2023 Annual Report
Table of Contents
Letter to the Shareholders
Board of Directors
Officers
2023 Form 10-K Insert
FYI
Shareholders,
2023 marked a year of significant change and progress
for Xerox. Amid an ongoing challenging and uneven
macroeconomic environment, the company overcame top-line
headwinds to deliver growth in full-year adjusted1 operating
income, EPS and free cash flow. These results are a testament
to Xerox’s disciplined culture. Our team’s dedication proved
essential as we closed out the first full year of a multi-year
Reinvention designed to propel Xerox into a period of long-
term, sustainable growth in revenue and profitability.
Reinvention takes a balanced approach to evolving Xerox’s
operating model and organizational structure, focusing on
improvements to our legacy Print business while building the
foundation to enhance adjacent opportunities with new and
existing clients, predominantly within the mid-market, where
Digital and IT Services are underutilized. Xerox’s Reinvention
also targets the complexity of our business - built over time,
and for a different time. By focusing on opportunities in Digital
and IT Services, we can meet the evolving needs of our clients
in this digital age with a more efficient and agile infrastructure.
Further, we can solidify our leading position in Print by
becoming more competitive, easier to work with, and more
relevant in today’s hybrid workplace.
The leadership team spearheading this transformation is
dedicated to modernizing our business while protecting Xerox’s
strong heritage, and our employee base is eager to embrace
the change required for success. We’re building a new Xerox,
and the opportunity to reinvent ourselves as a brand and
an organization is truly the opportunity of a lifetime.
While navigating through this transition last year, we never
lost sight of our 2023 priorities — Client Success, Profitability
and Shareholder Returns — and made significant
achievements in these areas along the way.
C L I E N T S U C C E S S
Client success has always been and will continue to be a
point of competitive differentiation for Xerox. This includes
recognizing when our clients’ needs are shifting and delivering
services that will help clients thrive in today’s rapidly evolving,
hybrid work environment. To enable complete operational
focus on the delivery of positive client outcomes, in 2023
we took actions to divest businesses to focus on Xerox’s core.
We donated Palo Alto Research Center and divested the Xerox
Research Center of Canada and Elem Additive, our 3D printing
business. We established new partnerships with PEAC
Solutions, an affiliate of HPS Investment Partners, to allow
XeroxTM Financial Services, formerly FITTLE, to focus exclusively
on financial solutions that support the sales of Xerox
equipment and services. We also decided to reduce our
presence in certain non-strategic markets with lower levels of
profitability, such as paper and certain types of IT hardware.
This heightened focus on client success delivered the intended
results, proving client-centricity can drive the revenue
trajectory. We increased equipment sales, grew our net
promoter score and equipment sales market share in Print,
and achieved revenue renewal rates above 100 percent across
large account services contract renewals. Our focus on positive
client outcomes will solidify our position as a trusted advisor
to clients as we build workplace technology solutions for the
future. It also improves the predictability and repeatability
of our business and expands our Total Addressable Market
by more closely responding to, and taking advantage of,
evolving market trends.
1 Refer to the “Non-GAAP Financial Measures” on page 59 of the Form 10-K, which
is included in this Annual Report, for an explanation of this Non-GAAP measure.
P R O F I TA B I L I T Y
A successful Reinvention requires a strong base of profits and
margin profile from which to build. We improved adjusted1
operating profit by more than $100 million, and adjusted1
profit margin by 170 basis points year-over-year. Improvements
stemmed from structural cost reduction efforts, pricing
discipline, ongoing operating efficiencies, and a deliberate
reduction in non-strategic revenue with low levels of
profitability.
The path forward will not be easy, but it will be worth it.
As 2024 unfolds, we will continue to be, as we’ve always been,
transparent about our progress as we lean into new strategic
priorities for the coming year: Strengthening Core Businesses,
Structural Cost Improvements and Balanced Capital Allocation.
The opportunities before us present a path to long-term,
sustainable growth. We know what needs to be done to achieve
our business goals, and we deeply appreciate everyone who
is supporting us on this journey.
S H A R E H O L D E R R E T U R N S
Regards,
Scott Letier
Chairman of the Board
Steven J. Bandrowczak
Chief Executive Officer
We believe investors should be rewarded while accompanying
Xerox on its Reinvention. We are pleased to share that in 2023,
we achieved our shareholder return policy while reducing total
debt by approximately $450 million.
L O O K I N G A H E A D
Continued Reinvention efforts in 2024 will further strengthen
our core Print, Digital and IT Services offerings and accelerate
the groundwork for repositioning the business for the future.
This starts with reorganization. At the beginning of 2024, we
adopted a business-unit led operating model, rather than a
geographical focus and a go to market model with a greater
emphasis on partner-led distribution. This structure sharpens
our client-centric mentality by more closely aligning Xerox
products and services with the economic buyers of today’s
hybrid workplace.
Naturally, reconfiguring our operating model comes with
challenges, including a difficult but necessary workforce
reduction. We are working to be as transparent as possible
through this process, treating our employees with respect
and appreciation during this trying time. We know a more
streamlined operating model is critical for ensuring the
long-term viability of the company.
1 Refer to the “Non-GAAP Financial Measures” on page 59 of the Form 10-K, which
is included in this Annual Report, for an explanation of this Non-GAAP measure.
B O A R D O F D I R E C T O R S
Scott Letier
Chairman of Xerox
Holdings, Managing
Director of Deason Capital
Services LLC, the family
office for Darwin Deason
Steven J. Bandrowczak
Chief Executive Officer,
Xerox Holdings Corporation
Philip Giordano
Founder and Chief
Investment Officer, Livello
Capital Management
Nichelle Maynard-Elliott
Former Executive Director,
Mergers & Acquisitions,
for Praxair, Inc.
Margarita Paláu-
Hernández
Founder and Chief
Executive Officer,
Hernández Ventures
O F F I C E R S
Steven J. Bandrowczak
Chief Executive Officer
John G. Bruno
President and Chief
Operating Officer
Fred Beljaars
Executive Vice President
and Chief Delivery and
Supply Chain Officer
Flor Colón
Executive Vice President
and Chief Legal Officer and
Corporate Secretary
Louie Pastor
Executive Vice President
and Chief Transformation
and Administrative Officer
Stuart Kirk
Vice President and Treasurer
Eric Risi
Assistant Secretary
Jacques-Edouard Gueden
Executive Vice President
and Chief Channel and
Partner Officer
Xavier Heiss
Executive Vice President
and Chief Financial Officer
Leanne Cropper
Vice President, Global Tax
Mirlanda Gecaj
Vice President and Chief
Accounting Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________
FORM 10-K
_________________________________________________
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended: December 31, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from: ______ to: _______
_________________________________________________
XEROX HOLDINGS CORPORATION
XEROX CORPORATION
(Exact Name of Registrant as specified in its charter)
_________________________________________________
001-39013
001-04471
(Commission File Number)
New York
New York
(State or other jurisdiction of
83-3933743
16-0468020
(IRS Employer Identification No.)
incorporation or organization)
P.O. Box 4505, 201 Merritt 7
Norwalk, Connecticut 06851-1056
(Address of principal executive offices and Zip Code)
203-849-5216
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Xerox Holdings Corporation
Common Stock, $1 par value
(Title of each class)
XRX
(Trading Symbol)
Nasdaq Global Select Market
(Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
____________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.
Xerox Holdings Corporation Yes ☒ No ☐
Xerox Corporation Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act.
Xerox Holdings Corporation Yes ☐ No ☒
Xerox Corporation Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.
Xerox Holdings Corporation Yes ☒ No ☐
Xerox Corporation Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required
to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Xerox Holdings Corporation Yes ☒ No ☐
Xerox Corporation Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-
accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of
the Exchange Act.
Xerox Holdings Corporation
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
☒
☐
☐
☐
☐
Xerox Corporation
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☒
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act.
Xerox Holdings Corporation ☐
Xerox Corporation ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s
assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-
Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Xerox Holdings Corporation ☒
Xerox Corporation ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements.
Xerox Holdings Corporation ☐
Xerox Corporation ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery
analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant
recovery period pursuant to § 240.10D-1(b).
Xerox Holdings Corporation ☐
Xerox Corporation ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Xerox Holdings Corporation Yes ☐ No ☒
Xerox Corporation Yes ☐ No ☒
The aggregate market value of the voting stock of the registrant held by non-affiliates as of June 30, 2023 was
$2,339,287,628.
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest
practicable date:
Class
Outstanding at January 31, 2024
Xerox Holdings Corporation
Common Stock, $1 par value
124,182,606
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document are incorporated herein by reference:
Document
Xerox Holdings Corporation Notice of 2024 Annual Meeting of
Shareholders and Proxy Statement (to be filed no later than 120 days after
the close of the fiscal year covered by this report on Form 10-K)
Part of Form 10-K in Which Incorporated
III
Cautionary Statement Regarding Forward-Looking Statements
This combined Annual Report on Form 10-K (Form 10-K), and other written or oral statements made from time to
time by management contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act
of 1995 that involve certain risks and uncertainties. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”,
“will”, “would”, “could”, “can” “should”, “targeting”, “projecting”, “driving”, “future”, “plan”, “predict”, “may” and similar
expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of
future performance and the Company’s actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such differences include, but are not limited to, those
discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors.” The Company assumes no
obligation to revise or update any forward-looking statements for any reason, except as required by law.
Additional risks that may affect Xerox’s operations that are set forth in the “Legal Proceedings” section, the
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other
sections of this Form 10-K, as well as in Xerox Holdings Corporation’s and Xerox Corporation’s combined Quarterly
Reports on Form 10-Q and Xerox Holdings Corporation’s and Xerox Corporation’s Current Reports on Form 8-K
filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of
this document or as of the date to which they refer, and we assume no obligation to update any forward-looking
statements as a result of new information or future events or developments, except as required by law.
Throughout this Form 10-K, 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. References
herein to “we,” “us,” “our,” or 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
subsidiaries.
Xerox Holdings Corporation's primary direct operating subsidiary is Xerox and therefore Xerox reflects nearly all of
Xerox Holdings' operations.
Intentionally
left blank
Xerox Holdings Corporation
Xerox Corporation
Form 10-K
December 31, 2023
Table of Contents
Part I
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . .
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships, Related Transactions and Director Independence . . . . . . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part IV
Item 15.
Exhibit and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule II . Xerox Holdings Corporation Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . .
Schedule II . Xerox Corporation Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16.
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures Xerox Holdings Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures Xerox Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
1
10
23
23
24
24
24
25
26
27
62
62
140
140
141
141
142
143
143
143
143
144
145
146
147
155
156
157
Table of Contents
Part I
Item 1. Business
Xerox is a workplace technology company, building and integrating software and hardware 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. Whether inventing the copier, the Ethernet, the laser printer
or more, Xerox has long defined the modern work experience and continues to do so with investments in artificial
intelligence (AI), augmented reality (AR)-driven service experiences, robotic process automation (RPA) and other
technologies that enable Xerox to deliver essential products and services to address productivity challenges of a
hybrid workplace and distributed workforce.
Xerox serves customers globally in North America, Central and South America, Brazil, Europe, Eurasia, the Middle
East, Africa, and India. This geographic span allows us to deliver our technology and solutions to customers of all
sizes, regardless of complexity or number of customer locations.
Recent Changes and Developments
Reinvention
2023 was the first full year of our Reinvention, which is expected to transform the way we operate, strengthening our
core business and improving our financial flexibility so we can invest in solutions, initiatives, and capabilities that will
position Xerox as a leading services-led, software-enabled technology solutions provider and deliver long-term,
sustainable growth. In January 2024, we announced a significant reorganization of our business, including the
adoption of a business unit-led operating model, a greater focus on partner-led distribution and the establishment of
a Global Business Services (GBS) organization to enable enterprise-wide efficiencies and productivity gains. These
changes are expected to both strengthen our core business and position us to capture new, ancillary revenue
opportunities over time. Reinvention is expected to deliver $300 million of annual net adjusted1 operating income
improvement above 2023 levels through 2026, and we expect to achieve more than one-third of that improvement in
2024, due in large part to organizational cost savings associated with the restructuring action that was announced in
January 2024. Operating profit improvement will be driven by three concurrent efforts over the next three years:
• Operating Model Simplification
– Continuous, tech-driven operating efficiencies enabled by GBS.
• Geographic and Offering Simplification:
– Replace direct to end-customer with partner-led distribution model in current markets with lower levels of
profitability; and
•
– Narrowed product and service offering focus to areas where we have strategic differentiation.
Reposition for Growth:
–
Tactical investments in Digital and IT Services, driving expanded services penetration among existing and
new clients.
_____________
(1) Refer to the "Non-GAAP Financial Measures" section for an explanation of this non-GAAP financial measure.
Divestitures and Other Strategic Changes
We divested certain businesses that are non-core to Print, Digital and IT Services, including PARC, Xerox Research
Center of Canada (XRCC), and Elem, our 3D printing business. We expanded our partnership with PEAC Solutions,
an affiliate of HPS Investment Partners, allowing FITTLE to focus exclusively on financial solutions that support the
direct sales of Xerox equipment and services. We also reduced our presence in certain non-strategic markets with
lower levels of profitability, such as paper and certain types of IT hardware.
Strategic Priorities
Our long-term strategic objective is to grow the share of our customer's technology spending as well as the Total
Addressable Market (TAM) through expanded penetration of existing solutions and the development of new, content-
driven solutions. We believe Xerox’s globally recognizable brand, our deep understanding of clients’ industries and
businesses, and clients' trust have afforded us a path to win in IT and Digital Services – markets where we already
have leading solutions and where we are actively investing to develop more.
Our strategic priorities for 2024 are: Strengthen Core Businesses, Structural Cost Improvements, and Balanced
Capital Allocation.
Xerox 2023 Annual Report 1
Xerox 2023 Annual Report 1
Table of Contents
Strengthen Core Businesses: Our Print, Digital and IT Services businesses form the bedrock of our strategic
repositioning, from which new capabilities and our client-centric mindset will be leveraged to drive incremental
services opportunities and revenue diversification. Recent changes to our organizational model, including the
implementation of a business unit-led organizational structure, rather than a geographic-led go-to-market model, and
greater focus on partner-led distribution models, are expected to both strengthen our core business and position us
to capture new ancillary revenue opportunities over time. A business unit-led organizational structure more closely
aligns Xerox products and services with the economic buyers of today’s hybrid workplace. And through the
establishment of a global partner ecosystem, we will pursue new partner relationships to expand the reach of our
core businesses. Stronger end-market alignment and partner reach is expected to further improve equipment market
share and Print, Digital, and IT services penetration rates with existing and prospective clients.
Structural Cost Improvements: We continue to implement structural cost improvements to drive higher profitability
and total shareholder returns. Our newly formed GBS organization will drive enterprise-wide efficiency and scalability
by centrally coordinating internal processes. GBS serves as a catalyst for organizational savings in 2024 and an
engine for continuous cost improvement going forward. The optimization of our geographic footprint and product
offerings are also expected to generate profit improvements in 2024.
Balanced Capital Allocation: We believe it is important to directly reward shareholders as we execute our
Reinvention. In 2024, free cash flow is expected to be used to pay our $1 per share dividend and reduce leverage.
Excess free cash flow will be used to tactically invest in projects or acquisitions that deliver high rates of return on
invested capital.
Acquisitions and Investments
We maintain a broad M&A pipeline that includes targets within the print industry and adjacent markets. Further
information about our acquisitions and investments can be found in Note 6 - Acquisitions and Divestitures in the
Consolidated Financial Statements.
Reportable Segments and Geographic Sales Channels
Our business is organized to ensure we focus on efficiently managing operations while serving our customers and
the markets in which we operate. During 2023 we had two operating and reportable segments – Print and Other
and FITTLE.
•
•
Print and Other – the design, development and sale of document systems, solutions, and services, as well
as associated technology offerings including IT and software products and services.
FITTLE – a financing solutions business for direct channel customer purchases of Xerox equipment and
solutions, and lease financing to end-user customers who purchase Xerox equipment and solutions.
We also employ a matrix organization that includes a product and geographic focus based on alignment with the
economic buyers of our products and services.
Please refer to the Reportable Segments section of Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations and Note 4 - Segment and Geographic Area Reporting in the Consolidated
Financial Statements for additional information.
Revenues
We have a broad and diverse base of customers by both geography and industry, ranging from small and mid-sized
clients to printing production companies, governmental entities, educational institutions and Fortune 1000
corporations. Our business does not depend upon a single customer, or a few customers, the loss of which would
have a material adverse effect on our business. Our business spans four primary offering areas: Workplace
Solutions, Production Solutions, Xerox Services and FITTLE.
Workplace Solutions is made up of two strategic product groups, Entry and Mid-Range, much of which share
common solutions, apps and ConnectKey® software. Workplace Solutions revenues include the sale of products
(captured primarily as equipment sales) as well as the supplies and associated technical service and financing of
those products through FITTLE (captured as post sale revenue).
•
Entry primarily comprises A4 desktop monochrome and color printers and multifunction printers (MFPs) ranging
from small personal devices to office workgroup devices. We offer our ConnectKey® system of digital workflow
and applications across a large portion of these devices.
• Mid-Range are primarily A3 devices that have more features and can handle higher print volumes and larger
paper sizes than entry devices. We are a leader in this area of the market and offer a wide range of MFPs, digital
printing presses and light production devices, as well as solutions that deliver flexibility and advanced features.
Xerox 2023 Annual Report 2
Table of Contents
Production Solutions (High-End) are designed for customers in the graphic communications, in-plant and
production print environments with high-volume printing requirements. Our broad portfolio of presses and solutions
provides black-and white and full-color, on-demand printing of a wide range of applications. Our xerographic and ink
jet presses provide high-speed, high-volume cut-sheet printing, ideal for publishing, and transactional printing,
including variable data for personalized content and one-to-one marketing, to the highest quality of color and
embellishment requirements. Our cut-sheet inkjet press enables new applications in true high-definition resolution
with high fusion ink, AI Powered image quality and advanced productivity technologies. Our portfolio spans a variety
of print speeds, image quality, feeding, finishing and media options. Production Solutions revenues include the sale
of products (captured primarily in equipment sales) as well as, software, supplies and the associated technical
service and financing of those products (captured as post sale revenue). FreeFlow® is a portfolio of software
offerings that brings intelligent workflow automation and integration to the processing of high-end print jobs, from file
preparation to final production, helping customers of all sizes address a wide range of business opportunities
including automation, personalization, and even electronic publishing.
Xerox® Services includes 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. Xerox has the capability to support integration and document security on a global scale, which are
critical factors for large enterprises. Our primary offerings in this area are Xerox® Managed Print Services (MPS),
Xerox® Capture & Content Services (CCS) and Xerox® Customer Engagement Services (CES) as well as IT
Services. CCS and CES encompass a range of Digital Services that leverage our software capabilities in Workflow
Automation, Personalization and Communication Software, Content Management Solutions, and Digitization
Services. The pandemic shifted our customers’ focus toward secure, efficient, and flexible solutions to operate in a
hybrid work environment. As a result, we enhanced our focus on the development and promotion of offerings to help
our customers accelerate their digital transformations.
• Managed Print Solutions (MPS) utilizes our portfolio of security, analytics, cloud, digitization, and ConnectKey®
technologies to help companies optimize their print infrastructure, secure their print environment, and automate
related business processes. We provide the most comprehensive portfolio of MPS services in the industry and
are recognized as an industry leader by major analyst firms including IDC and Quocirca. Our MPS offering
targets clients ranging from global enterprises to governmental entities and small and mid-sized businesses,
including those served via our channel partners. This portfolio includes a suite of services to help clients manage
hybrid workforces, including cost effective and secure printing devices along with apps and software tools that
enable work from anywhere, cloud server-enabled fleet management, security and automation software and
remote customer support. Xerox® Workflow Central extends the document workflow solutions available
through our ConnectKey® technologies to all devices, including PCs and smartphones, for easier access to
workflow solutions in hybrid workplace environments.
•
•
•
Capture & Content Services (CCS) enables content digitization, management, workflow automation, and
intelligent document processing and includes offerings such as Xerox® Digital Mailroom, where we use
scanning and capture technology combined with AI to extract printed and digital information into usable data that
is routed into business workflows (such as accounts payable) or into archives, integrating with cloud-based
content management systems such as our DocuShare® software.
Customer Engagement Services (CES) enable the integration of Xerox technology, software, and services to
securely design and manage our clients’ personalization and customization of targeted communications. These
services include Xerox® Digital Hub and Cloud Print services, a one-stop shop where customers can submit
print jobs from anywhere and leverage our Web2Print portal with on and off-site printing networks to meet their
printing or marketing collateral needs on demand. Our Customer Communications Management and Campaigns
on Demand solutions, such as those provided through our acquisition of Go Inspire, help drive personalized and
meaningful communications and touchpoints.
IT Services provides small and mid-sized clients with cost efficient and secure solutions, including end user
computing devices, network infrastructure, communications technology, and a range of managed IT solutions,
such as technology product support, professional engineering, and commercial RPA.
FITTLE is a global financing solutions business and currently offers lease financing for direct channel customer
purchases of Xerox equipment and solutions through bundled lease agreements and lease financing to end-user
customers who purchase Xerox equipment and solutions through our indirect channels.
In addition to our four primary offering areas described above, a small portion of our revenues comes from non-core
streams including paper sales in our developing market countries, and standalone software such as CareAR,
DocuShare®, and XMPie.
Xerox 2023 Annual Report 3
Xerox 2023 Annual Report 3
Table of Contents
Geographic Information
Overall, approximately 45% of our revenue is generated by customers outside the U.S. Additional details can be
found in Note 4 - Segment and Geographic Area Reporting in the Consolidated Financial Statements.
Patents, Trademarks and Licenses
In 2023, Xerox and its subsidiaries were awarded 300 U.S. utility and design patents. Our patent portfolio evolves as
new patents are awarded to us and older patents expire. As of December 31, 2023, Xerox held 6,471 U.S. utility and
design patents. These patents expire at various dates up to 20 years or more from their original filing dates. While we
believe that our portfolio of patents and applications has value, in general no single patent is essential to our
business. In addition, any of our proprietary rights could be challenged, invalidated, or circumvented, or may not
provide significant competitive advantages.
In 2023, we were party to multiple patent-related agreements in which we licensed or assigned our patents to others
in return for revenue and/or access to their patents or to further our business goals. Most patent licenses expire
concurrently with the expiration of the last patent identified in the license or after a specified term of years. We were
also party to a number of cross-licensing agreements with companies that also hold substantial patent
portfolios. These agreements vary in subject matter, scope, compensation, significance, and duration.
In the U.S., we own 155 trademarks, either registered or applied for. Outside of the U.S., we own 3,740 trademarks,
either registered or applied for. These trademarks have a perpetual life, subject to periodic renewal requirements. We
vigorously enforce and protect our trademarks.
Environmental, Social, and Governance (ESG)
At our core, is a deep and long-lasting commitment to ESG, a pledge to inspire and support our people, conduct
business ethically across the value chain and preserve our planet. This commitment stems from our corporate values
established over sixty years ago, which include: succeeding through satisfied clients; delivering quality and
excellence in all we do; requiring a premium return on assets; using technology to develop market leadership;
valuing and empowering our employees; and behaving responsibly as a corporate citizen.
We continue this legacy by creating products and services that help our customers be more productive, profitable,
and sustainable. We deliver solutions that drive customer success and enable a new, better world. We do this in our
own operations, as well as in workplaces, communities, and cities around the world. We recognize the world’s
challenges such as climate change and human rights and understand the role we play.
Our pledge to inspire and support our people, conduct business ethically, and protect our planet remains at the core
of everything we do. At Xerox, we believe in continuously improving, and we apply this mentality to ensuring we are
finding ways to improve the sustainability of our operations.
From our earliest days as a company, Xerox has demonstrated a steadfast commitment to corporate social
responsibility. Our greatest goal is to facilitate employee-driven philanthropy, with a focus on strengthening our
communities, sustainability, diversity, inclusion and belonging, education, and disaster relief. Together, Xerox and our
employees are creating real impact and sustainable change for the greater good. In 2023, Xerox employees
volunteered for approximately 42,300 hours, an increase of nearly 75% as compared to 2022, and donated
approximately $1.1 million, which includes the amount matched by Xerox.
The Xerox 2023 Corporate Social Responsibility (CSR) Report describes our management approach related to
ESG. Our work aligns with the United Nations Sustainable Development Goals (SDGs), which provide a framework
to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere. To ensure we are
responsive to all stakeholders, Xerox has also been reporting in accordance with the Sustainability Accounting
Standards Board (SASB) and the Task Force on Climate Change Related Disclosures (TCFD). (The 2023 CSR
Report, SASB report, and TCFD report are accessible at www.xerox.com/CSR. The content of our website is not
incorporated by reference in this combined Form 10-K unless expressly noted.)
Environment
With climate change being one of the defining issues of our time, we fast-tracked our net zero goal by 10 years to
2040 and integrated climate change-related risks and opportunities into our Enterprise Risk Management. We share
our roadmap to reach net zero in our 2023 CSR Report. Our roadmap covers our full value chain and focuses on
improving processes and energy efficiency as well as designing environmentally responsible products. Our interim
goal is to reduce our Scope 1 and Scope 2 GHG emissions at least 60% by 2030, against the Company’s 2016
baseline. Xerox's Scope 1 and Scope 2 GHG emissions decreased approximately 6.9% in 2022 (the latest year we
reported GHG emissions in our CSR report), bringing our total reduction to approximately 46% from our 2016
Xerox 2023 Annual Report 4
Table of Contents
baseline. This is in line with the ambitious science-based global warming target, validated and approved by the
Science Based Targets initiative (SBTi). Our GHG emissions are third-party assured in accordance with the
International Organization for Standardization (ISO) 14064-3:2019 and are updated in our progress summary as new
data becomes available. In 2023, Xerox was named to CDP’s Annual "A List” for climate change transparency and
performance. CDP is a nonprofit organization that runs the global disclosure system for investors, companies, and
regions to manage their environmental impacts.
Circular economy initiatives remain a part of our business strategy. We have developed several collection and waste
reduction programs, while also designing technology to align with the circular economy’s key elements. Based on
data from 2022 (the latest full year data is available), approximately 93% of spent toner cartridges and other
consumables, returned through Green World Alliance (Xerox's customer recycling program), are recycled, reused or
remanufactured. We continue to make progress towards increasing the post-consumer recycled content in our eco-
label eligible devices.
Human Capital
Our Employees
As of December 31, 2023, we had approximately 20,100 employees; a reduction of approximately 400 employees, or
2.0%, since December 31, 2022. The reduction in headcount resulted from net attrition (attrition net of gross hires)
and restructuring.
On a geographic basis, approximately 10,200 employees were located in the U.S. and approximately 9,900
employees were located outside the U.S. We had approximately 10,400 employees or approximately 50% of our
employees engaged in providing services to customers (direct service and managed services) and approximately
2,400 employees engaged in direct sales.
Approximately 20% of our employees are represented by unions or similar organizations, such as worker’s councils
with approximately 87% located outside the U.S. As of December 31, 2023, approximately 25% of our employees
were women and approximately 30% of our U.S. employees self-identified as diverse.
As a result of Xerox’s Reinvention and the implementation of our new operating model, in January 2024 the
Company announced a 15 percent targeted workforce reduction. The actions to be taken are expected to be across
all levels and areas of the organization. Proposed reductions will be subject to formal consultation with local works
councils and employee representative bodies, where applicable, and we will fully comply with all required
notifications, including U.S. state WARN laws, at the appropriate time. The decision to reduce our workforce was a
difficult but necessary step toward establishing the long-term viability for the Company, and we are committed to
providing transition support for affected employees.
Refer to the Recent Changes and Developments section above for additional information regarding Reinvention.
Employee Safety
At Xerox, we are committed to maintaining a safe workplace environment for our people. We have an incident
reporting process, workplace safety inspections and hazard analysis that allows improvements in areas where we
can reduce or prevent incidents. Several methods are also used to raise employee safety awareness including site-
specific hazard management, off-the-job safety information and communications regarding safety concerns. In 2023,
we created and launched a safety training module to raise safety awareness globally, which was completed by
approximately 99% of employees. During 2023 the total number Day Away from Work Injury cases, which relies on
employees to self-report, was 102 cases, as compared to 77 cases in 2022.
Diversity, Inclusion and Belonging
Our commitment to diversity began more than half a century ago with our first CEO, Joseph Wilson. His call for social
responsibility, diversity and inclusiveness is a Xerox core value and part of our company DNA. Joseph Wilson’s
vision is still reflected today in our diversity, inclusion and belonging (DIB) roadmap through the development and
execution of ESG targets. In 2023, we continued to make progress to our commitment to DIB by focusing on the
areas where we can make the most significant impact. Advancing our DIB roadmap enables us to have an inclusive
approach that addresses client needs, create diverse work teams, facilitate diversity of thought, increase our talent
pool, and foster accountability that supports our progress against our ESG metrics. In 2021, we outlined a 5-year DIB
roadmap comprising approximately 140 initiatives. Through 2023, we have progressed or completed approximately
70% of those initiatives.
Xerox 2023 Annual Report 5
Xerox 2023 Annual Report 5
Table of Contents
Engagement and Talent Development
Xerox is committed to continuously revitalizing our employee experience and is focused on listening to the
organization and taking distinct action based on feedback. Beginning in 2022 and continuing into 2023,
approximately 45% of Xerox employees were invited to participate in a variety of feedback processes, from digital
focus groups to engagement and inclusion surveys, to ensure that we understand the sentiments of our employees.
The main areas of focus for Xerox based on employee feedback included areas such as employee well-being,
leadership and belonging, and flexibility and remote work. This initiative included a review of our total rewards
package, how we support the development of our employees and our people leaders, and identifying how we
leverage both our physical and virtual working environments to ensure maximum collaboration across the enterprise.
Our employee communications system is multi-channeled, including town halls, digital campaigns, and pod casts, to
keep our employees linked to Xerox’s vision, mission, and values.
We evaluate our leaders against leadership attributes aligned to our corporate strategy. We support a structured
semi-annual performance management evaluation process, which enables focused goal setting, clarification of
employee and career development needs, and performance evaluation. In addition, Xerox sponsors numerous
corporate development initiatives for targeted populations (i.e., high potentials, women in leadership, senior leaders
identified for future executive roles, etc.), and corporate processes such as succession planning to ensure that we
have a clear leadership pipeline for critical organizational roles.
Total Rewards
Our success depends on attracting, retaining, and motivating a highly productive, global workforce. To achieve this,
we take pride in offering our employees a comprehensive Total Rewards program that includes various
compensation, benefits, and work-life programs. Our programs are designed to achieve the following objectives:
• Drive shareholder value: support our business strategy and culture.
• Align with performance: incentivize the right behaviors – when the Company wins, our employees win.
•
Support our talent strategy: attract, retain, and motivate a productive workforce.
As with most global companies, our compensation and benefits vary based on employee eligibility, and local
practices and regulations. We benchmark our programs to ensure we remain competitive with our peers and the
markets we serve, and to maintain alignment with our short-term and long-term business goals.
Our compensation offerings include base pay, and short-term and long-term incentive programs. Our short-term
programs include: a management incentive plan (MIP), designed to drive Xerox’s annual pay for performance culture
and incentivize our leaders to help Xerox achieve sustainable growth and profitability; and a sales compensation
program that tightly aligns our sales force with business goals. A Long-Term Incentive (LTI) equity-based program
reinforces alignment of our leaders and key talent with shareholders. In 2023, approximately 35% of Xerox's
employees were eligible to participate in our LTI program.
Our benefit offerings provide our employees with choice and flexibility to help them reach their health and financial
goals. Our offerings include the following core programs: health, wellness, retirement, paid time off, life and disability
insurance, and access to voluntary benefits.
Employee Training
All employees are required to complete annual training in ethics, privacy, DIB, and security. Certain employees are
required to complete additional specialized training pertaining to their role within the organization. Additionally,
numerous training programs are available for employees to take on their own initiative.
We adopt a blended technology-led learning model to drive the Xerox business and talent strategies. The Xerox
workforce has access to learning in various modalities that support professional development and build capabilities
across the Company, on time, and in a cost-effective manner. Our Learning and Development (L&D) function is
focused on business agility and driving digital transformation across our workforce.
Our employees have access to a global learning platform that includes an extensive portfolio of online courses,
virtual classroom events, simulations, job aids, and other learning and development resources. As our business
evolves, we continue to leverage technology to identify new skills and capabilities required to ensure we remain
competitive in the global market. Our L&D function partners with Xerox business leaders to design capability-building
programs and Xerox's senior leadership champions a long-term vision to continually develop the skills of our
employees. During 2023, approximately 95% of Xerox employees completed at least one or more formal learning
offering, which includes both required and voluntary training. Using Xerox’s global learning platform, Xerox
employees completed approximately 257,000 courses, over approximately 203,000 hours.
Xerox 2023 Annual Report 6
Table of Contents
Material Government Regulations
Our business activities are worldwide and are subject to various federal, state, local, and foreign laws and our
products and services are governed by a number of rules and regulations. Currently, costs incurred to comply with
these governmental regulations are not material to our capital expenditures, results of operations and competitive
position. Although there is no assurance that existing or future government laws and regulations applicable to our
operations, services or products will not have a material adverse effect on our capital expenditures, results of
operations and competitive position, we do not currently anticipate material expenditures for government regulations.
However, as a result of increased government focus in the U.S. and globally, we believe that environmental and
global trade regulations could potentially materially impact our business in the future.
For a discussion of the risks associated with government regulations that may materially impact us, please see Risk
Factors included in Item 1A of this combined Form 10-K.
Marketing and Distribution
We go to market with a client-centric, market-informed, and services-led approach, selling workplace products and
services that support the new hybrid workplace and distributed workforce. We service our clients through our direct
sales force or indirectly through distributors, independent agents, dealers, value-added resellers, systems
integrators, and e-commerce marketplaces. In addition, we continue to focus on broadening our footprint to sell
offerings to the small and mid-sized markets primarily in the U.S., U.K., and Canada through Xerox Business
Solutions (XBS) which is comprised of regional core companies that provide office technology and services, including
Managed IT Services, to small and mid-sized markets clients, and through the acquisitions of dealers and IT
Services providers internationally.
We are structured to serve our clients globally through our business-unit led operating model and organizational
structure which covers direct and indirect routes to market in the Americas (comprised of the U.S. and Canada along
with Mexico, Brazil, Central and South America) and EMEA (comprised of Europe, the Middle East, Africa and India).
We have an industry leading and common global delivery model that provides a consistent client experience
worldwide. We believe that this structure creates a leaner and more effective go-to-market model that streamlines
our supply chain and provides our client with best-in-class services.
Competition
Although we encounter competition in all areas of our business, we are the leader - or among the leaders - in our
core mid-range and high-end product groups. We compete on the basis of technology, performance, price, quality,
reliability, brand reputation, distribution, service and support.
The larger competitors in our print business include Canon, FUJIFILM Business Innovations Corp., HP Inc., Konica
Minolta, and Ricoh. Our brand recognition, reputation for document management expertise, innovative technology
and service delivery excellence are our competitive advantages. These advantages, combined with our breadth of
product offerings, global distribution channels and client relationships, position us as a strong competitor going
forward. As we continue our strategy to diversify and grow other businesses, there may be additional non-print
competitors.
With respect to our financing business, our main competitors vary considerably from equipment manufacturers with a
captive leasing group to third-party independent leasing entities and financial institutions. We generally compete
based on relationships with customers, dealers and partners and by offering a better integrated service experience.
Customer Financing (FITTLE)
We finance a large portion of our direct channel customer purchases of Xerox equipment through bundled lease
agreements. We also provide lease financing to end-user customers who purchase Xerox equipment and solutions
through our indirect channels. We compete with other third-party leasing companies and financial institutions with
respect to the lease financing provided to these end-user customers. In both instances, financing facilitates customer
acquisition of Xerox technology and enhances our value proposition, while providing Xerox a reasonable return on
our investment in this business.
Because our lease contracts allow customers to pay for equipment over time rather than upfront upon installation, we
maintain a certain level of debt to support our investment in these lease contracts. We fund our customer financing
activity through a combination of cash generated from operations, cash on hand and proceeds from capital market
offerings as well as secured borrowing arrangements and sales of receivables. At December 31, 2023, we had
approximately $2.5 billion of finance receivables and $265 million of Equipment on operating leases, net, or Total
Finance assets of approximately $2.8 billion. We maintain an assumed 7:1 leverage ratio of debt to equity as
Xerox 2023 Annual Report 7
Xerox 2023 Annual Report 7
Table of Contents
compared to our Finance assets, which results in approximately $2.4 billion of our $3.3 billion of debt being allocated
to our financing business.
In December 2022, the Company entered into a finance receivables funding agreement with an affiliate of HPS
Investment Partners (HPS) pursuant to which the Company agreed to offer for sale, and HPS agreed to purchase,
certain eligible pools of finance receivables on a monthly basis in transactions structured as "true sales at law" and
bankruptcy remote transfers. Accordingly, the receivables sold were derecognized from our financial statements and
HPS does not have recourse back to the Company for uncollectible receivables. During the second quarter 2023, the
finance receivables funding agreement with HPS was amended to expand the pools of finance receivables eligible
for sale to include the sale of the underlying leased equipment to HPS. The effect of these transactions has
accordingly reduced financing debt as funding for certain new finance receivable originations is through the direct
sale to HPS.
Refer to "Debt and Customer Financing Activities" and "Finance Assets and Related Debt" in the Capital Resources
and Liquidity section of Management's Discussion and Analysis, included in Item 7 of this combined Form 10-K, for
additional information.
Manufacturing and Supply
Our manufacturing and distribution facilities are located around the world. Our largest manufacturing site is in
Webster, N.Y., where we produce the Xerox® iGen, Xerox® Nuvera, and Xerox® Baltoro production printing presses
as well as key components and consumables for our products, such as toner. We have manufacturing operations for
materials and components in Dundalk, Ireland; Wilsonville, OR; Venray, Netherlands; Ontario, Canada; and
Oklahoma City, OK. We conduct sustainable manufacturing in all of these facilities. In addition, we work with various
manufacturing and distribution partners. This diversification of suppliers brings flexibility and cost efficiency to our
manufacturing and supply chain, a critical component in our strategic initiative to optimize operations for simplicity.
FUJIFILM Business Innovation Corp. (formerly Fuji Xerox Co., Ltd.) is our largest partner with whom we maintain
product sourcing agreements for specific products primarily across our mid-range and high-end portfolios. We also
acquire products from various third parties to increase the breadth of our product portfolio and meet channel
requirements. In addition, we outsource certain specialized manufacturing activities to partners, such as Flex Ltd.
and Jabil Inc., which are global contract manufacturers with whom we have long-standing relationships.
Our supply chain operations utilize a network of world-class logistics partners who offer warehousing and
transportation services. Reverse Logistics is an integral part of our sustainability mission, and in the U.S. we perform
these operations at our facility in Cincinnati, OH, and globally with a network of various partners.
FUJIFILM Business Innovation Corp. continues to be one of our strategic suppliers, and in 2023 we renewed our
multi-year contract with them. This agreement secures our ongoing access to the latest advancements in print
engine technology and related supplies, reinforcing Xerox’s commitment to delivering differentiated solutions to our
clients and partners.
Refer to the Capital Resources and Liquidity section of Management's Discussion and Analysis, included in Item 7
of this combined Form 10-K for additional information regarding our relationship with FUJIFILM Business Innovation
Corp.
International Operations
The financial measures, by geographical area for 2023, 2022 and 2021, are included in Note 4 - Segment and
Geographic Area Reporting in the Consolidated Financial Statements for additional information. See also the risk
factor entitled “The international nature of our business subjects us to a number of risks, including foreign exchange
and interest rate risk and unfavorable political, regulatory, and tax conditions in foreign countries.” in Part I, Item 1A
Risk Factors of this combined report on Form 10-K.
Seasonality
Our revenues may be affected by such factors as the introduction of new products, the length of sales cycles and the
seasonality of technology purchases and printing volume. These factors have historically resulted in lower revenues,
operating profits, and operating cash flows in the first and third quarters.
Xerox 2023 Annual Report 8
Table of Contents
Other Information
Xerox Holdings Corporation
Xerox Holdings is a New York corporation, organized in 2019 and our principal executive offices are located at 201
Merritt 7, P.O. Box 4505, Norwalk, Connecticut 06851-1056. Our telephone number is 203-849-5216.
Xerox Corporation
Xerox is a New York corporation, organized in 1906 and our principal executive offices are located at 201 Merritt 7,
P.O. Box 4505, Norwalk, Connecticut 06851-1056. Our telephone number is 203-849-5216.
Within the Investor Relations section of Xerox Holdings' website, you will find our combined Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports. We
make these documents available timely after we have filed them with, or furnished them to, the U.S. Securities and
Exchange Commission (the SEC). The SEC's Internet address is www.sec.gov.
Our Internet address is www.xerox.com. The content of our website is not incorporated by reference in this
combined Form 10-K unless expressly noted.
© 2022 Xerox Corporation. All rights reserved. Xerox®, ConnectKey®, FreeFlow®, Gen3®, Xerox Nuvera®,
Baltoro® and any other trademarks that are used here are trademarks of Xerox Corporation in the United States
and/or other countries.
Xerox 2023 Annual Report 9
Xerox 2023 Annual Report 9
Table of Contents
Item 1A. Risk Factors
You should carefully consider the following risk factors as well as the other information included, and risks
described, in other sections of this combined Form 10-K, including under the headings “Cautionary Statement
Regarding Forward-Looking Statements,” “Legal Proceedings,” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and in our Consolidated Financial Statements and the related notes
thereto.
Any of the following risks could materially and adversely affect our business, financial condition, or results of
operations. The selected risks described below, however, are not the only risks facing us. Additional risks and
uncertainties not currently known to us or those we currently view to be immaterial may also materially and
adversely affect our business, financial condition, or results of operations.
Company-Specific Risk Factors
Our business, results of operations, cash flow, and financial condition are affected by global
macroeconomic conditions.
