstanding 126,473 124,210 149,116 Diluted Loss per Share: $ ( 8.25 ) $ ( 10.75 ) $ ( 0.09 ) 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 (shares in thousands): Stock options 127 147 231 Restricted stock and performance shares 14,340 8,623 6,711 Convertible preferred stock 6,742 6,742 6,742 Convertible notes (1) 19,196 19,196 — Total Anti-Dilutive Securities 40,405 34,708 13,684 Dividends per Common Share $ 0.20 $ 1.00 $ 1.00 _____________ (1) Refer to Note 15 - Debt for additional information related to the issuance of Xerox Holdings Corporation's $ 400 of 3.75 % Convertible Senior Notes due 2030 . Xerox 2025 Annual Report 161 Table of Conten t s Note 26 – Subsequent Events We have evaluated subsequent events through the date the financial statements were issued. Warrant Dividend In January 2026 the Board of Directors of Xerox Holdings Corporation approved a pro-rata distribution of warrants to holders (collectively, the Eligible Holders) of Xerox’s common stock, par value $ 1.00 per share (the Common Stock), Series A Convertible Perpetual Voting Preferred Stock (the Series A Preferred Stock) and 3.75 % Convertible Senior Notes due 2030 (the Convertible Notes). On February 12, 2026, 77,271,234 warrants were issued and distributed, at no cost, to the Eligible Holders of record as of the close of business on February 9, 2026. Each holder of record of the Common Stock as of the Record Date received one warrant for every two shares of Xerox common stock held, rounded down to the nearest whole warrant. Holders of record of the Series A Preferred Stock and the Convertible Notes received warrants based on the same ratio in the manner determined by the charter governing the Series A Preferred Stock and the indenture governing the Convertible Notes, respectively. Each warrant entitles the holder to purchase one share of Common Stock (the Warrant Exercise Rate) at an exercise price of $ 8.00 per share (the Warrant Exercise Price), subject to the terms and conditions of the warrant agreement, and may be exercised (a) for cash, at any time prior to expiration of the warrants, and (b) using designated outstanding Xerox debt securities (the Designated Notes) at any time prior to the earlier of the expiration of the warrants and the termination of the right to use Designated Notes to exercise warrants. Xerox Holdings Corporation may also elect, in its sole and absolute discretion, to remove one or more or all series of its or Xerox Corporation’s notes from being “Designated Notes,” by giving notice to holders of warrants by way of press release. Such redesignation shall only be effective 20 consecutive Business Days from (and including) the date of publication of notice. The Warrant Exercise Rate is subject to certain customary anti-dilution adjustments as set forth in the warrant agreement and Xerox Holdings Corporation’s right to voluntarily increase the Warrant Exercise Rate in its sole and absolute discretion from time to time. The Warrant Exercise Price is subject to Xerox Holdings Corporation’s right to voluntarily decrease the Warrant Exercise Price in its sole and absolute discretion from time to time. The warrants have an expiration date of two years from the distribution date, unless an Early Expiration Price Condition Date (as defined below) is met, in which case the expiration will be accelerated. The warrants will be subject to early expiration if the volume-weighted average price of Xerox common stock equals or exceeds 100 % of the then-applicable warrant exercise price for 20 trading days within any 30 consecutive trading day period (such final day, the Early Expiration Price Condition Date). If this condition is met, the warrants will expire at 5:00 p.m. New York City time on the business day immediately following the Early Expiration Price Condition Date or such other date as Xerox Holdings Corporation may elect in accordance with the warrant agreement. Joint Venture Arrangement On February 17, 2026 (the Closing Date), Xerox Corporation and certain investors including certain funds and accounts managed by Angelo, Gordon & Co., L.P. (collectively, TPG) entered into a joint venture arrangement (the Joint Venture) pursuant to which TPG funded $ 405 aggregate principal amount of senior secured term loans (the Term Loans) to, and purchased $ 45 of Class A Units from, XRX Brandco Holdings LLC (IPCo Holdings) (the Joint Venture Financing). The proceeds of the Joint Venture Financing were distributed by dividend from IPCo Holdings to Xerox Corporation (the Distribution) and are expected to be used for general corporate purposes and opportunistically addressing Xerox Holdings’ capital structure over time (which may include the redemption or repayment of debt). Total transaction fees and expenses of $ 42 , including legal expenses and arranger fees, were paid by Xerox Corporation associated with the formation of the Joint Venture. In connection with the formation of the Joint Venture, Xerox Corporation contributed (the Contribution) certain