Global macroeconomic developments, including conflicts throughout the world, may adversely affect our business
and financial results. Our business and financial performance depend on worldwide economic conditions, which
affect the demand for our products and services in the markets we serve as well as the cost and availability of
inputs to our business. Prolonged or more severe economic weakness and uncertainty, including economic
slowdowns or recessions, global market volatility, rising inflation and interest rates, employment, and other adverse
economic conditions, may result in decreased demand for our products and services, logistical and supply-related
challenges, and increased difficulty with financial forecasting. Moreover, the global macroeconomy has a significant
impact on interest rates, borrowing costs, and availability and cost of capital, all of which could have an adverse
impact on our business. In addition, inflation may adversely affect customers’ financing costs, cash flows, and
profitability, which could adversely impact their operations and our ability to collect receivables. Rising interest rates
could have a dampening effect on overall economic activity and/or the financial condition of our customers, either or
both of which could negatively affect customer demand for our products and our customers’ ability to repay
obligations to us. These conditions may result in reduced consumer and business confidence and spending in many
countries, a tightening in the credit markets, a reduced level of liquidity in many financial markets, high volatility in
credit, fixed income and equity markets, currency exchange rate fluctuations, and global economic uncertainty. In
addition, longer term disruptions in the capital and credit markets could adversely affect our access to liquidity
needed for our business. If financial institutions that have extended credit commitments to us are adversely affected
by the conditions of the U.S. and international capital markets, they may become unable to fund borrowings under
their credit commitments to us, which could have an adverse impact on our financial condition and our ability to
borrow additional funds, if needed, for working capital, capital expenditures, acquisitions, research and development
and other corporate purposes.
The global supply chain has experienced and may continue to experience pronounced disruptions impacting service
providers, logistics, and the flow, cost, and availability of supplies and products. Our business depends on its timely
supply of equipment, services, and related products to meet the technical and volume requirements of our
customers. Shortages of parts, materials, and services needed to manufacture and service our products, as well as
delays and unpredictability of shipments due to transportation interruptions, have adversely impacted, and may
continue to adversely impact, our suppliers’ ability to meet our requirements, and in turn our ability to meet our
customers’ needs. Moreover, supply chain constraints may continue to increase costs of logistics and parts for our
products, which costs we may not be able to pass on to our customers. We may experience further disruptions to
our manufacturing operations, supply chain, and/or distribution channels in the future, and these disruptions may be
prolonged.
We are subject to foreign currency exchange and interest rate volatility in our business. Our future revenues, costs
and results of operations could be significantly affected by changes in foreign currency exchange rates - particularly
the euro, the British pound, and the Japanese yen. We use currency derivative contracts to hedge foreign currency-
denominated assets, liabilities, and anticipated transactions. This practice is intended to mitigate or reduce volatility
in the results of our foreign operations but does not completely eliminate such volatility. We do not hedge the
translation effect of international revenues and expenses that are denominated in currencies other than the U.S.
dollar. Although the use of hedging transactions limits our downside risk, their use may also limit future revenues.
Xerox 2023 Annual Report 10
Table of Contents
If we fail to successfully develop new and existing products, technologies, and service offerings, we may be
unable to retain current customers and gain new customers and our revenues would decline.
We operate in an environment of significant competition, driven by rapid technological developments, changes in
industry standards, and demands of customers to become more efficient. Our primary competitors are exerting
increased competitive pressure in targeted areas and are entering new markets, and our emerging competitors are
introducing new technologies and business models. Our competitors include large international companies, some of
which have significant financial resources and compete with us globally to provide document processing products
and services in each of the markets we serve. We compete primarily on the basis of technology, performance, price,
quality, reliability, brand, distribution, and customer service and support. Our future success is largely dependent
upon our ability to compete in the markets we currently serve, to promptly and effectively react to changing
technologies and customer expectations, and to expand into additional market segments. To remain competitive, we
must develop or acquire new services, applications and products and periodically enhance our existing offerings. If
we are unable to compete successfully through existing new sales channels, including new partnerships, we could
lose market share and important customers to our competitors, and such loss could materially adversely affect our
results of operations and financial condition.
The process of developing new high-technology products, software, services, and solutions and enhancing existing
hardware and software products, services, and solutions is complex, costly, and uncertain, and any failure by us to
accurately anticipate customers' changing needs and emerging technological trends could significantly harm our
market share, results of operations, and financial condition. These changing market trends are also opening up new,
adjacent, and ancillary markets for our products, services, and software, which requires us to accurately anticipate
our customers' changing needs and emerging technological trends. Our business model requires us to commit
resources before knowing whether our initiatives will result in products that are commercially successful and
generate the revenues required to provide desired returns.
In addition, our sales strategy requires us to simplify our coverage model and expand into adjacent markets with
new products, services, and technology such as Intelligent Document Processing, managed IT Services, and other
workplace productivity solutions. Our ability to develop or acquire new products, services, and technologies for
these adjacent markets through new or existing partners may require the investment of significant resources but
may not lead to the successful development of new technologies, products, or services.
Our digital services strategy involves developing and deploying essential products and services that address the
productivity challenges of a hybrid workplace and distributed workforce. We also expect to extend our IT and digital
services presence in the mid- market through organic and inorganic investments. Our future success depends on
our ability to make the investments and commit the necessary resources to execute on our business strategy in this
highly competitive market. Despite this investment, the process of developing new products, services, and
technologies is inherently complex and uncertain, and there are a number of risks to which we are subject, including
the risk that our products, services, or technologies will not successfully satisfy our customers’ needs, conform to
evolving preferences or technologies, or gain market acceptance, which could adversely affect our results of
operations and financial condition. As part of our Reinvention, we also implemented a new business-unit led
organizational structure to closely align our product development and sales teams with the economic buyers of our
products.
Our business and financial performance could suffer if we do not manage the risks associated with our
services businesses properly.
The success of our services business (such as our managed print services, digital services, and other workforce
and IT Services solutions) depends to a significant degree on attracting, retaining, and maintaining or increasing the
level of revenues from our customers. Our standard services agreements are generally renewable at a customer’s
option and/or subject to cancellation rights, with or without penalties for early termination. We may not be able to
retain or renew services contracts with our customers, or our customers may reduce the scope of the services they
contract for. Factors that may influence contract termination, non-renewal, or reduction include business downturns,
dissatisfaction with our services or products, our retirement or lack of support for our products and services, our
customers selecting alternative technologies, and the cost of our services as compared to our competitors.
We may not be able to replace the revenue and earnings from lost customers or reductions in services. Although
our services agreements may include penalties for early termination, these penalties may not fully cover our
investments in these businesses.
In addition, the pricing and other terms of certain services agreements require us to make estimates and
assumptions at the time we enter into these contracts that could differ from actual results. Any increased or
Xerox 2023 Annual Report 11
Xerox 2023 Annual Report 11
Table of Contents
unexpected costs or unanticipated delays in connection with the performance of these contracts, which may
increase as services become more customized, could make these agreements less profitable or unprofitable. As a
result, we may not generate the revenues, profits or cash flows we may have anticipated from our services business
within the expected timelines, if at all.
Our profitability is dependent upon our ability to obtain adequate pricing for our products and services and
to improve our cost structure.
Our success depends on our ability to obtain adequate pricing for our products and services that will provide a
reasonable return to our shareholders. Changes in the market, including inflation, interest rates, foreign currency
exchange movements, and global supply chain disruptions, may exert pressure on the margins we obtain for our
products and services. Cost-reduction and pricing actions we undertake may not prove sufficient to offset the
adverse impacts of such market conditions.
Our ability to sustain and improve profit margins is dependent on a number of factors, including geography mix, our
ability to continue to improve the cost efficiency of our operations, our ability to sustain pricing increases across our
portfolio of products and services in a competitive and inflationary environment, our success in diversifying our suite
of products and services, the additional costs imposed by supply chain disruptions, the proportion of high-end, mid
and entry-level equipment sales, and IT services equipment (product and services mix), the trend in our post-sale
revenue growth and our ability to successfully complete information technology initiatives. If any of these factors
adversely materialize or if we are unable to achieve and maintain productivity or efficiency improvements, our ability
to offset labor cost inflation, potential materials cost increases and competitive price pressures would be impaired,
all of which could adversely affect our results of operations and financial condition.
We continually review our operations with a view towards reducing our cost structure, including reducing our
employee base, exiting certain businesses and/or geographies, seeking more favorable terms in our current and
future supply contracts, improving process and system efficiencies, and outsourcing some internal functions. In
addition, supply chain disruptions and interest rate increases have increased the cost of materials and components
required to manufacture our products, transportation of components and products, and labor associated with all
steps of the supply chain.
If we are unable to control the cost of and obtain adequate pricing for our products and services or if our cost-cutting
efforts negatively impact our business, it could materially adversely affect our results of operations and financial
condition.
We have outsourced a significant portion of our manufacturing operations and increasingly rely on third-
party manufacturers, subcontractors, and suppliers.
We have outsourced a significant portion of our manufacturing operations to third parties, such as FUJIFILM
Business Innovation Corp. (formerly Fuji Xerox Co., Ltd.) In the normal course of business, we regularly reevaluate
our relationships with these third parties and have discussions with other third parties in order to maintain
competitive tension and seek more optimal terms. There is no guarantee that such discussions will lead to better
arrangements, and our existing suppliers could react negatively to any alternative arrangements we seek to
negotiate with other third parties. In addition, we could incur significant costs in order to transition from one third-
party manufacturing partner to another.
We face the risk that our third-party manufacturing partners may not be able to develop or manufacture products
satisfying all of our requirements, quickly respond to changes in customer demand, and obtain supplies and
materials necessary for the manufacturing process. In addition, in the normal course of business and exacerbated
by supply chain disruptions, our partners may experience labor shortages and/or disruptions, transportation cost
increases, materials cost increases, and/or manufacturing cost increases that could lead to higher prices for our
products and/or lower reliability of our products. Further, since certain third parties to whom we have outsourced
manufacturing are also our competitors in the print market, or may become competitors in the future, we could
experience product disruption as a result of competitive pressures that increase the cost of the products supplied. If
any of these risks were to be realized, and similar third-party manufacturing relationships could not be established
and/or successfully transitioned to, we could experience supply interruptions or increases in costs that might result
in our being unable to meet customer demand for our products, damage our relationships with our customers and
reduce our market share, all of which could materially adversely affect our results of operations and financial
condition.
In addition, in our services business, we may partner with other parties, including software and hardware vendors,
to provide the complex solutions required by our customers. Therefore, our ability to deliver the solutions and
Xerox 2023 Annual Report 12
Table of Contents
provide the services required by our customers is dependent on both our and our partners' ability to meet our
customers' requirements and schedules. If we or our partners fail to deliver services or products as required and on
time, our ability to complete the contract may be adversely affected, which may have an adverse impact on our
revenue and profits.
We may be unable to attract and retain key personnel while our business model undergoes significant
changes.
Xerox is undergoing significant changes in our business model and, accordingly, current and prospective employees
may experience uncertainty about their future and may have other opportunities available to them given the
competitive labor market. That uncertainty was further increased by Xerox's recently announced a 15 percent
targeted workforce reduction. Our success is dependent, among other things, on our ability to attract, develop and
retain highly qualified senior management and other key employees. Competition for key personnel is intense, and
our ability to attract and retain key personnel is dependent on a number of factors, including prevailing market
conditions and compensation packages offered by companies competing for the same talent. Our ability to do so
also depends on how well we maintain a strong corporate culture and corporate brand that is attractive to
employees. Hiring and training of new employees has been adversely impacted by global economic uncertainty, the
tight labor market caused by low unemployment, and changes to office environments and workplace trends
precipitated by COVID-19. The departure of existing key employees or the failure of potential key employees to
accept employment with Xerox, despite our recruiting efforts, could have a material adverse impact on our business,
financial condition, and operating results.
We may not achieve the expected benefits of our restructuring and transformation plans, including
Reinvention, and may adversely affect our business.
We engage in restructuring actions, as well as other transformation efforts, in order to reduce our cost structure,
manage cash flow, achieve operating efficiencies, and align our business to fit with our operating plan. In addition,
these actions are expected to simplify our organizational structure, upgrade our IT infrastructure and redesign our
business processes. As a result of our restructuring initiatives, we may experience a loss of continuity, loss of
accumulated knowledge and/or inefficiency during transitional periods. Transformation and restructuring may
require a significant amount of time and focus from both management and other employees, which may divert
attention from operating and growing our business. The wide-ranging nature and number of actions underway at
any point in time may become difficult for the organization to satisfactorily manage and implement, as these actions
may have impacts across the organization, processes and systems that are not apparent by individual project but
may have unintended consequences in the aggregate. Furthermore, the expected savings associated with these
initiatives may be offset to some extent by business disruption during the implementation phase as well as
investments in new processes and systems until such time as the initiatives are fully implemented and stabilized. If
we fail to achieve some or all of the expected benefits of our restructuring and transformation plans, it could have a
material adverse effect on our competitive position, business, financial condition, results of operations and cash
flows.
Our Reinvention entails the implementation of a new business-unit led operating model and the central coordination
of internal processes through a new Global Business Services organization.
As part of our efforts to streamline operations and reduce costs, we have offshored and outsourced certain of our
operations, services and other functions through arrangements with third parties (e.g., TCS and HCL) and we will
continue to evaluate additional offshoring or outsourcing possibilities in the future. If our outsourcing partners fail to
perform their obligations in a timely manner or at satisfactory quality levels or if we are unable to attract or retain
sufficient personnel with the necessary skill sets to meet our offshoring or outsourcing needs, the quality of our
services, products, and operations, as well as our reputation, could suffer. In addition, much of our offshoring takes
place in developing countries and as a result may also be subject to geopolitical uncertainty. Diminished service
quality from offshoring and outsourcing could have an adverse material impact to our operating results due to
service interruptions and negative customer reactions.
Our government contracts are subject to termination rights, audits, and investigations, which, if exercised,
could negatively impact our reputation and reduce our ability to compete for new contracts.
A significant portion of our revenue is derived from contracts with U.S. federal, state and local governments and
their agencies, as well as international governments and their agencies. Government entities typically finance
projects through appropriated funds. While these projects are often planned and executed as multi-year projects,
government entities usually reserve the right to change the scope of or terminate these projects for lack of approved
funding and/or at their convenience. Changes in government or political developments, including budget deficits,
Xerox 2023 Annual Report 13
Xerox 2023 Annual Report 13
Table of Contents
shortfalls or uncertainties, government spending reductions (e.g., Congressional sequestration of funds under the
Budget Control Act of 2011), government shutdowns, or other debt or funding constraints, could result in lower
governmental sales and in our projects being reduced in price or scope or terminated altogether, which also could
limit our recovery of incurred costs, reimbursable expenses and profits on work completed prior to the termination.
Additionally, government agencies routinely audit government contracts. If the government finds that we charged
them inappropriate pricing, we could be required to refund or reimburse the government, and there is the possibility
of paying fines and penalties. If the government discovers improper or illegal activities or contractual non-
compliance in the course of audits or investigations, we may be subject to various civil and criminal penalties and
administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and
suspensions or debarment from doing business with the government. Any resulting penalties or sanctions could
have a material adverse effect on our business, financial condition, results of operations and cash flows. Further,
the negative publicity that arises from findings in such audits or investigations could have an adverse effect on our
reputation and reduce our ability to compete for new contracts and could also have a material adverse effect on our
business, financial condition, results of operations and cash flow.
Additionally, our business with the U.S. government, direct or indirect, is subject to specific laws and regulations
with numerous and unique compliance requirements relating to formation, administration and performance of U.S.
federal or federally funded contracts. These requirements, which may increase or change over time, may increase
our performance and compliance costs thereby reducing our margins, which could have an adverse effect on our
financial condition. Violations or other failures to comply with these laws, regulations or other compliance
requirements could lead to terminations for default, suspension or debarment from U.S. government contracting or
subcontracting for a period of time or other adverse actions. Such laws, regulations or other compliance
requirements include those related to procurement integrity, export control, U.S. government security and
information security regulations, supply chain and sourcing requirements and restrictions, employment practices,
protection of criminal justice data, protection of the environment, accuracy of records, proper recording of costs,
foreign corruption, Trade Agreements Act, Buy America Act, other domestic content requirements, and the False
Claims Act.
Our ability to fund our customer financing activities at economically competitive levels depends on our
ability to borrow and the cost of borrowing in the credit markets.
The long-term viability and profitability of our financing business is dependent, in part, on our ability to borrow
against or sell leases and the cost of borrowing in the credit markets. This ability and cost, in turn, is dependent on
(i) our credit rating, which is currently non-investment grade according to credit rating agency assessments that are
subject to periodic reviews and can change following a review and (ii) credit market volatility, the war in Ukraine,
conflicts in the Middle East, and other global macroeconomic developments. Enhanced credit market volatility has,
among other things, increased the cost of borrowing and reduced access to debt and equity markets. We primarily
fund our financing business through a combination of cash generated from operations, cash on hand, capital market
offerings, and sales and securitizations of finance receivables. Our ability to continue to offer customer financing
and be successful in the placement of equipment, software, and IT services with customers seeking to finance
those transactions through Xerox is largely dependent on our ability to obtain funding at a reasonable cost. If our
credit rating changes, the credit market becomes more volatile, or other events occur that reduce the demand for, or
our ability to provide at attractive rates on, customer financing, it may adversely impact our finance business and
results of operations, however, there are alternative sources of funding available to the majority of our customers,
which could reduce the overall impact to the broader Xerox business.
Our level of indebtedness could adversely affect our financial condition and reduce our financial flexibility.
As of December 31, 2023, our total debt was $3.3 billion, which primarily consisted of $2.4 billion of Senior and
Unsecured Debt and approximately $900 million of Secured Borrowings. In the future, we may incur additional
indebtedness for organic or inorganic growth or otherwise. Our level of indebtedness could affect our flexibility and
operations in several ways, including the following:
•
•
•
•
a significant portion of our cash flows could be used to service our indebtedness;
the covenants contained in the agreements governing our outstanding indebtedness may limit our ability to
borrow additional funds, dispose of assets, pay dividends, and make certain investments;
our debt covenants may also affect our flexibility in planning for, and reacting to, changes in the economy and in
our industry;
a high level of debt would increase our vulnerability to general adverse economic and industry conditions;
Xerox 2023 Annual Report 14
Table of Contents
•
•
a high level of debt may place us at a competitive disadvantage compared to our competitors that may be less
leveraged and therefore may be able to take advantage of opportunities that our indebtedness would prevent us
from pursuing; and
a high level of debt may impair our ability to obtain additional financing in the future for working capital, capital
expenditures, debt service requirements, acquisitions, or general corporate or other purposes.
In addition, revolving borrowings under our ABL (as defined below) and the term loans under our TLB (as defined
below), and potentially other credit facilities we or our subsidiaries may enter into in the future, will bear interest at
variable rates. Increases in market interest rates could lead to higher debt service requirements associated with our
variable-rate borrowings, if any. The effect of inflation on interest rates could increase our financing costs over time,
either through near-term borrowings on our ABL and TLB, refinancing of our existing borrowings, or the issuance of
new debt
In addition to our debt service obligations, our operations require substantial expenditures on a continuing basis.
Our ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to
fund capital and non-capital expenditures necessary to maintain the condition of our operating assets and
properties, as well as to provide capacity for the growth of our business, depend on our financial and operating
performance. We may not be able to generate sufficient cash flows to pay the interest on our debt, and future
working capital borrowings or debt or equity financing may not be available to pay or refinance such debt at
attractive rates or at all.
We need to maintain adequate liquidity in order to meet our operating cash flow requirements, repay
maturing debt and meet other financial obligations, such as payment of dividends to the extent declared by
our Board of Directors. If we fail to comply with the covenants contained in our various debt agreements, it
may adversely affect our liquidity, results of operations, and financial condition.
Our liquidity is a function of our cash on-hand and our ability to successfully generate cash flows from a combination
of efficient operations and continuing operating improvements, access to capital markets and funding from third
parties, which includes securitizations and sales of our finance receivables. We believe our liquidity (including
operating and other cash flows that we expect to generate) will be sufficient to meet operating requirements as they
arise; however, our ability to maintain sufficient liquidity going forward will be subject to the general liquidity of and
on-going changes in the credit markets as well as general economic, financial, competitive, legislative, regulatory,
and other market factors that are beyond our control.
Our $300 million asset-based revolving credit agreement (the ABL), dated as of May 22, 2023, with Citibank, N.A.,
as administrative agent and collateral agent, and the lenders and issuing banks party thereto, contains a fixed
charge coverage ratio of 1x, as defined in the ABL, 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) $22.5 million and (B) 10% of the Line Cap (the
lesser of the aggregate amount of Revolving Commitments and the then-applicable Borrowing Base). Both the ABL
and our $550 million term loan B credit agreement, dated as of November 17, 2023, with Jefferies Finance LLC as
administrative agent and collateral agent, and the lenders party thereto (the TLB), are supported by guarantees
from us and certain US, Canadian and English subsidiaries (and, within a specified period following the closing date
of the TLB, certain German and Belgian subsidiaries), and by security interests in substantially all of our and such
US, Canadian and English subsidiaries’ assets, subject to certain exceptions (and, within a specified period
following the closing date of the TLB, the finance lease receivables of such German and Belgian subsidiaries).
The ABL and the TLB also impose significant operating and financial restrictions on us and may limit our ability to
engage in acts that may be in our best interest, including restrictions on our ability to: pay dividends, make other
distributions in respect of, or repurchase or redeem capital stock; incur additional indebtedness and guarantee
indebtedness; prepay, redeem, or repurchase certain debt; make loans, investments, and other restricted payments;
sell or otherwise dispose of assets; incur liens; enter into agreements restricting our subsidiaries’ ability to pay
dividends; consolidate, merge, or sell all or substantially all of our assets; make strategic acquisitions or
investments; or enter into joint ventures.
Failure to comply with material provisions or covenants in the ABL and the TLB or our other debt agreements,
including our secured financing agreements in connection with our securitization transactions and the indentures
governing our outstanding notes, could have a material adverse effect on our liquidity, results of operations, and
financial condition. A default under certain of our debt agreements may allow our creditors to accelerate the
applicable obligations and result in the acceleration of other obligations to which a cross-acceleration or cross-
default provision applies. In addition, an event of default under the ABL and the TLB would permit the lenders
thereunder to terminate all commitments to extend credit. Furthermore, if we were unable to repay the amounts due
Xerox 2023 Annual Report 15
Xerox 2023 Annual Report 15
Table of Contents
and payable under the ABL and the TLB, the lenders could proceed against the collateral granted to them to secure
the obligations under the ABL and the TLB. If any of our creditors accelerate the repayment of applicable
indebtedness, we and our subsidiaries may not have sufficient assets to repay that indebtedness.
Our credit rating or macroeconomic conditions, including the interest rate environment, could impact our ability to
continue to enter into receivables financing transactions at attractive prices or at all. Any new indebtedness, if
available to us at all, may result in higher borrowing costs and may contain covenants that would place greater
restrictions on how we can run our businesses and/or limit our ability to take certain actions that might otherwise be
beneficial to the Company and/or its shareholders, customers, suppliers, partners, and/or lenders.
Our financial condition and results of operations could be adversely affected by employee benefit-related
funding requirements.
We sponsor several defined benefit pension and retiree-health benefit plans throughout the world. We are required
to make contributions to these plans to comply with minimum funding requirements imposed by laws governing
these employee benefit plans. Although most of our major defined benefit plans have been amended to freeze
current benefits and eliminate benefit accruals for future service, several plans remain unfunded (by design) or are
under-funded. The projected benefit obligations for these benefit plans at December 31, 2023 exceeded the value of
the assets of those plans by approximately $1.2 billion. The current unfunded or underfunded status of these plans
is a significant factor in determining the ongoing future contributions we will be required to make to these plans.
Accordingly, we expect to have additional funding requirements in future years, and we may make additional,
voluntary contributions to the plans. Depending on our cash position at the time, any such funding or contributions
to our defined benefit plans could impact our operating flexibility and financial position, including adversely affecting
our cash flow for the quarter in which such funding or contributions are made. Weak macroeconomic conditions and
related under-performance of asset markets could also lead to increases in our funding requirements.
Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our
products, services, and brand.
In developing new technologies and products and maintaining our product portfolio, we rely upon patent, copyright,
trademark, and trade secret laws in the United States and similar laws in other countries, and a combination of
confidentiality, license, assignment and other agreements with our employees, customers, suppliers and other
parties, to establish and maintain our intellectual property rights in technology and products used in our operations.
However, various events outside of our control may pose a threat to our intellectual property rights, as well as to our
products and services. Monitoring and detecting any unauthorized access, use or disclosure of our intellectual
property is difficult and costly and we cannot be certain that the protective measures we have implemented will
completely prevent misuse. Our ability to enforce our intellectual property rights is subject to litigation risks and
uncertainty as to the protection and enforceability of those rights in some countries. If we seek to enforce our
intellectual property rights, we may be subject to claims that those rights are invalid or unenforceable, and others
may seek counterclaims against us, which could have a negative impact on our business. Effective protection of
intellectual property rights is expensive and difficult to maintain, both in terms of application and maintenance costs,
as well as the costs of defending and enforcing those rights. Any action against our Company relating to our
intellectual property rights, regardless of the outcome, could generate substantial costs and require significant
involvement from our management team, which could adversely impact our results of operations and financial
condition. If we are unable to enforce and protect intellectual property rights, or if they are circumvented, rendered
obsolete, invalidated by the rapid pace of technological change, or stolen or misappropriated by employees or third
parties, it could have an adverse impact on our competitive position and business. Changes in intellectual property
laws or their interpretation may impact our ability to protect and assert our intellectual property rights, increase costs
and uncertainties in the prosecution of patent applications or related enforcement actions, and diminish the value
and competitive advantage conferred by our intellectual property assets. Negative publicity generated from
intellectual property disputes could also harm our reputation and brand image.
The efforts we have taken to protect our intellectual property rights may not be sufficient or effective, or existing
agreements may be breached. It is possible that our intellectual property rights could be infringed, misappropriated,
challenged, invalidated, or circumvented, which could allow others to use our intellectual property to our competitive
detriment. Further, we routinely apply for patents to protect innovative ideas in our technology, but we may not
always be successful in obtaining patent grants from these applications. We also pursue registration of copyrights,
trademarks, and domain names in numerous jurisdictions, but doing so may not always be successful or cost-
effective. The laws of certain countries may not protect our proprietary rights to the same extent as the laws of the
United States and we may be unable to protect our proprietary technology adequately against unauthorized third-
party copying or use, which could adversely affect our competitive position. In addition, some of our products rely on
Xerox 2023 Annual Report 16
Table of Contents
technologies developed by third parties. We may not be able to obtain or to continue to obtain licenses and
technologies from these third parties at all or on reasonable terms, or such third parties may demand cross-licenses
to our intellectual property.
If we fail to accurately anticipate and meet our customers' needs through the development of new products,
technologies, and service offerings or if we fail to adequately protect our intellectual property rights, we could lose
market share and customers to our competitors, which could materially adversely affect our results of operations
and financial condition.
Failure to meet ESG expectations or standards or achieve our ESG goals could adversely affect our
business, results of operations, financial condition, or stock price.
There has been an increased focus from regulators and stakeholders on environmental, social, and governance
(ESG) matters, including greenhouse gas emissions and climate-related risks; diversity, equity, and inclusion;
responsible sourcing and supply chain; human rights and social responsibility; and corporate governance and
oversight. In the European Union, the Corporate Sustainability Reporting Directive (CSRD) expands the scope of
companies required to publicly report ESG-related information and defines the ESG-related information that
companies are required to report in accordance with European Sustainability Reporting Standards (ESRS).
Additionally, on March 21, 2022, the SEC released its Proposed Rules to Enhance and Standardize Climate-
Related Disclosures for Investors, which, if adopted as a final rule, would require companies to include certain
climate-related disclosures in their registration statements and periodic reports, including disclosure of their direct
and indirect greenhouse gas emissions. Other mandatory ESG-related disclosures include the Conflict Minerals
Reporting in the U.S., Transparency in Supply Chain Act in California, the Modern Slavery Act in the UK and
Canada, and the Law on Child Labour Due Diligence in The Netherlands. There are also a number of voluntary
reporting schemes that provide a framework to report ESG-related information.
In 2021 Xerox voluntarily announced its 2040 net zero goal to meet growing expectations of companies to reduce
GHG emissions. Xerox recognizes these goals are subject to risks and uncertainties depending on global climate
change, economic conditions, and other factors outside of our control. Xerox also recognizes transitional risks
associated with changes in voluntary standards and customer preferences in connection with concerns about
climate change. If Xerox is unable to offer products that are as energy efficient as our competitors, there is a risk of
reduced demand for our products and reduced market share. Inability, or a perception of inability, to achieve
progress toward our environmental goals could adversely impact our business or damage our reputation. Damage
to our reputation may reduce demand for our products and services and thus have an adverse effect on our future
financial results and our stock price, as well as require additional resources to rebuild our reputation.
Given our commitment to ESG, we actively engage external and internal stakeholders to manage these issues and
have established and publicly announced certain goals, commitments, and targets which we may refine or even
expand further in the future. These goals, commitments, and targets reflect our current plans and aspirations and
are not guarantees that we will be able to achieve them. Evolving stakeholder expectations and our efforts and
ability to manage these issues, provide updates on them, and accomplish our goals, commitments, and targets
present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which may be outside
of our control or could have a material adverse impact on our business, including on our reputation and stock price.
Further, there is uncertainty around the accounting standards, corporate social responsibility, and climate-related
disclosures associated with emerging laws and reporting requirements and the related costs to comply with the
emerging regulations.
Our failure or perceived failure to achieve our ESG goals, maintain ESG practices, or comply with emerging ESG
regulations that meet evolving regulatory or stakeholder expectations could harm our reputation, adversely impact
our ability to attract and retain customers and talent, and expose us to increased scrutiny from the investment
community and enforcement authorities. Increased focus and activism on ESG topics may hinder our access to
capital, as investors may reconsider their capital investment as a result of their assessment of our ESG practices.
Our reputation also may be harmed by the perceptions that our stakeholders have about our action or inaction with
regards to ESG-related issues. Damage to our reputation and loss of brand equity may cause customers to choose
to stop purchasing our products and services, purchase products and services from another company or a
competitor, or refuse to renew existing contracts, ultimately reducing demand for our products and services and thus
have an adverse effect on our future financial results and stock price, as well as require additional resources to
rebuild our reputation.
Xerox 2023 Annual Report 17
Xerox 2023 Annual Report 17
Table of Contents
Regulatory Risk Factors
The international nature of our business subjects us to a number of risks, including foreign exchange and
interest rate risk and unfavorable political, regulatory, and tax conditions in foreign countries.
A significant portion of our revenue is generated from operations outside of the United States, and we manufacture
or acquire many of our products and/or their components outside the United States. As a result of the global nature
of our operations, our business performance and results of operations may be adversely affected by a number of
factors, including:
•
•
•
•
•
•
•
•
•
uncertain global economic and political developments that may impact business conditions and demands;
global trade issues including changes in, and uncertainties with respect to, trade and export regulatory
requirements, trade policies and sanctions restrictions, tariffs, and international trade disputes;
evolving positions taken by governmental agencies regarding possible national economic and/or security
issues posed by the development, sale, or export of certain products and technologies;
political instability, natural disasters, regional or global health epidemics, social unrest, terrorism, acts of war
or other geopolitical turmoil;
variations among, and weakness and/or changes in, local, regional, national or international laws and
regulations, including contract, intellectual property, data privacy, data protection and cybersecurity, labor,
tax, and import/export laws, and the interpretation and application of such laws and regulations;
challenges to effective management of a diverse workforce with different experience levels, languages,
cultures, customs, business practices and worker expectations, and differing employment practices and
labor issues across multiple countries around the world;
impacts of climate change on our operations and those of our customers and suppliers;
challenges in hiring, retention, and integration of workers in multiple countries around the world; and
the increasing need for a mobile workforce to work in or travel to different regions.
If our future revenues, costs, and results of operations are significantly affected by economic or political conditions
abroad and we are unable to effectively hedge these risks, they could materially adversely affect our results of
operations and financial condition.
We operate globally and changes in tax laws could adversely affect our results.
We are subject to income taxes in the United States and foreign jurisdictions. Significant judgment is required to
determine and estimate worldwide tax liabilities. Our provision for income taxes and effective tax rates could be
affected by numerous factors, including changes in applicable tax laws, interpretations of applicable tax laws,
amount and composition of pre-tax income in jurisdictions with differing tax rates, and valuation of deferred tax
assets.
We monitor U.S. and non-U.S. tax law changes that may adversely impact our overall tax costs. From time to time,
proposals have been made and/or legislation has been introduced to change tax rates, as well as related tax laws,
regulations or interpretations thereof, by various jurisdictions, or to limit tax treaty benefits which, if enacted or
implemented could materially increase our tax costs and/or our effective tax rate and could have a material adverse
impact on our financial condition and results of operations. The international tax environment continues to change
as a result of both coordinated actions by governments and unilateral measures designed by individual countries,
both intended to tackle concerns over base erosion and profit shifting (BEPS) and perceived international tax
avoidance techniques. The Organization for Economic Cooperation and Development (OECD) is issuing guidelines
that are different, in some respects, than long-standing international tax principles. This includes the development of
an inclusive framework that is based on a two-pillar approach. In December 2022, the EU Member States formally
adopted the EU’s Pillar Two Directive, which generally provides for a global minimum tax rate of at least 15%.
Various countries in which we operate in have implemented legislation, effective January 1, 2024.
Based on the currently enacted legislation, the Company does not expect Pillar Two to have a material impact on its
consolidated financial statements. However, we will continue to monitor any impact to Xerox as countries continue
to amend their tax law to adopt certain parts of the OECD guidelines. Taxation at the country, state, provincial or
municipal level also may be subject to review and potential override by regional, federal, national, or other
government authorities. In addition, we continue to be subject to examination of our income tax returns by the
United States Internal Revenue Service and other tax authorities around the world. We currently are, and expect to
Xerox 2023 Annual Report 18
Table of Contents
continue to be, subject to numerous federal, state, local and foreign taxes relating to income, sales & use, value-
added (VAT), and other tax liabilities. While we have established reserves based on assumptions and estimates that
we believe are reasonably sufficient to cover such liabilities, any adverse outcome of a review or audit, or changes
in tax laws, could have an adverse impact on our financial position and results of operations if the reserves prove to
be insufficient.
We are subject to breaches of our security systems, cyber-attacks, and service interruptions, which could
expose us to liability, litigation, regulatory action and damage our reputation.
We have implemented and maintain security systems measures and safeguards, which we believe to be
reasonable, to protect our information systems and confidential information, including personal information, and that
of our customers, clients and suppliers that is held or processed by us, against unauthorized access or disclosure
and to prevent, detect, contain, respond to, and mitigate security-related threats and potential incidents. We
undertake ongoing improvements to the security of our systems, connected devices, and information-sharing
products in order to minimize potential vulnerabilities, in accordance with industry and regulatory standards. Despite
such efforts, our safeguards may fail or we may be subject to breaches of our security resulting in unauthorized
access to our facilities or information systems and the information we are trying to protect. Moreover, our business
or operations may be affected in the event our customers, clients and suppliers experience data security incidents,
cyber-attacks or extended interruptions of their services or systems. Our operations depend on the use of various
information systems, including those that may have reached their end-of-life, and may contain unpatched
vulnerabilities. Unpatched vulnerabilities in our systems and the utilization of end-of-life systems may expose us to
increased cybersecurity risks, including unauthorized access, data breaches, and operational disruptions. The
absence of vendor support for end-of-life systems may impede our ability to promptly address and remediate
security issues, potentially leading to extended downtime, data breaches, and financial losses. Additionally, the
third-party software, or applications we utilize may possess inherent vulnerabilities or design, manufacturing, or
operational defects when implemented intentionally or unintentionally in a manner that could compromise security of
our information systems. Increased adoption of remote work has also increased possible attack surfaces on our
information systems. The techniques used to obtain unauthorized access are constantly changing, are becoming
increasingly sophisticated and often are not recognized until after an exploitation of information has occurred.
Therefore, we may be unable to anticipate these techniques or implement sufficient preventative measures.
Threat actors regularly attempt and, from time to time, have been successful in breaching our security controls, to
gain access to our information and infrastructure through various techniques, including phishing, ransomware,
account compromise, and other targeted attacks. The Company has retained and, in the future, may retain third-
party experts to assist with the containment of and response to security incidents and, in coordination with law
enforcement, with the investigation of such incidents. The Company has incurred, and expects to continue to incur,
costs, including to retain such third-party experts, in connection with such incidents. We may also find it necessary
to make significant further investments to protect this information and our infrastructure. These investments, and
costs we incur in connection with security incidents, could be material.
While we do not believe cybersecurity incidents have resulted in any material impact on our business, operations or
financial results or our ability to service our customers or run our business, past and future incidents resulting in
unauthorized access to our facilities or information systems, or those of our suppliers, or accidental loss or
disclosure of proprietary or confidential information about us, our clients or our customers could result in, among
other things, a total shutdown of our systems that would disrupt our ability to conduct business or pay vendors and
employees, violations of applicable privacy and other laws, significant legal and financial exposure, damage to our
reputation, and a loss of investor confidence in our security measures. Additional impacts from cybersecurity
incidents could include remediation costs to our customers or business partners, such as liability for stolen assets or
information, repairs of system damage, and incentives for continued business; increased cybersecurity protection
costs, which may include the costs of making organizational changes, deploying additional personnel, resources
and security technologies, training employees, and engaging third-party experts and consultants; lost revenue
resulting from the unauthorized use of proprietary information or the failure to retain or attract business partners
following an incident; increased insurance premiums; and damage to the Company’s competitiveness, stock price,
and long-term shareholder value. In addition, cybersecurity risks and data security incidents could lead to
unfavorable publicity, governmental inquiry and oversight, regulatory actions by federal, state and non-U.S.
governmental authorities, litigation by affected parties and possible financial obligations for damages related to the
theft or misuse of such information, any of which could have a material adverse effect on our profitability and cash
flow.
Xerox 2023 Annual Report 19
Xerox 2023 Annual Report 19
Table of Contents
We are subject to laws of the United States and foreign jurisdictions relating to the privacy and protection
of personal information, and failure to comply with those laws could subject us to legal actions and
negatively impact our operations.
We receive, process, transmit and store information relating to identifiable individuals, both in our role as a
technology provider and as an employer. As a result, we are subject to numerous privacy and data protection laws
and regulations in the United States (both federal and state) and foreign jurisdictions.
The global regulatory landscape regarding the protection of personal information is evolving, and U.S. (federal and
state) and foreign governments have enacted, and are considering further enacting, legislation and regulations
related to privacy and data protection, we expect to see an increase in, or changes to, legislation and regulation in
this area. For example, the California Consumer Privacy Act of 20-18 (CCPA), regulates businesses’ processing of
personal information, which is defined broadly enough to include online identifiers provided by individuals’ devices,
applications, and protocols (such as IP addresses, mobile application identifiers and unique cookie identifiers) and
individuals’ location data. The CCPA, which went into effect on January 1, 2020, instituted a new privacy framework
for covered businesses by, among other requirements, establishing certain rights for consumers in California to
protect their personal information (including rights of deletion of and access to personal information), imposing
special rules on the collection of consumer data from minors, creating new notice obligations and new limits on the
“sale” of personal information, and creating a new and potentially severe statutory damages framework for violations
of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data
breaches. The CCPA also offers the possibility for a consumer to recover statutory damages for certain violations
and could expose our company to additional risks of individual and class-action lawsuits even though the statute’s
private right of action is limited in scope. The California Privacy Rights Act of 2020 (CPRA), which took effect on
January 1, 2023, amended and expanded upon the CCPA to impose additional notice, access, objection, limitation
of use, nondiscrimination, and other obligations and restrictions with regards to the processing of sensitive data and
the disclosure of data to third parties, which does not constitute a “sale”.
Several other U.S. states have enacted their own data privacy laws similar to the CCPA. These laws generally grant
individuals a range of new privacy rights and protections relating to their personal data, and impose obligations on
businesses processing such data. Each of these new laws may create additional compliance costs for us and our
industry partners, though efforts taken toward compliance with other privacy laws will likely be applicable to many
elements of the newly enacted state statutes. Although we have attempted to mitigate certain risks posed by these
laws, we cannot predict with certainty the effect of these laws and their implementing regulations on our business.
Laws governing personal data in Europe may have a similar effect on our Company. For example, the General
Data Protection Regulation (GDPR) enhances data protection obligations for controllers of such data and for service
providers processing the data. It also provides certain rights, such as access and deletion, to the individuals about
whom the personal data relates. Non-compliance with the GDPR can trigger steep fines of up to the greater of EUR
20 million or 4% of total worldwide annual revenue. Continuing to maintain compliance with the requirements of the
GDPR and other similar foreign laws, including monitoring and adjusting to rulings and interpretations by
supervisory authorities and/or courts of competent jurisdiction, may affect our approach to compliance and requires
significant ongoing time, resources and expense, as will the effort to monitor whether additional changes to our
business practices and our backend configuration are needed, all of which may increase operating costs, or limit our
ability to operate or expand our business. Furthermore, we are also subject to similar laws related to data protection
in other jurisdictions, such as the Personal Information Protection and Electronic Documents Act (PIPEDA) in
Canada, and the General Data Protection Law (LGDP) in Brazil.
These laws and other obligations may be interpreted and applied in a manner that is inconsistent with our existing
data management practices or features of our systems and services. If so, we could be required to fundamentally
change our business activities and practices or modify our products, which could have an adverse effect on our
business. We may be unable to make such changes and modifications in a commercially reasonable manner or at
all, and our ability to develop new products and features could be limited. Changes to existing laws, introduction of
new laws in this area, or failure to comply with existing laws that are applicable to us may subject us to, among
other things, additional costs or changes to our business practices, liability for monetary damages, fines and/or
criminal prosecution, unfavorable publicity or other reputational harm, restrictions on our ability to obtain and
process information and allegations by our customers and clients that we have not performed our contractual
obligations, any of which may have a material adverse effect on our profitability and cash flow.
Xerox 2023 Annual Report 20
Table of Contents
Tariffs or other restrictions on foreign imports could negatively impact our financial performance.
Our business, results of operations and financial condition may be negatively impacted by a potential increase in the
cost of our products as a result of new or incremental trade protection measures, such as increased import tariffs or
import or export restrictions; or, the revocation or material modification of trade agreements. Changes in U.S. and
international trade policy and resultant retaliatory countermeasures, including imposition of increased tariffs, quotas,
or duties by affected countries and trading partners are difficult to predict and may adversely affect our business.
The U.S. government has and could in the future impose trade barriers including tariffs, quotas, duties, or other
restrictions on foreign imports, or restrictions on U.S. exports. The implementation of a border tax, tariff or higher
customs duties on our products manufactured abroad or components that we import into the U.S., or any potential
corresponding actions by other countries in which we do business, could negatively impact our financial
performance.
We are subject to numerous environmental laws, regulations, and procurement initiatives and failure to
comply could result in substantial costs, including cleanup costs, fines, civil or criminal sanctions, third-
party damage or personal injury claims, or limited market access.
Continuing political and social attention to the issue of climate change has led to existing and proposed international
agreements as well as national, state, local, and foreign legislative, regulatory and procurement initiatives directed
at requiring companies to disclose and limit greenhouse gas emissions in the countries, states, and territories in
which we operate. Laws, regulatory actions, international agreements, such as the Paris Agreement, and other
initiatives to address concerns about climate change and greenhouse gas emissions could negatively impact our
business, results of operations, and financial condition, including, among other things, by limiting the availability of
our products, increasing the cost to obtain or sell those products, and increasing our reporting and disclosure
expenses, or imposing taxes on us or our customers. Though the ultimate impact of these and similar initiatives is
not yet fully known, compliance with such proposed or newly adopted disclosure initiatives may incur significant
costs.
Our operations and our products are subject to environmental regulations in each of the jurisdictions in which we
conduct our business and sell our products. Various countries and jurisdictions have adopted, or are expected to
adopt, restrictions on the types and amounts of chemicals that may be present in electronic equipment or other
items that we use or sell. Ongoing research and review of chemicals used in our products could lead to further
restriction of common chemicals in office equipment and supplies. In the European Union, we are subject to
“REACH” Regulation (Registration, Evaluation, Authorization and Restriction of Chemicals), a broad initiative that
requires parties throughout the supply chain to register, assess and disclose information regarding many chemicals
in their products. Depending on the types, applications, forms and uses of chemical substances in various products,
REACH and similar regulatory programs in other jurisdictions could lead to restrictions and/or bans on certain
chemical usage. In the United States, the Toxics Substances Control Act (TSCA) authorizes the U.S. Environmental
Protection Agency to regulate and screen all chemicals produced or imported into the United States. Xerox
continues its efforts toward monitoring and evaluating the applicability of these and numerous other regulatory
initiatives in a continuous effort to develop and enable compliance strategies. As these and similar initiatives and
programs become regulatory requirements throughout the world and/or are adopted as public or private
procurement requirements, we must comply. Failure to comply could result in the company being subject to
potential liability and facing market access limitations that could have a material adverse effect on our operations
and financial condition.
Other potentially relevant regulatory initiatives throughout the world include various efforts to limit energy use in
product manufacturing and other environment-related programs impacting products and operations, such as those
associated with climate change accords, agreements and regulations. For example, the European Union's Energy-
Related Products Directive (ERP) has led to the adoption of “implementing measures” or "voluntary agreements"
that require certain classes of products to achieve certain design and/or performance standards, in connection with
energy use and potentially other environmental parameters and impacts. A number of our products are already
required to comply with ERP requirements and further regulations are being developed by the EU authorities. The
EU Circular Economy Action Plan (CEAP) introduced legislative and non-legislative measures focusing on how
products are designed, promoting circular economy processes, encouraging sustainable consumption, and ensuring
waste is prevented. The implementation of the CEAP is expected to impact how companies prove environmental
claims and the materials used, including chemicals and plastics, in products that are placed in the EU market.
Environmentally driven procurement requirements also voluntarily adopted by customers in the marketplace (e.g.,
U.S. EPA EnergyStar, EPEAT, and EU Green Public Procurement) are constantly evolving and becoming more
stringent, presenting further market access challenges if our products fail to comply.
Xerox 2023 Annual Report 21
Xerox 2023 Annual Report 21
Table of Contents
Various countries and jurisdictions have adopted or are expected to adopt requirements clarifying manufacturer
roles and responsibilities related to the recovery of products that were placed on the market and remediation of by-
products of the manufacturing process. For example, jurisdictions have adopted or are expected to adopt, programs
that make producers of electrical goods, including computers and printers, responsible for certain labeling,
collection, recycling, treatment and disposal of these recovered products. If we are unable to collect, recycle, treat
and dispose of our products in a cost-effective manner and in accordance with applicable requirements, it could
materially adversely affect our results of operations and financial condition. Further, Xerox is party to, or otherwise
involved in, proceedings in a limited number of locations brought by U.S. or state environmental agencies under the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), known as "Superfund," or
state laws, in which the primary relief sought is the cost of past and/or future remediation. The nature of financial
exposure depends on a variety of factors including changes in laws, known contamination, and discovered
contamination that was previously unknown.
General Risk Factors
Our business, results of operations and financial condition may be negatively impacted by legal and
regulatory matters.
We have various contingent liabilities that are not reflected on our balance sheet, including those arising as a result
of being involved in a variety of claims, lawsuits, investigations, and proceedings including as discussed in Note 20 -
Contingencies and Litigation in the Consolidated Financial Statements. 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 materially increase an existing accrual, or should any of these matters result in a final adverse
judgment or be settled for significant amounts above any existing accruals, it 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.
Due to the international scope of our operations, we are subject to a complex system of commercial and trade
regulations around the world. With respect to the war in Ukraine, in the first quarter 2022, we halted shipments to
Russia and Belarus when sanctions were imposed, and we completed the sale of all Russian operations in 2023.
Recent years have seen an increase in the development and enforcement of laws regarding trade compliance and
anti-corruption, such as the U.S. Foreign Corrupt Practices Act and similar laws from other countries. Our numerous
foreign subsidiaries, affiliates and joint venture partners are governed by laws, rules and business practices that
differ from those of the U.S. The activities of these entities may not comply with U.S. or foreign laws or business
practices or our Code of Business Conduct. Violations of these laws may result in severe criminal or civil sanctions,
could disrupt our business, and result in an adverse effect on our reputation, business and results of operations or
financial condition. We cannot predict the nature, scope or effect of future regulatory requirements to which our
operations might be subject, our compliance with such requirements, or the manner in which existing laws might be
administered or interpreted.
Our failure to maintain an adequate system of internal control over financial reporting, could adversely
affect our ability to accurately report our results.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our
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 in accordance with generally accepted
accounting principles. A material weakness is a deficiency, or a combination of deficiencies, in our internal control
over financial reporting that results in a reasonable possibility that a material misstatement of the annual or interim
financial statements will not be prevented or detected on a timely basis. Effective internal controls are necessary for
us to provide reliable financial reports and deter and detect any material fraud. If we cannot provide reliable financial
reports or prevent material fraud, our reputation and operating results would be harmed. We maintained effective
internal control over financial reporting as of December 31, 2023, as further described in Part II “Item 9A—Controls
and Procedures.” Our efforts to develop and maintain our internal controls and to remediate any material
weaknesses in our controls may not be successful, and we may be unable to maintain adequate controls over our
financial processes and reporting in the future, including future compliance with the obligations under Section 404 of
the Sarbanes-Oxley Act of 2002. Any failure to develop or maintain effective controls, or difficulties encountered in
their implementation, including those related to acquired businesses, or other effective improvement of our internal
controls could harm our operating results. Ineffective internal controls could also cause investors to lose confidence
in our reported financial information.
Xerox 2023 Annual Report 22
Table of Contents
Item 1B. Unresolved Staff Comments
None
Item 1C. Cybersecurity
Risk Management Strategy
Xerox Holdings maintains a cyber risk management program designed to identify, assess, manage, mitigate, and
respond to cybersecurity threats. This program is integrated within the Company’s enterprise risk management
system and addresses both the corporate information technology environment and customer-facing products and
services. The underlying controls of the cyber risk management program are based on recognized leading practices
and standards for cybersecurity and information technology, including the National Institute of Standards and
Technology (NIST) Cybersecurity Framework (CSF) and the International Organization for Standardization (ISO)
27001 Information Security Management System Requirements.
The risk management program is primarily focused on safeguarding the organization's digital assets, ensuring
continuous business operations, and minimizing the potential impact of cyber threats. The structured risk
management process is designed to comprehensively identify and assess risks, implement effective mitigation and
remediation strategies, enhance overall cybersecurity resilience, and provide transparent reporting. Continuous risk
assessments are conducted through internal evaluations and routine engagements with independent third-party
security services organizations to systematically identify, prioritize and manage information security risks.
Subsequently, risk mitigation strategies are developed and executed to address and remediate identified risks
effectively through new cybersecurity initiatives and ongoing enhancements to the cybersecurity program. Regular
audits and assessments, including penetration tests and attack simulations, are performed both internally and
through independent third-party consultants, and internal auditors evaluate the operational effectiveness of
cybersecurity controls and risk management measures. These inputs form the basis of a risk register that is
integrated into the overall enterprise risk management program to further inform the Company's strategy assessing
the likelihood, impact, and velocity of these risks on a forward-looking, multi-year mitigated basis. A formal process
exists, grounded in the enterprise risk management program where material risks, interdependencies, and the
associated remediation plans that are tracked to completion at a minimum on a monthly basis are presented and
discussed cross-functionally. In addition to the normal discourse on emerging risks, a focused drill down into
cybersecurity risk is presented annually at the enterprise risk steering committee meeting. The outcomes of these
discussions are submitted quarterly to the Audit Committee of the Board of Directors.
All employees and contractors play an important role in protecting the organization from cyber threats. We have
implemented a formal cybersecurity training and awareness program that includes mandatory annual information
security training and continuous education through various enterprise collaboration platforms. Our Cyber Defense
team plays an important role in implementing our protection, detection, and response capabilities. Security incidents
are evaluated, ranked by severity and prioritized for response and remediation. Our incident response process
outlines actions required to triage, analyze, contain, remediate, and safely recover from cybersecurity incidents.
Security incidents are evaluated to determine materiality as well as operational and business impacts, and are
reviewed for privacy impacts.
Xerox Holdings has established a structured third-party risk management program, with a primary focus on
assessing and mitigating potential cyber risks linked to external vendors and partners who have access to the
organization's digital assets or play a role in storing and processing data. This also extends to the software supply
chain supporting our products and services. A thorough due diligence process is conducted on all prospective third
parties to evaluate their overall security posture and alignment with Xerox Holdings' organizational standards.
Additionally, ongoing assessments are regularly conducted on selected existing vendors and partners to confirm
their continuous compliance with Xerox Holdings' cybersecurity standards and policies. Where applicable, we also
include security and data privacy addendums in our third-party contracts. Xerox Holdings also engages with
external managed security service providers to support certain day-to-day operational activities in addition to in-
house cybersecurity staff as part of the cybersecurity program.
To date, no cybersecurity incident has resulted in any material impact on our business, operations or financial
results or our ability to service our customers or run our business.
Refer to Item 1A Risk Factors for additional discussion of risks associated with cybersecurity threats to the
Company.
Xerox 2023 Annual Report 23
Xerox 2023 Annual Report 23
Table of Contents
Governance
Xerox Holdings' Cybersecurity organization is a global organization and is dedicated to protecting its infrastructure,
information, and digital assets. It is responsible for establishing appropriate security policies, safeguards and
controls to prevent, detect and respond to cyber threats, meet regulatory and compliance requirements, securing
Xerox Holdings' intellectual property, products and services, and supply chain in collaboration with business,
product, and IT partners. The information security organization is led by the Chief Information Security Officer
(CISO) who reports to the Chief Transformation and Administrative Officer. In his over 18-year career as a
Cybersecurity professional, the CISO has served in various roles with Fortune 500 companies, including as Deputy
CISO, Head of Cyber Defense & Security Architecture, Distinguished Technologist Security, and Specialist Master.
The CISO holds a bachelor’s degree in Electrical and Electronics Engineering, is a Certified Information Systems
Security Professional (CISSP), and has extensive experience in multiple security domains, including security
operations, security architecture, identity and access management, cloud security, vulnerability management, and
application/product security, policy, and compliance.
The Audit Committee of the Board of Directors provides governance and oversight of the cybersecurity program and
approves the information security program annually. Regular updates are presented to the Audit Committee by the
CISO on the current state of the cybersecurity program, providing transparency including progress on initiatives,
operational and compliance metrics, risks, cybersecurity and data privacy incidents (if any), and appropriate
remediation actions. The Board of Directors also considers cybersecurity topics on an ad hoc basis where
appropriate, including for purposes of receiving briefings on developments in cybersecurity or cybersecurity
incidents and assessing and managing potentially material risks arising from cybersecurity threats. There are two
committees comprised of Company leadership, including the enterprise risk management steering committee, which
meets monthly, and the Xerox Holdings management audit committee, which meets at least quarterly, to discuss the
current operational and security compliance metrics, cybersecurity incidents, and risks.
Item 2. Properties
We own or lease several manufacturing, engineering and research facilities. Our principal owned manufacturing and
engineering facilities are located in New York, Oklahoma, Oregon and Ireland, and our principal owned research
facility is located in New York. We also lease manufacturing facilities in the Netherlands and Ontario, Canada. Our
Corporate Headquarters is a leased facility located in Norwalk, Connecticut.
In 2023, we owned or leased facilities globally which include general offices, sales offices, service locations, data
centers, call centers, manufacturing facilities, warehouses and distribution centers. The size of our property portfolio
at December 31, 2023 was approximately 10.3 million square feet, which was comprised of 273 leased facilities and
11 owned properties with 59 buildings (of which 45 are located on our Webster, New York campus). We occupied
approximately 8.6 million square feet, 1.6 million square feet were surplus, and approximately 91 thousand square
feet was sublet to third parties. It is our opinion that our properties have been well maintained, are in sound
operating condition and contain all the necessary equipment and facilities to perform their functions. Our properties
are primarily managed by, and are in support of, the Print and Other segment. The FITTLE segment does share in
the use of certain facilities for which they are allocated occupancy costs. We believe that our current facilities are
suitable and adequate for our current businesses.
Refer to Note 11 - Lessee in the Consolidated Financial Statements, for additional information regarding our leased
assets.
Item 3. Legal Proceedings
Refer to the information set forth under Note 20 - Contingencies and Litigation in the Consolidated Financial
Statements - Litigation Matters.
We are also engaged in numerous other legal actions arising in the ordinary course of our business (for example,
proceedings relating to employment matters or the initiation or defense of proceedings relating to intellectual
property rights), and while there can be no assurance, 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.
Item 4. Mine Safety Disclosures
Not applicable.
Xerox 2023 Annual Report 24
Table of Contents
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Corporate Information
Stock Exchange Information
Xerox Holdings Corporation's common stock (XRX) is listed on the Nasdaq Global Select Market.
There is no established public trading market for Xerox Corporation's common stock, as all of the outstanding Xerox
common stock is held solely by Xerox Holdings.
Common Shareholders of Record
As of December 31, 2023, Xerox Holdings Corporation had approximately 18,741 shareholders of record.
Dividends
For additional information regarding dividends, refer to Item 8 - Financial Statements and Supplementary Data,
Xerox Holdings Corporation Statement of Shareholders' Equity, which is incorporated herein by reference.
Performance Graph(1)(2)
Comparison of Cumulative Five-Year Total Return
$350
$300
$250
$200
$150
$100
$50
$0
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
Xerox Holdings Corporation
S&P 500 Information Technology Index
S&P 600 Information Technology Index
S&P 500 Index
S&P 600 Index
Total Return to Shareholders
2018
2019
2020
2021
2022
2023
Year Ended December 31,
Xerox Holdings Corporation
$
100.00 $
192.27 $
127.65 $
130.17 $
89.40 $
S&P 500 Index
S&P 500 Information Technology Index
S&P 600 Index
S&P 600 Information Technology Index
100.00
100.00
100.00
100.00
131.49
150.29
122.78
139.59
155.68
216.25
136.64
178.41
200.37
290.92
173.29
226.31
164.08
208.90
145.39
175.70
119.63
207.21
329.73
168.73
212.50
_____________
Source: Standard & Poor's Investment Services
(1) Graph assumes $100 invested on December 31, 2018 in Xerox Holdings, the S&P 500 Index, the S&P 500 Information Technology Index,
S&P 600 Index and the S&P 600 Information Technology Index, respectively, and assumes dividends are reinvested.
(2) Beginning with the 2023 Form 10-K, the Company changed its benchmark indexes to the S&P 600 Index and the S&P 600 Information
Technology Index, from the S&P 500 Index and the S&P 500 Information Technology Index, as the Company became part of the S&P 600
Index during the year ended December 31, 2023. The Company believes that the S&P 600 Indexes are more representative of the
Company's market capitalization and peer group. Data for the S&P 500 Indexes are provided for comparison purposes only as we transition
to use of the S&P 600 Indexes.
Xerox 2023 Annual Report 25
Xerox 2023 Annual Report 25
Table of Contents
Sales Of Unregistered Securities During the Quarter Ended December 31, 2023
There were no unregistered sales of securities for the quarter ended December 31, 2023.
Issuer Purchases of Equity Securities During the Quarter Ended December 31, 2023
There were no repurchases of Xerox Holdings Corporation's Common Stock for the quarter ended December 31,
2023 pursuant to share repurchase programs authorized by Xerox Holdings' Board of Directors.
Repurchases Related to Stock Compensation Programs(1):
Total Number of
Shares Purchased
Average Price
Paid per Share(2)
15.56
14,201 $
27,411
—
41,612
13.77
—
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Approximate
Dollar Value of Shares
That May Yet Be
Purchased Under the
Plans or Programs
n/a
n/a
n/a
n/a
n/a
n/a
October 1 through 31
November 1 through 30
December 1 through 31
Total
_____________
(1) These repurchases are made under a provision in our restricted stock compensation programs for the indirect repurchase of shares through
a net-settlement feature upon the vesting of shares in order to satisfy minimum statutory tax-withholding requirements.
(2) Exclusive of fees and expenses.
Item 6. [Reserved]
Information pertaining to Item 6 is not presented in accordance with amendments to Item 301 of Regulation S-K.
Xerox 2023 Annual Report 26
Table of Contents
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations
Throughout the Management’s Discussion and Analysis (MD&A) that follows, 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. References herein to “we,” "us," “our,” or 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.
Xerox Holdings' primary direct operating subsidiary is Xerox and Xerox reflects nearly all of Xerox Holdings'
operations. Accordingly, the following MD&A primarily focuses on the operations of Xerox and is intended to help the
reader understand Xerox's business and its results of operations and financial condition. Throughout this combined
Form 10-K, references are made to various notes in the Consolidated Financial Statements which appear in Part II,
Item 8 of this combined Form 10-K, and the information contained in such notes is incorporated by reference into
the MD&A in the places where such references are made.
Xerox Holdings' other direct subsidiary is Xerox Ventures LLC, which was established in 2021 solely to invest in
startups and early/mid-stage growth companies aligned with the Company’s innovation focus areas and targeted
adjacencies. The investments are primarily equity or equity-linked securities and for less than 20% ownership.
Xerox Ventures LLC had investments of approximately $26 million and $21 million at December 31, 2023 and 2022,
respectively. In January 2024, Myriad Ventures Fund I LP was established, and the investments held by Xerox
Ventures LLC were transferred to this new entity, which will continue to be fully consolidated by Xerox Holdings.
Due to its immaterial impact to earnings and the balance sheet, and for ease of discussion, Xerox Ventures LLC's
results are included within the following discussion.
Executive Overview
2023 was a pivotal year for Xerox and marked the first full year of our Reinvention, a multi-year strategy to
reposition our business for long-term, sustainable growth. We took structural and foundational actions to improve
our core business and simplify operations, resulting in greater operational focus and a clear path for more
transformative Reinvention actions in 2024 and beyond. For the full year, the Company delivered growth in earnings
and operating cash flows despite a modest decline in revenue, reflecting the successful implementation of a more
flexible cost structure and rigorous operating discipline. Total revenue for full year 2023 of $6.9 billion decreased
3.1% and included a 0.8-percentage point benefit from acquisitions, as well as a 0.2-percentage point benefit from
currency.
Recent Changes and Developments
2023 was the first full year of our Reinvention, which is expected to transform the way we operate, strengthening
our core business and improving our flexibility so we can invest in the solutions, initiatives, and capabilities that will
position Xerox as a leading services-led, software-enabled technology solutions provider and deliver long-term,
sustainable growth. In January 2024, we announced a significant reorganization of our business, including the
adoption of a business unit-led operating model, a greater focus on partner-led distribution and the establishment of
a Global Business Services (GBS) organization to enable enterprise-wide efficiencies and productivity gains. These
changes are expected to both strengthen our core business and position us to capture new, ancillary revenue
opportunities over time. Reinvention is expected to deliver at least $300 million of annual net adjusted1 operating
income improvement above 2023 levels through 2026 and we expect to achieve more than one-third of that
improvement in 2024, due in large part to organizational cost savings associated with the restructuring action
announced in January 2024. Operating profit improvement will be driven by three concurrent efforts over the next
three years:
• Operating Model Simplification:
– Continuous, tech-driven operating efficiencies enabled by GBS.
• Geographic and Offering Simplification:
– Replace direct to end-customer with partner-led distribution model in current markets with lower levels of
profitability; and
– Narrow product and service offering focus to areas where we have strategic differentiation.
•
Reposition for Growth:
–
Tactical investments in Digital and IT Services, driving expanded services penetration among existing and
new clients.
Xerox 2023 Annual Report 27
Xerox 2023 Annual Report 27
Table of Contents
During 2023, we also divested several businesses that were non-core to Print, Digital and IT Services, including
PARC, Xerox Research Center of Canada (XRCC), and Elem, our 3D printing business. We also expanded our
partnership with PEAC Solutions, an affiliate of HPS Investment Partners, allowing FITTLE to focus exclusively on
financial solutions that support the direct sales of Xerox equipment and solutions. We also reduced our presence in
certain non-strategic markets with lower levels of profitability, such as paper and low margin endpoint IT hardware.
Refer to Restructuring and Related Costs, Net section of the MD&A and Note 13 - Restructuring Programs in
the Consolidated Financial Statements for additional information regarding costs incurred to implement initiatives
under our business transformation projects including Reinvention and the impacts from other divestitures. Refer to
Note 6 - Acquisitions and Divestitures in the Consolidated Financial Statements for additional information
regarding the donation of PARC.
Russia-Ukraine Conflict
With respect to the war in Ukraine, in the first quarter 2022, we halted shipments to Russia and Belarus when
sanctions were imposed. Since the imposition of sanctions through the date of the filing of this Form 10-K, we have
been compliant with sanctions and government restrictions at all times. Finally, in October 2023, we completed the
sale of our Russian subsidiary, fully exiting from this market. Refer to Note 13 - Restructuring Programs in the
Consolidated Financial Statements for additional information regarding this divestiture.
Segment Reporting Change
During the second quarter of 2023, the Company recast FITTLE’s segment revenues and profits measures to reflect
the strategic shift in the Company’s approach to funding FITTLE through finance receivable funding agreements
that involve the sale of lease receivables. Refer to Note 4 - Segment and Geographic Area Reporting in the
Consolidated Financial Statements for additional information regarding this reporting change.
Business Overview
With annual revenues of approximately $6.9 billion, we remain a leading global provider of digital print technology
and related services, software and solutions. Our primary offerings span four main areas: Workplace Solutions,
Production Solutions, Xerox Services and FITTLE.
• Workplace Solutions includes two strategic product groups, Entry and Mid-Range, much of which share
common solutions, apps and ConnectKey® software. Workplace Solutions revenues include the sale of
products (captured primarily as equipment sales) as well as the supplies and associated maintenance services
and the financing of those products through FITTLE (captured as post sale revenue).
•
•
•
Production Solutions are designed for customers in the graphic communications, in-plant and production print
environments with high-volume printing requirements. Our broad portfolio of presses and solutions provides
black-and-white and full-color, on-demand printing of a wide range of applications.
Xerox Services includes a continuum of solutions and services that helps our customers optimize their print and
communications infrastructure, apply automation and simplification to maximize productivity, and ensure the
highest levels of security. Our primary offerings in this area are Managed Print Services (MPS), Capture &
Content Services (CCS) and Customer Engagement Services (CES) as well as IT Services. CCS and CES
encompass a range of Digital Services that leverage our software capabilities in Workflow Automation,
Personalization and Communication Software, Content Management Solutions, and Digitization Services.
FITTLE is a global financing solutions business and currently offers financing for direct channel customer
purchases of Xerox equipment through bundled lease agreements, lease financing to end-user customers who
purchase Xerox equipment and solutions through our indirect channels.
Headquartered in Norwalk, Connecticut, with approximately 20,100 employees, Xerox serves customers globally in
North America, Central and South America, Brazil, Europe, Eurasia, the Middle East, Africa and India. We have a
broad and diverse base of customers by both geography and industry, ranging from small and mid-sized businesses
to printing production companies, governmental entities, educational institutions and Fortune 1000 corporations.
Our business does not depend upon a single customer or a few customers, the loss of which, individually or
collectively, would have a material adverse effect on our business. In 2023, approximately 45% of our revenue was
generated outside the United States.
Post-sale Based Business Model
In 2023, 76% of our total revenue was post-sale-based, which primarily reflects contractual print services2, supplies
and financing. These revenue streams generally follow equipment placements and provide some stability to our
revenue and cash flows. Key indicators of future post sale revenue include installs of printers and multifunction
devices, the number and type of machines in the field (MIF), page volumes, revenue per page, and the type and
Xerox 2023 Annual Report 28
Table of Contents
nature of related software and ancillary services provided to customers - e.g., digital services. Post sale revenue
also includes transactional IT hardware sales and other Managed IT services revenues, a growing part of our
business as a result of recent acquisitions, as well as gains and commissions, and servicing revenue on the sale of
finance receivables.
_____________
(1) Refer to the "Non-GAAP Financial Measures" section for an explanation of this non-GAAP financial measure.
(2)
Includes revenues from Services, maintenance and rentals.
Financial Overview
Total revenue of $6.9 billion in 2023 decreased 3.1% and included a 0.8-percentage point benefit from acquisitions,
as well as a 0.2-percentage point benefit from currency. The decrease in revenue was attributable to lower post sale
revenue reflecting the intentional reduction of non-strategic revenue - paper and IT endpoint device placement
sales, as well as the termination of Fuji royalty income and the donation of PARC. 2023 total revenue reflected a
decrease in Post sale revenue of 4.6%, which included a 1.1-percentage point benefit from acquisitions, as well as
a 0.2-percentage point benefit from currency. Equipment sales revenue increased 1.9% and included a 0.2-
percentage point benefit from currency.
Net income (loss) was as follows:
(in millions)
Net income (loss)
Adjusted(1) Net income
Year Ended December 31,
2022
2021
2023
B/(W)
2023
2022
$
1 $
287
(322) $
189
(455) $
293
323 $
98
133
(104)
Net income for 2023 of $1 million improved by $323 million as compared to Net (loss) of $(322) million in 2022. The
increase in Net income is primarily due to the Goodwill impairment charge of $395 million ($412 million pre-tax) in
2022, as well as the impact of lower supply chain-related costs, lower RD&E expenses and Selling, administrative
and general expenses, and a higher benefit from Income taxes. These favorable impacts were partially offset by the
after-tax PARC donation charge of $92 million ($132 million pre-tax) in the second quarter 2023, lower revenue,
Restructuring and related costs, net, which were $102 million higher than 2022, and higher Other expenses, net.
Adjusted1 net income for 2023 of $287 million increased $98 million as compared to 2022 primarily reflecting the
impact of lower supply chain-related costs, as well as lower RD&E expenses and Selling, administrative and general
expenses, which were primarily due to divestitures, cost reduction and productivity actions. These favorable impacts
were partially offset by lower revenue, and higher Other expenses, net.
_____________
(1) Refer to the "Non-GAAP Financial Measures" section for an explanation of this non-GAAP financial measure.
A summary of our segment information is as follows:
(in millions)
Revenue
Print and Other
FITTLE
Intersegment Elimination(1)
Total Revenue
Profit
Print and Other
FITTLE
Total Profit
Year Ended December 31,
2022
2021
2023
% Change
% of Total
2023
2022
2023
2022
$
6,571 $
401
(86)
6,804 $
393
(90)
$
6,886 $
7,107 $
6,729
401
(92)
7,038
(3.4) %
2.0 %
(4.4) %
(3.1) %
1.1 %
(2.0) %
(2.2) %
1.0 %
95 %
6 %
(1) %
96 %
5 %
(1) %
100 %
100 %
$
$
360 $
258 $
29
17
389 $
275 $
311
64
375
39.5 %
70.6 %
41.5 %
(17.0) %
(73.4) %
(26.7) %
93 %
7 %
100 %
94 %
6 %
100 %
_____________
(1) Reflects revenue, primarily commissions and other payments, made by the FITTLE segment to the Print and Other segment for the lease of
Xerox equipment placements.
Cash from operating activities was $686 million in 2023 as compared to $159 million in 2022. The increase of $527
million was primarily related to reductions in finance receivables due to on-going sales of finance receivables under
our finance receivables funding agreement, as well as higher net income, partially offset by an increased use of
cash for working capital1, particularly accounts payable.
_____________
(1) Working capital, net reflects Accounts receivable, net, Inventories and Accounts payable.
Xerox 2023 Annual Report 29
Xerox 2023 Annual Report 29
Table of Contents
2024 Outlook
Core print and services business revenue is expected to be roughly flat year-over-year, reflecting stable Print
demand, growth in Digital and IT Services and neutral macroeconomic conditions. However, total revenue trends in
2024 are expected to be moderately impacted negatively by the effects of prior year backlog reductions as well as
the exit or deemphasis of non-strategic businesses – all of which are unrelated to the performance of our core
businesses. We expect profit margins to improve in 2024 primarily driven by structural simplification actions enabled
by our reorganization, including the effects of the workforce reduction decisions announced in January 2024.
We expect Operating cash flows to be approximately $650 million, which is expected to benefit from a reduction in
our finance receivables balance. Improvements in cash flow from underlying operations are expected to be offset by
restructuring payments, higher cash taxes and an increase in pension contributions. Capital expenditures are
expected to be approximately $50 million.
Currency Impact
To understand the trends in the business, we believe that it is helpful to analyze the impact of changes in the
translation of foreign currencies into U.S. Dollars on revenue and expenses. We refer to this analysis as "constant
currency", “currency impact” or “the impact from currency.” This impact is calculated by translating current period
activity in local currency using the comparable prior year period's currency translation rate. This impact is calculated
for all countries where the functional currency is the local country currency. We do not hedge the translation effect of
revenues or expenses denominated in currencies where the local currency is the functional currency. Management
believes the constant currency measure provides investors an additional perspective on revenue trends. Currency
impact can be determined as the difference between actual growth rates and constant currency growth rates.
Approximately 45% of our consolidated revenues are derived from operations outside of the U.S. where the U.S.
Dollar is normally not the functional currency. As a result, foreign currency translation had a 0.2-percentage point
favorable impact on revenue in 2023 and a 3.8-percentage point adverse impact on revenue in 2022.
Xerox 2023 Annual Report 30
Table of Contents
Application of Critical Accounting Policies
In preparing our Consolidated Financial Statements and accounting for the underlying transactions and balances,
we apply various accounting policies. Senior management has discussed the development and selection of the
critical accounting policies, estimates and related disclosures included herein with the Audit Committee of the Xerox
Holdings Board of Directors. We consider the policies discussed below as critical to understanding our Consolidated
Financial Statements, as their application places the most significant demands on management's judgment, since
financial reporting results rely on estimates of the effects of matters that are inherently uncertain. In instances where
different estimates could have reasonably been used, we disclosed the impact of these different estimates on our
operations. In certain instances, such as revenue recognition for leases, the accounting rules are prescriptive;
therefore, it would not have been possible to reasonably use different estimates. Changes in assumptions and
estimates are reflected in the period in which they occur. The impact of such changes could be material to our
results of operations and financial condition in any quarterly or annual period.
Specific risks associated with these critical accounting policies are discussed throughout the MD&A, where such
policies affect our reported and expected financial results. For a detailed discussion of the application of these and
other accounting policies, refer to Note 2 - Recent Accounting Pronouncements and Summary of Significant
Accounting Policies in the Consolidated Financial Statements.
Revenue Recognition
Application of the various accounting principles in GAAP related to the measurement and recognition of revenue
requires us to make judgments and estimates including ASC Topic 606 - Revenue from Contracts with Customers
and ASC Topic 842 Leases. Refer to Note 2 - Recent Accounting Pronouncements and Summary of Significant
Accounting Policies in the Consolidated Financial Statements for additional information regarding our revenue
recognition and lease revenue recognition policies. Complex arrangements with nonstandard terms and conditions
may require significant contract interpretation to determine the appropriate accounting. Specifically, the revenue
related to the following areas involves significant judgments and estimates:
Bundled Lease Arrangements: We sell our equipment direct to end customers under bundled lease arrangements,
which typically include the equipment, service, supplies and a financing component for which 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. Lease
deliverables include the equipment and financing, while the non-lease deliverables generally consist of the services,
which include supplies. Sales made under bundled lease arrangements directly to end customers comprise
approximately 56% or $920 million of our equipment sales revenue. Revenues under these bundled lease
arrangements are allocated considering the relative standalone selling prices of the lease and non-lease
deliverables included in the bundled arrangement. The allocation of revenue among the elements – equipment
versus post sale (service, supplies and financing) – has remained fairly consistent at approximately 25% and 75%,
respectively, over the past three years.
Sales to Distributors and Resellers: We utilize distributors and resellers to sell many of our products, supplies and
parts to end-user customers. Sales to distributors and resellers are generally recognized as revenue when products
are shipped to such distributors and resellers. Distributors and resellers participate in various discount, rebate,
price-support, cooperative marketing and other programs, and we record provisions and allowances for these
programs as a reduction to revenue when the sales occur. Similarly, we also record estimates for sales returns and
other discounts and allowances when the sales occur. We consider various factors, including a review of specific
transactions and programs, historical experience and market and economic conditions when calculating these
provisions and allowances. Total sales of equipment, supplies and parts to distributors and resellers were $1,044
million for the year ended December 31, 2023 and provisions, and allowances recorded on these sales were
approximately 26% of the associated gross revenues.
Allowance for Doubtful Accounts and Credit Losses
The allowance for doubtful accounts and credit losses is based on an assessment of historical collection experience
as well as consideration of current and future economic conditions and changes in our customer-specific collection
trends. Our methodology includes an expected loss model that incorporates an assessment of current and future
economic conditions.
We recorded bad debt provisions of $28 million, $43 million and $7 million in Selling, administrative and general
(SAG) expenses in our Consolidated Statements of Income (Loss) for the three years ended December 31, 2023,
2022 and 2021, respectively. The reserves, as a percentage of trade and finance receivables, were 4.4% at
Xerox 2023 Annual Report 31
Xerox 2023 Annual Report 31
Table of Contents
December 31, 2023, as compared to 4.1% and 4.3% at December 31, 2022 and 2021, respectively. We continue to
assess our receivables portfolio in light of the current macroeconomic environment and its impact on our estimation
of the adequacy of the allowance for doubtful accounts.
In 2023, we recorded approximately $12 million of bad debt reversals related to our finance receivable provision,
primarily related to a reserve release in the U.S. due to the favorable reassessment of the credit exposure on a
large customer receivable balance after a contract amendment, which improved our credit position.
In 2021, we recorded approximately $31 million of bad debt reversals reflecting improvements in the
macroeconomic environment in 2021 as well as lower write-offs as a result of the COVID-19 pandemic. The bad
debt provision in 2022 and 2023 has been more in-line with historical trends but the reserve as a percentage of our
trade and finance receivables balance remains elevated to cover expected losses that may result from future
macroeconomic conditions including higher inflation and interest rates.
During the five-year period ended December 31, 2023, our reserve for doubtful accounts ranged from 3.0% to 4.8%
of gross receivables. Holding all assumptions constant, a 0.5-percentage point increase or decrease in the reserve
from the December 31, 2023 rate of 4.4% would change the 2023 provision by approximately $18 million.
Refer to Note 2 - Recent Accounting Pronouncements and Summary of Significant Accounting Policies, Note 7 -
Accounts Receivable, Net and Note 8 - Finance Receivables, Net in the Consolidated Financial Statements for
additional information regarding our policy with respect to the Allowance for Doubtful Accounts and Credit Losses.
Pension Plan Assumptions
We sponsor defined benefit pension plans in various forms in several countries covering employees who meet
eligibility requirements. 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. Final Salary 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 past service.
Our pension plan in the Netherlands for past service is a Collective Defined Contribution (CDC) plan with future
service benefits provided in a defined contribution plan for 2023 and later years. From a Company risk perspective,
this CDC plan operates just like a defined contribution plan as the Company was only responsible for a contribution
for annual benefit accruals under 5-year agreements through 2022. Although the Company risk has been mitigated,
under U.S. GAAP this CDC plan does not meet the definition of a defined contribution plan and therefore is
accounted for as a defined benefit plan. In December 2023, the Trustees for the U.K. pension plan entered an
insurance buy-in contract, in accordance with U.K. pension regulations. The insurance buy-in contract is a group
annuity contract that is 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 arrangement further mitigates the company's risk associated with these obligations.
Several statistical and other factors that attempt to anticipate future events are used in calculating the expense,
liability and to project asset values related to our defined benefit pension plans. These factors include assumptions
we make about the expected return on plan assets, discount rate, lump-sum settlement rates, the rate of future
compensation increases and mortality. Differences between these assumptions and actual experiences are reported
as net actuarial gains and losses and are subject to amortization to net periodic benefit cost over future periods.
Cumulative net actuarial losses for our defined benefit pension plans of $2.3 billion as of December 31, 2023
increased by $388 million from December 31, 2022, primarily due to the impact of lower discount rates and the
resultant increase of the Projected Benefit Obligation (PBO), the excess of expected returns over actual returns as
well as the impact from unfavorable currency, partially offset by the recognition of actuarial losses through
amortization and U.S. settlement losses. The total actuarial loss at December 31, 2023 is subject to offsetting gains
or losses in the future due to both changes in actuarial assumptions and future experience and will be recognized in
future periods through amortization or settlement losses.
We used a consolidated weighted average expected rate of return on plan assets of 5.2% for 2023, 3.9% for 2022
and 3.9% for 2021, on a worldwide basis. During 2023, the actual return on plan assets was a gain of $193 million
as compared to an expected return of $320 million, with the difference primarily due to lower returns than expected
in our U.K. Plan as we managed and repositioned plan assets in anticipation of entering in the buy-in contract.
When estimating the 2024 expected rate of return, in addition to assessing recent performance, we considered the
historical returns earned on plan assets, the rates of return expected in the future, particularly in light of current
economic conditions, and our investment strategy and mix with respect to the plans' assets. The weighted average
expected rate of return on plan assets we will use in 2024 is 5.2% which is flat as compared to 2023.
Xerox 2023 Annual Report 32
Table of Contents
Another significant assumption affecting our defined benefit pension obligations and the net periodic benefit cost is
the rate that we use to discount our future anticipated benefit obligations. In the U.S. and the U.K., which comprise
approximately 75% of our PBO, we consider yield curves derived from Moody's Aa or better rated Corporate Bonds
and U.K. Corporate bonds rated AA by at least one of the main ratings agencies, respectively, in the determination
of the appropriate discount rate assumptions. The consolidated weighted average discount rate we used to
measure our pension obligations as of December 31, 2023 and to calculate our 2024 expense was 4.4%; the rate
used to calculate our obligations as of December 31, 2022 and our 2023 expense was 4.7%. The decrease reflects
lower interest rates in both the U.S. and non-U.S. regions.
Holding all other assumptions constant, the following table summarizes the estimated impacts of a 0.25% change in
the discount rate and a 0.25% change in the expected return on plan assets:
(in millions)
(Decrease)/Increase
Discount Rate
Expected Return
0.25%
Increase
0.25%
Decrease
0.25%
Increase
0.25%
Decrease
2024 Projected net periodic pension cost
Projected benefit obligation as of December 31, 2023
$
(4) $
(195)
6 $
210
(15) $
N/A
(15)
N/A
One of the most significant elements of our net periodic defined benefit pension plan expense is settlement losses.
Our primary domestic plans allow participants the option of settling their vested benefits through the receipt of a
lump-sum payment. We recognize the losses associated with these settlements 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. As noted above, cumulative unamortized net actuarial losses were $2.3 billion
at December 31, 2023, of which the U.S. primary domestic plans, with a lump-sum feature, represented
approximately $630 million. The pro-rata factor is computed as the percentage reduction in the projected benefit
obligation due to the settlement of a participant's vested benefit. Settlement accounting is only applied when the
event of settlement occurs - i.e., the lump-sum payment is made. Since settlement is dependent on an employee's
decision and election, the level of settlements and the associated losses can fluctuate significantly from period to
period. During the three years ended December 31, 2023, 2022 and 2021, U.S. plan settlements were
approximately $70 million, $240 million and $300 million, respectively, and the associated settlement losses on
those plan settlements were $19 million, $56 million and $54 million, respectively. In 2024, we estimate
approximately $185 million of plan settlements and settlement losses of approximately $50 million.
The following is a summary of our benefit plan expenses for the three years ended December 31, 2023, 2022 and
2021, as well as estimated amounts for 2024:
(in millions)
Defined benefit pension plans(1)(4)
U.S. settlement losses
Defined contribution plans(2)
Retiree health benefit plans(3)
Total Benefit Plan Expense
_____________
Estimated
2024
2023
Actual
2022
2021
90 $
22 $
(47) $
50
35
(20)
19
40
(16)
56
37
(3)
155 $
65 $
43 $
$
$
(64)
54
18
(55)
(47)
(1) Excludes U.S. settlement losses.
(2) The increase in 2022 reflects the Company's decision to resume the 2022 employer matching contribution to our U.S. based 401(k) savings
plans for salaried employees previously suspended in 2021.
(3) The 2018 U.S. Retiree Health Plan amendment was fully amortized by December 31, 2021. Subsequent amendments have further increased
the amortization credits and the postretirement benefit (income).