intellectual property and related assets, including the trademarks in respect of the Xerox brand (collectively, the Contributed IP), to IPCo Holdings and received Class B Units of IPCo Holdings. Subsequent to the Joint Venture Financing, the Distribution and the Contribution, Xerox Corporation contributed approximately $ 5 in cash to the common equity capital of IPCo Holdings. Credit Agreement On the Closing Date, IPCo Holdings, as borrower, entered into a credit agreement (the Credit Agreement) with Alter Domus (US) LLC, as the administrative agent and the collateral agent, and the lending institutions from time to time party thereto, as lenders. Xerox 2025 Annual Report 162 Table of Conten t s The Term Loans are guaranteed by XRX Brandco LLC (IPCo), a wholly owned subsidiary of IPCo Holdings. Borrowings under the Term Loans will bear interest at a per annum rate equal to either (a) a base rate plus a margin of 7.125 % for ABR Loans (as defined in the Credit Agreement), or (b) the applicable term SOFR rate plus a margin of 8.125 % for SOFR Loans (as defined in the Credit Agreement). The Term Loans mature on the date that is the fifth anniversary of the Closing Date. The Term Loans amortize at a quarterly rate of 4.50 % of the aggregate principal amount of Term Loans outstanding as of the Closing Date, with such amounts payable in equal installments, commencing following the fiscal quarter ending September 30, 2026. The remaining outstanding principal balance is due in full at maturity. The Term Loans are subject to customary voluntary and mandatory prepayment provisions, including requirements to prepay the Term Loans with the proceeds of certain indebtedness and excess cash flow. The Credit Agreement also contains customary affirmative covenants, representations and warranties and events of default for borrowers and facilities of this type, including, among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other indebtedness and insolvency events. In addition, the Credit Agreement includes customary negative covenants for borrowers and facilities of this type that, among other things, restrict the ability of IPCo Holdings and its subsidiaries to pay dividends or make other distributions, make investments, incur additional debt and engage in certain other activities. The obligations of IPCo Holdings and IPCo under the Credit Agreement are secured by a pledge of substantially all of their respective assets. Shared Services and License Agreement On the Closing Date, in connection with the formation of the Joint Venture, Xerox Holdings, Xerox Corporation, IPCo Holdings and IPCo entered into a Shared Services and License Agreement (the SSLA), pursuant to which (i) Xerox Holdings agreed to provide certain services to IPCo Holdings and IPCo and (ii) IPCo granted a worldwide royalty-free, non-exclusive, non-assignable, and sublicensable license in the Contributed IP to Xerox Corporation and, at the election of Xerox Holdings, certain of its subsidiaries (collectively, the Licensees). The Licensees are required to pay IPCo a royalty fee equal to 2.0 % of specified consolidated revenue generated by Holdings and its subsidiaries from the Contributed IP. The royalty is payable in arrears on a quarterly basis. The obligations of the Licensees in respect of the SSLA are guaranteed by and secured by the assets of certain subsidiaries of Xerox Holdings (the SSLA Guarantee). The SSLA Guarantee contains representations and warranties and covenants limiting certain such guarantors and certain other subsidiaries of Xerox Holdings from incurring debt and liens, selling assets, making investments and limiting certain other transactions and requiring certain such guarantors and other subsidiaries to maintain at the end of each quarter a specified asset coverage ratio, generally defined as the ratio of certain assets held by such guarantors and subsidiaries to the outstanding amount of the Term Loans and Class A Units (net of cash held by IPCo Holdings). The SSLA Guarantee also contains certain events of default relating to, among others, the breach of such representations, warranties and covenants and defaults under the SSLA or SSLA Guarantee. The initial term of the SSLA is 10 years from the effective date, with automatic five-year renewal periods, provided either Xerox Holdings or IPCo may terminate the SSLA effective as of the end of the then-applicable term on 18 months’ advance notice to the other parties. In addition, the SSLA may be terminated by IPCo upon certain events of default by Xerox Holdings, including non-payment, material breach, insolvency or change of control, subject to applicable cure periods. Xerox Holdings may terminate the SSLA with IPCo’s consent or upon certain breaches by IPCo. Upon termination, the Licensees’, and their sublicensees’, rights to use the Contributed IP also cease, subject to a 90-day sell-off period for existing inventory. Xerox 2025 Annual Report 163 Table of Conten t s Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None.