(4) The increase in 2024 expense is primarily due to an increase in actuarial losses subject to amortization and the resultant increase in the
amortization of these prior period losses.
Xerox 2023 Annual Report 33
Xerox 2023 Annual Report 33
Table of Contents
The following is a summary of our benefit plan funding for the three years ended December 31, 2023, 2022 and
2021, as well as estimated amounts for 2024:
(in millions)
U.S. Defined benefit pension plans
Non-U.S. Defined benefit pension plans
Defined contribution plans(1)
Retiree health benefit plans
Total Benefit Plan Funding
_____________
Estimated
2024
2023
Actual
2022
2021
$
100 $
53 $
24 $
30
35
20
28
40
21
81
17
19
$
185 $
142 $
141 $
24
111
18
25
178
(1) The difference of $20 million between the 2022 funded amount of $17 million and the 2022 expense of $37 million is due to contributions for
our U.S. based 401(k) savings plans for salaried employees being expensed in 2022 as earned and contributed in January of 2023.
Approximately $30 million of the U.S. pension contributions in 2023 were for our tax-qualified defined benefit plans.
Approximately $80 million of estimated U.S. pension contributions for 2024 are for our 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.
The decrease in non-U.S. Defined benefit pension plan contributions in 2023 is due to no further contributions to our
U.K. defined benefit pension plan being required after October 2022 following agreement of the triennial valuation of
the Plan with the Plan Trustees.
Refer to Note 18 - Employee Benefit Plans in the Consolidated Financial Statements for additional information
regarding defined benefit pension plan assumptions, expense and funding.
Income Taxes
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgments are required in
determining the consolidated provision for income taxes. Our provision is based on nonrecurring events as well as
recurring factors, including the taxation of foreign income. In addition, our provision will change based on discrete or
other nonrecurring events such as audit settlements, tax law changes, changes in valuation allowances, etc., that
may not be predictable.
We record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities
and the amounts reported in our Consolidated Balance Sheets, as well as 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. Refer to Note 19 - Income and Other Taxes in the Consolidated
Financial Statements for additional information regarding the valuation allowance against our deferred tax assets.
Our valuation allowance changed through income tax expense by approximately $(4) million, $7 million and $(9)
million for the years ended December 31, 2023, 2022 and 2021, respectively. There were other changes to our
valuation allowance, including the effects of currency, of $13 million, $2 million and $(30) million for the years ended
December 31, 2023, 2022 and 2021, respectively. These did not affect income tax expense in total as there was a
corresponding adjustment to Deferred tax assets or Other comprehensive (loss) income.
The following is a summary of gross deferred tax assets and the related valuation allowances for the years ended
December 31, 2023, 2022 and 2021:
(in millions)
Gross deferred tax assets
Valuation allowance
Net deferred tax assets
Year Ended December 31,
2023
2022
2021
$
$
1,267 $
(375)
892 $
1,138 $
(366)
772 $
1,062
(357)
705
Xerox 2023 Annual Report 34
Table of Contents
We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, we may incur
additional tax expense based upon our assessment of the more-likely-than-not outcomes of such matters. In
addition, when applicable, we adjust the previously recorded tax expense to reflect examination results. Our
ongoing assessments of the more-likely-than-not outcomes of the examinations and related tax positions require
judgment and can materially increase or decrease our effective tax rate, as well as impact our operating results.
Unrecognized tax benefits were $140 million, $110 million and $107 million at December 31, 2023, 2022 and 2021,
respectively.
Refer to Note 19 - Income and Other Taxes in the Consolidated Financial Statements for additional information
regarding deferred income taxes and unrecognized tax benefits.
Business Combinations and Goodwill
We allocate the fair value of purchase consideration to tangible assets, liabilities assumed, and intangible assets
acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair
values of these identifiable assets and liabilities is allocated to Goodwill. The allocation of the purchase
consideration requires management to make significant estimates and assumptions, especially with respect to
intangible assets. These estimates can include, but are not limited to, future expected cash flows of acquired
customers, development of new offerings, acquired technology and trade names from a market participant
perspective, as well as estimates of useful lives and discount rates. Management’s estimates of fair value are based
upon assumptions believed to be reasonable and when appropriate, include assistance from independent third-
party valuation firms. During the measurement period, which is up to one year from the acquisition date, we may
record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to Goodwill. Upon
the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Refer to Note 6 -
Acquisitions and Divestitures in the Consolidated Financial Statements for additional information regarding the
allocation of the purchase price consideration for our acquisitions.
Our Goodwill, net balance was $2.7 billion at December 31, 2023. We assess Goodwill for impairment at least
annually, during the fourth quarter based on balances as of October 1st, and more frequently on an interim basis if
we believe indicators of an impairment exist. The application of an interim or the annual Goodwill impairment test
begins with the identification of reporting units, which requires judgment. A reporting unit is the same as, or one level
below, an operating segment. The Company has two operating/reportable segments - Print and Other, and FITTLE.
We determined that the Print and Other, and FITTLE operating segments were also our reporting units for Goodwill
assessment purposes. The Goodwill, net balance is fully allocated to the Print and Other reporting unit and no
Goodwill has been allocated to the FITTLE reporting unit.
The process of evaluating the potential impairment of Goodwill is highly subjective and requires significant
judgment. Our review of impairment starts with an assessment of qualitative factors to determine whether events or
circumstances lead to a determination that it is more-likely-than-not that the fair value of the Company is less than
the net book value. Our qualitative assessment of the recoverability of Goodwill, whether performed annually or
based on specific events or circumstances, considers various macroeconomic, industry-specific and company-
specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company-
specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or
projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization below
our net book value. After assessing the totality of events and circumstances, if we determine that it is not more-
likely-than-not that the fair value of the Company is less than its net book value, no further assessment is
performed. If we determine that it is more-likely-than-not that the fair value of the Company is less than net book
value or if we elect to bypass the qualitative assessment, we proceed to a quantitative assessment or test of
Goodwill.
If a quantitative assessment of Goodwill is required, the determination of the fair value of the Company will involve
the use of significant estimates and assumptions. Our quantitative Goodwill impairment test uses both the income
approach and the market approach to estimate fair value. The income approach is based on the discounted cash
flow method that uses the Company's estimates of forecasted future financial performance including revenues,
gross margins, operating expenses, and taxes, as well as working capital and capital asset requirements. These
estimates are developed as part of our long-term planning process based on assumed market segment growth
rates and our assumed market segment share, estimated costs based on historical data and various internal
estimates. Projected cash flows are then discounted to a present value employing a discount rate that properly
accounts for the estimated market weighted-average cost of capital, as well as any risks unique to the subject cash
flows. When performing our market approach, we rely specifically on the guideline public company method. Our
guideline public company method incorporates revenues and earnings multiples from publicly traded companies
Xerox 2023 Annual Report 35
Xerox 2023 Annual Report 35
Table of Contents
with operations and other characteristics similar to our entity. The selected multiples consider our entity's growth,
profitability, size and risk relative to those of the selected publicly traded companies.
In 2023, as a result of favorable operating results as compared to prior projections and a fairly stable market
capitalization, we performed our annual Goodwill assessment in the fourth quarter 2023 qualitatively. After
completing this qualitative impairment review, we concluded that it is more likely-than-not that the fair value of the
Print and Other reporting unit, the only reporting unit with goodwill, is higher than its carrying amount and a
quantitative Goodwill impairment test was not required. Our qualitative review indicated that our 2023 actual results
as well as our latest full year 2024 projections are in line with the projections used in our third quarter 2022
quantitative impairment test, which was when we last performed a quantitative assessment and recorded a goodwill
impairment charge. In addition, discounts rates as well as the Company’s market capitalization in the fourth quarter
2023 have remained consistent with the third quarter 2022.
If the Company's future performance varies from current expectations, assumptions, or estimates, including
assumptions related to current macro-economic uncertainties as well as the expected benefits from the Company’s
Reinvention project, this may impact impairment analysis in future periods. The impact could result in a reduction in
the underlying cash flows used to estimate fair values and result in a decline in fair value that may trigger future
impairment charges. We will continue to monitor developments in 2024 including updates to our forecasts as well as
discount rates and our market capitalization, and an update of our assessment and related estimates may be
required in the future.
Refer to Note 12 - Goodwill, Net and Intangible Assets, Net in the Consolidated Financial Statements for additional
information regarding Goodwill.
Xerox 2023 Annual Report 36
Table of Contents
Revenue Results Summary
Total Revenue
Revenue for the three years ended December 31, 2023, 2022 and 2021 was as follows:
(in millions)
Equipment sales
Post sale revenue
Total Revenue
Revenue
% Change
CC % Change
% of Total Revenue
2023
2022
2021
2023
2022
2023
2022
2023
2022
2021
$ 1,655 $ 1,624 $ 1,581
1.9 %
2.7 %
1.7 %
5,231
5,483
5,457
$ 6,886 $ 7,107 $ 7,038
(4.6) %
(3.1) %
0.5 % (4.8) %
1.0 % (3.3) %
6.6 %
4.2 %
4.8 %
24 %
76 %
23 %
77 %
22 %
78 %
100 %
100 %
100 %
Reconciliation to Consolidated Statements of Income (Loss):
Sales
$ 2,720 $ 2,800 $ 2,582
(2.9) %
8.4 % (3.4) % 12.2 %
Less: Supplies, paper and other sales
(1,065)
(1,176)
(1,001)
(9.4) % 17.5 % (10.5) % 21.0 %
Equipment sales
$ 1,655 $ 1,624 $ 1,581
1.9 %
2.7 %
1.7 %
6.6 %
Services, maintenance and rentals
$ 3,975 $ 4,100 $ 4,235
(3.0) % (3.2) % (3.0) %
0.6 %
Add: Supplies, paper and other sales
1,065
1,176
1,001
(9.4) % 17.5 % (10.5) % 21.0 %
Add: Financing
Post sale revenue
191
207
221
(7.7) % (6.3) % (8.0) % (2.9) %
$ 5,231 $ 5,483 $ 5,457
(4.6) %
0.5 % (4.8) %
4.2 %
Segments
Print and Other
FITTLE
Intersegment elimination(1)
Total Revenue(2)
Americas
EMEA
Other
Total Revenue(3)
$ 6,571 $ 6,804 $ 6,729
(3.4) %
1.1 %
401
(86)
393
(90)
401
2.0 % (2.0) %
(92)
(4.4) % (2.2) %
$ 6,886 $ 7,107 $ 7,038
(3.1) %
1.0 %
95 %
6 %
(1) %
96 %
5 %
(1) %
95 %
6 %
(1) %
100 %
100 %
100 %
$ 4,524 $ 4,638 $ 4,432
(2.5) %
4.6 % (2.4) %
2,241
2,291
2,434
(2.2) % (5.9) % (2.9) %
121
178
172
(32.0) %
3.5 % (32.0) %
$ 6,886 $ 7,107 $ 7,038
(3.1) %
1.0 % (3.3) %
5.1 %
4.1 %
3.5 %
4.8 %
66 %
32 %
2 %
65 %
32 %
3 %
63 %
35 %
2 %
100 %
100 %
100 %
_____________
CC - See "Currency Impact" section for description of constant currency.
(1) Reflects revenue, primarily commissions and other payments, made by the FITTLE segment to the Print and Other segment for the lease of
Xerox equipment placements.
(2) Refer to the "Reportable Segments" section.
(3) Refer to the "Geographic Sales Channels" section.
Revenue
2023 results were affected by uneven macroeconomic conditions, current and prior year reductions in equipment
backlog1 and the intentional reduction of certain non-strategic revenue. Total revenue decreased 3.1% for the year
ended December 31, 2023 and included a 0.8-percentage point benefit from acquisitions and a 0.2-percentage
point benefit from currency. The decrease in revenue was attributable to lower post sale revenue reflecting the
intentional reduction of non-strategic revenue - paper and IT endpoint device placement sales, as well as the
termination of Fuji royalty income and the donation of PARC. Contractual print services2 declined modestly, due to
lower production print activity, our exit from Russia and a shift in distribution strategy for one of our European
markets, partially offset by Digital and Managed IT Services revenue growth, which includes the benefits from an
acquisition. The decrease in Post sale revenue was partially offset by growth in equipment sales revenue, reflecting
stable demand, higher pricing, and favorable mix, as well as improved product supply availability and the associated
year-over-year reduction in backlog.
Total revenue increased 1.0% for the year ended December 31, 2022 and included a 2.6-percentage point benefit
from acquisitions, which was partially offset by a 3.8-percentage point adverse impact from currency. The increase
in revenue reflected growth in equipment sales revenue, due to stable demand and improved product supply
availability, particularly in the last third of the year. Post sale revenue also improved, primarily reflecting the impact
from acquisitions as well as growth in IT and Digital service revenue and an increase in paper and supplies sales.
Contractual print services2 grew low single digits at constant currency3, including the benefit of recent acquisitions.
Xerox 2023 Annual Report 37
Xerox 2023 Annual Report 37
Table of Contents
Geographically, revenue in our Americas region decreased 2.5% for the year ended December 31, 2023, as
compared to the prior year, including a 0.1-percentage point adverse impact from currency. The decline in revenue
reflects lower post sale revenue, partially offset by higher equipment sales, resulting from increased product
availability. Revenues in our Americas region for the year ended December 31, 2022 increased 4.6%, as compared
to the prior year, including a 0.5-percentage point adverse impact from currency, primarily reflecting the benefits of
recent acquisitions and growth in equipment sales and consumables, such as paper and supplies.
Revenue in our EMEA operations decreased 2.2% for the year ended December 31, 2023, as compared to the prior
year, with a 0.7-percentage point benefit from currency, driven by lower equipment sales revenue, due to prior year
backlog reductions, which was partially offset by higher post sale revenue. The increase in post sale revenue
primarily reflected the benefits of a recent acquisition, partially offset by lower paper sales. Revenue in our EMEA
operations decreased 5.9% for the year ended December 31, 2022, with a 10.0-percentage point adverse impact
from currency. Absent the adverse impact from currency, revenue increased, driven by strength in equipment sales,
reflecting better product availability, and the benefits of recent acquisitions.
______________
(1) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be
installed, including orders with future installation dates. It includes printing devices as well as IT hardware associated with our IT service
offerings.
Includes revenues from service, maintenance and rentals.
(2)
(3) See "Currency Impact" section for description of constant currency.
Total revenues included the following:
Post sale revenue
Post sale revenue reflects revenues from Contractual print services1, supplies and financing. These revenues are
associated not only with the population of devices in the field, which is affected by installs and removals, but also by
the page volumes generated from the usage of such devices and the revenue per printed page. Post sale revenue
also includes transactional IT hardware sales and other Managed IT services, as well as gains and commissions,
and servicing revenue on the sale of finance receivables.
For the year ended December 31, 2023, Post sale revenue decreased 4.6% as compared to the prior year, which
included a 1.1-percentage point benefit from an acquisition, as well as a 0.2-percentage point benefit from currency.
For the year ended December 31, 2022, Post sale revenue increased 0.5% as compared to the prior year and
included a 3.4-percentage point benefit from acquisitions, which was partially offset by a 3.7-percentage point
adverse impact from currency.
Post sale revenue is comprised of the following:
Services, maintenance and rentals revenue includes maintenance revenue (including bundled supplies), print and
digital services revenue from our Services offerings, rentals and other revenues.
•
•
For the year ended December 31, 2023, these revenues decreased 3.0% as compared to the prior year period
and included no impact from currency. The decline in revenues was due in part to the termination of Fuji royalty
income and the donation of PARC. Contractual print services1 revenue decreased modestly as compared to the
prior year period, primarily reflecting declines in production print activity, our exit from Russia and the shift in
distribution strategy for one of our European markets. These declines were partially offset by revenue growth in
Digital and Managed IT Services, which includes the benefits of a recent acquisition, and price increases, as
well as gains and commissions, and servicing revenue on sales of finance receivables.
For the year ended December 31, 2022, these revenues decreased 3.2% as compared to the prior year period,
including a 3.8-percentage point adverse impact from currency. The increase at constant currency2 was
primarily due to increases in contracted price per page and the acquisition of Go Inspire during the third quarter
2022. Contractual print services1 grew modestly compared to 2021, including benefits of Go Inspire, despite a
slower-than expected return of employees to offices and ongoing macroeconomic concerns. These benefits
were partially offset by the impact of lower royalty revenues from FUJIFILM Business Innovation Corp. lower
third-party leasing commissions (resulting from higher FITTLE lease penetration of our XBS operations), and
slightly lower page volumes.
Supplies, paper and other sales includes unbundled supplies, IT hardware and other sales.
•
For the year ended December 31, 2023, these revenues decreased 9.4% as compared to the prior year,
including a 1.1-percentage point benefit from currency, primarily reflecting lower paper sales, as well as IT
hardware, particularly endpoint devices, and unbundled supplies revenue. Paper and IT endpoint sales are low
margin and non-strategic, and are expected to be reduced further over time.
Xerox 2023 Annual Report 38
Table of Contents
•
For the year ended December 31, 2022, these revenues increased 17.5% as compared to the prior year,
including a 3.5-percentage point adverse impact from currency. The increase at constant currency2 primarily
reflected higher IT Services revenues, which included revenues from the recent acquisition of Powerland as well
as higher paper and supplies revenues driven by higher channel demand.
Financing revenue is generated from direct and indirect financing of Xerox equipment.
•
•
For the year ended December 31, 2023, Financing revenue decreased 7.7% as compared to the prior year,
including a 0.3-percentage point benefit from currency. The decline at constant currency2 reflects a reduction of
the average finance receivables balance during 2023 as a result of the sales of finance receivables to HPS
Investment Partners (HPS). Finance receivables were approximately $600 million lower in December of 2023 as
compared to December of 2022.
For the year ended December 31, 2022, Financing revenue decreased 6.3% as compared to the prior year,
including a 3.4-percentage point adverse impact from currency. The decline at constant currency2 reflected a
lower average finance receivables balance, due to a decrease in equipment sales in prior periods and declines
in Xerox channel originations, due primarily to supply constraints, as well as lower interest rates due to an
increase in indirect originations. These declines were partially offset by an increase in originations from third-
party dealers and non-Xerox equipment providers as compared to the prior year.
_____________
(1)
(2) See "Currency Impact" section for description of constant currency.
Includes revenues from service, maintenance and rentals.
Equipment sales revenue
Equipment sales revenue increased 1.9% for the year ended December 31, 2023 as compared to the prior year,
including a 0.2-percentage point benefit from currency. The increase in constant currency1 reflects improvement in
product availability for higher-margin mid-range and high-end devices, in the Americas region, as well as recent
pricing actions and stable demand conditions. These increases were partially offset by lower revenue from the Entry
product group, primarily in EMEA, as compared to the prior year period.
For the year ended December 31, 2022, Equipment sales revenue increased 2.7% as compared to the prior year,
including a 3.9-percentage point adverse impact from currency. The increase at constant currency1 reflected higher
demand and improvement in product availability, primarily in the last third of the year, as well as higher prices and a
more favorable product and geography mix relative to the prior year. Backlog2 declined meaningfully on a year-over-
year basis exiting 2022 but remained above pre-pandemic levels. Equipment sales revenue increased across all
product categories (entry, mid-range, and high-end), led by strength in mid-range.
See Segment Review - Print and Other below for additional discussion on Equipment sales revenue.
Geographic Sales Channels
In 2023 our geographic sales channels were as follows:
•
Americas, which includes our sales channels in the U.S. and Canada, as well as Mexico, Brazil and Central
and South America.
EMEA, which includes our sales channels in Europe, the Middle East, Africa and India.
•
• Other, primarily includes royalties and licensing revenue.
_____________
(1) See "Currency Impact" section for description of constant currency.
(2) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be
installed, including orders with future installation dates. It includes printing devices as well as IT hardware associated with our IT service
offerings.
Xerox 2023 Annual Report 39
Xerox 2023 Annual Report 39
Table of Contents
Costs, Expenses and Other Income
Summary of Key Financial Ratios
The following is a summary of our key financial ratios used to assess our performance:
(in millions)
Gross Profit
RD&E
SAG
Equipment Gross Margin
Post sale Gross Margin
Total Gross Margin
RD&E as a % of Revenue
SAG as a % of Revenue
Pre-tax Loss(1)
Pre-tax Loss Margin(1)
Adjusted(2) Operating Profit
Adjusted(2) Operating Margin
2023
2022
2021
2023 B/(W)
2022 B/(W)
Year Ended December 31,
$
2,314
$
2,318
$
2,403
$
229
1,696
33.7 %
33.6 %
33.6 %
3.3 %
24.6 %
304
1,760
310
1,718
25.1 %
34.9 %
32.6 %
4.3 %
24.8 %
24.2 %
37.0 %
34.1 %
4.4 %
24.4 %
(4)
75
64
8.6 pts.
(1.3) pts.
1.0 pts.
1.0 pts.
0.2 pts.
$
$
(28)
$
(325)
$
(472)
$
297
(0.4) %
(4.6) %
(6.7) %
4.2 pts.
389
$
275
$
375
$
114
5.6 %
3.9 %
5.3 %
1.7 pts.
$
$
$
(85)
6
(42)
0.9 pts.
(2.1) pts.
(1.5) pts.
0.1 pts.
(0.4) pts.
147
2.1 pts.
(100)
(1.4) pts.
_____________
(1) 2023 includes the pre-tax PARC donation charge of $132 million, while 2022 and 2021 include pre-tax non-cash Goodwill impairment
charges of $412 million and $781 million, respectively.
(2) Refer to the "Non-GAAP Financial Measures" section for an explanation of the non-GAAP financial measure.
Gross Margin
Total gross margin for the year ended December 31, 2023 of 33.6% increased 1.0-percentage points compared to
2022, primarily reflecting lower supply chain-related costs, favorable equipment mix, and the benefits associated
with recent pricing and cost and productivity actions, as well as gains and commissions, and servicing revenues on
sales of finance receivables. These favorable impacts were partially offset by lower revenue, which includes the
termination of Fuji royalty income, and price increases from a product supplier, as well as lower financing margin.
Total gross margin for the year ended December 31, 2022 of 32.6% decreased 1.5-percentage points compared to
2021, primarily reflecting approximately 0.9-percentage points associated with the adverse impacts of higher supply
chain costs and capacity restrictions as well as unfavorable product and service mix. In addition, gross margin was
negatively impacted by lower third-party financing commissions, lower royalty revenue, benefits from temporary
government assistance and furlough measures in the prior year, and investments to support future growth. These
negative impacts were partially offset by favorable currency and productivity and cost savings associated with
Project Own It transformation actions.
Equipment gross margin for the year ended December 31, 2023 of 33.7% increased 8.6-percentage points
compared to 2022, primarily reflecting higher revenue, a favorable product and channel mix, lower supply chain-
related costs, and the benefits associated with recent pricing actions. These favorable impacts were partially offset
by price increases from a product supplier.
Equipment gross margin for the year ended December 31, 2022 of 25.1% increased 0.9-percentage points as
compared to 2021, primarily reflecting the benefits of price increases, lower freight costs, and favorable mix of
products, partially offset by the impact of continued product supply constraints and higher product costs.
Post sale gross margin for the year ended December 31, 2023 of 33.6% decreased 1.3-percentage points
compared to 2022, reflecting lower revenue due to the termination of Fuji royalty income, and lost revenues as a
result of the donation of PARC, as well as a lower financing margin. Financing margin decreased primarily due to
higher interest costs. These impacts were partially offset by the benefits associated cost and productivity actions
and lower supply chain-related costs, as well as gains and commissions, and servicing revenues on sales of finance
receivables.
Post sale gross margin for the year ended December 31, 2022 of 34.9% decreased 2.1-percentage points
compared to 2021, reflecting higher parts costs associated with supply chain disruption, the impacts of recent
acquisitions, benefits from temporary government assistance in the prior year, a competitive price environment, and
lower royalty revenues and third-party financing commissions. A higher mix of IT services revenues also contributed
to the decrease in margins. These negative impacts were partially offset by favorable currency as well as
productivity and cost savings associated with Project Own It transformation actions.
Xerox 2023 Annual Report 40
Table of Contents
Research, Development and Engineering Expenses (RD&E)
(in millions)
R&D
Sustaining engineering
Total RD&E Expenses
Year Ended December 31,
Change
2023
2022
2021
2023
2022
$
$
174 $
55
229 $
246 $
58
304 $
251 $
59
310 $
(72) $
(3)
(75) $
(5)
(1)
(6)
RD&E as a percentage of revenue for the year ended December 31, 2023 of 3.3% decreased 1.0-percentage points
as compared to 2022, and RD&E of $229 million for the year ended December 31, 2023 decreased $75 million as
compared to 2022. The decrease was primarily due to the strategic decision to donate PARC and the spin-off, exit,
or shutdown of certain other RD&E related activities or businesses. The lower spending in innovation reflects
decisions which provide greater focus and financial flexibility to pursue growth opportunities adjacent to our core
operations within Print, Digital and Managed IT services.
RD&E as a percentage of revenue for the year ended December 31, 2022 of 4.3% decreased 0.1-percentage points
as compared to 2021, and RD&E of $304 million for the year ended December 31, 2022, decreased $6 million from
2021, primarily due to investment prioritization and rationalization as well as cost savings from restructuring and
productivity actions. Spending in innovation areas was lower in the fourth quarter 2022 reflecting the decision to
scale back activities in PARC and to spin out or shut down certain other businesses and activities.
Selling, Administrative and General Expenses (SAG)
SAG as a percentage of revenue of 24.6% decreased 0.2-percentage points for the year ended December 31, 2023
as compared to 2022. SAG expenses of $1,696 million for the year ended December 31, 2023 were $64 million
lower than 2022 primarily reflecting the prior year stock compensation expense of $21 million associated with the
accelerated vesting of all outstanding equity awards in connection with the passing of Xerox Holding's former CEO.
SAG also benefited from productivity and cost savings, including savings related to restructuring actions, the
strategic decision to donate PARC and other dispositions as well as a reduced investment in new businesses.
Additionally, the decrease in SAG also reflected lower bad debt expense, lower supply chain-related costs, and the
favorable true-up of prior year shared services contract costs. These benefits were partially offset by higher
incentive compensation expense and marketing expenses, and the impact of an acquisition.
Bad debt expense for the year ended December 31, 2023 of $28 million decreased $15 million as compared to the
prior year, primarily due a lower finance receivable provision of $20 million partially offset by higher provision for
trade receivables of $5 million. The decrease in the 2023 finance receivable provision reflected a reserve release of
approximately $12 million as a result of a favorable reassessment of the credit exposure on a large customer
receivable balance as well as the benefits related to the sale of finance receivables on a non-recourse basis as part
of our on-going finance receivables funding agreement. The increase in the trade receivable provisions is partly due
to an increase in aged receivables in the U.S.
SAG as a percentage of revenue of 24.8% increased 0.4-percentage points for the year ended December 31, 2022
compared to 2021 primarily due to higher administrative and bad debt expenses, partially offset by lower selling
expenses as a result of the favorable impact from currency as well as productivity and cost savings associated with
our Project Own It transformation actions, and the impact of higher revenues.
SAG expenses of $1,760 million for the year ended December 31, 2022 increased $42 million from 2021, reflecting
higher bad debt expense due to the reserve releases in 2021 and higher stock compensation expense of $21
million. The higher stock compensation expense was primarily due to the accelerated vesting of all outstanding
equity awards, according to the terms of the award agreement, in connection with the passing of Xerox Holding's
former CEO. The increase in SAG expenses was also due to acquisitions, investments in FITTLE, as well as
benefits from temporary government assistance in 2021. These actions were partially offset by lower sales and
marketing expenses resulting from lower sales volumes in the first half of 2022, and productivity and cost savings
associated with our Project Own It transformation actions, as well as the favorable impact from currency.
Bad debt expense for the year ended December 31, 2022 of $43 million increased $36 million as compared to the
prior year period, primarily due to reserve releases of approximately $31 million in 2021 as well as increased
provisions as a result of macroeconomic conditions during the year.
Refer to Note 7 - Accounts Receivable, Net and Note 8 - Finance Receivables, Net in the Consolidated Financial
Statements for additional information regarding our bad debt provision and related reserves.
Xerox 2023 Annual Report 41
Xerox 2023 Annual Report 41
Table of Contents
Restructuring and Related Costs, Net
We incurred restructuring and related costs, net of $167 million, $65 million and $38 million for the three years
ended December 31, 2023, 2022 and 2021, respectively. These costs were primarily related to the implementation
of initiatives under our business transformation projects to reduce and realign our cost structure to the changing
nature of our business. Restructuring and related costs, net reflect the following components:
Restructuring charges, net(1)
Asset impairment charges, net
Related costs, net
Total Restructuring and related costs, net
____________
2023
Year Ended December 31,
2022
2021
$
$
114 $
32
21
167 $
68 $
(6)
3
65 $
18
9
11
38
(1) Reflects net headcount reductions of approximately 2,125, 1,940, and 525 for the three years ended 2023, 2022 and 2021, respectively.
2023 Restructuring charges, net includes a pre-tax charge of $104 million associated with the workforce reduction
announced in January 2024 as part of the reorganization of our business and the establishment of a Global
Business Services (GBS) organization to enable enterprise-wide efficiencies and productivity gains.
2023 actions impacted several functional areas, with approximately 25% focused on gross margin improvements,
approximately 65% focused on SAG reductions, and the remainder focused on RD&E optimization. We expect 2024
pre-tax savings of approximately $165 million from our 2023 restructuring actions, with a significant portion related
to the workforce reduction announced in January 2024.
2023 activity also include asset impairment charges of $32 million primarily associated with the following:
•
•
•
The sale of our Russian subsidiary, which was completed in October 2023;
The sale of our Xerox Research Center of Canada (XRCC), which was completed in July 2023; and
The strategic actions taken as a result of the Company's Reinvention, including the outsourcing of certain back-
office functions and geographic simplification.
Restructuring and related costs for 2023 also included related costs of $21 million primarily related to consulting and
other costs associated with our initiatives.
Refer to Note 13 - Restructuring Programs in the Consolidated Financial Statements for additional information
regarding our restructuring programs. The restructuring reserve balance as of December 31, 2023, for all programs,
was $137 million, of which $127 million is expected to be paid over the next twelve months.
Amortization of Intangible Assets
Amortization of intangible assets for the three years ended December 31, 2023, 2022 and 2021 was $43 million,
$42 million and $55 million, respectively. The decreased level of amortization in 2022 was primarily related to the
write-off of certain XBS trade names in prior years as part of our continued efforts to realign and consolidate this
sales unit, partially offset by intangible amortization related to our recent acquisitions of Powerland and Go Inspire.
Refer to Note 6 - Acquisitions and Divestitures, and Note 12 - Goodwill, Net and Intangible Assets, Net in the
Consolidated Financial Statements for additional information regarding our intangible assets.
Worldwide Employment
Worldwide employment was approximately 20,100 as of December 31, 2023, a decrease of approximately 400 from
December 31, 2022. The reduction in headcount resulted from net attrition (attrition net of gross hires) and
restructuring.
Xerox 2023 Annual Report 42
Table of Contents
Other Expenses, Net
(in millions)
Non-financing interest expense
Interest income
Non-service retirement-related costs
Gains on sales of businesses and assets
Currency losses, net
Loss on early extinguishment of debt
Contract termination costs - product supply
Excess contribution refund
Tax indemnification from Conduent
All other expenses, net(1)
Other expenses, net
Year Ended December 31,
2023
2022
2021
$
68 $
91 $
(16)
19
(39)
28
10
—
(6)
(7)
(11)
(12)
(56)
13
5
33
(16)
—
$
18
75 $
13
60 $
96
(4)
(89)
(40)
7
—
—
—
—
3
(27)
_____________
(1)
Includes Equity income of $(4) million, $(3) million and $(3) million and Noncontrolling interest charge of $3 million, $0 million and $0 million
for the three years ended December 31, 2023, 2022 and 2021, respectively.
Non-Financing Interest Expense
Non-financing interest expense for the year ended December 31, 2023 of $68 million was $23 million lower than
2022. The decrease was related to lower average non-financing debt as a result of the repayment of Senior Notes
in 2022 and the first quarter 2023, partially offset by higher interest rates on new debt. When non-financing interest
expense is combined with financing interest expense (Cost of financing), total interest expense of $198 million
decreased by $1 million from the prior year period primarily reflecting a lower average debt balance mostly offset by
the impact of higher average interest rates.
Non-financing interest expense for the year ended December 31, 2022 of $91 million was $5 million lower than
2021. When non-financing interest expense is combined with financing interest expense (Cost of financing), total
interest expense of $199 million decreased by $8 million from the prior year period primarily reflecting a lower
average debt balance offset slightly by higher average interest rates.
For the years ended December 31, 2023, 2022 and 2021, both Xerox Holdings and Xerox reported total interest
expense of $198 million, $199 million and $207 million, respectively, however, the amount reported by Xerox
includes $80 million of interest expense, in each of the three years, paid to Xerox Holdings on an Intercompany
Loan. The Intercompany Loan represents a loan to Xerox of the net proceeds Xerox Holdings Corporation received
from its Senior Notes, which was used to repay existing debt of Xerox Corporation. Xerox's interest expense on the
Intercompany Loan matches the interest expense recognized by Xerox Holdings on its Senior Notes.
Refer to Note 15 - Debt in the Consolidated Financial Statements for additional information regarding the Xerox
Holdings Corporation/Xerox Corporation Intercompany Loan, our debt activity and information regarding the
allocation of interest expense.
Interest Income
Interest income for the year ended December 31, 2023 was $5 million higher than 2022, and for the year ended
December 31, 2022 was $7 million higher than 2021. The increase in both years was due to higher interest rates,
partially offset by a lower cash balance.
Non-Service Retirement-Related Costs
Non-service retirement-related costs increased $31 million for the year ended December 31, 2023 as compared to
2022. The increase primarily reflects higher interest cost associated with higher discount rates as well as a
decrease in the expected return on plan assets, partially offset by lower settlement losses.
Non-service retirement-related costs increased $77 million for the year ended December 31, 2022 as compared to
2021 primarily driven by an increase in interest costs due to higher discount rates as well as negative asset returns
on certain plan assets.
Service retirement-related costs, which are included in operating expenses, were $6 million, $18 million and $24
million for December 31, 2023, 2022 and 2021, respectively. The decrease in service-related costs for the year
ended December 31, 2023 as compared to 2022 is primarily due to the transition of our pension plan in the
Netherlands to a Defined Contribution Plan for future service at the end of 2022.
Refer to Note 18 - Employee Benefit Plans in the Consolidated Financial Statements for additional information
regarding service and non-service retirement-related costs.
Xerox 2023 Annual Report 43
Xerox 2023 Annual Report 43
Table of Contents
Gains on Sales of Businesses and Assets
Gains on sales of businesses and assets primarily relate to sales of non-core surplus business assets.
Currency Losses, Net
Currency losses, net of $28 million for the year ended December 31, 2023 were $15 million higher as compared to
2022 due to continued volatility in the global exchange rates, particularly in the Middle East and Argentina, which
could not be fully hedged, as well as an increase in the cost of hedging.
Currency losses, net of $13 million for the year ended December 31, 2022 were $6 million higher than 2021
primarily due to increased volatility in the global exchange rates, particularly in our Eurasia and Middle East
operations, which could not be fully hedged.
Refer to Note 16 - Financial Instruments in the Consolidated Financial Statements for additional information
regarding our foreign currency derivatives.
Loss on Early Extinguishment of Debt
During 2023, we recorded losses of $10 million on the extinguishment of debt related to the early repayment on
secured borrowings, the termination of our $250 million Credit Facility prior to entering into the new 5-year Asset
Based Lending Facility (ABL), and the write-off of deferred debt issuance costs associated with the early
extinguishment of the $555 million Bridge Loan Facility, that was replaced with the Term Loan B facility.
During 2022, we recorded a loss of $1 million related to the write-off of deferred debt issuance costs as a result of
the reduction in the Company's Credit Facility from $500 million to $250 million and $4 million related to the early
redemption of $700 million of the $1 billion of Xerox Corporation's 4.625% Senior Notes due March 2023.
Refer to Note 15 - Debt in the Consolidated Financial Statements for additional information regarding our Senior
Notes and Credit Facilities.
Contract Termination Costs
For the year ended December 31, 2022, we recorded contract termination costs of $33 million ($25 million after-tax)
associated with the early termination of a product supply agreement. The charge primarily reflects the payment of
the contractual cancellation fee plus interest and related legal fees.
Excess Contribution Refund
During 2023 and 2022, we received a refund of $6 million and $16 million, respectively, reflecting the return of
excess employer contributions to a defined contribution plan for one of our Latin American subsidiaries as a result of
employee forfeitures. The excess contributions had accumulated over the past 20 plus years.
Refer to Note 18 - Employee Benefit Plans in the Consolidated Financial Statements for additional information
regarding our defined contribution plans.
Tax Indemnification - Conduent
The credit of $7 million for the year ended December 31, 2023 represents the reversal of a payable to Conduent of
an IRS refund Xerox was expected to receive with the settlement of a pre-separation unrecognized tax position. The
matter was resolved during the third quarter 2023 and both the receivable from the IRS and the payable to
Conduent were no longer required. The reversal of the offsetting IRS refund receivable is recorded as a charge in
Income tax benefit.
Pre-tax (Loss) Margin
Pre-tax (loss) margin for the year ended December 31, 2023 of (0.4)% was a 4.2-percentage point improvement
from the pre-tax (loss) margin of (4.6)% in 2022. The improvement is primarily due to the Goodwill impairment
charge of $412 million in 2022. In addition, the improvement also reflects the impacts of lower supply chain-related
costs and the benefits of price increases and favorable mix as well as lower RD&E expenses and Selling,
administrative and general expenses. These favorable impacts were partially offset by lower revenue, which
includes the termination of Fuji royalty income, lost revenue associated with the donation of PARC and the
intentional reduction in non-strategic revenue. Pre-tax margin was also negatively impacted by the PARC donation
charge of $132 million in the second quarter 2023, which had a 1.9-percentage point adverse impact on pre-tax
margin, as well as higher Restructuring and related costs, net, which includes the workforce reduction announced in
connection with Reinvention, and Other expenses, net.
Pre-tax (loss) margin for the year ended December 31, 2022 of (4.6)% was a 2.1-percentage point increase from
the pre-tax (loss) margin of (6.7)% in 2021. Both periods include the impact of a pre-tax non-cash Goodwill
impairment charge - $412 million in 2022 or 5.8% versus $781 million in 2021 or 11.1%; a decrease of 5.3%. The
Xerox 2023 Annual Report 44
Table of Contents
decrease in the Goodwill impairment charge impact was partially offset by the impact of lower adjusted1 operating
margin (see Adjusted1 Operating Margin discussion below), of 1.4-percentage points, increased Restructuring and
related costs, net, and Selling, administrative and general expenses (SAG) due to higher stock compensation and
bad debt expense. Other expenses, net, were also higher primarily due to increased non-service retirement costs
and a $33 million charge associated with the termination of a product supply agreement.
Adjusted1 Operating Margin
Adjusted1 operating margin for the year ended December 31, 2023 of 5.6% increased 1.7-percentage points as
compared to 2022. The increase primarily reflects higher gross margin, which includes the impacts of lower supply
chain-related costs, the benefits of price increases and favorable mix. The increase also reflects lower RD&E
expense, and Selling, administrative and general expenses, which includes benefits associated with structural cost
reductions and ongoing operating efficiencies. Partially offsetting these benefits was lower revenue, which includes
the termination of Fuji royalty income, lost revenue associated with the donation of PARC, and the intentional
reduction in non-strategic revenue, as well as price increases from a product supplier, and higher Other expenses,
net.
Adjusted1 operating margin for the year ended December 31, 2022 of 3.9% decreased 1.4-percentage points as
compared to 2021. The decrease is primarily due to lower gross margin, reflecting the negative impact of supply
chain disruption, which caused an unfavorable mix of equipment and services revenue due to product constraints
and higher product costs, partially offset by improved logistics costs. The decrease also reflects investments to
support future growth, as well as the adverse impacts from higher bad debt expense, the cessation of sales to
Russia, and lower royalty revenues from FUJIFILM Business Innovation Corp. These negative impacts were
partially offset by higher revenues, favorable currency benefits, and productivity and cost savings associated with
our Project Own It transformation actions.
_____________
(1) Refer to the Adjusted Operating Income and Margin reconciliation table in the "Non-GAAP Financial Measures" section.
Income Taxes
The 2023 effective tax rate was 103.6% and includes the loss on the PARC donation as well as the associated tax
benefits. Excluding this impact, the effective tax rate was 10.6%. On an adjusted1 basis, the 2023 effective tax rate
was 14.6%. Both rates were lower than the U.S. federal statutory tax rate of 21% primarily due to the tax benefits
related to the redetermination of certain unrecognized tax positions upon the conclusion of several audits, as well as
the remeasurement of deferred tax assets and change in tax filing positions, partially offset by the geographical mix
of earnings.
The 2022 effective tax rate was 0.9% and was lower than the U.S. federal statutory tax rate of 21% primarily due to
the non-deductibility of the Goodwill impairment charge and the tax expense associated with changes in elections
made to certain tax positions for recently filed returns, which were only partially offset by benefits from additional tax
incentives and the geographical mix of earnings. On an adjusted1 basis, the 2022 effective tax rate was 21.6% and
was higher than the U.S. federal statutory tax rate of 21% primarily due to tax expense associated with changes in
elections made to certain tax positions for recently filed returns, offset by benefits from additional tax incentives.
The 2021 effective tax rate was 3.6%. On an adjusted1 basis, the 2021 effective tax rate was 6.4%. Both rates were
lower than the U.S. statutory tax rate of 21% primarily due to the benefits from tax law changes, additional
incentives as a result of changes in elections made with the filed tax returns, the decrease in deferred tax valuation
allowances as well as the remeasurement of uncertain tax positions. The reported effective tax rate also reflected
the non-deductibility of the Goodwill impairment charge, while the adjusted1 effective tax rate also reflects partial
offsets for the geographical mix of earnings.
Xerox operations are widely dispersed. However, no one country outside of the U.S. is a significant factor in
determining our overall effective tax rate. Refer to Note 19 - Income and Other Taxes in the Consolidated Financial
Statements for additional information regarding the geographic mix of income before taxes and the related impacts
on our effective tax rate.
Our effective tax rate is based on nonrecurring events as well as recurring factors, including the taxation of foreign
income. In addition, our effective tax rate will change based on discrete or other nonrecurring events that may not
be predictable.
_____________
(1) Refer to the Adjusted Effective Tax Rate reconciliation table in the "Non-GAAP Financial Measures" section.
Xerox 2023 Annual Report 45
Xerox 2023 Annual Report 45
Table of Contents
Net Income (Loss)
Net income for the year ended December 31, 2023 was $1 million, or $(0.09) per diluted share, which included the
after-tax PARC donation charge of $92 million ($132 million pre-tax), or $0.58 per diluted share. On an adjusted1
basis, Net Income was $287 million, or $1.82 per diluted share.
Net (loss) for the year ended December 31, 2022 was $(322) million, or $(2.15) per diluted share, which included an
after-tax Goodwill impairment charge of $395 million (pre-tax charge of $412 million) or $(2.54) per share. On an
adjusted1 basis, Net income was $189 million, or $1.12 per diluted share.
Net (loss) for the year ended December 31, 2021 was $(455) million, or $(2.56) per diluted share, which included an
after-tax Goodwill impairment charge of $750 million (pre-tax charge of $781 million) or $(4.08) per share. On an
adjusted1 basis, Net income was $293 million, or $1.51 per diluted share.
Refer to Note 25 - Loss per Share in the Consolidated Financial Statements, for additional information regarding the
calculation of basic and diluted loss per share.
_____________
(1) Refer to the Adjusted Net Income and EPS reconciliation table in the "Non-GAAP Financial Measures" section.
Other Comprehensive (Loss) Income
Other comprehensive loss was $139 million in 2023 and included the following: i) $331 million of net losses from the
changes in defined benefit plans primarily due to actuarial losses as a result of a decrease in discount rates and
lower asset returns as compared to expected returns, as well as the negative impact of currency, partially offset by
the amortization of actuarial losses and settlement losses; ii) $191 million of net translation adjustment gains
reflecting the strengthening of most of our major foreign currencies against the U.S. Dollar during 2023; and iii) $1
million in unrealized gains, net.
Other comprehensive loss was $549 million in 2022 and included the following: i) $376 million of net translation
adjustment losses reflecting the weakening of our major foreign currencies against the U.S. Dollar during 2022; ii)
$171 million of net losses from the changes in defined benefit plans primarily due to actuarial losses as a result of
negative asset returns, partially offset by the positive impact of currency and the amortization of actuarial losses and
settlement losses; and iii) $2 million in unrealized losses, net.
Other comprehensive income was $344 million in 2021 and included the following: i) $489 million of net gains from
the changes in defined benefit plans primarily due to remeasurement and net actuarial gains as a result of higher
discount rates, as well as the favorable impact of currency; ii) $141 million of net translation adjustment losses
reflecting the weakening of our major foreign currencies against the U.S. Dollar during 2021; and iii) $4 million in
unrealized losses, net.
Refer to our discussion of Pension Plan Assumptions in the Application of Critical Accounting Policies section of
the MD&A as well as Note 18 - Employee Benefit Plans in the Consolidated Financial Statements for additional
information regarding changes in our defined benefit plans. Refer to Note 16 - Financial Instruments in the
Consolidated Financial Statements for additional information regarding our foreign currency derivatives and
associated unrealized gains and losses.
Recent Accounting Pronouncements
Refer to Note 2 - Recent Accounting Pronouncements and Summary of Significant Accounting Policies in the
Consolidated Financial Statements for a description of recent accounting pronouncements including the respective
dates of adoption and the effects on results of operations and financial conditions.
Xerox 2023 Annual Report 46
Table of Contents
Reportable Segments
Our business is organized to ensure we focus on efficiently managing operations while serving our customers and
the markets in which we operate. We have two operating and reportable segments – Print and Other and FITTLE.
Refer to Note 4 - Segment and Geographic Area Reporting in the Consolidated Financial Statements for additional
information regarding our reportable segments.
Segment Review
(in millions)
2023
Print and Other
FITTLE
Total
2022
Print and Other
FITTLE
Total
2021
Print and Other
FITTLE
Total
External
Revenue
Intersegment
Revenue(1)
Total Segment
Revenue
% of Total
Revenue
Segment
Profit
Segment
Margin(2)
Year Ended December 31,
$
$
$
$
$
$
6,485 $
401
6,886 $
6,714 $
393
7,107 $
6,637 $
401
7,038 $
86 $
—
86 $
90 $
—
90 $
92 $
—
92 $
6,571
401
6,972
6,804
393
7,197
6,729
401
7,130
94 % $
6 %
100 % $
95 % $
5 %
100 % $
94 % $
6 %
100 % $
360
29
389
258
17
275
311
64
375
5.6 %
7.2 %
5.6 %
3.8 %
4.3 %
3.9 %
4.7 %
16.0 %
5.3 %
_____________
(1) Reflects revenue, primarily commissions and other payments, made by the FITTLE Segment to the Print and Other Segment for the lease
of Xerox equipment placements.
(2) Segment margin based on external revenue only.
Print and Other
Print and Other includes the design, development and sale of document management systems, solutions and
services as well as associated technology offerings including IT and software products and services.
Revenue
(in millions)
Equipment sales
Post sale revenue
Intersegment revenue (1)
Total Print and Other Revenue
Year Ended December 31,
% Change
2023
2022
2021
$
$
1,634 $
4,851
86
6,571 $
1,602 $
5,112
90
6,804 $
1,554
5,083
92
6,729
2023
2.0%
(5.1)%
(4.4)%
(3.4)%
2022
3.1%
0.6%
(2.2)%
1.1%
_____________
(1) Reflects revenue, primarily commissions and other payments, made by the FITTLE segment to the Print and Other segment for the lease
of Xerox equipment placements.
Print and Other segment revenue results included the following:
Equipment Sales Revenue
•
•
For the year ended December 31, 2023, Equipment sales revenue increased 2.0% as compared to 2022,
driven by improvement in product availability for higher-margin mid-range and high-end devices in the
Americas, as well as recent pricing actions and stable demand conditions, both of which were partially offset by
lower revenue from the Entry product group, primarily in EMEA, due to backlog1 reductions in the prior year.
For the year ended December 31, 2022, Equipment sales revenue increased 3.1% as compared to 2021,
reflecting higher demand, primarily for our Mid-range products, and improvement in product availability in both
the Americas and EMEA regions. Backlog declined meaningfully on a year-over-year basis but remained
above pre-pandemic levels.
_____________
(1) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be
installed, including orders with future installation dates. It includes printing devices as well as IT hardware associated with our IT service
offerings.
Xerox 2023 Annual Report 47
Xerox 2023 Annual Report 47
Table of Contents
Post Sale Revenue
•
For the year ended December 31, 2023, Post sale revenue decreased by 5.1% as compared to 2022 due
primarily to lower sales of lower-margin, non-strategic paper and IT endpoint devices, as well as the
termination of Fuji royalty income and PARC revenue. Supplies, paper and other, and Contractual print
services1 revenue declined modestly as compared to the prior year period. The decline in Contractual print
services1 is mainly driven by lower production print activity, the exit from Russia and a shift in distribution
strategy for one of our European markets, partially offset by Digital and Managed IT Services revenue growth,
which includes the benefits of a recent acquisition. These declines were partially offset by price increases, as
well as gains and commissions, and servicing revenue on sales of finance receivables.
For the year ended December 31, 2022, Post sale revenue increased 0.6% as compared to 2021 primarily
driven by growth in our IT Services business, including our recent acquisition of Powerland as well as growth in
supplies and paper revenue and Contractual Print Services1, which includes the acquisition of Go Inspire.
These increases were partially offset by the adverse impacts from currency, lower royalty income and third-
party leasing commissions as compared to 2021.
•
_____________
(1) Represents revenues from service, maintenance and rentals.
Detail by product group is shown below:
(in millions)
Entry
Mid-range
High-end
Other
Equipment sales(1)(2)
Revenue
2022
2021
2023
237 $
280 $
$
1,084
316
18
1,030
295
19
282
972
304
23
2023
% Change
2022
(15.4)% (0.7)% (15.9)%
6.0%
(3.0)%
5.2%
7.1%
(5.3)% (17.4)% (5.3)% (17.4)%
CC % Change
2022
2023
3.6%
9.7%
0.8%
5.1%
6.8%
% of Equipment Revenue
2022
17%
64%
18%
1%
2021
18%
62%
19%
1%
2023
14%
66%
19%
1%
$ 1,655 $ 1,624 $ 1,581
1.9%
2.7%
1.7%
6.6%
100%
100%
100%
_____________
CC - See "Currency Impact" section for description of constant currency.
(1) Refer to the Products and Offerings Definitions section.
(2)
Includes equipment sales related to the FITTLE segment of $21 million, $22 million and $27 million for the three years ended
December 31, 2023, 2022 and 2021, respectively.
The change at constant currency1 reflected the following:
Entry
•
•
For the year ended December 31, 2023, the decrease, as compared to 2022, primarily reflects backlog
reductions in the prior year, and the normalization of work-from-home demand, offset by price increases.
For the year ended December 31, 2022, the increase, as compared to 2021, was driven by growth in color
devices, and overall price increases, partially offset by the impacts of supply constraints, which most
significantly affected our black-and-white devices, and lower sales in the developing regions of EMEA,
including lower sales associated with halting shipments to Russia.
Mid-range
•
•
For the year ended December 31, 2023, the increase, as compared to 2022, reflects improved product
availability primarily in the Americas and price increases, partially offset by declines in EMEA due to backlog
reductions in the prior year.
For the year ended December 31, 2022, the increase, as compared to 2021, was primarily driven by improved
product availability, price increases, and a more favorable product mix toward color devices in both the
Americas and EMEA regions.
High-end
•
•
For the year ended December 31, 2023, the increase, as compared to 2022, was driven by revenue growth in
the Americas, as well as higher revenue and higher installs of both Entry Production Color devices and iGens,
due to improved product availability and benefits from price increases.
For the year ended December 31, 2022, the increase, as compared to 2021, was primarily driven by a
favorable mix toward color devices, higher sales in our channels in the U.S. and Canada and increased
product availability, partially offset by lower sales of mono devices and lower sales in the developing regions of
EMEA, as well as the impact of global product supply constraints and freight disruptions.
_____________
(1) See "Currency Impact" section for description of constant currency.
Xerox 2023 Annual Report 48
Table of Contents
Total Installs
Installs reflect new placements of devices only (i.e., measure does not take into account removal of devices which
may occur as a result of contract renewals or cancellations). Revenue associated with equipment installations may
be reflected up-front in Equipment sales or over time either through rental income or as part of our services
revenues (which are both reported within our Post sale revenues), depending on the terms and conditions of our
agreements with customers. Installs include activity for Xerox and non-Xerox branded products installed by our
XBS sales unit. Detail by product group (see Products and Offerings Definitions) is shown below.
Installs for the year ended December 31, 2023 were:
Entry1
•
37% decrease in entry color installs driven by declines in entry color printers and A4 Color MFPs, reflecting
backlog reductions in the prior year.
16% decrease in entry black-and-white installs driven by declines in A4 mono MFPs, primarily in EMEA, which
was partially offset by higher entry mono printer installs.
•
Mid-Range
• Mid-range color installs were flat, reflecting higher light production installations offset by a slight decline in A3
•
color MFPs.
7% increase in mid-range black-and-white installs, driven by A3 mono MFPs, reflecting increased product
availability primarily in the Americas.
High-End
•
25% increase in high-end color installs reflecting higher demand for iGen and Versant products, primarily in the
Americas.
16% decrease in high-end black-and-white installs reflecting a market shift toward color production equipment.
•
_____________
(1) Reflects install activity for total Entry product group.
Installs for the year ended December 31, 2022 were:
Entry
•
•
37% increase in color multifunction devices reflecting higher demand for devices at the lower end of the
portfolio and increased product availability, primarily in the EMEA region.
34% decrease in black-and-white multifunction devices primarily due to higher prior year installs in the
developing regions of EMEA associated with work-from-home demand, resulting from the COVID-19
pandemic, and halting shipments to Russia, as well as ongoing product constraints.
Mid-Range
•
•
9% increase in mid-range color installs primarily in EMEA, reflecting higher installs of our recently launched
new-generation of ConnectKey multi-function printers, as well as increased installs of our PrimeLink entry-
production color devices in the fourth quarter of 2022.
13% decrease in black-and-white installs, primarily in the developing regions of EMEA, reflecting the impact of
freight disruption and product supply constraints.
High-End
•
•
3% decrease in color installs, primarily in EMEA, reflecting the impact of global product constraints and freight
disruptions, partially offset by higher installations of our Baltoro cut-sheet inkjet devices.
15% decrease in black-and-white systems, primarily in the Americas region, reflecting the impact of global
product constraints and freight disruptions.
Product and Offerings Definitions
Our product groups 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 teams environments as
well as products in the Light Production product groups serving centralized print centers, print for pay and
lower 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.
Xerox 2023 Annual Report 49
Xerox 2023 Annual Report 49
Table of Contents
Segment Margin
Print and Other segment margin of 5.6% for the year ended December 31, 2023 increased 1.8-percentage points
as compared to 2022. The increase is primarily due to higher segment gross profit, which includes reduced RD&E,
lower selling expense, lower freight costs, as well as the benefits from pricing and cost and productivity actions.
These benefits were partially offset by lower revenue.
Print and Other segment margin of 3.8% for the year ended December 31, 2022 decreased 0.9-percentage points
as compared to 2021. The decrease is primarily due to lower segment gross profit, which includes the impacts of
higher freight and production costs associated with product supply constraints, as well as the benefits from
temporary government assistance and furlough measures in the prior year, and lower royalty revenues and third-
party leasing commissions, partially offset by higher revenues, lower selling expense, reduced RD&E, and
productivity and cost savings associated with Project Own It transformation actions.
FITTLE
FITTLE represents a global financing solutions business, primarily enabling the sale of our equipment and
services.
Revenue
(in millions)
Equipment sales
Financing
Other Post sale revenue(1)
Total FITTLE Revenue
Year Ended December 31,
% Change
2023
2022
2021
$
$
21 $
22 $
191
189
207
164
401 $
393 $
27
221
153
401
2023
(4.5)%
(7.7)%
15.2%
2.0%
2022
(18.5)%
(6.3)%
7.2%
(2.0)%
_____________
(1) Other Post sale revenue includes lease renewal and fee income as well as gains, commissions and servicing revenue associated with sold
finance receivables.
FITTLE segment revenues included the following:
Financing Revenue
•
•
For the year ended December 31, 2023, Financing revenue decreased 7.7%, as compared to 2022 and is
primarily due to a reduction of the average finance receivables balance as a result of the sales of finance
receivables under our finance receivables funding agreement. Finance receivables were approximately $600
million lower as of December 2023 as compared to December 2022.
For the year ended December 31, 2022, Financing revenue decreased 6.3%, as compared to 2021, due to a
lower average finance receivables balance, as collections continue to outpace originations, and lower Print and
Other equipment sales in prior periods. Originations have been impacted by the global product supply
constraints and freight disruptions.
Other Post sale revenue
•
•
For the year ended December 31, 2023, Other Post sale revenue increased 15.2%, as compared to 2022,
primarily due to higher commissions and servicing revenue on increased sales of finance receivables under
our finance receivables funding agreement, which was $34 million for the year ended December 31, 2023, as
compared to $2 million for the year ended December 31, 2022.
For the year ended December 31, 2022, Other Post sale revenue increased 7.2%, as compared to 2021,
primarily due to an increase in renewal income from a higher level of end of lease extensions for equipment as
a result of supply constraints delaying the installation of new devices.
Segment Margin
FITTLE segment margin of 7.2% for the year ended December 31, 2023 increased 2.9-percentage points, as
compared to 2022, primarily due to higher revenues, lower bad debt expense, and a reduction in commissions paid
to equipment suppliers (primarily the Print and Other segment), partially offset by higher funding costs.
FITTLE segment margin of 4.3% for the year ended December 31, 2022 decreased 11.7-percentage points, as
compared to 2021, primarily reflects higher bad debt expense due to 2021 including reserve releases of
approximately $31 million, and incremental costs associated with standing up the business, including the
receivables funding agreement. These negative impacts were partially offset by a reduction in commissions paid to
the Print and Other segment due to lower new lease originations for Xerox equipment.
Xerox 2023 Annual Report 50
Table of Contents
Capital Resources and Liquidity
Our liquidity is primarily dependent on our ability to continue 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 through secured borrowings on our finance receivable
balances and the sales and assignment of finance lease receivables. Accordingly, we believe we have sufficient
liquidity to manage the business and settle obligations as they come due.
The following is a summary of our liquidity position:
•
•
•
•
•
As of December 31, 2023, total cash, cash equivalents and restricted cash were $617 million and apart from
restricted cash of $98 million, was readily accessible for use.
Total debt at December 31, 2023 was $3,277 million of which $2,428 million is internally allocated to and
supports the Company's finance assets. The remaining debt of $849 million is attributable to the core business.
Debt consists of senior unsecured notes, secured borrowings through the securitization of finance assets, and
borrowings of $550 million under a Term Loan B credit facility (the TLB). The TLB was entered into in the fourth
quarter 2023 to repay a bridge Loan Facility which was used to initially fund a share repurchase from Icahn
and affiliates. The Company has a balanced bond maturity ladder over the next few years with $300 million of
senior note debt maturing in the second quarter of 2024. Refer to Note 15 - Debt in the Consolidated Financial
Statements for additional details regarding our debt.
During 2023, we refinanced our French and Canadian secured borrowing arrangements, which resulted in
additional net proceeds of $107 million and $52 million, respectively.
In May 2023, we entered into a five-year senior secured revolving credit facility of up to $300 million (the ABL
Facility). Our previous $250 million Credit Facility due July 2024 was terminated prior to entering into the ABL
Facility. As of December 31, 2023, there were no borrowings under the ABL Facility, and no letters of credits
were issued under the facility. During 2023, maximum borrowings under the ABL Facility were $220 million. We
are in full compliance with the covenants and other provisions of the ABL Facility.
In December 2022, Xerox entered into a finance receivables funding agreement with an affiliate of HPS
Investment Partners (HPS) that provides a committed funding arrangement for new financed lease originations
through the sale of those receivables. During the second quarter 2023, the finance receivables funding
agreement was amended to expand the pools of finance receivables eligible for sale and to include the sale of
the underlying leased equipment to HPS. We sold approximately $1,100 million of finance receivables to HPS
during 2023, which included sales of leases originated in prior years.
• We expect Operating cash flows in 2024 to be approximately $650 million and capital expenditures to be
approximately $50 million.
Refer to Note 8 – Finance Receivables, Net in the Consolidated Financial Statements for additional information
regarding the sale of finance receivables, Note 15 - Debt in the Consolidated Financial Statements for additional
information regarding our debt activity and Note 22 – Shareholders’ Equity in the Consolidated Financial
Statements for additional information regarding the Icahn share repurchase.
Cash Flow Analysis
The following summarizes our cash flows for the three years ended December 31, 2023, 2022 and 2021, as
reported in our Consolidated Statements of Cash Flows in the accompanying Consolidated Financial Statements:
(in millions)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
Decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Year Ended December 31,
2022
2021
2023
Change
2023
2022
$
686 $
159 $
629 $
527 $
(470)
(5)
(1,202)
(1)
(522)
1,139
(78)
(822)
(29)
(770)
1,909
(85)
(1,310)
(16)
(782)
2,691
73
(380)
28
248
(770)
7
488
(13)
12
(782)
(770)
Cash, Cash Equivalents and Restricted Cash at End of Year
$
617 $
1,139 $
1,909 $
(522) $
Xerox 2023 Annual Report 51
Xerox 2023 Annual Report 51
Table of Contents
Cash Flows from Operating Activities
Net cash provided by operating activities was $686 million for the year ended December 31, 2023. The $527
million increase in operating cash from 2022 was primarily due to the following:
•
•
•
•
•
•
•
•
•
$116 million increase in pre-tax income before depreciation and amortization, provisions, gains on sales of
businesses and assets, PARC donation, stock-based compensation, goodwill impairment, restructuring and
related costs, net and non-service retirement-related costs.
$755 million increase from finance receivables reflecting the sale of approximately $1,100 million of finance
receivables under the finance receivables funding agreement in the current year as well as lower indirect
originations due to the change in FITTLE’s strategy to focus on leasing of Xerox equipment. These impacts
were partially offset by higher originations from increased equipment sales. Refer to Note 8 – Finance
Receivables, Net in the Consolidated Financial Statements for additional information regarding the sale of
finance receivables.
$266 million increase from inventory primarily due to the prior year increase in inventory as compared to
reductions in inventory in the current year reflecting increased sales of equipment and supplies.
$43 million increase from accounts receivable due to the lower quarterly revenues partially offset by the timing
of collections.
$22 million increase from lower contributions to our retirement plans mainly due to additional contributions to
our U.K. defined benefit pension plan not required in 2023.
$14 million increase from accrued compensation related to the year-over-year timing of payments.
$568 million decrease from accounts payable primarily due to the timing of supplier and vendor payments and
lower year-over-year spending.
$141 million decrease from other current and long-term liabilities mainly attributable to the timing of payments
of higher year-end accruals.
$29 million decrease from higher installs of equipment on operating leases.
Net cash provided by operating activities was $159 million for the year ended December 31, 2022. The $470
million decrease in operating cash from 2021 was primarily due to the following:
•
•
•
•
•
•
•
•
•
$151 million decrease in pre-tax income before depreciation and amortization, provisions, gains on sales of
businesses and assets, stock-based compensation, goodwill impairment, restructuring and related costs, net
and non-service retirement-related costs.
$231 million decrease due to higher inventory levels in anticipation of increased sales activity in the first half of
2023 as the Company continues to work down its backlog1 and manage continued supply chain challenges.
$146 million decrease primarily due to lower royalty income as the prior year includes receipts of an upfront
prepaid fixed royalty from Fuji Xerox (now known as FUJIFILM Business Innovation Corp.) of $100 million for
their continued use of the Xerox brand trademark after the termination of our technology agreement with them
and $46 million of royalty payments under the technology agreement prior to its termination.
$144 million decrease due to a current year increase in net finance receivables of $161 million reflecting
improved equipment sale activity and the financing business growth strategy offset by lower equipment on
operating leases of $17 million. The $161 million use of cash in 2022 is net of $60 million received in
connection with the sale of finance receivables in the fourth quarter 2022 under a Receivables Funding
Agreement. Refer to Note 8 – Finance Receivables, Net in the Consolidated Financial Statements for
additional information regarding the sale of finance receivables.
$89 million decrease from accounts receivable primarily due to higher revenues partially offset by the timing of
collections.
$160 million increase from accounts payable primarily due to the timing of supplier and vendor payments and
higher spending as compared to the prior year.
$36 million increase from lower contributions to retirement plans primarily as a result of a $30 million decrease
in required contributions to our non-U.S. plans, particularly the U.K. pension plan, as well as a $6 million
decrease in retiree-health contributions.
$25 million increase from accrued compensation primarily related to the year-over-year timing of payments.
$24 million increase primarily due to lower payments associated with restructuring and related costs as a result
of the timing of actions.
_____________
(1) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be
installed, including orders with future installation dates. It includes printing devices as well as IT hardware associated with our IT service
offerings.
Xerox 2023 Annual Report 52
Table of Contents
Cash Flows from Investing Activities
Net cash used in investing activities was $5 million for the year ended December 31, 2023. The $73 million
decrease in the use of cash from 2022 was primarily due to lower acquisitions, capital expenditures and corporate
venture capital investments, partially offset by lower proceeds from the sale of surplus buildings and other assets.
Net cash used in investing activities was $78 million for the year ended December 31, 2022. The $7 million
decrease in the use of cash from 2021 was primarily due to the following:
•
•
•
$28 million decrease from the sales of surplus buildings and land in 2022 of $25 million in the U.S and $7
million in Europe as compared to $4 million in the U.S. in the prior year.
$11 million decrease reflecting lower capital expenditures.
$10 million decrease from the sales of non-core business assets of $48 million in 2022 as compared to $38
million in the prior year.
$40 million increase from acquisitions.
•
• Other investing, net of Xerox Holdings includes $13 million of noncontrolling investments as part of our
corporate venture capital fund for 2022 as compared to $8 million in the prior year.
Cash Flows from Financing Activities
Net cash used in financing activities for Xerox Holdings was $1,202 million for the year ended December 31, 2023.
The $380 million increase in the use of cash from 2022 was due to the following:
•
•
$431 million increase due to the share repurchase from Icahn and Affiliated Parties for $544 million in 2023
compared to $113 million of share repurchases in the prior year under the Company’s open-market share
repurchase program.
$51 million decrease from net debt activity. 2023 reflects net proceeds of $524 million from the TLB, which is
net of an original issue discount of $17 million and debt issuance costs payments of $9 million, and net
proceeds of $107 million and $52 million from the refinance of our French and Canadian secured loans,
respectively. These borrowings were offset by payments of $846 million on secured financing arrangements,
$300 million on Senior Notes and deferred debt issuance costs payments of $14 million on the ABL Facility and
the bridge Loan Facility used to initially fund the Icahn share repurchase, which was repaid in the fourth quarter
2023. The $846 million of payments on secured financing arrangements includes the early repayments of $270
million for U.S. secured borrowings. 2022 reflects proceeds of $1,193 million on secured financing
arrangements offset by payments of $714 million, $300 million on maturing 2022 Senior Notes and $703
million for the early partial redemption of 2023 Senior Notes, which includes a premium payment of $3 million.
Refer to Note 15 - Debt in the Consolidated Financial Statements for additional information regarding debt activity
and Note 22 – Shareholders’ Equity in the Consolidated Financial Statements for additional information regarding
the Icahn share repurchase.
Net cash used in financing activities for Xerox was $1,207 million for the year ended December 31, 2023. 2023
reflects net proceeds of $524 million from the TLB, which is net of an original issue discount of $17 million and debt
issuance costs payments of $9 million, and net proceeds of $107 million and $52 million from the refinance of our
French and Canadian secured loans, respectively. These borrowings were offset by payments of $846 million on
secured financing arrangements, $300 million on Senior Notes and deferred debt issuance costs payments of $14
million on the ABL Facility and the bridge Loan Facility used to initially fund the Icahn share repurchase, which was
repaid in the fourth quarter 2023. The $846 million of payments on secured financing arrangements includes the
early repayments of $270 million for U.S. secured borrowings. 2022 reflects proceeds of $1,193 million on secured
financing arrangements offset by payments of $714 million, $300 million on maturing 2022 Senior Notes and $703
million for the early partial redemption of 2023 Senior Notes, which includes a premium payment of $3 million.
Distributions to Xerox Holdings were $722 million and were primarily used to fund Xerox Holdings continuing
dividends to shareholders and share repurchases. Xerox's distributions to the parent are expected to continue with
those distributions primarily being used by Xerox Holdings to fund dividends and share repurchases.
Net cash used in financing activities for Xerox Holdings was $822 million for the year ended December 31, 2022.
The $488 million decrease in the use of cash from 2021 was primarily due to the following:
•
•
•
$775 million decrease due to lower share repurchases in the current year.
$32 million decrease due to lower common stock dividends due to lower outstanding shares.
$321 million increase from net debt activity. 2022 reflects proceeds of $1,193 million on secured financing
arrangements offset by payments of $714 million, $300 million on maturing 2022 Senior Notes and $703
million for the early partial redemption of 2023 Senior Notes, which includes a premium payment of $3 million.
Xerox 2023 Annual Report 53
Xerox 2023 Annual Report 53
Table of Contents
2021 reflects payments of $518 million on secured financing arrangements and $1 million of deferred debt
issuance costs offset by proceeds of $311 million on a new secured financing arrangement.
• Other financing, net includes receipts for noncontrolling investments of $6 million in 2022 as compared to $15
million in the prior year.
Net cash used in financing activities for Xerox was $835 million for the year ended December 31, 2022. 2022
reflects proceeds of $1,193 million on secured financing arrangements offset by payments of $714 million, $300
million on maturing 2022 Senior Notes and $703 million for the early partial redemption of 2023 Senior Notes,
which includes a premium payment of $3 million. 2021 reflects payments of $518 million on secured financing
arrangements and $1 million of deferred debt issuance costs offset by proceeds of $311 million on a new secured
financing arrangement. Distributions to Xerox Holdings were $312 million and were primarily used to fund Xerox
Holdings' continuing dividends to shareholders and share repurchases. Xerox's distributions to the parent are
expected to continue with those distributions primarily being used by Xerox Holdings to fund dividends and share
repurchases.
Cash, Cash Equivalents and Restricted Cash
Refer to Note 14 - Supplementary Financial Information in the Consolidated Financial Statements for additional
information regarding restricted cash.
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 eleven years and a variety of renewal and/or termination options. As of December 31, 2023 and 2022, total
operating lease liabilities were $182 million and $229 million, respectively.
Refer to Note 11 - Lessee in the Consolidated Financial Statements for additional information regarding our right-
of-use (ROU) assets and lease obligations associated with our operating leases.
Debt and Customer Financing Activities
The following summarizes our total debt:
(in millions)
Xerox Holdings Corporation
Xerox Corporation
Xerox - Other Subsidiaries(1)
Subtotal - Principal debt balance
Debt issuance costs
Xerox Holdings Corporation
Xerox Corporation
Xerox - Other Subsidiaries(1)
Subtotal - Debt issuance costs
Net unamortized (discount) premium
Total Debt
December 31,
2023
2022
$
1,500 $
1,450
361
3,311
(6)
(12)
(1)
(19)
(15)
1,500
1,200
1,042
3,742
(9)
(4)
(5)
(18)
2
$
3,277 $
3,726
_____________
(1) Represents secured debt issued by subsidiaries of Xerox Corporation as part of the securitization of finance receivables.
Refer to Note 15 - Debt in the Consolidated Financial Statements for additional information regarding our debt
activity.
Finance Assets and Related Debt
We provide lease equipment financing to our customers. Our lease contracts permit customers to pay for
equipment over time rather than at the date of installation. Our investment in these contracts is reflected in total
finance assets, net. We primarily fund our customer financing activity through cash generated from operations,
cash on hand, sales and securitizations of finance receivables and proceeds from capital markets offerings.
We have arrangements, in certain international countries where third-party leasing companies or financial
institutions independently provide lease financing directly to our customers, on a non-recourse basis to Xerox. In
these arrangements, we sell and transfer title of the equipment to these entities. Generally, we have no continuing
Xerox 2023 Annual Report 54
Table of Contents
ownership rights in the equipment subsequent to its sale; therefore, the unrelated third-party finance receivable
and debt are not included in our Consolidated Financial Statements.
The following represents our total finance assets, net associated with our lease and finance operations:
December 31,
2023
2022
$
$
2,510 $
265
2,775 $
3,102
235
3,337
(in millions)
Total finance receivables, net(1)
Equipment on operating leases, net
Total Finance assets, net (2)
____________
(1)
Includes (i) Billed portion of finance receivables, net, (ii) Finance receivables, net and (iii) Finance receivables due after one year, net as
included in our Consolidated Balance Sheets.
(2) The change from December 31, 2022 includes an increase of $55 million due to currency.
Our lease contracts permit customers to pay for equipment over time rather than at the date of installation;
therefore, we maintain a certain level of debt (that we refer to as financing debt) to support our investment in these
lease contracts, which are reflected in Total finance receivables, net. For this financing aspect of our business, we
maintain an assumed 7:1 leverage ratio of debt to equity as compared to our finance assets. Approximately 45% of
our Total Finance assets, net balance at December 31, 2023 includes indirect lease financing primarily provided to
end-user customers who purchased Xerox and non-Xerox equipment sold through distributors, resellers and
dealers.
Based on this leverage, the following represents the breakdown of total debt between financing debt and core debt:
(in millions)
Finance receivables debt(1)
Equipment on operating leases debt
Financing debt
Core debt
Total Debt
December 31,
2023
2022
$
2,196 $
232
2,428
849
$
3,277 $
2,714
206
2,920
806
3,726
_____________
(1) Finance receivables debt is the basis for our calculation of “Cost of financing” expense in the Consolidated Statements of Income (Loss).
At December 31, 2023, leverage was assessed against the total debt of Xerox Holdings Corporation and Xerox
Corporation since the debt held by Xerox Holdings Corporation is guaranteed by Xerox Corporation and the funds
from that borrowing were contributed in full by Xerox Holdings Corporation to Xerox Corporation. In 2024, we
expect to continue leveraging our finance assets on a total debt basis at an assumed 7:1 ratio of debt to equity.
Sale of Finance Receivables
In December 2022, the Company entered into a finance receivables funding agreement with an affiliate of HPS
Investment Partners (HPS) pursuant to which the Company agreed to offer for sale, and HPS agreed to purchase,
certain eligible pools of finance receivables on a monthly basis in transactions structured as "true sales at law" and
bankruptcy remote transfers. Accordingly, the receivables sold were derecognized from our financial statements
and HPS does not have recourse back to the Company for uncollectible receivables. During the second quarter
2023, the finance receivables funding agreement with HPS was amended to expand the pools of finance
receivables eligible for sale and to include the sale of the underlying leased equipment to HPS. The effect of these
transactions has accordingly reduced financing debt as funding for certain new finance receivable originations is
through the direct sale to HPS.
Refer to Note 8 - Finance Receivables, Net in the Consolidated Financial Statements for additional information
regarding our sales of finance receivables.
Third Party Leasing Programs
In the third quarter 2023, the Company entered into an agreement with PEAC Solutions (a subsidiary of HPS) that
named PEAC as the provider of certain leasing and financial services programs for Xerox and non-Xerox
equipment sold through our U.S. network of independent dealers and resellers. In the fourth quarter 2023, our
partnership with PEAC Solutions was further expanded to include the transition of some FITTLE U.S. employees in
risk, IT, and operations to PEAC Solutions. Upon completion of this transition, PEAC Solutions will become the
preferred financing partner, primary funder, and service provider for XBS leases in the U.S.
Xerox 2023 Annual Report 55
Xerox 2023 Annual Report 55
Table of Contents
Capital Market/Debt Activity
During 2023 we received net proceeds of $524 million from the Term Loan B Facility, and approximately $159
million from the refinancing of our Canadian and French secured financing arrangements. We paid $846 million on
existing secured financing arrangements, which includes the early repayment of $185 million on a U.S. secured
borrowing, and also repaid $300 million of Senior Notes that matured in 2023.
Refer to Note 15 - Debt in the Consolidated Financial Statements for additional information regarding our debt
activity, as well as our secured financing arrangements.
Financial Instruments
Refer to Note 16 - Financial Instruments in the Consolidated Financial Statements for additional information.
Share Repurchase Programs - Treasury Stock
On September 28, 2023, Xerox Holdings Corporation entered into a share purchase agreement with Carl C. Icahn
and certain of his affiliates pursuant to which the Company agreed to purchase an aggregate of approximately 34
million shares of the Company’s common stock for an aggregate purchase price of approximately $542 million,
exclusive of fees and expenses.
Refer to Note 22 - Shareholders' Equity in the Consolidated Financial Statements for additional information
regarding our share repurchases.
Dividends
Aggregate dividends of $146 million, $159 million, and $181 million were declared on common stock in 2023, 2022
and 2021, respectively. The decrease in dividends since 2021 primarily reflects lower shares of common stock
outstanding as a result of our share repurchase programs.
Aggregate dividends of $14 million were declared on preferred stock in 2023, 2022 and 2021, respectively.
Liquidity and Financial Flexibility
We manage our worldwide liquidity using internal cash management practices, which are subject to (i) the statutes,
regulations and practices of each of the local jurisdictions in which we operate, (ii) the legal requirements of the
agreements to which we are a party and (iii) the policies and cooperation of the financial institutions we utilize to
maintain and provide cash management services. Our principal debt maturities are in line with historical and
projected cash flows and are spread over the next five years as follows:
(in millions)
2024 - Q1
2024 - Q2
2024 - Q3
2024 - Q4
2025
2026
2027
2028
2029 and thereafter
Total
Xerox Holdings
Corporation
Xerox Corporation
Xerox - Other
Subsidiaries(1)
Total
$
— $
—
—
—
750
—
—
750
—
$
1,500 $
7 $
307
7
7
27
41
55
55
944
1,450 $
106 $
71
34
33
102
15
—
—
—
113
378
41
40
879
56
55
805
944
361 $
3,311
_____________
(1) Represents subsidiaries of Xerox Corporation.
Refer to Note 15 - Debt in the Consolidated Financial Statements for additional information regarding our debt.
Xerox 2023 Annual Report 56
Table of Contents
Pension and Retiree Health Benefit Plans
We sponsor defined benefit pension plans and retiree health plans that require periodic cash contributions. Our
2023 cash contributions for these plans were $81 million for our defined benefit pension plans and $21 million for
our retiree health plans.
In 2024, based on current actuarial calculations, we expect to make contributions of approximately $130 million to
our worldwide defined benefit pension plans and $20 million to our retiree health benefit plans. Approximately $80
million of estimated contributions for 2024 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. Contributions to our
defined benefit pension plans in subsequent years will depend on multiple factors, including the investment
performance of plan assets and discount rates as well as potential legislative and plan changes.
Although most of our major defined benefit plans have been amended to freeze current benefits and eliminate
benefit accruals for future service, several plans remain under-funded or unfunded by design. The projected benefit
obligations for these benefit plans at December 31, 2023 exceeded the fair value of the assets of those plans by
$1,190 million, which is an increase of $48 million from the balance at December 31, 2022, of $1,142 million. The
increase is largely due to decreased discount rates and the resultant increase in projected benefit obligations.
Cash contributions to our retiree health plans are made each year to cover medical premiums and claim costs
incurred during the year. Our retiree health benefit plans are unfunded and are primarily related to our U.S. and
Canada operations. The unfunded balance of our retiree health plans of $193 million at December 31, 2023
decreased by $16 million from the balance at December 31, 2022, primarily due to benefit payments partially offset
by decreased discount rates.
Refer to Note 18 - Employee Benefit Plans in the Consolidated Financial Statements for additional information
regarding contributions to our defined benefit pension and retiree health plans.
FUJIFILM Business Innovation Corp.
We purchased products, including parts and supplies, from FUJIFILM Business Innovation Corp. totaling $933
million, $1,175 million and $966 million in 2023, 2022 and 2021, respectively. Our product supply agreements with
FUJIFILM Business Innovation Corp. are designed to support the entire product lifecycle, end-to-end, including the
availability of spare parts, consumables and technical support throughout the time such products are with our
customers. Our purchase orders under such agreements are made in the normal course of business and typically
have a lead time of three months.
Shared Services Arrangements
In March 2019, Xerox entered into a shared services arrangement with HCL Technologies (HCL) pursuant to which
we transitioned certain global administrative and support functions, including, among others, selected information
technology and finance functions, from Xerox to HCL. The shared services arrangement with HCL includes a
remaining aggregate spending commitment of approximately $440 million over the next 3 years. However, we can
terminate the arrangement at any time at our discretion, subject to payment of termination fees that decline over
the term, or for cause.
In July 2021, Xerox entered into an arrangement with Tata Consulting Services (TCS), whereby TCS provides
business processing outsourcing services in support of our global finance and accounting organization. The shared
services arrangement with TCS includes a remaining aggregate spending commitment of approximately $144
million over the next 4 years. We can terminate the arrangement subject to payment of termination fees that
decline over the term.
We incurred net charges of $227 million, $220 million and $207 million for the three years ended December 31,
2023, 2022, and 2021, respectively, related to these shared services arrangements. The cost has been allocated to
the various functional expense lines in the Consolidated Statements of Income (Loss) based on an estimate of the
nature and amount of the costs incurred for the various transferred functions.
Other Contingencies and Commitments
Refer to Note 20 - Contingencies and Litigation in the Consolidated Financial Statements for additional information
regarding our other contingencies and commitments.
Xerox 2023 Annual Report 57
Xerox 2023 Annual Report 57
Table of Contents
Off-Balance Sheet Arrangements
We may occasionally utilize off-balance sheet arrangements in our operations (as defined by the SEC Financial
Reporting Release 67 (FRR-67), “Disclosure in Management’s Discussion and Analysis about Off-Balance Sheet
Arrangements and Aggregate Contractual Obligations”). We enter into the following arrangements that have off-
balance sheet elements:
• We have a facility in Europe where we sell certain accounts receivables on a recurring basis. Refer to Note 7
- Accounts Receivable, Net in the Consolidated Financial Statements for further information regarding
accounts receivable sales.
•
During 2022, the Company entered into a Master Agreement for the Sale and Assignment of Lease
Receivables that establishes a committed sale and purchase facility pursuant to which the Company agreed
to offer for sale certain eligible pools of finance receivables relating to equipment leases on a monthly basis
in transactions intended to be true sales. During 2023 and 2022, the Company sold approximately $1,100
million and $60 million, respectively, in principal balances of lease receivables under this agreement and will
continue to service those receivables for which we will earn a servicing fee. Refer to Note 8 - Finance
Receivables, Net in the Consolidated Financial Statements for further information regarding this
arrangement.
As of December 31, 2023, we do not believe we have any off-balance sheet arrangements that have, or are
reasonably likely to have, a material current or future effect on financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
In addition, refer to Note 20 - Contingencies and Litigation in the Consolidated Financial Statements for additional
information regarding contingencies, guarantees, indemnifications and warranty liabilities.
Xerox 2023 Annual Report 58
Table of Contents
Non-GAAP Financial Measures
We have reported our financial results in accordance with generally accepted accounting principles (GAAP). In
addition, we have discussed our financial results using the non-GAAP measures described below. We believe these
non-GAAP measures allow investors to better understand the trends in our business and to better understand and
compare our results. Management regularly uses our supplemental non-GAAP financial measures internally to
understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are
among the primary factors management uses in planning for and forecasting future periods. Compensation of our
executives is based in part on the performance of our business based on these non-GAAP measures. Accordingly,
we believe it is necessary to adjust several reported amounts, determined in accordance with GAAP, to exclude the
effects of certain items as well as their related income tax effects.
However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the
Company’s reported results prepared in accordance with GAAP. Our non-GAAP financial measures are not meant to
be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction
with our Consolidated Financial Statements prepared in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures
calculated and presented in accordance with GAAP are set forth below.
Adjusted Earnings Measures
•
•
Adjusted Net Income and Earnings per share ( Adjusted EPS)
Adjusted Effective Tax Rate
The above measures were adjusted for the following items:
Restructuring and related costs, net: Restructuring and related costs, net include restructuring and asset impairment
charges as well as costs associated with our transformation programs beyond those normally included in
restructuring and asset impairment charges. Restructuring consists of costs primarily related to severance and
benefits paid to employees pursuant to formal restructuring and workforce reduction plans. Asset impairment
includes costs incurred for those assets sold, abandoned or made obsolete as a result of our restructuring actions,
exiting from a business or other strategic business changes. Additional costs for our transformation programs are
primarily related to the implementation of strategic actions and initiatives and include third-party professional service
costs as well as one-time incremental costs. All of these costs can vary significantly in terms of amount and
frequency based on the nature of the actions as well as the changing needs of the business. Accordingly, due to that
significant variability, we will exclude these charges since we do not believe they provide meaningful insight into our
current or past operating performance, nor do we believe they are reflective of our expected future operating
expenses as such charges are expected to yield future benefits and savings with respect to our operational
performance.
Amortization of intangible assets: The amortization of intangible assets is driven by our acquisition activity which can
vary in size, nature and timing as compared to other companies within our industry and from period to period. The
use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our
future period revenues as well. Amortization of intangible assets will recur in future periods.
Non-service retirement-related costs: Our defined benefit pension and retiree health costs include several elements
impacted by changes in plan assets and obligations that are primarily driven by changes in the debt and equity
markets as well as those that are predominantly legacy in nature and related to employees who are no longer
providing current service to the Company (e.g. retirees and ex-employees). These elements include (i) interest cost,
(ii) expected return on plan assets, (iii) amortization of prior plan amendments, (iv) amortized actuarial gains/losses
and (v) the impacts of any plan settlements/curtailments. Accordingly, we consider these elements of our periodic
retirement plan costs to be outside the operational performance of the business or legacy costs and not necessarily
indicative of current or future cash flow requirements. This approach is consistent with the classification of these
costs as non-operating in Other expenses, net. Adjusted earnings will continue to include the service cost elements
of our retirement costs, which is related to current employee service as well as the cost of our defined contribution
plans.
Xerox 2023 Annual Report 59
Xerox 2023 Annual Report 59
Table of Contents
PARC donation
Discrete, unusual or infrequent items: We excluded the following items given their discrete, unusual or infrequent
nature and their impact on our results for the period:
•
• Goodwill impairment loss
•
•
Contract termination costs - product supply
Stock compensation expense associated with the accelerated vesting of all outstanding equity awards, according
to the terms of the award agreement, in connection with the passing of Xerox Holding's former CEO
Losses on early extinguishment of debt
Tax Indemnification - Conduent
•
•
Adjusted Operating Income and Margin
We calculate and utilize adjusted operating income and margin measures by adjusting our reported pre-tax loss and
margin amounts. In addition to the costs and expenses noted as adjustments for our adjusted earnings measures,
adjusted operating income and margin also exclude the remaining amounts included in Other expenses, net, which
are primarily non-financing interest expense and certain other non-operating costs and expenses. We exclude these
amounts in order to evaluate our current and past operating performance and to better understand the expected
future trends in our business.
Constant Currency (CC)
Refer to the Currency Impact section in the MD&A for a discussion of this measure and its use in our analysis of
revenue growth.
Adjusted Net Income and EPS Reconciliation
(in millions, except per share amounts)
Reported(1)
Adjustments:
PARC donation
Goodwill impairment
Restructuring and related costs, net
Amortization of intangible assets
Non-service retirement-related costs
Contract termination costs - product supply
Accelerated share vesting
Loss on early extinguishment of debt
Tax indemnification - Conduent
Income tax on PARC donation(2)
Income tax on adjustments(2)
Adjusted
Dividends on preferred stock used in adjusted EPS
calculation(3)
Weighted average shares for adjusted EPS(3)
Estimated fully diluted shares at December 31, 2023(4)
2023
Net Income
$
1 $
Year Ended December 31,
2022
2021
EPS
Net (Loss)
Income
EPS
Net (Loss)
Income
EPS
(0.09) $
(322) $
(2.15) $
(455) $
(2.56)
132
—
167
43
19
—
—
10
(7)
(40)
(38)
287 $
$
$
1.82 $
14
151
125
—
412
65
42
(12)
33
21
5
—
—
(55)
189 $
$
1.12 $
14
157
—
781
38
55
(89)
—
—
—
—
—
(37)
293 $
$
1.51
14
185
_____________
(1) Net Income (loss) and EPS.
(2) Refer to Adjusted Effective Tax Rate reconciliation.
(3) For those periods that include the preferred stock dividend, the average shares for the calculations of diluted EPS exclude 7 million shares
associated with our Series A Convertible preferred stock.
(4) Represents common shares outstanding at December 31, 2023, plus potential dilutive common shares used for the calculation of adjusted
diluted earnings per share for the year ended December 31, 2023. Excludes shares associated with our Series A convertible preferred stock,
which were anti-dilutive for the year ended December 31, 2023.
Xerox 2023 Annual Report 60
Table of Contents
Adjusted Effective Tax Rate Reconciliation
2023
2022
2021
Year Ended December 31,
Pre-Tax
(Loss)
Income
Income Tax
(Benefit)
Expense
Effective
Tax Rate
Pre-Tax
(Loss)
Income
Income Tax
(Benefit)
Expense
Effective
Tax Rate
Pre-Tax
(Loss)
Income
Income Tax
(Benefit)
Expense
Effective
Tax Rate
$
103.6 % $
(28) $
132
—
(in millions)
Reported(1)
PARC donation(2)
Goodwill impairment(2)
Non-GAAP Adjustments(2)
Adjusted(3)
_____________
(1) Pre-tax Loss and Income tax benefit.
(2) Refer to Adjusted Net Income and EPS reconciliation for details.
(3) The tax impact on Adjusted Pre-Tax Income is calculated under the same accounting principles applied to the Reported Pre-Tax (Loss) under
(325) $
—
412
(29)
40
—
21.6 % $
14.6 % $
0.9 % $
(472) $
336 $
241 $
313 $
3.6 %
6.4 %
(17)
781
154
232
(3)
17
31
20
38
52
49
38
4
$
6
ASC 740, which employs an annual effective tax rate method to the results.
Adjusted Operating Income and Margin Reconciliation
2023
Year Ended December 31,
2022
2021
(in millions)
Net Income (Loss)
Income tax benefit
Pre-tax (loss)
Adjustments:
Goodwill impairment
Restructuring and related costs, net
Amortization of intangible assets
PARC donation
Accelerated share vesting
Other expenses, net(1)
Adjusted
Profit
(Loss)
Revenue
1 $ 6,886
—
(29) $
(28) $ 6,886
$
$
Margin
(Loss)
Profit
$
(0.4) % $
Revenue
(322) $ 7,107
—
(325) $ 7,107
(3) $
Margin
(Loss)
Profit
$
(4.6) % $
Revenue
(455) $ 7,038
—
(472) $ 7,038
(17) $
Margin
(6.7) %
—
167
43
132
—
75
412
65
42
—
21
60
$
389 $ 6,886
5.6 % $
275 $ 7,107
3.9 % $
781
38
55
—
—
(27)
375 $ 7,038
5.3 %
0
_____________
(1)
Includes non-service retirement-related costs.
Xerox 2023 Annual Report 61
Xerox 2023 Annual Report 61
Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Risk Management
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. We utilized derivative financial instruments to hedge economic exposures, as well as reduce earnings
and cash flow volatility resulting from shifts in market rates.
Recent market events have not caused us to materially modify or change our financial risk management strategies
with respect to our exposures to interest rate and foreign currency risk. Refer to Note 16 - Financial Instruments in
the Consolidated Financial Statements for additional discussion on our financial risk management.
Foreign Exchange Risk Management
Assuming a 10% appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency
exchange rates at December 31, 2023, it would not significantly change the value of foreign currency-denominated
assets and liabilities as all material currency asset and liability exposures were economically hedged as of
December 31, 2023. A 10% appreciation or depreciation of the U.S. Dollar against all currencies from the quoted
foreign currency exchange rates at December 31, 2023 would have an impact on our cumulative translation
adjustment portion of equity of approximately $320 million. The net amount invested in foreign subsidiaries and
affiliates, primarily Xerox Limited and Xerox Canada Inc. and translated into U.S. Dollars using the year-end
exchange rates, was approximately $3.2 billion at December 31, 2023.
Interest Rate Risk Management
The consolidated average interest rate associated with our total debt for 2023, 2022 and 2021 approximated 6.0%,
5.3%, and 4.8%, respectively. Interest expense includes the impact of our interest rate derivatives.
Nearly all of our customer-financing assets earn fixed rates of interest. The interest rates on a significant portion of
the Company's term debt are fixed.
As of December 31, 2023, of our total principal debt of $3,311 million, a total of $911 million of secured borrowings
carried variable interest rates, of which $729 million has a variable interest rate based on SOFR/CDOR plus a
spread and the remaining $182 million has a variable interest rate based on the financial institution's cost of funds
plus a spread.
The fair market values of our fixed-rate financial instruments are sensitive to changes in interest rates. At
December 31, 2023, a 10% increase in market interest rates would reduce the fair values of such financial
instruments by approximately $63 million.
As of December 31, 2023, we had $911 million of secured borrowings with a variable rate and $463 million of
variable to fixed rate interest rate caps and swaps. As of December 31, 2023, $290 million of the $463 million of
derivatives were designated as cash flow hedges. A 10% change in the yield curve, representing 20 - 30 basis
points, will increase the derivative mark-to-market by approximately $1 million.
Refer to Note 15 - Debt in the Consolidated Financial Statements for additional information regarding our interest
expense and our secured borrowings and Note 16 - Financial Instruments in the Consolidated Financial Statements
for additional information regarding our interest rate caps and swaps.
Item 8. Financial Statements and Supplementary Data
Xerox 2023 Annual Report 62
Table of Contents
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, 2023 and 2022, and the related consolidated statements of income (loss), of
comprehensive loss, of shareholders' equity and of cash flows for each of the three years in the period ended
December 31, 2023, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2023 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, 2023, 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.
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
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.
Xerox 2023 Annual Report 63
Xerox 2023 Annual Report 63
Table of Contents
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.
Realizability of Deferred Tax Assets - U.S. Foreign Tax Credit Carryforwards
As described in Note 19 to the consolidated financial statements, the Company has recorded $892 million of
deferred tax assets, net of a valuation allowance of $375 million, as of December 31, 2023, which includes U.S.
foreign tax credit carryforwards with a limited life. Management records the estimated future tax effects of temporary
differences between the tax bases of assets and 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.
Management applied judgment in assessing the realizability of these deferred tax assets and the need for any
valuation allowances, in particular the realizability of U.S. foreign tax credit carryforwards with a limited life. In
determining the amount of deferred tax assets that are more-likely-than-not to be realized, management considered
historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary
differences and tax planning strategies.
The principal considerations for our determination that performing procedures relating to the realizability of deferred
tax assets related to the U.S. foreign tax credit carryforwards is a critical audit matter are (i) the significant judgment
by management in assessing the realizability of deferred tax assets related to the Company’s U.S. foreign tax credit
carryforwards with a limited life; (ii) a high degree of auditor judgment, subjectivity, and effort in performing
procedures and in evaluating management’s significant assumptions related to projected future taxable income; (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 realizability of deferred tax assets, including controls over projected future taxable income.
These procedures also included, among others, evaluating management’s assessment of the realizability of
deferred tax assets related to the Company’s U.S. foreign tax credit carryforwards with a limited life, including
evaluating the reasonableness of the assumptions related to projected future taxable income. Evaluating
management’s assumptions related to projected future taxable income involved evaluating whether the assumptions
were reasonable by considering historical profitability as well as other audit evidence related to management’s
forecasts. Professionals with specialized skill and knowledge were used to assist in the evaluation of management’s
application of income tax law in determining projected future taxable income and the assessment of the realizability
of deferred tax assets related to the Company’s U.S. foreign tax credit carryforwards with a limited life.
/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
February 23, 2024
We have served as the Company’s or its predecessor's auditor since 2001.
Xerox 2023 Annual Report 64
Table of Contents
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, 2023 and 2022, and the related consolidated statements of income (loss), of
comprehensive loss, of shareholder’s equity and of cash flows for each of the three years in the period ended
December 31, 2023, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2023 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, 2023, 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.
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
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.
Xerox 2023 Annual Report 65
Xerox 2023 Annual Report 65
Table of Contents
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.
Realizability of Deferred Tax Assets - U.S. Foreign Tax Credit Carryforwards
As described in Note 19 to the consolidated financial statements, the Company has recorded $892 million of
deferred tax assets, net of a valuation allowance of $375 million, as of December 31, 2023, which includes U.S.
foreign tax credit carryforwards with a limited life. Management records the estimated future tax effects of
temporary differences between the tax bases of assets and 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. Management applied judgment in assessing the realizability of these deferred tax assets and the
need for any valuation allowances, in particular the realizability of U.S. foreign tax credit carryforwards with a
limited life. In determining the amount of deferred tax assets that are more-likely-than-not to be realized,
management considered historical profitability, projected future taxable income, the expected timing of the
reversals of existing temporary differences and tax planning strategies.
The principal considerations for our determination that performing procedures relating to the realizability of
deferred tax assets related to the U.S. foreign tax credit carryforwards is a critical audit matter are (i) the significant
judgment by management in assessing the realizability of deferred tax assets related to the Company’s U.S.
foreign tax credit carryforwards with a limited life; (ii) a high degree of auditor judgment, subjectivity, and effort in
performing procedures and in evaluating management’s significant assumptions related to projected future taxable
income; (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 realizability of deferred tax assets, including controls over projected future taxable
income. These procedures also included, among others, evaluating management’s assessment of the realizability
of deferred tax assets related to the Company’s U.S. foreign tax credit carryforwards with a limited life, including
evaluating the reasonableness of the assumptions related to projected future taxable income. Evaluating
management’s assumptions related to projected future taxable income involved evaluating whether the
assumptions were reasonable by considering historical profitability as well as other audit evidence related to
management’s forecasts. Professionals with specialized skill and knowledge were used to assist in the evaluation
of management’s application of income tax law in determining projected future taxable income and the assessment
of the realizability of deferred tax assets related to the Company’s U.S. foreign tax credit carryforwards with a
limited life.
/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
February 23, 2024
We have served as the Company’s auditor since 2001.
Xerox 2023 Annual Report 66
Table of Contents
Xerox Holdings Corporation
Reports of Management
Management's Responsibility for Financial Statements
The management of Xerox Holdings Corporation is responsible for the integrity and objectivity of all information
presented in this annual report. The Consolidated Financial Statements were prepared in conformity with
accounting principles generally accepted in the United States of America and include amounts based on
management's best estimates and judgments. Management believes the Consolidated Financial Statements fairly
reflect the form and substance of transactions and that the financial statements fairly represent Xerox Holdings
Corporation's financial position and results of operations.
The Audit Committee of the Xerox Holdings Corporation Board of Directors, which is composed solely of
independent directors, meets regularly with the independent auditors, PricewaterhouseCoopers LLP, the internal
auditors and representatives of management to review accounting, financial reporting, internal control and audit
matters, as well as the nature and extent of the audit effort. The Audit Committee is responsible for the engagement
of the independent auditors. The independent auditors and internal auditors have free access to the Audit
Committee.
Management's Report on Internal Control Over Financial Reporting
The management of Xerox Holdings Corporation is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in the rules promulgated under the Securities Exchange Act
of 1934. Under the supervision and with the participation of our management, including our principal executive,
financial and accounting officers, we have conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in “Internal Control - Integrated Framework (2013)” issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on the above evaluation, management has concluded that our internal control over financial reporting was
effective as of December 31, 2023. The effectiveness of our internal control over financial reporting as of
December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report, which is included herein.
/s/ STEVEN J. BANDROWCZAK
Chief Executive Officer
/s/ XAVIER HEISS
Chief Financial Officer
/s/ MIRLANDA GECAJ
Chief Accounting Officer
Xerox 2023 Annual Report 67
Xerox 2023 Annual Report 67
Table of Contents
Xerox Corporation
Reports of Management
Management's Responsibility for Financial Statements
The management of Xerox Corporation is responsible for the integrity and objectivity of all information presented in
this annual report. The Consolidated Financial Statements were prepared in conformity with accounting principles
generally accepted in the United States of America and include amounts based on management's best estimates
and judgments. Management believes the Consolidated Financial Statements fairly reflect the form and substance
of transactions and that the financial statements fairly represent Xerox Corporation's financial position and results of
operations.
The Audit Committee of the Xerox Holdings Corporation Board of Directors, which is composed solely of
independent directors, meets regularly with the independent auditors, PricewaterhouseCoopers LLP, the internal
auditors and representatives of management to review accounting, financial reporting, internal control and audit
matters, as well as the nature and extent of the audit effort. The Audit Committee is responsible for the engagement
of the independent auditors. The independent auditors and internal auditors have free access to the Audit
Committee.
Management's Report on Internal Control Over Financial Reporting
The management of Xerox Corporation is responsible for establishing and maintaining adequate internal control
over financial reporting, as such term is defined in the rules promulgated under the Securities Exchange Act of
1934. Under the supervision and with the participation of our management, including our principal executive,
financial and accounting officers, we have conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in “Internal Control - Integrated Framework (2013)” issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on the above evaluation, management has concluded that our internal control over financial reporting was
effective as of December 31, 2023. The effectiveness of our internal control over financial reporting as of
December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report, which is included herein.
/s/ STEVEN J. BANDROWCZAK
Chief Executive Officer
/s/ XAVIER HEISS
Chief Financial Officer
/s/ MIRLANDA GECAJ
Chief Accounting Officer
Xerox 2023 Annual Report 68
Table of Contents
Xerox Holdings Corporation
Consolidated Statements of Income (Loss)
(in millions, except per-share data)
Revenues
Sales
Services, maintenance and rentals
Financing
Total Revenues
Costs and Expenses
Cost of sales
Cost of services, maintenance and rentals
Cost of financing
Research, development and engineering expenses
Selling, administrative and general expenses
Goodwill impairment
Restructuring and related costs, net
Amortization of intangible assets
PARC donation
Other expenses, net
Total Costs and Expenses
Loss before Income Taxes
Income tax benefit
Net Income (Loss)
Less: Preferred stock dividends, net
Year Ended December 31,
2023
2022
2021
$
2,720 $
2,800 $
3,975
191
6,886
1,778
2,664
130
229
1,696
—
167
43
132
75
6,914
(28)
(29)
1
(14)
4,100
207
7,107
2,002
2,679
108
304
1,760
412
65
42
—
60
7,432
(325)
(3)
(322)
(14)
Net Loss Attributable to Common Shareholders
Basic Loss per Share
Diluted Loss per Share
$
$
$
(13) $
(336) $
(0.09) $
(0.09) $
(2.15) $
(2.15) $
2,582
4,235
221
7,038
1,862
2,662
111
310
1,718
781
38
55
—
(27)
7,510
(472)
(17)
(455)
(14)
(469)
(2.56)
(2.56)
The accompanying notes are an integral part of these Consolidated Financial Statements.
Xerox 2023 Annual Report 69
Xerox 2023 Annual Report 69
Table of Contents
Xerox Holdings Corporation
Consolidated Statements of Comprehensive Loss
(in millions)
Net Income (Loss)
Other Comprehensive Income (Loss), Net(1)
Translation adjustments, net
Unrealized gains (losses), net
Changes in defined benefit plans, net
Other Comprehensive (Loss) Income, Net
Comprehensive Loss, Net
_____________
Year Ended December 31,
2023
2022
2021
$
1 $
(322) $
(455)
191
1
(331)
(139)
(376)
(2)
(171)
(549)
(141)
(4)
489
344
$
(138) $
(871) $
(111)
(1) Refer to Note 24 - Other Comprehensive (Loss) Income for gross components of Other Comprehensive (Loss) Income, 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 2023 Annual Report 70
Table of Contents
Xerox Holdings Corporation
Consolidated Balance Sheets
(in millions, except share data in thousands)
Assets
Cash and cash equivalents
Accounts receivable (net of allowance of $64 and $52, respectively)
Billed portion of finance receivables (net of allowance of $4 and $4, respectively)
Finance receivables, net
Inventories
Other current assets
Total current assets
Finance receivables due after one year (net of allowance of $88 and $113, respectively)
Equipment on operating leases, net
Land, buildings and equipment, net
Intangible assets, net
Goodwill, net
Deferred tax assets
Other long-term assets
Total Assets
Liabilities and Equity
Short-term debt and current portion of long-term debt
Accounts payable
Accrued compensation and benefits costs
Accrued expenses and other current liabilities
Total current liabilities
Long-term debt
Pension and other benefit liabilities
Post-retirement medical benefits
Other long-term liabilities
Total Liabilities
Commitments and Contingencies (See Note 20)
Noncontrolling Interests (See Note 6)
Convertible Preferred Stock
Common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Xerox Holdings shareholders’ equity
Noncontrolling interests
Total Equity
Total Liabilities and Equity
December 31,
2023
2022
$
519 $
850
71
842
661
234
3,177
1,597
265
266
177
2,747
745
1,034
$
$
10,008 $
567 $
1,044
306
862
2,779
2,710
1,216
171
360
7,236
10
214
123
1,114
4,977
(3,676)
2,538
10
2,548
$
10,008 $
1,045
857
93
1,061
797
254
4,107
1,948
235
320
208
2,820
582
1,323
11,543
860
1,331
258
881
3,330
2,866
1,175
184
411
7,966
10
214
156
1,588
5,136
(3,537)
3,343
10
3,353
11,543
Shares of Common Stock Issued and Outstanding
123,144
155,781
The accompanying notes are an integral part of these Consolidated Financial Statements.
Xerox 2023 Annual Report 71
Xerox 2023 Annual Report 71
Table of Contents
Xerox Holdings Corporation
Consolidated Statements of Cash Flows
(in millions)
Cash Flows from Operating Activities
Net Income (Loss)
Adjustments required to reconcile Net income (loss) to Cash flows
provided by operating activities
Depreciation and amortization
Provisions
Deferred tax benefit
Net gain on sales of businesses and assets
PARC donation
Stock-based compensation
Goodwill impairment
Restructuring and asset impairment charges
Payments for restructurings
Non-service retirement-related costs
Contributions to retirement plans
(Increase) decrease in accounts receivable and billed portion of finance
receivables
Decrease (increase) in inventories
Increase in equipment on operating leases
Decrease (increase) in finance receivables
Decrease in other current and long-term assets
(Decrease) increase in accounts payable
Increase in accrued compensation
(Decrease) increase in other current and long-term liabilities
Net change in income tax assets and liabilities
Net change in derivative assets and liabilities
Other operating, net
Net cash provided by operating activities
Cash Flows from Investing Activities
Cost of additions to land, buildings, equipment and software
Proceeds from sales of businesses and assets
Acquisitions, net of cash acquired
Other investing, net
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt
Payments on long-term debt
Dividends
Payments to acquire treasury stock, including fees
Other financing, net
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Year Ended December 31,
2023
2022
2021
$
1 $
(322) $
(455)
251
54
(68)
(39)
132
54
—
146
(27)
19
(102)
(5)
123
(141)
614
16
(290)
48
(114)
(12)
13
13
686
(37)
43
(7)
(4)
(5)
1,396
(1,874)
(165)
(544)
(15)
(1,202)
(1)
(522)
1,139
270
65
(27)
(56)
—
75
412
62
(52)
(12)
(124)
(48)
(143)
(112)
(141)
27
278
34
9
(27)
(22)
13
159
(57)
87
(93)
(15)
(78)
1,194
(1,723)
(174)
(113)
(6)
(822)
(29)
(770)
1,909
1,139 $
327
46
(89)
(40)
—
54
781
27
(72)
(89)
(160)
41
88
(129)
20
68
118
9
89
10
2
(17)
629
(68)
44
(53)
(8)
(85)
311
(519)
(206)
(888)
(8)
(1,310)
(16)
(782)
2,691
1,909
Cash, Cash Equivalents and Restricted Cash at End of Year
$
617 $
The accompanying notes are an integral part of these Consolidated Financial Statements.
Xerox 2023 Annual Report 72
Table of Contents
Xerox Holdings Corporation
Consolidated Statements of Shareholders' Equity
Additional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
AOCL(2)
Xerox
Holdings
Shareholders’
Equity
Non-
controlling
Interests
Total
Equity
198 $
2,445 $
— $ 6,281 $ (3,332) $
5,592 $
4 $ 5,596
Common
Stock(1)
$
(in millions)
Balance at December 31, 2020
Comprehensive (loss) income, net
Cash dividends declared-common(3)
Cash dividends declared-preferred(4)
Stock option and incentive plans, net
Common stock repurchased
—
—
—
2
—
—
—
—
35
—
Cancellation of treasury stock
(32)
(679)
Transactions with noncontrolling
interests
Distributions to noncontrolling interests
—
—
1
—
—
—
—
—
(888)
711
—
—
(455)
(181)
(14)
—
—
—
—
—
344
—
—
—
—
—
—
—
(111)
(181)
(14)
37
(888)
—
1
—
—
—
—
—
—
—
4
(1)
(111)
(181)
(14)
37
(888)
—
5
(1)
Balance at December 31, 2021
$
168 $
1,802 $
(177) $ 5,631 $ (2,988) $
4,436 $
7 $ 4,443
Comprehensive loss, net
Cash dividends declared-common(3)
Cash dividends declared-preferred(4)
Stock option and incentive plans, net
Common stock repurchased
Cancellation of treasury stock
Transactions with noncontrolling
interests
Distributions to noncontrolling interests
Balance at December 31, 2022
Comprehensive income (loss), net
Cash dividends declared-common(3)
Cash dividends declared-preferred(4)
Stock option and incentive plans, net
Common stock repurchased
—
—
—
2
—
(14)
—
—
—
—
—
62
—
—
—
—
—
(276)
(113)
290
—
—
—
—
(322)
(159)
(14)
—
—
—
—
—
(549)
—
—
—
—
—
—
—
(871)
(159)
(14)
64
(113)
—
—
—
—
—
—
—
—
—
4
(1)
(871)
(159)
(14)
64
(113)
—
4
(1)
1,588 $
—
—
— $ 5,136 $ (3,537) $
1
—
(146)
—
(139)
—
3,343 $
(138)
(146)
10 $ 3,353
(138)
—
(146)
—
—
—
(553)
553
(14)
—
—
—
—
—
—
—
—
—
— $ 4,977 $ (3,676) $
—
—
—
—
(14)
46
(553)
—
—
—
—
—
(14)
46
(553)
—
—
—
2,538 $
2
2
(2)
(2)
10 $ 2,548
$
156 $
—
—
—
1
—
—
45
—
Cancellation of treasury stock
(34)
(519)
Transactions with noncontrolling
interests
Distributions to noncontrolling interests
—
—
Balance at December 31, 2023
$
123 $
—
—
1,114 $
_____________
(1) Common Stock has a par value of $1 per share.
(2) AOCL - Accumulated other comprehensive loss.
(3) Cash dividends declared on common stock for 2023, 2022 and 2021 were $0.25 per share on a quarterly basis and $1.00 per share on an
annual basis, respectively.
(4) Cash dividends declared on preferred stock for 2023, 2022 and 2021 were $20 per share on a quarterly basis and $80 per share on an
annual basis, respectively.
The accompanying notes are an integral part of these Consolidated Financial Statements.
Xerox 2023 Annual Report 73
Xerox 2023 Annual Report 73
Table of Contents
Xerox Corporation
Consolidated Statements of Income (Loss)
(in millions)
Revenues
Sales
Services, maintenance and rentals
Financing
Total Revenues
Costs and Expenses
Cost of sales
Cost of services, maintenance and rentals
Cost of financing
Research, development and engineering expenses
Selling, administrative and general expenses
Goodwill impairment
Restructuring and related costs, net
Amortization of intangible assets
PARC donation
Other expenses, net
Total Costs and Expenses
Loss before Income Taxes
Income tax benefit
Net Income (Loss)
Year Ended December 31,
2023
2022
2021
$
2,720 $
2,800 $
3,975
191
6,886
1,778
2,664
130
229
1,696
—
167
43
132
75
6,914
(28)
(29)
4,100
207
7,107
2,002
2,679
108
304
1,760
412
65
42
—
60
7,432
(325)
(3)
$
1 $
(322) $
2,582
4,235
221
7,038
1,862
2,662
111
310
1,718
781
38
55
—
(27)
7,510
(472)
(17)
(455)
The accompanying notes are an integral part of these Consolidated Financial Statements.
Xerox 2023 Annual Report 74
Table of Contents
Xerox Corporation
Consolidated Statements of Comprehensive Loss
(in millions)
Net Income (Loss)
Other Comprehensive Income (Loss), Net(1)
Translation adjustments, net
Unrealized gains (losses), net
Changes in defined benefit plans, net
Other Comprehensive (Loss) Income, Net
Comprehensive Loss, Net
_____________
Year Ended December 31,
2023
2022
2021
$
1 $
(322) $
(455)
191
1
(331)
(139)
(376)
(2)
(171)
(549)
(141)
(4)
489
344
$
(138) $
(871) $
(111)
(1) Refer to Note 24 - Other Comprehensive (Loss) Income for gross components of Other Comprehensive (Loss) Income, 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 2023 Annual Report 75
Xerox 2023 Annual Report 75
Table of Contents
Xerox Corporation
Consolidated Balance Sheets
(in millions)
Assets
Cash and cash equivalents
Accounts receivable (net of allowance of $64 and $52, respectively)
Billed portion of finance receivables (net of allowance of $4 and $4, respectively)
Finance receivables, net
Inventories
Other current assets
Total current assets
Finance receivables due after one year (net of allowance of $88 and $113, respectively)
Equipment on operating leases, net
Land, buildings and equipment, net
Intangible assets, net
Goodwill, net
Deferred tax assets
Other long-term assets
Total Assets
Liabilities and Equity
Short-term debt and current portion of long-term debt
Accounts payable
Accrued compensation and benefits costs
Accrued expenses and other current liabilities
Total current liabilities
Long-term debt
Related party debt
Pension and other benefit liabilities
Post-retirement medical benefits
Other long-term liabilities
Total Liabilities
Commitments and Contingencies (See Note 20)
Noncontrolling Interests (See Note 6)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Xerox shareholder's equity
Noncontrolling interests
Total Equity
Total Liabilities and Equity
December 31,
2023
2022
$
519 $
850
71
842
661
234
3,177
1,597
265
266
177
2,747
745
1,008
9,982 $
567 $
1,044
306
820
2,737
1,213
1,497
1,216
171
360
7,194
$
$
1,045
857
93
1,061
797
254
4,107
1,948
235
320
208
2,820
582
1,302
11,522
860
1,331
258
834
3,283
1,370
1,496
1,175
184
411
7,919
10
10
3,485
2,959
(3,676)
2,768
10
2,778
$
9,982 $
3,693
3,427
(3,537)
3,583
10
3,593
11,522
The accompanying notes are an integral part of these Consolidated Financial Statements.
Xerox 2023 Annual Report 76
Table of Contents
Xerox Corporation
Consolidated Statements of Cash Flows
(in millions)
Cash Flows from Operating Activities
Net Income (Loss)
Adjustments required to reconcile Net income (loss) to Cash flows
provided by operating activities
Depreciation and amortization
Provisions
Deferred tax benefit
Net gain on sales of businesses and assets
PARC donation
Stock-based compensation
Goodwill impairment
Restructuring and asset impairment charges
Payments for restructurings
Non-service retirement-related costs
Contributions to retirement plans
(Increase) decrease in accounts receivable and billed portion of finance
receivables
Decrease (increase) in inventories
Increase in equipment on operating leases
Decrease (increase) in finance receivables
Decrease in other current and long-term assets
(Decrease) increase in accounts payable
Increase in accrued compensation
(Decrease) increase in other current and long-term liabilities
Net change in income tax assets and liabilities
Net change in derivative assets and liabilities
Other operating, net
Net cash provided by operating activities
Cash Flows from Investing Activities
Cost of additions to land, buildings, equipment and software
Proceeds from sales of businesses and assets
Acquisitions, net of cash acquired
Other investing, net
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt
Payments on long-term debt
Distributions to parent
Other financing, net
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Year Ended December 31,
2023
2022
2021
$
1 $
(322) $
(455)
251
54
(68)
(39)
132
54
—
146
(27)
19
(102)
(5)
123
(141)
614
16
(290)
48
(114)
(12)
13
13
686
(37)
43
(7)
1
—
1,396
(1,874)
(722)
(7)
(1,207)
(1)
(522)
1,139
270
65
(27)
(56)
—
75
412
62
(52)
(12)
(124)
(48)
(143)
(112)
(141)
27
278
34
9
(27)
(22)
13
159
(57)
87
(93)
(2)
(65)
1,194
(1,723)
(312)
6
(835)
(29)
(770)
1,909
327
46
(89)
(40)
—
54
781
27
(72)
(89)
(160)
41
88
(129)
20
68
118
9
89
10
2
(17)
629
(68)
44
(53)
—
(77)
311
(519)
(1,120)
10
(1,318)
(16)
(782)
2,691
1,909
Cash, Cash Equivalents and Restricted Cash at End of Year
$
617 $
1,139 $
The accompanying notes are an integral part of these Consolidated Financial Statements.
Xerox 2023 Annual Report 77
Xerox 2023 Annual Report 77
Table of Contents
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, 2020
$
4,888 $
5,834 $
(3,332) $
7,390 $
4 $
7,394
Comprehensive (loss) income, net
Dividends declared to parent
Intercompany loan capitalization(2)
Transfers to parent
Transactions with noncontrolling interests
Distributions to noncontrolling interests
—
—
(1,494)
(193)
1
—
(455)
(903)
—
—
—
—
344
—
—
—
—
—
(111)
(903)
(1,494)
(193)
1
—
—
—
—
—
4
(1)
(111)
(903)
(1,494)
(193)
5
(1)
Balance at December 31, 2021
$
3,202 $
4,476 $
(2,988) $
4,690 $
7 $
4,697
Comprehensive loss, net
Dividends declared to parent
Transfers from parent
Transactions with noncontrolling interests
Distributions to noncontrolling interests
—
—
491
—
—
(322)
(727)
—
—
—
(549)
—
—
—
—
(871)
(727)
491
—
—
—
—
—
4
(1)
(871)
(727)
491
4
(1)
Balance at December 31, 2022
$
3,693 $
3,427 $
(3,537) $
3,583 $
10 $
3,593
Comprehensive income (loss), net
Dividends declared to parent
Transfers to parent
Transactions with noncontrolling interests
Distributions to noncontrolling interests
—
—
(208)
—
—
1
(469)
—
—
—
(139)
—
—
—
—
(138)
(469)
(208)
—
—
—
—
—
2
(2)
(138)
(469)
(208)
2
(2)
Balance at December 31, 2023
$
3,485 $
2,959 $
(3,676) $
2,768 $
10 $
2,778
_____________
(1) AOCL - Accumulated other comprehensive loss.
(2) Refer to Note 15 - Debt for information regarding capitalization of balance to Intercompany Loan with Xerox Holdings Corporation.
The accompanying notes are an integral part of these Consolidated Financial Statements.
Xerox 2023 Annual Report 78
Table of Contents
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. 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).
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 global enterprise for workplace technology that integrates hardware, services
and software for large to small enterprises. As customers seek to manage information and document workflows
across digital and physical platforms, we deliver secure and sustainable document management solutions. We
provide advanced document technology, services, software 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, Central and South America, Brazil, Europe, Eurasia, the
Middle East, Africa and India.
Xerox Holdings' other direct subsidiary, Xerox Ventures LLC, was established in 2021 solely to invest in startups
and early/mid-stage growth companies aligned with the Company’s innovation focus areas and targeted
adjacencies. The investments are normally 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. Xerox Ventures LLC had investments of approximately $26 and $21 at
December 31, 2023 and 2022, respectively. In January 2024, Myriad Ventures Fund I LP was established, and
Xerox Ventures LLC investments were transferred to this new entity, which will continue to be fully consolidated by
Xerox Holdings.
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 Income (Loss) 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 Income (Loss) from the date such determination is made.
For convenience and ease of reference, we refer to the financial statement caption “Loss before Income Taxes” as
“pre-tax loss” throughout the Notes to the Consolidated Financial Statements.
Certain reclassifications have been made to the amounts for prior years in order to conform to the current year’s
presentation.
Xerox 2023 Annual Report 79
Xerox 2023 Annual Report 79
Table of Contents
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.
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:
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of
Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying
U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London
Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued. In January 2021, the
FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), Scope, which provided clarification to ASU
2020-04. These ASUs were effective commencing with our quarter ended March 31, 2020 through December 31,
2022. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848), Deferral of the
Sunset Date of Topic 848, which defers the sunset date of Topic 848 from December 31, 2022, to December 31,
2024, after which entities will no longer be permitted to apply the relief in Topic 848.
There has been no material impact to date as a result of adopting these ASUs on reference rate reform. However,
we continue to evaluate potential future impacts that may result from the discontinuation of LIBOR or other
reference rates as well as the accounting provided in this update on our financial condition, results of operations,
and cash flows.
Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through
enhanced disclosures about significant expenses. The update will require public entities to disclose significant
segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within
segment profit and loss. The amendments are effective for the Company's annual periods beginning January 1,
2024, and interim periods beginning January 1, 2025, with early adoption permitted, and will be applied
retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact of
the adoption of this standard to determine its impact on the Company's disclosures.
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, with early adoption
Xerox 2023 Annual Report 80
Table of Contents
permitted, and should be applied either prospectively or retrospectively. We are currently evaluating the impact of
the adoption of this standard to determine its impact on the Company's disclosures.
Accounting Standard Updates Recently Adopted:
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 rollforward of those obligations. The
guidance does not affect the recognition, measurement or financial statement presentation of supplier finance
program obligations. The new standard’s requirements to disclose the key terms of the programs and information
about obligations outstanding was effective for our fiscal year beginning on January 1, 2023. The new standard’s
requirement to disclose a rollforward of obligations outstanding will be effective for our fiscal year beginning on
January 1, 2024. Refer to Note 14 - Supplementary Financial Information for the required disclosures effective
January 1, 2023.
Financial Instruments
In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326), Troubled Debt
Restructurings and Vintage Disclosures - Gross Write-offs. The amendments in this update eliminate the accounting
guidance for Troubled Debt Restructurings (TDRs) by creditors while enhancing disclosure requirements for certain
loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty. The
amendments also require disclosure of current-period gross write-offs by year of origination for financing
receivables. The disclosure of current-period gross write-offs by year of origination is applicable for financing
receivables and net investments in leases that are within the scope of ASC 326-20, Financial Instruments - Credit
Losses - Measured at Amortized Cost. This update was effective for our fiscal year beginning on January 1, 2023.
The provisions of this amendment are to be applied on a prospective basis. Refer to Note 8 - Finance Receivables,
Net for required disclosures regarding gross write-offs by vintage year.
Government Assistance
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business
Entities about Government Assistance. The update increases the transparency surrounding government assistance
by requiring disclosure of 1) the types of assistance received, 2) an entity’s accounting for the assistance, and 3) the
effect of the assistance on the entity’s financial statements. We adopted this update effective for our fiscal year
beginning January 1, 2022. The impact of adoption was not material to our Consolidated Financial Statements.
Impacts on future periods will depend on the amounts of government assistance received. Prior to the COVID-19
pandemic, the amounts of government assistance the Company received were not material and since the update is
limited to increased disclosures, we do not expect the adoption to have a material impact on our financial condition,
results of operations, and cash flows in future periods.
Business Combinations
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract
Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and
contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the
acquisition date in accordance with ASC Topic 606, Revenue from Contracts with Customers, as if the acquirer had
originated the contracts. This approach differs from the current requirement to measure contract assets and contract
liabilities acquired in a business combination at fair value. We early adopted this update effective for our fiscal year
beginning January 1, 2022. The adoption of this update did not have a material impact on the Company’s
consolidated financial statements and related disclosures. The impact of adopting the new standard will depend on
the magnitude of future acquisitions. The standard did not impact contract assets or liabilities acquired in business
combinations that occurred prior to the adoption date.
Debt
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40). This update simplified the
accounting for convertible instruments by reducing the number of accounting models available for convertible debt
instruments and convertible preferred stock. This update also amended the guidance for the derivatives scope
exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and
required the application of the if-converted method for calculating diluted earnings per share. We adopted this
Xerox 2023 Annual Report 81
Xerox 2023 Annual Report 81
Table of Contents
update effective for our fiscal year beginning January 1, 2022. The adoption of this update did not have a material
impact on the Company’s consolidated financial statements and related disclosures.
Income Taxes
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes, which was intended to simplify various aspects related to accounting for income taxes. ASU 2019-12
removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to
improve consistent application. We adopted this update effective for our fiscal year beginning January 1, 2021. The
adoption did not have a material impact on our results of operations, financial position, cash flows or disclosures.
Other Updates
In 2023 and 2022 the FASB also issued the following ASUs, which could impact the Company in the future but
currently did not have, nor are expected to have, a material impact on our financial condition, results of operations,
cash flows or related disclosures upon adoption. Those updates are as follows:
•
Disclosure Improvements: ASU 2023-06, Codification Amendments in Response to the SEC’s Disclosure
Update and Simplification Initiative. Since the Company is already subject to SEC disclosure requirements, this
update was effective upon issuance.
Business Combinations: ASU 2023-05, Business Combinations - Joint Venture Formation (Topic 805-60):
Recognition and Initial Measurement. This update is effective for our fiscal year beginning January 1, 2025.
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.
Fair Value Measurement: ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of
Equity Securities Subject to Contractual Sale Restrictions. This update is effective for our fiscal year beginning
January 1, 2024.
Derivatives and Hedging: ASU 2022-01, Derivatives and Hedging (Topic 815), Fair Value Hedging - Portfolio
Layer Method. This update was effective for our fiscal year beginning January 1, 2023.
•
•
•
•
•
•
Summary of Accounting Policies
Revenue Recognition
We generate revenue through the sale of equipment and supplies and by providing maintenance and printing
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, 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 for the substantial portion of
our revenue, the disclosure of the value of unsatisfied performance obligations for our services is not required.
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: Revenues from the sale of equipment 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 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.
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
Xerox 2023 Annual Report 82
Table of Contents
considered substantive. These agreements are normally sold as part of a bundled lease arrangement or through
distributors and resellers. 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. 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 warranty obligations, including any obligations under customer
satisfaction programs.
Service offerings: The Company’s primary service offerings include Managed Print Services, Digital Services and
IT Services. 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
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 typically measured on an output basis such as usage and is
normally consistent with the billing or invoicing to the customer. Revenues on unit-price or time-based contracts are
recognized as work is completed to the customer.
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 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.
Software: Most of our equipment has both software and non-software components that function together to deliver
the equipment's essential functionality and therefore they are 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.
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. Consistent with the guidance in ASC 842 and ASC 606, the transaction price is
allocated between the lease and non-lease deliverables based on standalone selling price (SSP). Lease
deliverables include the equipment and financing, while the non-lease deliverables generally consist of the services,
which normally include supplies. 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 billed to the
Xerox 2023 Annual Report 83
Xerox 2023 Annual Report 83
Table of Contents
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, as well as the prices established by
management in 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 Income (Loss).
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 of finance receivables is determined on a collective basis by year of origination through the
application of projected loss rates to our different portfolios by country, 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
Xerox 2023 Annual Report 84
Table of Contents
projected loss rates are primarily based upon historical loss experience adjusted for judgments about the probable
effects of relevant observable data including current and future economic conditions as well as 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 classified as Finance receivables, net. The
Company continues 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 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 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
Xerox 2023 Annual Report 85
Xerox 2023 Annual Report 85
Table of Contents
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
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
Xerox 2023 Annual Report 86
Table of Contents
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.
We assess Goodwill for impairment at least annually, during the fourth quarter based on balances as of October 1st,
and 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. Consistent with the
determination that we had two operating/reportable segments we determined that we had two reporting units – Print
and Other, and FITTLE.
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
entity is less than its carrying amount. If we conclude it is more-likely-than-not that the fair value of the entity 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 entity to its fair value. Fair value of the entity 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 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, 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
of the long-term rate of return on the plan assets that support our pension obligations, after deducting assets that
Xerox 2023 Annual Report 87
Xerox 2023 Annual Report 87
Table of Contents
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 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. 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 $55, $58 and $59 in for the years ended December 31, 2023, 2022 and 2021, respectively.
Government Grants/Assistance
Government grants related to income are recognized as a reduction of related expenses in the Consolidated
Statements of Income (Loss) when there is a reasonable assurance that the entity will comply with the conditions
attached to the grant and that the grants will be received. The timing and pattern of recognition of government
grants is made on a systematic basis over the periods in which the Company recognizes the related expenses or
losses that the grants are intended to compensate.
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 2023 Annual Report 88
Table of Contents
Note 3 – Revenue
Revenues disaggregated by primary geographic markets, major product lines, and sales channels are as follows:
Year Ended December 31,
2023
2022
2021
Primary geographical markets(1)
United States
Europe
Canada
Other
Total Revenues
Major product and services lines
Equipment
Supplies, paper and other sales
Maintenance agreements(2)
Service arrangements(3)
Rental and other
Financing
Total Revenues
Sales channels:
Direct equipment lease(4)
Distributors & resellers(5)
Customer direct
Total Sales
$
$
$
$
$
$
3,826 $
1,951
554
555
6,886 $
1,655 $
1,065
1,631
1,984
360
191
6,886 $
920 $
1,044
756
2,720 $
4,014 $
1,935
545
613
7,107 $
1,624 $
1,176
1,730
1,953
417
207
7,107 $
708 $
1,222
870
2,800 $
3,982
2,023
398
635
7,038
1,581
1,001
1,787
1,991
457
221
7,038
664
1,130
788
2,582
_____________
(1) Geographic area data is based upon the location of the subsidiary reporting the revenue.
(2)
Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through
our channel partners.
(3) Primarily includes revenues from our Print outsourcing arrangements including revenues from embedded operating leases in those
arrangements, which were not significant.
(4) Primarily reflects sales through bundled lease arrangements.
(5) Primarily reflects sales through our two-tier distribution channels.
Contract assets and liabilities: We normally do not have contract assets, which are primarily unbilled accounts
receivable that are conditional on something other than the passage of time. Our contract liabilities, which represent
billings in excess of revenue recognized, are primarily related to advanced billings for maintenance and other
services to be performed and were approximately $132 and $131 at December 31, 2023 and 2022, respectively.
The majority of the balance at December 31, 2023 will be amortized to revenue over approximately the next 30
months.
Contract Costs:
We incur the following contract costs as part of our revenue arrangements:
•
•
•
Incremental direct costs of obtaining a contract, which are primarily sales commissions paid to salespeople and
agents in connection with the placement of equipment with associated post sale services arrangements. These
costs are deferred and amortized to Selling Expenses on a straight-line basis over the estimated contract term,
which is currently estimated to be approximately four years. We pay commensurate sales commissions upon
customer renewals; therefore, our amortization period is aligned to our initial contract term.
Contract fulfillment costs, which are costs incurred for resources and assets that will be used to satisfy our
future performance obligations included in our service arrangements. These costs are amortized over the
contractual service period of the arrangement to cost of services.
Contract inducements, which are capitalized and amortized as a reduction of revenue over the term of the
contract.
Xerox 2023 Annual Report 89
Xerox 2023 Annual Report 89
Table of Contents
Changes in contract costs, net are as follows:
Balance at January 1st,
Customer contract costs deferred
Amortization of customer contract costs
Other(1)
Balance at December 31st,
_____________
(1)
Includes currency.
2023
2022
2021
135
70
(69)
—
$
136 $
147
65
(73)
(4)
135 $
158
66
(79)
2
147
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.
Note 4 – Segment and Geographic Area Reporting
Our reportable segments – Print and Other, and FITTLE – are aligned to how the Chief Operating Decision Maker
(CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance against the Company’s
key growth strategies and are consistent with how we manage the business and view the markets we serve.
Segment Reporting Change
During the second quarter 2023, as a result of the strategic shift in the Company’s approach to funding FITTLE’s
new originations through funding agreements that involve the sale of lease receivables, the measures for FITTLE’s
segment revenues and profits used by our CODM were recast as follows to correspond with this change in strategy:
•
•
The management and oversight of the equipment on operating leases portion of our financing business was
transferred from the FITTLE segment to the marketing and sales groups in the Print and Other segment since
the funding agreements currently exclude the sale of operating lease arrangements.
The allocation of shared expenses as well as commissions and other payments made by the FITTLE segment
to the Print and Other segment were recast to better reflect the operations of FITTLE in line with the change in
strategic direction.
The following provides segment revenues and profit for 2022 and 2021, recast to conform to our new segment
measurements:
As Reported:
Print and Other
FITTLE
Intersegment revenue(1)
Total External Revenue
Change:
Print and Other
FITTLE
Intersegment revenue(1)
Total External Revenue
Recast:
Print and Other
FITTLE
Intersegment revenue(1)
Total External Revenue
Segment Revenues
Segment Profit
2022
2021
2022
2021
$
$
$
$
$
$
6,667 $
610
(170)
7,107 $
137 $
(217)
80
— $
6,548 $
695
(205)
7,038 $
181 $
(294)
113
— $
238 $
37
—
275 $
20 $
(20)
—
— $
6,804 $
6,729 $
258 $
393
(90)
401
(92)
17
—
7,107 $
7,038 $
275 $
293
82
—
375
18
(18)
—
—
311
64
—
375
_____________
(1)
Intersegment revenue is primarily commissions and other payments made by the FITTLE Segment to the Print and Other Segment for the
lease of Xerox equipment placements.
Xerox 2023 Annual Report 90
Table of Contents
Our Print and Other segment includes the sale of document systems, supplies and technical services and
managed 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 IT services and software. Our 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 teams environments as
well as products in the Light Production product groups serving centralized print centers, print for pay and
lower 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. Segment revenues also
include commissions and other payments from the FITTLE segment for the exclusive right to provide lease
financing for Xerox products. These revenues are reported as part of Intersegment Revenues, which are eliminated
in consolidated revenues.
The FITTLE segment provides leasing solutions and currently offers leasing for direct channel customer purchases
of Xerox solutions through bundled lease agreements and lease financing to end-user customers who purchase
Xerox solutions through our indirect channels. Segment revenues primarily include financing income on sales-type
leases (including month-to-month extensions) and leasing fees. Segment revenues also include gains/losses from
the sale of finance receivables including commissions, fees on the sales of underlying equipment residuals and
servicing fees.
In December 2022, the Company entered into a finance receivables funding agreement with an affiliate of HPS
Investment Partners (HPS) pursuant to which the Company agreed to offer for sale, and HPS agreed to purchase,
certain eligible pools of finance receivables on a monthly basis. During the second quarter 2023, the finance
receivables funding agreement with HPS was amended to expand the pools of finance receivables eligible for sale
and to include the sale of the underlying leased equipment to HPS. Refer to Note 8 - Finance Receivables, Net
for additional information on the sale of receivables.
In the third quarter 2023, the Company entered into an agreement with PEAC Solutions (a subsidiary of HPS) that
named PEAC as the provider of certain leasing and financial services programs for Xerox and non-Xerox equipment
sold through our U.S. network of independent dealers and resellers. In the fourth quarter 2023, our partnership with
PEAC Solutions was further expanded to include the transition of some FITTLE U.S. employees in risk, IT, and
operations to PEAC Solutions. Upon completion of this transition, PEAC Solutions will become the preferred
financing partner, primary funder, and service provider for XBS leases in the U.S.
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 revenues such as finance income in bundled lease arrangements
and other leasing revenues and operating lease revenues embedded in our managed services contracts as well as
the allocation of expenses for shared selling and administrative services. Accordingly, the financial results for the
segments may not be indicative of the results the businesses would have as 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 and profit. The CODM uses these results, in part,
to evaluate the performance of, and to allocate resources to each segment. The FITTLE segment also includes
interest expense associated with allocated debt of the Company in support of its Finance assets, while no interest
expense is allocated to the Print and Other segment.
Xerox 2023 Annual Report 91
Xerox 2023 Annual Report 91
Table of Contents
Selected financial information for our reportable segments was as follows:
2023
Year Ended December 31,
2022(1)
2021(1)
External revenue
Intersegment revenue(2)
Print and
Other
FITTLE
Total
Print and
Other
FITTLE
Total
Print and
Other
FITTLE
Total
$ 6,485
$ 401
$ 6,886
$ 6,714
$ 393
$ 7,107
$ 6,637
$ 401
$ 7,038
86
—
86
90
—
90
92
—
92
Total Segment revenue
$ 6,571
$ 401
$ 6,972
$ 6,804
$ 393
$ 7,197
$ 6,729
$ 401
$ 7,130
Segment profit
Segment margin(3)
Interest income
Interest expense
Depreciation and amortization
Capital expenditures(4)
Total Assets
$ 360
$
29
$ 389
$ 258
$
17
$ 275
$ 311
$
64
$ 375
5.6 %
7.2 %
5.6 %
3.8 %
4.3 %
3.9 %
4.7 %
16.0 %
5.3 %
$ —
$ 191
$ 191
$ —
$ 207
$ 207
$ —
$ 221
$ 221
—
208
37
130
—
—
130
208
37
—
228
57
108
—
—
108
228
57
—
272
68
111
—
—
111
272
68
7,301
2,707
10,008
8,230
3,313
11,543
9,949
3,274
13,223
_____________
(1) Amounts for 2022 and 2021 have been recast to conform to the current year's reporting presentation. See the Segment Reporting Change
(2)
section above.
Intersegment revenue is primarily commissions and other payments made by the FITTLE Segment to the Print and Other Segment for the
lease of Xerox equipment placements.
(3) Segment margin based on External revenue only.
(4) Capital expenditures are allocated fully to the Print and Other segment since they are primarily managed and controlled through that
segment, together, with related long-lived assets.
Selected financial information for our reportable segments was as follows:
Pre-tax (Loss)
Total Segment profit
Goodwill impairment
Restructuring and related costs, net
Amortization of intangible assets
PARC Donation
Accelerated share vesting
Other expenses, net
Total Pre-tax (loss)
Depreciation and Amortization
Total reported segments
Amortization of intangible assets
Total Depreciation and amortization
Interest Expense
Total reported segments
Corporate
Total Interest expense
Interest Income
Total reported segments
Corporate
Total Interest income
$
$
$
$
$
$
$
$
Year Ended December 31,
2023
2022
2021
389 $
—
(167)
(43)
(132)
—
(75)
(28) $
208 $
43
251 $
130 $
68
198 $
191 $
16
207 $
275 $
(412)
(65)
(42)
—
(21)
(60)
375
(781)
(38)
(55)
—
—
27
(325) $
(472)
228 $
42
270 $
108 $
91
199 $
207 $
11
218 $
272
55
327
111
96
207
221
4
225
Xerox 2023 Annual Report 92
Table of Contents
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
2023
Year Ended December 31,
2022
$
$
3,826 $
1,951
554
555
6,886 $
4,014 $
1,935
545
613
7,107 $
Long-Lived Assets (1)
As of December 31,
2021
2023
2022
3,982 $
2,023
398
635
7,038 $
467 $
241
42
21
771 $
537
249
54
25
865
United States
Europe
Canada
Other areas
Total
_____________
(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.
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 and present revenue net of these costs.
The components of lease income are as follows:
Location in Statements of
Income (Loss)
2023
Year Ended December 31,
2022
2021
Revenue from sales type leases
Interest income on lease receivables
Lease income - operating leases
Variable lease income
Sales
Financing
Services, maintenance and rentals
Services, maintenance and rentals
Total Lease income
$
$
920 $
191
161
62
1,334 $
708 $
207
170
63
1,148 $
664
221
246
62
1,193
Profit at lease commencement on sales type leases was estimated to be approximately $332, $229 and $221 for
the three years ended December 31, 2023, 2022 and 2021, respectively.
Xerox 2023 Annual Report 93
Xerox 2023 Annual Report 93
Table of Contents
Note 6 – Acquisitions and Divestitures
Acquisitions
The following table summarizes the purchase price allocations for our acquisitions as of the acquisition dates:
Accounts/finance receivables
Intangible assets:
Customer relationships
Trademarks
Technology
Goodwill(1)
Other assets
Total Assets acquired
Liabilities assumed(2)
Total Cash Purchase Price
Year Ended December 31, 2022
Year Ended December 31, 2021
Weighted-
Average Life
Acquisitions
Weighted-
Average Life
Acquisitions
10 years
5 years
9 years
5 years
3 years
$
$
29
41
7
—
62
30
169
(76)
93
$
$
5
27
3
1
25
4
65
(12)
53
_____________
(1) Goodwill from 2022 acquisitions included approximately $20 of goodwill that is expected to be deductible for tax purposes.
(2) Liabilities assumed in 2022 acquisitions included estimated contingent consideration liabilities of approximately $11.
2023 Acquisitions
There were no material business acquisitions during 2023.
2022 Acquisitions
During 2022, Xerox acquired two businesses that totaled $93, net of cash acquired.
In February 2022, Xerox acquired Powerland, a leading IT services provider in Canada, for approximately $52 (CAD
66 million), net of cash. The acquisition also included contingent consideration up to approximately $22 (CAD 28
million) based on future performance of the acquisition over the two-year period following the date of acquisition.
Approximately $11 was accrued as part of the purchase price reflecting the estimated fair value payout for this
element. During 2023 $6 of contingent consideration was paid. The acquisition strengthened Xerox’s IT services
offerings in North America, which include cloud, cybersecurity, end user computing and managed services.
In July 2022, Xerox acquired Go Inspire, a U.K.-based print and digital marketing and communication services
provider, for approximately $41 (GBP 34 million), net of cash. The acquisition strengthened Xerox’s strategy to grow
its global Digital Services presence in EMEA.
The Goodwill associated with both acquisitions is included in our Print and Other segment.
2021 Acquisitions
In 2021, Xerox continued its strategy of focusing on further penetrating the small-to-medium sized business (SMB)
market through acquisitions of local area resellers and partners, including multi-brand dealers as well as companies
with an adjacent or sole IT services business. During 2021, we acquired businesses associated with this initiative
that totaled $50, net of cash acquired, which included an office equipment dealer in Canada for approximately $31,
as well as two acquisitions in the U.S. for approximately $19. 2021 also included smaller acquisitions totaling
approximately $3.
The Goodwill associated with these acquisitions is included in our Print and Other segment.
Summary
Our acquisitions in 2022 and 2021 resulted in 100% ownership of the acquired companies. The operating results of
these acquisitions were not material to our financial statements and were included within our results from the
respective acquisition dates. The purchase prices were all cash, with the exception of the Powerland acquisition in
2022, which included a contingent consideration element.
Xerox 2023 Annual Report 94
Table of Contents
Revenue Impact
Our acquisitions contributed aggregate revenues from their respective acquisition dates as follows:
Acquisition Year
2023
2022
2021
Total Contributed Aggregate Revenue
Investments
ServiceNow Inc. Investment in CareAR
Year Ended December 31,
2023
2022
2021
$
$
— $
— $
215
42
163
37
257 $
200 $
—
—
19
19
In August 2021, in connection with Xerox Holdings Corporation's formation of the CareAR software business,
ServiceNow, Inc. acquired a noncontrolling interest in CareAR Holdings LLC for $10. CareAR Holdings LLC is a
direct operating subsidiary of Xerox Corporation and includes Xerox’s XMPie, Inc., DocuShare LLC and CareAR,
Inc. business units. ServiceNow’s investment includes a fair value redemption right, which is contingent on the non-
occurrence of a future liquidity event (e.g., sale, public offering, spin-off, etc.) within 6 years of the closing of the
investment. As a result of this contingent redemption right, we classified ServiceNow’s noncontrolling interest in
CareAR Holdings LLC as temporary equity within Xerox’s Consolidated Balance Sheet.
Divestitures
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 will be 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. 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.
Xerox 2023 Annual Report 95
Xerox 2023 Annual Report 95
Table of Contents
Note 7 – Accounts Receivable, Net
Accounts receivable, net were as follows:
Invoiced
Accrued (1)
Allowance for doubtful accounts
Accounts receivable, net
December 31,
2023
2022
$
$
710 $
204
(64)
850 $
____________
(1) Accrued receivables includes amounts to be invoiced in the subsequent quarter for current services provided.
The allowance for doubtful accounts was as follows:
Balance at December 31, 2021
Provision
Charge-offs, net
Other(1)
Balance at December 31, 2022
Provision
Charge-offs, net
Other(1)
Balance at December 31, 2023
$
$
$
698
211
(52)
857
58
17
(14)
(9)
52
22
(17)
7
64
_____________
(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.
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 7.0% at December 31, 2023 and 5.7% at December 31, 2022. The increase in
the allowance is primarily due to an increase in aged receivables in the U.S.
Accounts Receivable Sale Arrangements
We have one facility in Europe that enables us to sell accounts receivable associated with our distributor network on
an ongoing basis, without recourse. Under this arrangement, we sell our entire interest in the related accounts
receivable for cash and no portion of the payment is held back or deferred by the purchaser.
Of the accounts receivable sold and derecognized from our balance sheet, $99 and $159 remained uncollected as
of December 31, 2023 and 2022, respectively.
Accounts receivable sales activity was as follows:
Accounts receivable sales(1)
_____________
(1) Losses on sales were not material.
Year Ended December 31,
2023
2022
2021
$
399 $
593 $
478
Xerox 2023 Annual Report 96
Table of Contents
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:
Gross receivables
Unearned income
Subtotal
Residual values
Allowance for doubtful accounts
Finance Receivables, Net
Less: Billed portion of finance receivables, net
Less: Current portion of finance receivables not billed, net
Finance Receivables Due After One Year, Net
December 31,
2023
2022
$
$
2,899 $
(297)
2,602
—
(92)
2,510
71
842
1,597 $
3,593
(374)
3,219
—
(117)
3,102
93
1,061
1,948
A summary of our gross finance receivables' future contractual maturities, including those previously billed, is as
follows:
12 months
24 months
36 months
48 months
60 months
Thereafter
Total
December 31,
2023
2022
$
$
1,075 $
758
547
343
143
33
2,899 $
1,325
967
690
411
169
31
3,593
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 credit losses on a country or geographic basis. Customer credit limits
are based upon an initial evaluation of the customer's credit quality, and we adjust that limit accordingly based upon
ongoing credit assessments of the customer, including payment history and changes in credit quality. The allowance
for doubtful credit losses is principally determined based on an assessment of origination year and past collection
experience as well as consideration of current and future economic conditions and changes in our customer
collection trends.
The risk characteristics in our finance receivable portfolio segments are generally consistent with the risk factors
associated with the economies of the countries/regions included in those geographies. Since EMEA is comprised of
various countries and regional economies, the risk profile within that portfolio segment is somewhat more diversified
due to the varying economic conditions among and within the countries.
The net bad debt provision was $6 for the year ended December 31, 2023. This compares to the bad debt provision
of $26 for the year ended December 31, 2022. The decrease in the bad debt provision was primarily due to a credit
of $(12) related to a reserve release in the U.S. as the result of a favorable reassessment of the credit exposure on
a large customer receivable balance after a contract amendment, which improved our credit position. In addition,
the bad debt provision benefited from the sales of finance lease receivables and a lower balance of finance
receivables in 2023 as compared to 2022. The allowance for credit losses as a percentage of net finance
receivables before allowance was 3.5% at December 31, 2023 and 3.6% at December 31, 2022.
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 includes 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 2023 Annual Report 97
Xerox 2023 Annual Report 97
Table of Contents
The allowance for credit losses as well as the related investment in finance receivables were as follows:
Allowance for Credit Losses:
Balance at December 31, 2021
Provision
Charge-offs, net
Other(2)
Balance at December 31, 2022
Provision
Charge-offs, net
Other(2)
Balance at December 31, 2023
Finance Receivables Collectively Evaluated for Impairment:
December 31, 2022(3)
December 31, 2023(3)
United States
Canada
EMEA(1)
Total
$
$
$
$
$
77 $
11 $
30 $
20
(15)
1
83 $
(8)
(17)
—
58 $
(2)
(3)
1
7 $
1
(3)
2
7 $
8
(8)
(3)
27 $
13
(14)
1
27 $
118
26
(26)
(1)
117
6
(34)
3
92
1,948 $
1,205 $
228 $
255 $
1,043 $
1,142 $
3,219
2,602
_____________
(1)
(2)
Includes developing market countries.
Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as
customer accommodations and contract terminations.
(3) Total Finance receivables exclude the allowance for credit losses of $92 and $117 at December 31, 2023 and 2022, respectively.
In the U.S., customers are further evaluated by class based on the type of lease origination. The primary categories
are direct, which primarily includes leases originated directly with end-user customers through bundled lease
arrangements, and indirect, which primarily includes leases originated through our XBS sales channel and lease
financing to end-user customers who purchased equipment we sold to distributors or resellers.
We evaluate our customers based on the following credit quality indicators:
•
•
•
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
less than 1%.
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 2% 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 7% to 10%.
Credit quality indicators are updated at least annually, or more frequently to the extent required by economic
conditions, and the credit quality of any given customer can change during the life of the portfolio.
Xerox 2023 Annual Report 98
Table of Contents
Details about our finance receivables portfolio based on geography, origination year and credit quality indicators are
as follows:
2023
2022
2021
2020
2019
Prior
Total
Finance
Receivables
December 31, 2023
122 $
51 $
61 $
43 $
17 $
3 $
104
34
260 $
1 $
35
36
122 $
1 $
49
25
135 $
1 $
23
22
88 $
1 $
9
6
32 $
1 $
2
3
8 $
2 $
136 $
77 $
48 $
22 $
6 $
— $
111
12
259 $
4 $
45 $
63
6
114 $
— $
251 $
192
19
462 $
3 $
554 $
470
71
1,095 $
8 $
69
8
154 $
3 $
24 $
36
5
65 $
— $
182 $
148
16
346 $
8 $
334 $
288
65
687 $
12 $
41
6
95 $
3 $
16 $
18
4
38 $
— $
110 $
73
11
194 $
4 $
235 $
181
46
462 $
8 $
15
2
39 $
2 $
9 $
12
5
26 $
2 $
48 $
36
7
91 $
2 $
122 $
86
36
244 $
7 $
6
1
13 $
2 $
4 $
6
1
11 $
— $
19 $
17
4
40 $
— $
46 $
38
12
96 $
3 $
—
—
— $
3 $
— $
—
1
1 $
1 $
6 $
3
—
9 $
— $
9 $
5
4
18 $
6 $
297
222
126
645
7
289
242
29
560
17
98
135
22
255
3
616
469
57
1,142
17
1,300
1,068
234
2,602
44
United States (Direct):
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
Charge-offs
United States (Indirect):
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
Charge-offs
Canada
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
Charge-offs
EMEA(1)
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
Charge-offs
Total Finance Receivables
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
Total Charge-offs
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Xerox 2023 Annual Report 99
Xerox 2023 Annual Report 99
Table of Contents
2022
2021
2020
2019
2018
Prior
Total
Finance
Receivables
December 31, 2022
173 $
104 $
80 $
53 $
23 $
2 $
83
71
36
70
26
49
28
18
7
6
2
2
327 $
210 $
155 $
99 $
36 $
6 $
249 $
165 $
91 $
49 $
12 $
1 $
210
22
156
20
73
9
40
5
11
2
—
—
435
182
216
833
567
490
58
481 $
341 $
173 $
94 $
25 $
1 $
1,115
31 $
22 $
17 $
12 $
5 $
46
6
25
6
22
8
16
4
5
2
83 $
53 $
47 $
32 $
12 $
269 $
152
17
438 $
722 $
491
116
1,329 $
167 $
105
13
285 $
458 $
322
109
889 $
90 $
63
9
162 $
278 $
184
75
537 $
59 $
43
7
109 $
173 $
127
34
334 $
24 $
15
2
41 $
64 $
38
12
114 $
— $
—
1
1 $
5 $
3
—
8 $
8 $
5
3
16 $
87
114
27
228
614
381
48
1,043
1,703
1,167
349
3,219
United States (Direct):
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
United States (Indirect):
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
Canada
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
EMEA(1)
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
Total Finance Receivables
Low Credit Risk
Average Credit Risk
High Credit Risk
Total
$
$
$
$
$
$
$
$
$
$
_____________
(1)
Includes developing market countries.
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 uncollectibility 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.
The aging of our billed finance receivables is as follows:
Direct
Indirect
Total United States
Canada
EMEA (1)
Total
December 31, 2023
Current
31-90
Days
Past Due
>90 Days
Past Due
Total Billed
Unbilled
Total
Finance
Receivables
>90 Days
and
Accruing
$
24 $
6 $
5 $
35 $
610 $
645 $
16
40
6
7
3
9
1
2
3
8
1
1
$
53 $
12 $
10 $
22
57
8
10
75 $
538
560
1,148
247
1,132
2,527 $
1,205
255
1,142
2,602 $
41
—
41
10
10
61
Xerox 2023 Annual Report 100
Table of Contents
Direct
Indirect
Total United States
Canada
EMEA(1)
Total
December 31, 2022
Current
31-90
Days
Past Due
>90 Days
Past Due
Total Billed
Unbilled
Total
Finance
Receivables
>90 Days
and
Accruing
$
30 $
6 $
6 $
42 $
791 $
833 $
27
57
5
9
6
12
1
2
4
10
—
1
$
71 $
15 $
11 $
37
79
6
12
97 $
1,078
1,869
222
1,031
3,122 $
1,115
1,948
228
1,043
3,219 $
47
—
47
6
12
65
_____________
(1)
Includes developing market countries.
Sales of Receivables
In December 2022, the Company entered into a finance receivables funding agreement with an affiliate of HPS
Investment Partners (HPS) pursuant to which the Company agreed to offer for sale, and HPS agreed to purchase,
certain eligible pools of finance receivables on a monthly basis in transactions structured as "true sales at law," and
bankruptcy remote transfers and we have received an opinion to that effect from outside legal counsel. Accordingly,
the receivables sold are derecognized from our financial statements and HPS does not have recourse back to the
Company for uncollectible receivables.
During the second quarter 2023, the finance receivables funding agreement with HPS was amended to expand the
pools of finance receivables eligible for sale and to include the sale of the underlying leased equipment to HPS. The
commission paid by HPS was also accordingly amended to cover the value associated with the underlying
equipment being sold to HPS. The company retained a first right of refusal to repurchase the underlying equipment
at the end of the lease term, to the extent offered for sale by HPS, at its then fair value.
The amended finance receivables funding agreement automatically renews each year for a one-year period, unless
terminated by either the Company or HPS. Additionally, the Company will continue to service the lease receivables
for a specified fee and will also be paid a commission on lease receivables sold under the finance receivables
funding agreement.
Of the finance receivables sold and derecognized from our balance sheet, $994 and $60 remained uncollected as of
December 31, 2023 and 2022, respectively.
Finance receivable sales activity was as follows:
Finance receivable sales - net proceeds(1)
Gain on sale/Commissions(2)(3)
Servicing revenue(2)
_____________
Year Ended December 31,
2022
2023
$
$
1,102 $
25
9 $
60
2
—
(1) Cash proceeds were reported in Net cash provided by operating activities.
(2) Recorded in Services, maintenance and rentals as Other Revenue. Amounts include revenues associated with the sale of the underlying
leased equipment.
(3) The year ended December 31, 2023 includes $4 of revenues associated with the sale of the underlying leased equipment and which are
expected to be paid over the term of the agreements.
Secured Borrowings and Collateral
In 2022 and 2021 we sold certain finance receivables to consolidated special purpose entities included in our
Consolidated Balance Sheet as collateral for secured loans.
Refer to Note 15 - Debt, for additional information related to these arrangements.
Xerox 2023 Annual Report 101
Xerox 2023 Annual Report 101
Table of Contents
Note 9 – Inventories and Equipment on Operating Leases, Net
The following is a summary of Inventories by major category:
Finished goods
Work-in-process
Raw materials
Total Inventories
December 31,
2023
2022
$
$
528 $
47
86
661 $
640
45
112
797
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 depreciated to estimated salvage value at
the end of the lease term.
Equipment on operating leases and the related accumulated depreciation were as follows:
Equipment on operating leases
Accumulated depreciation
Equipment on operating leases, net
December 31,
2023
2022
$
$
1,074 $
(809)
265 $
1,163
(928)
235
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:
12 months
24 months
36 months
48 months
60 months
Thereafter
Total
December 31,
2023
2022
165 $
89
52
30
13
2
351 $
185
95
59
30
13
4
386
$
$
Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum
contracted amounts, for the years ended December 31, 2023, 2022 and 2021 amounted to $62, $63 and $62,
respectively.
Secured Borrowings and Collateral
In 2021, we sold the rights to payments under operating leases to a consolidated special purpose entity included in
our Consolidated Balance Sheet as collateral for a secured loan.
Refer to Note 15 - Debt, for additional information related to this arrangement.
Xerox 2023 Annual Report 102
Table of Contents
Note 10 - Land, Buildings, Equipment and Software, Net
Land, buildings and equipment, net were as follows:
Land
Building and building equipment
Leasehold improvements
Plant machinery
Office furniture and equipment
Finance leased assets
Other
Construction in progress
Subtotal
Accumulated depreciation(1)
Land, buildings and equipment, net
_____________
December 31,
Estimated
Useful Lives (Years)
2023
2022
$
8 $
25 to 50
1 to 12
5 to 12
3 to 15
1 to 12
4 to 20
678
78
855
436
33
37
11
2,136
$
(1,870)
266 $
8
708
112
1,000
460
26
38
15
2,367
(2,047)
320
(1) Depreciation expense was $60, $68 and $76 for the three years ended December 31, 2023, 2022 and 2021, respectively.
We lease buildings 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
As of December 31, 2023 and 2022, capitalized costs related to internal use software, net of accumulated
amortization, were $68 and $95, respectively. Useful lives of our internal use software generally vary from three to
seven years.
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 eleven years and a variety of renewal and/or termination options. The components of lease expense are as
follows:
Operating lease expense
Short-term lease expense
Variable lease expense(1)
Sublease income
Total Lease expense
2023
Year Ended December 31,
2022
2021
$
$
83 $
16
53
(1)
151 $
97 $
17
49
(5)
158 $
104
20
48
(4)
168
_____________
(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, 2023, we had approximately $6 additional 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:
Other long-term assets
Accrued expenses and other current liabilities
Other long-term liabilities
Total Operating lease liabilities
December 31,
2023
2022
172 $
41 $
141
182 $
215
68
161
229
$
$
$
Xerox 2023 Annual Report 103
Xerox 2023 Annual Report 103
Table of Contents
Supplemental information related to operating leases is as follows:
Year Ended December 31,
2023
2022
2021
Cash paid for amounts included in the measurement of lease liabilities -
Operating cash flows
Right-of-use assets obtained in exchange for new lease liabilities (1)
Weighted-average remaining lease term
$
$
Weighted-average discount rate
91
23
$
$
4 years
6.07 %
101
45
$
$
4 years
5.19 %
109
41
5 years
4.67 %
_____________
(1)
Includes the impact of new leases as well as remeasurements and modifications to existing leases.
Maturities and additional information related to operating lease liabilities are as follows:
12 months
24 months
36 months
48 months
60 months
Thereafter
Total Lease payments
Less: Imputed interest
Total Operating lease liabilities
Finance Leases
December 31, 2023
$
$
62
47
39
22
17
21
208
26
182
Xerox has finance leases for equipment in the U.S. and Europe and related infrastructure, within outsourced
warehouse supply arrangements, in the U.S. These leases have remaining maturities up to four years with a
maximum expiration date through August 2027. As of December 31, 2023 and 2022, the remaining lease obligation
for all finance leases is $17 and $16, respectively, based on discount rates of 7.28% and 6.40%, respectively. The
ROU asset balances associated with these finance leases at December 31, 2023 and 2022 of $19 and $18,
respectively are included in Land, buildings and equipment, net in the Consolidated Balance Sheets.
Note 12 - Goodwill, Net and Intangible Assets, Net
Goodwill, Net
The following table presents the changes in the carrying amount of Goodwill, net:
Goodwill
Accumulated impairment losses
Goodwill, net at January 1
Goodwill Activity:
Foreign currency translation
Acquisitions(1):
U.S. Acquisitions
U.K. Acquisitions
Canada Acquisition
Other
Dispositions(2)
Goodwill impairment
Goodwill
Accumulated impairment losses
Goodwill, net at December 31
2023
2022
2021
4,013 $
(1,193)
2,820 $
47
—
5
—
—
(125)
—
3,940 $
(1,193)
2,747 $
4,068 $
(781)
3,287 $
(120)
—
28
34
3
—
4,071
—
4,071
(23)
9
—
16
(5)
—
(412)
(781)
4,013 $
(1,193)
2,820 $
4,068
(781)
3,287
$
$
$
$
_____________
(1) Refer to Note 6 - Acquisitions and Divestitures for additional information related to acquisitions.
(2) Primarily includes the write-off of $115 of goodwill associated with the donation of our Palo Alto Research Center (PARC) as well as other
immaterial dispositions. Refer to Note 6 - Acquisitions and Divestitures for additional information related to the PARC donation.
Xerox 2023 Annual Report 104
Table of Contents
Total Goodwill is fully allocated to the Print and Other segment and no Goodwill has been allocated to the FITTLE
segment for the three years ended December 31, 2023, 2022 or 2021, respectively.
We performed our annual Goodwill assessment in the fourth quarter of 2023 qualitatively and concluded that it is
more likely-than-not that the fair value of the Print and Other reporting unit, the only reporting unit with Goodwill, is
higher than its carrying amount and Goodwill was not impaired.
In the third quarter of 2022, we concluded that an interim impairment 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 $395 ($412 pre-tax) related to our Goodwill for the year ended December 31, 2022.
In the fourth quarter of 2021, after completing our annual impairment test, we concluded that the estimated fair
value of the Company had declined below its carrying value. As a result, we recognized an after-tax non-cash
impairment charge of $750 ($781 pre-tax) related to our Goodwill for the year ended December 31, 2021.
Intangible Assets, Net
Intangible assets, net were $177 at December 31, 2023, all of which relate to our Print and Other segment.
Intangible assets were comprised of the following:
December 31, 2023
December 31, 2022
Weighted
Average
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Net
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Amount
Customer relationships
Distribution network
Trademarks
Technology and non-
compete
Total Intangible Assets
$
10 years
25 years
18 years
3 years
200 $
123
209
13
92 $
118
147
11
$
545 $
368 $
108 $
5
62
2
177 $
214 $
123
201
15
85 $
113
135
12
553 $
345 $
129
10
66
3
208
Excluding the impact of future acquisitions, amortization expense is expected to approximate $39 in 2024 and $32
in 2025, 2026, 2027 and in 2028, respectively. Distribution network, technology and non-compete assets are
expected to be fully amortized by 2025.
Note 13 – Restructuring Programs
We engage in restructuring actions and other transformation efforts in order to reduce our cost structure and realign
it to the changing nature of our business. As part of our efforts to reduce costs, our restructuring actions may also
include the offshoring and/or outsourcing of certain operations, services and other functions, as well as reducing our
real estate footprint.
Restructuring and related costs, net reflect the following components for the three years ended December 31, 2023,
2022 and 2021:
Restructuring charges, net
Asset impairment charges, net
Related costs, net
Total Restructuring and related costs, net
2023
Year Ended December 31,
2022
2021
$
$
114 $
32
21
167 $
68 $
(6)
3
65 $
18
9
11
38
Restructuring charges, net primarily includes employee severance costs and other contractual termination costs that
may result from restructuring actions and initiatives. In those geographies where we have either a formal severance
plan or a history of consistently providing severance benefits representing a substantive plan (on-going benefit
arrangements), we recognize employee severance and associated costs when they are both probable and
reasonably estimable and is the primary accounting applied for most of our Restructuring actions. Severance
payments made under a one-time benefit arrangement are recorded upon communication to the affected
employees. In the event employees are required to perform future service beyond their minimum retention period in
a one-time benefit arrangement, we record severance charges ratably over the remaining service period of those
employees as restructuring related costs. Contractual termination costs, including facility exit costs, are generally
recognized when it has been determined that a liability has been incurred. 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 within countries and is net of any gains we may realize on the disposal
Xerox 2023 Annual Report 105
Xerox 2023 Annual Report 105
Table of Contents
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 also 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 that we 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 FITTLE
segment were immaterial for all periods presented. A summary of our restructuring program activity for the three
years ended December 31, 2023, 2022 and 2021 is as follows:
Severance
Costs
Other Contractual
Termination Costs(2)
Total
Balance at December 31, 2020
Restructuring provision
Reversals of prior charges
Net Current Period Charges(1)
Charges against reserve and currency
Balance at December 31, 2021
Restructuring provision
Reversals of prior charges
Net Current Period Charges(1)
Charges against reserve and currency
Balance at December 31, 2022
Restructuring provision
Reversals of prior charges
Net Current Period Charges(1)
Charges against reserve and currency
Balance at December 31, 2023
$
$
$
$
78 $
30
(13)
17
(70)
25 $
74
(8)
66
(52)
39 $
125
(11)
114
(24)
129 $
4 $
3
(2)
1
(3)
2 $
3
(1)
2
—
4 $
—
—
—
(4)
— $
82
33
(15)
18
(73)
27
77
(9)
68
(52)
43
125
(11)
114
(28)
129
_____________
(1) Represents net amount recognized within the Consolidated Statements of Income (Loss) for the years shown for restructuring. Reversals of
prior charges primarily include net changes in estimated reserves from prior period initiatives.
(2) Primarily includes additional costs incurred upon the exit from our facilities including decommissioning costs and associated contractual
termination costs.
The following table summarizes the reconciliation to the Consolidated Statements of Cash Flows:
Restructuring Cash Payments
Effects of foreign currency and other non-cash items
Charges against reserve and currency
Asset Impairment Charges, Net
Year Ended December 31,
2023
2022
2021
$
$
(27) $
(1)
(28) $
(52) $
—
(52) $
(72)
(1)
(73)
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. 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 Project Reinvention,
including the outsourcing of certain back-office functions and geographic simplification.
Xerox 2023 Annual Report 106
Table of Contents
Lease right of use assets(1)
Owned assets(1)
Asset impairments
Gain on sales of owned assets(2)
Adjustments/Reversals
Net asset impairment charge (credit)
Year Ended December 31,
2023
2022
2021
$
$
— $
36
36
—
(4)
32 $
2 $
15
17
(22)
(1)
(6) $
______________
(1) Primarily related to the exit and abandonment of leased and owned facilities, net of any potential sublease income and recoveries.
(2) Reflect gain on the sales of exited surplus facilities and land.
Related Costs
In connection with our restructuring programs, we also incurred certain related costs as follows:
Retention-related severance/bonuses(1)
Contractual severance costs
Consulting and other costs(2)
Total
Year Ended December 31,
2023
2022
2021
$
$
(2) $
—
23
21 $
— $
3
—
3 $
3
12
15
(4)
(2)
9
6
1
4
11
_____________
(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, 2023, 2022 and 2021, cash payments for restructuring related costs were
approximately $26, $9 and $13, respectively, while the reserve was $8 and $12 at December 31, 2023 and 2022,
respectively. The balance at December 31, 2023 is expected to be paid over the next twelve months.
Xerox 2023 Annual Report 107
Xerox 2023 Annual Report 107
Table of Contents
Note 14 - Supplementary Financial Information
The components of Other assets and liabilities are as follows:
December 31,
2023
2022
Other Current Assets
Income taxes receivable
Royalties, license fees and software maintenance
Restricted cash
Prepaid expenses
Advances and deposits
Other
Total Other Current Assets
Other Long-term Assets
Income taxes receivable
Prepaid pension costs
Internal use software, net
Restricted cash
Customer contract costs, net
Operating lease right-of-use assets
Deferred compensation plan investments
Investments in affiliates, at equity(1)
Investments at cost - Xerox Holdings
Other
Total Other Long-term Assets(2)
Accrued Expenses and Other Current Liabilities
Income taxes payable
Other taxes payable
Operating lease obligations
Interest payable
Restructuring reserves
Dividends payable - Xerox Holdings(3)
Distributor and reseller rebates/commissions
Unearned income and other revenue deferrals
Administration and overhead
Other
Total Accrued Expenses and Other Current Liabilities(4)
Other Long-term Liabilities
Deferred taxes
Income taxes payable
Operating lease obligations
Environmental reserves
Restructuring reserves
Other
$
$
$
$
$
$
$
13 $
19
70
29
33
70
234 $
22 $
423
68
28
136
172
14
40
26
105
1,034 $
39 $
60
41
37
119
42
120
147
61
196
862 $
95 $
14
141
11
10
89
Total Other Long-term Liabilities
$
360 $
27
23
55
32
29
88
254
1
667
95
39
135
215
15
38
21
97
1,323
16
60
68
43
39
47
145
154
72
237
881
95
41
161
11
4
99
411
_____________
(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 $1,008 and $1,302 at December 31, 2023 and 2022, respectively, excludes Investments at cost.
(3) Represents dividends payable by Xerox Holdings Corporation on Common and Preferred Stock.
(4) Xerox's balances of $820 and $834 at December 31, 2023 and 2022, respectively, excludes dividends payable of $42 and $47, respectively.
Xerox 2023 Annual Report 108
Table of Contents
Cash, Cash Equivalents and Restricted Cash
Restricted cash primarily relates to escrow cash deposits made in Brazil associated with ongoing litigation as well
as cash collections on finance receivables that were pledged for secured borrowings. As more fully discussed in
Note 20 - Contingencies and Litigation, various litigation matters in Brazil require us to make cash deposits to
escrow as a condition of continuing the 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:
Cash and cash equivalents
Restricted cash
Litigation deposits in Brazil
Escrow and cash collections related to secured borrowings and receivable sales(1)
Other restricted cash
Total Restricted cash
Cash, cash equivalents and restricted cash
__________________________
December 31,
2023
2022
519 $
27
49
22
98
617 $
1,045
39
54
1
94
1,139
$
$
(1)
Includes collections on finance receivables pledged for secured borrowings or sold that will be remitted in the following month.
Restricted cash is reported in the Consolidated Balance Sheets as follows:
Other current assets
Other long-term assets
Total Restricted cash
Summarized Cash Flow Information
Summarized cash flow information is as follows:
December 31,
2023
2022
$
$
70 $
28
98 $
55
39
94
Source/(Use)
Location in Statement of
Cash Flows
Year Ended December 31,
Provision for receivables(1)
Provision for inventory
Depreciation of buildings and equipment
Depreciation and obsolescence of equipment on
operating leases
Amortization of internal use software
Amortization of acquired intangible assets
Amortization of patents(2)
Amortization of customer contract costs(3)
Cost of additions to land, buildings and equipment
Cost of additions to internal use software
Payments to acquire noncontrolling interests - Xerox
Holdings
Common stock dividends - Xerox Holdings
Preferred stock dividends - Xerox Holdings
Payments to noncontrolling interests
Investment from noncontrolling interests
Repurchases related to stock-based compensation -
Xerox Holdings
Operating
Operating
Operating
Operating
Operating
Operating
Operating
Operating
Investing
Investing
Investing
Financing
Financing
Financing
Financing
Financing
2023
2022
2021
$
36 $
36 $
18
60
111
37
43
9
69
(29)
(8)
(5)
(151)
(14)
(2)
—
(8)
29
68
115
45
42
10
73
(36)
(21)
(13)
(160)
(14)
(1)
6
(12)
12
34
76
155
41
55
11
79
(29)
(39)
(8)
(192)
(14)
(1)
15
(18)
__________________________
(1) Provision for receivables includes adjustments for customer accommodations and contract terminations of $8, $(7), and $5 for the three
years ended December 31, 2023, 2022 and 2021, respectively.
(2) Amortization of patents is reported in Decrease in other current and long-term assets on the Consolidated Statements of Cash Flows.
(3) Amortization of customer contract costs is reported in Decrease 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 2023 Annual Report 109
Xerox 2023 Annual Report 109
Table of Contents
Supplier Finance Programs
The Company has a program through a financial institution that enables vendors and suppliers, at their option, to
receive early payment for their invoices. The program operates in a similar manner to a purchasing card program,
however with this program the Company directly receives invoices associated with those vendors and suppliers
participating in the program. The Company confirms and validates those invoices and the amounts due before
submitting the invoices to the financial institution for early payment at a discounted amount. The financial institution
subsequently invoices the Company for the stated or full amount of the invoices paid early and we are required to
make payment within 45 days of the statement date. The overall impact of the program generally results in the
Company paying its supplier and vendor invoices consistent with their original terms. This program is generally
available to all non-inventory vendors and suppliers. Spending associated with this program during 2023 was
approximately $125. 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 amounts due to vendors and suppliers participating in this program
and included in Accounts payable were approximately $40 at both December 31, 2023 and 2022, respectively.
Note 15 – Debt
Short-term borrowings were as follows:
Short-term debt and current portion of long-term debt
Xerox Holdings Corporation
Xerox Corporation
Xerox - Other Subsidiaries(1)
Total
_____________
(1) Represents subsidiaries of Xerox Corporation.
December 31,
2023
2022
$
$
— $
323
244
567 $
—
300
560
860
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 Income (Loss).
Xerox 2023 Annual Report 110
Table of Contents
Long-term debt was as follows:
Xerox Holdings Corporation
Senior Notes due 2025
Senior Notes due 2028
Subtotal - Xerox Holdings Corporation
Xerox Corporation
Senior Notes due 2023(2)
Senior Notes due 2024
Term Loan B due 2029(3)
Senior Notes due 2035
Senior Notes due 2039
Subtotal - Xerox Corporation
Xerox - Other Subsidiaries(3)
United States
Canada
France
Subtotal Xerox - Other Subsidiaries
Principal debt balance
Xerox Holdings Corporation - Debt issuance costs
Xerox Corporation - Debt issuance costs
Xerox - Other subsidiaries - Debt issuance costs
Subtotal - Debt issuance costs
Unamortized (discount) premium
Less: current maturities
Total Long-term Debt
Stated Rate
Weighted Average
Interest Rates at
December 31, 2023(1)
December 31,
2023
2022
5.00 %
5.50 %
4.38 %
3.80 %
9.34 %
4.80 %
6.75 %
4.95 % $
5.40 %
$
4.63 % $
3.84 %
9.65 %
4.84 %
6.78 %
750 $
750
1,500 $
— $
300
550
250
350
750
750
1,500
300
300
—
250
350
$
$
$
$
$
$
1,450 $
1,200
102 $
77
182
361 $
3,311 $
(6)
(12)
(1)
(19) $
(15)
(567)
2,710 $
790
57
195
1,042
3,742
(9)
(4)
(5)
(18)
2
(860)
2,866
_____________
(1) Represents the weighted average effective interest rate, which includes the effect of discounts and premiums on issued debt.
(2) As a result of the downgrade of our debt ratings in February 2022, the coupon rate of 4.375% increased by 0.25% to 4.625% effective
March 15, 2022.
(3) 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..
Scheduled principal payments due on our long-term debt for the next five years and thereafter are as follows:
2024(1)
2025
2026
2027
2028
Thereafter
Total
Xerox Holdings Corporation
Xerox Corporation
Xerox - Other Subsidiaries(2)
Total
$
$
— $
328
244
572 $
750 $
27
102
879 $
— $
41
15
56 $
— $
55
—
55 $
750 $
— $
55
—
944
—
805 $
944 $
1,500
1,450
361
3,311
_____________
(1) Current portion of long-term debt maturities for 2024 are $113, $378, $41 and $40 for the first, second, third and fourth quarters,
respectively.
(2) Represents subsidiaries of Xerox Corporation.
Xerox Holdings Corporation/Xerox Corporation Intercompany Loan
In February 2021, Xerox Holdings Corporation and Xerox Corporation entered into an Intercompany Loan
agreement for the net proceeds of $1,494 contributed by Xerox Holdings Corporation to Xerox Corporation in 2020.
The contribution was the result of the net debt proceeds Xerox Holdings Corporation received in connection with the
issuance of the Senior Notes.
The intercompany loan was established to mirror the terms of Xerox Holdings Corporation’s 2025 and 2028 Senior
Notes, including interest rates and payment dates. The intercompany interest expense also includes a ratable
amount to reimburse Xerox Holdings Corporation for its debt issuance costs and premium.
At December 31, 2023 and 2022, the balance of the Intercompany Loan reported in Xerox Corporation’s
Consolidated Balance Sheet was $1,497 and $1,496, respectively, which is net of related debt issuance costs, and
the intercompany interest payable was $30 and $30, respectively.
Xerox 2023 Annual Report 111
Xerox 2023 Annual Report 111
Table of Contents
Revolving Credit Facility
In May 2023, Xerox Corporation, as borrower, its parent company, Xerox Holdings Corporation, and certain of its
subsidiaries, as guarantors, entered into a five-year asset-based revolving credit agreement (the ABL Facility) with
Citibank, N.A., as administrative and collateral agent and several participating lending banks including Citibank N.A.
The aggregate outstanding principal amount of the ABL is payable in full at maturity on May 22, 2028, and there are
no scheduled principal payments prior to maturity. We deferred approximately $7 of debt issuance costs in
connection with the ABL Facility, which will be amortized over the five-year term. Our previous $250 Revolving
Credit Facility due July 2024 was terminated prior to entering into the ABL Facility and resulted in a debt
extinguishment loss of approximately $1 related to the write-off of deferred debt issuance costs.
Under the ABL Facility, Xerox Corporation may borrow up to the lesser of (x) $300 and (y) a borrowing base
calculated based on working capital amounts (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 Canadian and English subsidiaries (and, within a specified period following the
closing date of the TLB - see below - certain U.S., German and Belgian subsidiaries), and by security interests in
substantially all of the working capital assets of Xerox Corporation, Xerox Holdings Corporation, and such Canadian
and English subsidiaries (and, within a specified period following the closing date of the TLB (see below),
substantially all assets of Xerox Corporation, Xerox Holdings Corporation and such U.S., Canadian and English
subsidiaries (subject to certain exceptions and limitations set forth in the TLB), and all finance lease receivables of
such German and Belgian subsidiaries).
At Xerox Corporation’s election, the loans under the ABL Facility will bear interest at either:
(1) a fluctuating rate per annum equal to the highest of (A) Citibank’s base rate, (B) a rate of 0.5% in excess of
the “NYFRB” rate, and (C) a rate of 1.0% in excess of one-month Term SOFR, provided that such
fluctuating rate shall not be less than 0.0%, in each case plus an applicable margin (the loans bearing
interest at such fluctuating rate, “ABR Loans”); 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 excess
availability. The applicable margin for Term SOFR loans from 1.5% to 2.0% depending on the Company’s average
daily excess availability.
At December 31, 2023, there were no borrowings under the ABL Facility, and no letters of credits were issued under
the facility. During 2023, maximum borrowings under the ABL Facility were $220.
The 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) $22.5 and (B) 10% of the Line Cap (the lesser of the aggregate amount of Revolving
Commitments and the then-applicable Borrowing Base). Based on the excess availability at December 31, 2023,
the fixed charge coverage ratio measurement was not applicable. The ABL Facility also contains negative
covenants governing dividends, investments, indebtedness, and other matters customary for similar facilities. As of
December 31, 2023, we were in full compliance with all covenants under the ABL Facility and no Event of Default
(as such term is defined in the ABL Facility) had occurred.
If an event of default occurs under the ABL Facility, the entire principal amount outstanding, together with all
accrued unpaid interest and other amounts owed in respect thereof, may be declared immediately due and payable,
subject, in certain instances, to the expiration of applicable cure periods.
Term Loan B Credit Facility
In November 2023, Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation, and
certain of Xerox’s subsidiaries, as guarantors, entered into a first lien term loan Credit Agreement with Jefferies
Finance LLC (Jefferies Finance), as Administrative Agent and Collateral Agent, and a syndicate of Lenders
providing for a first lien senior secured term loan credit facility (the Term Loan B or “TLB”) to Xerox Corporation of
$550, which was fully extended as term loans to Xerox Corporation at closing. The term loans under this facility
Xerox 2023 Annual Report 112
Table of Contents
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 will be amortized over the
term of the Loans.
The proceeds of the term loans were used to repay in full the bridge Loan Facility of $555 extended to Xerox under
a credit agreement, dated as of September 28, 2023, entered into with Jefferies Finance as Administrative Agent,
Collateral Agent and Lender. The Loan Facility was a 5-year agreement with a final maturity date of September 28,
2028 and bore interest at an annual rate of 8.50%. The proceeds from that bridge loan were used to finance the
repurchase of an aggregate of approximately 34 million shares of the Company’s common stock from Carl C. Icahn
and certain of his affiliates pursuant to the terms of a related purchase agreement as disclosed in Note 22 –
Shareholders’ Equity. The repayment of the Loan Facility resulted in a debt extinguishment loss of $7 primarily
related to the write-off of deferred debt issuance costs.
Xerox’s obligations under the TLB are supported by, (i) on the closing date thereof, guarantees from the Company
and certain of Xerox’s U.S., Canadian and English subsidiaries, and security interests in substantially all of the
assets of Xerox, the Company, and such U.S., Canadian and English subsidiaries (subject to certain exceptions and
limitations set forth in the TLB), and (ii) within a specified period following such closing date, guarantees from
certain of Xerox’s German and Belgium subsidiaries, and security interests in the finance lease receivables of such
German and Belgium subsidiaries. Liens in favor of the Lenders under the TLB are subject to an intercreditor
agreement entered into on the Closing Date with the Administrative Agent and Collateral Agent under Xerox’s
existing ABL Facility, dated as of May 22, 2023.
At Xerox’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. Based on Xerox’s current elections, the $550 of term loans at December 31,
2023 currently bear interest at an average of 9.34% through January 31, 2024, at which time the interest rate will
reset based on Xerox’s elections.
The term loans are repayable in full at maturity in November 2029 and amortize at a rate of 5% per annum in 2024
and 2025, 7.5% per annum in 2026 and 10% per annum thereafter. If the term loans are voluntarily prepaid in
connection with a repricing transaction within six months of the closing date, a prepayment premium of 1% will
apply.
If an event of default occurs under the TLB, 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 also contains customary
excess cash flow and asset sale mandatory prepayments, reporting covenants and negative covenants governing
dividends, investments, indebtedness, and other matters that are customary for similar term loan B facilities.
Secured Borrowings and Collateral
Over the past three years, we have entered into secured loan agreements with various financial institutions where
we sold finance receivables and rights to payments under our equipment on operating leases. In certain
transactions, the sales were made to special purpose entities (SPEs), owned and controlled by Xerox, where the
SPEs funded the purchase through amortizing secured loans from the financial institutions. The loans have variable
interest rates and expected lives of approximately 2.5 years, with half projected to be repaid within the first year
based on collections of the underlying portfolio of receivables. For certain loans, we entered into interest rate hedge
agreements to either fix or cap the interest rate over the life of the loan.
The sales of the receivables to the SPEs were structured as "true sales at law," and we have received opinions to
that effect from outside legal counsel. However, the transactions were accounted for as secured borrowings as we
fully consolidate the SPEs in our financial statements. As a result, the assets of the SPEs are not available to satisfy
any of our other obligations. Conversely, the credit holders of these SPEs do not have legal recourse to the
Company’s general credit.
Xerox 2023 Annual Report 113
Xerox 2023 Annual Report 113
Table of Contents
Below are the secured assets and obligations held by subsidiaries of Xerox, which are included in our Consolidated
Balance Sheets.
United States(4)
January 2022
September 2021
Total U.S.
Canada(4)(5)
July 2023
France(6)
November 2023
Total
United States(4)
December 2022(7)
January 2022
September 2021
Total U.S.
Canada(4)
April 2022
France
December 2022
Total
Balance at December 31, 2023
Finance
Receivables,
Net(1)
Equipment on
Operating
Leases, Net
Secured
Debt(2)
Interest Rate(3)
Expected
Maturity
209
89
—
2
298 $
2 $
77
25
102
6.82 %
6.76 %
2024
2024
86 $
— $
77
6.74 %
2026
235 $
— $
619 $
2 $
182
361
5.42 %
2026
$
$
$
$
Balance at December 31, 2022
Finance
Receivables,
Net(1)
Equipment on
Operating
Leases, Net
Secured
Debt(2)
Interest Rate(3)
Expected
Maturity
$
$
$
$
$
370 $
528
180
1,078 $
— $
—
5
5 $
247
407
136
790
7.43 %
5.83 %
5.65 %
2025
2024
2024
63 $
— $
57
5.45 %
2025
235 $
— $
195
3.03 %
2025
1,376 $
5 $
1,042
_____________
(1)
Includes (i) Billed portion of finance receivables, net (ii) Finance receivables, net and (iii) Finance receivables due after one year, net as
included in the Consolidated Balance Sheets as of December 31, 2023 and 2022.
(2) Represents principal debt balance and excludes debt issuance costs of $1 and $5 as of December 31, 2023 and 2022, respectively.
(3) Represents the pre-hedged rate - refer to Note 16 - Financial Instruments for additional information regarding hedging of these borrowings.
(4) Secured assets and obligations held by SPEs.
(5)
In July 2023, the outstanding balance from the April 2022 loan, was refinanced into a new loan, resulting in additional net proceeds of
approximately $52.
In November 2023, the outstanding balance from the December 2022 loan, was refinanced into a new loan, resulting in additional net
proceeds of approximately $107.
In the second quarter of 2023, we repaid the remaining balance of $185 early, and incurred a $2 loss on extinguishment.
(6)
(7)
Interest
Interest paid on our short-term and long-term debt amounted to $201, $201 and $203 for the years ended
December 31, 2023, 2022 and 2021, respectively. Interest expense and interest income was as follows:
Interest expense(1) (2)
Interest income(3)
Year Ended December 31,
2023
2022
2021
$
198 $
207
199 $
218
207
225
_____________
(1)
Includes Equipment financing interest as well as non-financing interest expense included in Other expenses, net in the Consolidated
Statements of Income (Loss).
Interest expense of Xerox Corporation included intercompany expense associated with the Xerox Holdings Corporation/Xerox Corporation
Intercompany Loan of $80, $80 and $80 for the three years ended December 31, 2023, 2022 and 2021, respectively.
Includes Finance income, as well as other interest income that is included in Other expenses, net in the Consolidated Statements of Income
(Loss).
(2)
(3)
Xerox 2023 Annual Report 114
Table of Contents
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, and the Japanese Yen. 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 depending on the nature of the risk being hedged. We had no fair value hedges for the three-
year period ended December 31, 2023, 2022, and 2021, 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.
At December 31, 2023 there were four interest rate derivatives outstanding on our finance receivable secured
borrowings that are designated as cash flow hedges as follows:
Borrowing
Derivative Type
Principal
Debt (1)
Notional
Amount
Expected
Maturity
Pre-Hedged
Rate
Hedged Rate
Net Fair
Value
U.S. (September 2021) Cap
$
25 $
Canada
France
France
Total
Swap
Cap
Cap
77
182
—
$
284 $
30
77
118
65
290
2024
2026
2026
2026
6.76 %
6.74 %
5.42 %
5.42 %
0.50 %
5.19 %
3.00 %
4.00 %
$
—
(1)
—
1
—
_____________
(1) Reflects principal debt and excludes debt issuance costs of $1 at December 31, 2023.
No material amount of ineffectiveness was recorded in the Consolidated Statements of Income (Loss) for these
designated cash flow hedges and all components of each derivative’s gain or loss were included in the assessment
of hedge effectiveness. In December 2023, an interest rate Cap associated with the December 2022 U.S. secured
borrowing with a notional value of $173 was dedesignated as a cash flow hedge and the net fair value recorded in
Accumulated Other Comprehensive Loss was reclassified to earnings.
Xerox 2023 Annual Report 115
Xerox 2023 Annual Report 115
Table of Contents
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, 2023, we had outstanding forward exchange and purchased option contracts with terms of less
than 12 months. At December 31, 2023, approximately 94% of these contracts mature within three months, 3% in
three to six months and 3% in six to twelve months.
During second quarter 2023, as a result of a change in the currency terms included in a significant supplier
inventory contract, forecasted purchases of inventory in YEN were no longer expected. This change resulted in
decrease in our YEN/USD and YEN/EUR hedging positions in 2023. There have not been any other material
changes in our hedging strategy during 2023.
The following is a summary of the primary hedging positions and corresponding fair values as of December 31,
2023:
$
Currencies Hedged (Buy/Sell)
Euro/U.K. Pound Sterling
U.S. Dollar/Euro
Euro/Canadian Dollar
Euro/U.S. Dollar
Japanese Yen/U.S. Dollar
Japanese Yen/Euro
U.S. Dollar/Canadian Dollar
Swedish Krona/Euro
Euro/Swedish Krona
U.K. Pound Sterling/Euro
Euro/Danish Krone
Canadian Dollar/Euro
All Other
Total Foreign exchange hedging
$
Year Ended December 31,
2023
2022
Gross Notional
Value
Fair Value
Asset(1)
Gross Notional
Value
Fair Value
Asset(1)
385 $
359
169
150
113
60
—
—
—
36
25
24
75
1,396 $
3 $
(3)
—
1
1
—
—
—
—
—
—
—
—
2 $
297 $
127
131
70
389
250
53
49
45
—
—
—
130
1,541 $
6
(1)
—
—
3
(1)
1
—
—
—
—
—
—
8
_____________
(1) Represents the net receivable (payable) amount included in the Consolidated Balance Sheet at December 31, 2023.
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
Income (Loss) for these designated cash flow hedges was not material for the three years ended December 31,
2023. The net liability fair value of these contracts was $2 and $4 as of December 31, 2023 and 2022, respectively.
Xerox 2023 Annual Report 116
Table of Contents
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:
Derivatives in Cash Flow
Hedging Relationships
Foreign exchange contracts –
forwards/options
Interest rate contracts
Total
$
$
Derivative (Loss) Gain Recognized in
OCI (Effective Portion)
Year Ended December 31,
2023
2022
2021
Location of Derivative
(Loss) Gain Reclassified
from AOCI into Income
(Effective Portion)
(Loss) Gain Reclassified from AOCI to
Income (Effective Portion)
Year Ended December 31,
2023
2022
2021
(17) $
(41) $
(12) Cost of sales
(1)
6
—
Interest expense
(18) $
(35) $
(12)
$
$
(22) $
(36) $
4
1
(18) $
(35) $
(7)
—
(7)
For the three years ended December 31, 2023, 2022 and 2021 no amount of ineffectiveness was recorded in the
Consolidated Statements of Income (Loss) 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, 2023, a net after-tax loss of $3 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.
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 fair value of these contracts was $5 and
$12 as of December 31, 2023 and 2022, respectively.
The following table provides a summary of gains (losses) on non-designated derivative instruments:
Derivatives NOT Designated as
Hedging Instruments
Location of Derivative Gain (Loss)
2023
2022
2021
Foreign exchange contracts –
forwards
Other expense – Currency gains
(losses), net
$
26 $
17 $
(26)
Year Ended December 31,
For the three years ended December 31, 2023, 2022 and 2021, we recorded net currency losses, net of $28, $13
and $7, 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 2023 Annual Report 117
Xerox 2023 Annual Report 117
Table of Contents
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.
Assets
Derivatives
Deferred compensation investments in mutual funds
Total
Liabilities
Derivatives
Deferred compensation plan liabilities
Total
As of December 31,
2023
2022
$
$
$
$
11 $
14
25 $
8 $
13
21 $
26
15
41
11
14
25
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:
Cash and cash equivalents
Accounts receivable, net
Short-term debt and current portion of long-term debt
Long-term debt
Xerox Holdings Corporation
Xerox Corporation
Xerox - Other Subsidiaries(1)
Total Long-term debt
_____________
(1) Represents subsidiaries of Xerox Corporation.
December 31, 2023
December 31, 2022
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
$
$
$
519 $
519 $
1,045 $
850
567
850
567
857
860
1,497 $
1,410 $
1,496 $
1,096
117
1,023
117
894
476
2,710 $
2,550 $
2,866 $
1,045
857
861
1,294
726
478
2,498
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 2023 Annual Report 118
Table of Contents
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 an insurance buy-in contract, in accordance with
U.K. pension regulations. The insurance buy-in contract is a group annuity contract that is 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 until full liquidation of
certain illiquid assets of the plan. The insurance 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 an extension of a similar 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.
Effective January 1, 2023, we implemented a new defined contribution plan in the Netherlands to provide future
retirement benefits for eligible employees and ceased accruals in in the existing pension plan in the Netherlands.
We recorded this change as a curtailment effective December 31, 2022. The benefits accrued prior to 2023 under
the pension plan in the Netherlands remain in a Collective Defined Contribution (CDC) plan. From a Company risk
perspective, this portion of the plan operates just like a defined contribution plan as the company is only responsible
for a contribution for annual benefit accruals under 5-year agreements through 2022. Although the Company's risk
has been mitigated, under U.S. GAAP this plan doesn’t meet the definition of a defined contribution plan and
therefore it continues to be accounted for as a defined benefit plan.
Xerox 2023 Annual Report 119
Xerox 2023 Annual Report 119
Table of Contents
1
8
9
(59)
(7)
(26)
—
(27)
7
209
—
—
19
8
—
(27)
—
—
Change in Benefit Obligation:
Benefit obligation, January 1
Service cost
Interest cost (income)
Plan participants' contributions
Actuarial loss (gain)
Currency exchange rate changes
Plan amendment
Plan curtailments
Benefits paid/settlements
Other
Pension Benefits
U.S. Plans
Non-U.S. Plans
Retiree Health
2023
2022
2023
2022
2023
2022
$
2,345 $
3,372 $
4,240 $
6,543 $
209 $
303
—
116
—
75
—
—
—
(147)
—
1
(65)
—
(643)
—
—
—
(320)
—
5
188
1
165
205
36
—
(273)
—
16
123
2
(1,697)
(534)
72
(20)
(265)
—
1
10
7
(5)
2
(3)
—
(28)
—
Benefit Obligation, December 31
$
2,389 $
2,345 $
4,567 $
4,240 $
193 $
Change in Plan Assets:
Fair value of plan assets, January 1
Actual return on plan assets
Employer contributions
Plan participants' contributions
Currency exchange rate changes
Benefits paid/settlements
Other
Fair Value of Plan Assets, December 31
Net Funded Status at December 31(1)
Amounts Recognized in the Consolidated Balance
Sheets:
Other long-term assets
Accrued compensation and benefit costs
Pension and other benefit liabilities
Post-retirement medical benefits
Net Amounts Recognized
Accumulated Benefit Obligation
_____________
(1)
Includes under-funded and unfunded plans.
$
$
$
$
$
$
1,518 $
2,544 $
4,594 $
7,252 $
104
53
—
—
(147)
—
1,528 $
(730)
24
—
—
(320)
—
1,518 $
89
(1,865)
28
1
223
(273)
—
4,662 $
81
2
(609)
(265)
(2)
4,594 $
— $
—
21
7
—
(28)
—
— $
(861) $
(827) $
95 $
354 $
(193) $
(209)
— $
(24)
(837)
—
(861) $
— $
(24)
(803)
—
(827) $
423 $
(20)
(308)
—
95 $
667 $
(19)
(294)
—
354 $
— $
(22)
—
(171)
(193) $
—
(25)
—
(184)
(209)
2,389 $
2,345 $
4,526 $
4,194
Pension and other benefit liabilities include the following additional accounts at December 31st:
Pension liabilities(1)
Accrued compensation liabilities
Deferred compensation liabilities(2)
Pension and other benefit liabilities
__________________________
(1) Reflects pension net funded status liability.
December 31,
2023
2022
$
$
1,145 $
56
15
1,216 $
1,097
61
17
1,175
(2)
Includes amounts measured at fair value on a recurring basis at December 31, 2023 and 2022 of $13 and $14, respectively. Refer to Note
17 - Fair Value of Financial Assets and Liabilities for additional information regarding deferred compensation liabilities.
Benefit plans pre-tax amounts recognized in AOCL at December 31st:
Net actuarial loss (gain)
Prior service cost (credit)
Total loss (gain) - Pre-tax
Pension Benefits
U.S. Plans
Non-U.S. Plans
Retiree Health
2023
2022
2023
2022
2023
2022
$
$
731 $
692 $
—
—
731 $
692 $
1,551 $
134
1,685 $
1,202 $
99
1,301 $
(73) $
(82)
(155) $
(79)
(94)
(173)
Xerox 2023 Annual Report 120
Table of Contents
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.
Underfunded Plans:
U.S.
Non-U.S.
Unfunded Plans:
U.S.
Non-U.S.
Total Underfunded and Unfunded Plans:
U.S.
Non-U.S.
Total
December 31, 2023
December 31, 2022
Accumulated
Benefit Obligation
Fair Value of
Plan Assets
Accumulated
Benefit Obligation
Fair Value of
Plan Assets
$
$
$
$
2,146 $
46
1,528 $
40
2,098 $
44
243 $
317
— $
—
247 $
304
2,389 $
363
2,752 $
1,528 $
40
1,568 $
2,345 $
348
2,693 $
1,518
38
—
—
1,518
38
1,556
Aggregate information for pension plans with a projected benefit obligation in excess of plan assets is presented
below:
Underfunded Plans:
U.S.
Non-U.S.
Unfunded Plans:
U.S.
Non-U.S.
Total Underfunded and Unfunded Plans:
U.S.
Non-U.S.
Total
December 31, 2023
December 31, 2022
Projected Benefit
Obligation
Fair Value of
Plan Assets
Projected Benefit
Obligation
Fair Value of
Plan Assets
$
$
$
$
2,146 $
47
1,528 $
40
2,098 $
45
243 $
322
— $
—
247 $
308
2,389 $
369
2,758 $
1,528 $
40
1,568 $
2,345 $
353
2,698 $
1,518
38
—
—
1,518
38
1,556
Pension plan assets and benefit obligations by country were as follows:
December 31, 2023
December 31, 2022
Fair Value of
Pension Plan
Assets
Projected
Benefit
Obligation
Net Funded
Status
Fair Value of
Pension Plan
Assets
Projected
Benefit
Obligation
Net Funded
Status
$
1,528 $
2,146 $
—
1,528
2,892
839
586
—
345
243
2,389
2,655
769
562
248
333
$
6,190 $
6,956 $
(618) $
(243)
(861)
237
70
24
(248)
12
(766) $
1,518 $
2,098 $
—
1,518
2,903
793
553
—
345
247
2,345
2,439
729
532
237
303
6,112 $
6,585 $
(580)
(247)
(827)
464
64
21
(237)
42
(473)
U.S. funded
U.S. unfunded
Total U.S.
U.K.
Netherlands
Canada
Germany
Other
Total
Xerox 2023 Annual Report 121
Xerox 2023 Annual Report 121
Table of Contents
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
2023
2022
2021
2023
2022
2021
2023
2022
2021
$
— $
1 $
2 $
5 $
16 $
20 $
1 $
1 $
116
(103)
16
(65)
71
13
80
(117)
17
188
(217)
11
123
(226)
23
88
(208)
59
—
19
—
48
19
67 $
—
56
—
76
20
96 $
(1)
54
—
35
—
35 $
5
1
—
(7)
21
14 $
1
—
(4)
(67)
17
(50) $
(1)
1
(4)
(45)
18
(27) $
$
10
—
(12)
(15)
—
—
(16)
n/a
(16) $
8
—
(4)
(8)
—
—
(3)
n/a
(3) $
$
74 $
16 $
(57) $
298 $
368 $
(425) $
(5) $
(57) $
—
—
—
36
72
(4)
(3)
(26)
(35)
(69)
(71)
(12)
(23)
(60)
—
—
—
—
1
—
(5)
—
(1)
4
1
4
12
15
—
4
15
—
$
39 $
(53) $
(127) $
317 $
420 $
(484) $
19 $
(64) $
2
8
—
1
(66)
—
—
(55)
n/a
(55)
(1)
(50)
(1)
66
—
14
$
106 $
43 $
(92) $
331 $
370 $
(511) $
3 $
(67) $
(41)
Components of Net Periodic
Benefit Costs:
Service cost
Interest cost (income)(1)
Expected return on plan assets(2)
Recognized net actuarial loss (gain)
Amortization of prior service (credit)
cost
Recognized settlement loss
Recognized curtailment gain
Defined Benefit Plans
Defined contribution plans
Net Periodic Benefit Cost (Credit)
Other changes in plan assets and
benefit obligations recognized in
Other Comprehensive (Loss)
Income:
Net actuarial loss (gain)
Prior service cost (credit)
Amortization of net actuarial (loss)
gain
Amortization of net prior service
credit (cost)
Curtailment gain
Total Recognized in Other
Comprehensive (Loss) Income(3)
Total Recognized in Net Periodic
Benefit Cost (Credit) and Other
Comprehensive (Loss) Income
_____________
(1)
Interest cost for Pension Benefits includes interest expense on non-TRA obligations of $284, $205 and $150 and interest expense/(income)
directly allocated to TRA participant accounts of $20, $(147) and $18 for the years ended December 31, 2023, 2022 and 2021, respectively.
(2) Expected return on plan assets includes expected investment income on non-TRA assets of $300, $302 and $307 and actual investment
income/(loss) on TRA assets of $20, $(147) and $18 for the years ended December 31, 2023, 2022 and 2021, respectively.
(3) Amounts represent the pre-tax effect included in Other comprehensive income. Refer to Note 24 - Other Comprehensive (Loss) Income for
the related tax effects and the net of tax amounts.
Plan Amendments
Pension:
In April 2023 and 2022, 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 2023 and 2022 pension increase
award to 6.5% and 7.5%, respectively. The April 2023 plan amendment resulted in an increase of $36 in the
projected benefit obligation (PBO) for this plan and the April 2022 plan amendment resulted in an increase of
approximately $72 in the PBO for this plan, with both 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, 2023, the aggregate cost for this matter was estimated to be approximately GBP 17 million
(approximately USD $22). This latest estimate reflects a most recent analysis completed by the Plan Actuary
adjusted for market conditions at December 31, 2023. The equalization method was agreed between the Company
and Trustee and is in the process of being implemented.
Xerox 2023 Annual Report 122
Table of Contents
Retiree Health Plans:
During 2022, we amended our U.S. Retiree Health Plan to reduce benefits and eliminate coverage for existing union
retirees and for certain union employees as a result of contract negotiations. These negative plan amendments
resulted in a reduction of approximately $30 in the Company's postretirement benefit obligation.
In December 2021, we amended our U.S. Retiree Health Plan to reduce certain benefits for existing union retirees
through the reduction or elimination of coverage or cost-sharing subsidies for retiree health care and life insurance
costs. This negative plan amendment resulted in a reduction of $50 in the postretirement benefit obligation.
Plan Assets
Current Allocation
As of the 2023 and 2022 measurement dates, the global pension plan assets were $6,190 and $6,112, 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.
U.S. Plans
Non-U.S. Plans
December 31, 2023
Asset Class
Cash and cash equivalents
Equity Securities:
U.S.
International
Fixed Income Securities:
U.S. treasury securities
Debt security issued by
government agency
Corporate bonds
Derivatives
Real estate
Private equity/venture capital
Guaranteed insurance
contracts
Other(2)(3)
Total Fair Value of Plan
Assets
Level 1
$
Level 2
Level 3
— $ — $
1 $
Total
Level 1
Level 2
452 $ — $
Level 3
Assets
measured
at NAV(1)
48
87
—
—
—
—
—
—
—
(18)
—
—
74
134
660
57
—
—
—
—
—
—
—
—
—
—
47
—
—
—
— $
1 $
—
127
—
—
—
—
12
48
214
74
134
660
57
59
157
157
—
—
142
124
13
315
—
—
—
—
—
—
—
24
20
—
2
546
197
90
—
—
Assets
measured
at NAV(1)
Total
— $
— $ 452
—
—
—
—
—
—
106
—
27
—
—
—
—
70
33
342
2
546
197
90
176
4
311
315
—
2,481
4
—
—
—
2,481
28
$
118 $
925 $
47 $
438 $ 1,528 $
804 $
859 $ 2,591 $
408 $ 4,662
_____________
(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 NAV includes mutual funds of $92 (measured at NAV) which are invested approximately 70% in fixed income securities and
approximately 30% in equity securities.
(3) At December 31, 2023, 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 $(18), while the Non-U.S. plans had net assets of $24.
Xerox 2023 Annual Report 123
Xerox 2023 Annual Report 123
Table of Contents
U.S. Plans
Non-U.S. Plans
December 31, 2022
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
$
3 $
— $
— $
— $
3 $
532 $
— $
— $
— $ 532
Equity Securities:
U.S.
International
Fixed Income Securities:
U.S. treasury securities
Debt security issued by
government agency
Corporate bonds
Derivatives
Real estate
Private equity/venture
capital
Guaranteed insurance
contracts
Other(2)(3)
Total Fair Value of Plan
Assets
44
89
—
—
—
—
—
—
—
—
—
—
73
151
644
(8)
—
—
—
—
—
—
—
—
—
—
57
—
—
—
—
128
—
—
—
—
13
44
217
73
151
644
(8)
70
202
202
—
122
—
122
75
358
—
—
—
—
—
—
—
22
27
2
72
1,326
263
79
—
—
—
17
—
—
—
—
—
—
144
—
30
—
—
—
—
71
102
390
72
1,326
263
79
215
4
1,089
1,093
483
—
—
—
483
39
$
136 $
860 $
57 $
465 $ 1,518 $
987 $ 1,786 $
631 $
1,190 $ 4,594
_____________
(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 NAV includes mutual funds of $94 (measured at NAV) which are invested approximately 30% in fixed income securities and
approximately 70% in equity securities.
(3) Other Level 1 includes net non-financial, Non-U.S assets of $22, such as due to/from broker, interest receivables and accrued expenses.
The following tables represents a rollforward of the defined benefit plans assets measured at fair value using
significant unobservable inputs (Level 3 assets):
U.S.
Real Estate
Real Estate
Non-U.S.
Private Equity/
Venture Capital
Guaranteed
Insurance
Contracts
Total
51 $
—
(2)
8
—
57 $
—
(13)
3
—
47 $
164 $
—
(19)
(10)
9
144 $
—
(16)
(31)
9
106 $
4 $
—
—
1
(1)
4 $
—
—
—
—
4 $
75 $
569
(5)
(133)
(23)
483 $
1,951
(3)
(9)
59
2,481 $
243
569
(24)
(142)
(15)
631
1,951
(19)
(40)
68
2,591
$
$
Balance at December 31, 2021
Purchases
Sales
Unrealized gains (losses)
Currency translation
Balance at December 31, 2022
Purchases
Sales
Unrealized gains (losses)
Currency translation
Balance at December 31, 2023
$
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. 2022 and 2023
purchases of Guaranteed Insurance Contracts (GICs) include the purchase of a buy-in annuity contract, which has
been valued based on the member benefits covered by the contract adjusted for current market factors. The
valuation techniques and inputs for our Level 3 assets have been consistently applied for all periods presented.
Xerox 2023 Annual Report 124
Table of Contents
Investment Strategy
The target asset allocations for our worldwide defined benefit pension plans were:
Equity investments(1)
Fixed income investments
Real estate
Private equity/venture capital
Other
Total Investment Strategy
U.S.
24%
60%
6%
8%
2%
100%
2023
Non-U.S.(2)
8%
16%
4%
8%
64%
100%
U.S.
24%
60%
6%
8%
2%
100%
2022
Non-U.S.
11%
36%
5%
25%
23%
100%
_____________
(1) Target allows for an additional allocation to synthetic equity which is offset by cash.
(2) Significant changes in asset allocation in Non-U.S. are due to the U.K. pension plan entering an insurance buy-in contract, which is included
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.
U.S. Plans
Non-U.S. Plans
Total Pension Plans
Retiree Health
Total Retirement Plans
Year Ended December 31,
2023
Estimated
2024
53 $
28
81 $
21
102 $
100
30
130
20
150
$
$
$
Approximately $30 of the 2023 contributions for our U.S. plans were for our tax-qualified defined benefit plans.
Approximately $80 of estimated contributions for 2024 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 2023 Annual Report 125
Xerox 2023 Annual Report 125
Table of Contents
Estimated Future Benefit Payments
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid
during the following years:
2024
2025
2026
2027
2028
Years 2029-2033
Assumptions
U.S.
$
Pension Benefits
Non-U.S.
Total
Retiree Health
266 $
235
228
224
213
904
279 $
285
293
298
306
1,629
545 $
520
521
522
519
2,533
20
20
18
17
16
63
Weighted-average assumptions used to determine benefit obligations at the plan measurement dates:
Discount rate
Rate of compensation increase
Interest crediting rate
Discount rate
2023
Pension Benefits
2022
2021
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
4.9 %
— %
4.5 %
4.1 %
2.7 %
2.5 %
5.1 %
— %
4.5 %
4.5 %
2.9 %
2.1 %
2.7 %
0.1 %
2.8 %
1.8 %
2.8 %
1.5 %
2023
Retiree Health
2022
2021
4.7 %
5.0 %
2.7 %
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
Discount rate
Expected return on plan assets
Rate of compensation increase
Interest crediting rate
Discount rate
Pension Benefits
2024
2023
2022
2021
U.S.
4.9 %
8.1 %
— %
4.5 %
Non-U.S.
4.1 %
4.3 %
2.7 %
2.5 %
U.S.
5.1 %
8.1 %
— %
4.5 %
Non-U.S.
4.5 %
4.3 %
2.9 %
2.1 %
U.S.
2.7 %
5.9 %
0.1 %
2.5 %
Non-U.S.
1.8 %
3.2 %
2.8 %
1.5 %
U.S.
2.2 %
5.9 %
0.1 %
2.8 %
Non-U.S.
1.3 %
3.1 %
2.6 %
1.5 %
Retiree Health
2024
2023
2022
2021
4.7 %
5.0 %
2.7 %
2.2 %
_____________
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:
Health care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
Year that the rate reaches the ultimate trend rate
Defined Contribution Plans
December 31,
2023
2022
6.3 %
4.2 %
2028
5.1 %
4.3 %
2026
We have post-retirement 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 $40 in 2023,
$37 in 2022 and $18 in 2021.
During 2021, the Company suspended its full year employer matching contribution for its U.S. based 401(k) plan for
salaried (non-union) employees. The employer matching contribution was reinstated for 2022 and was made in the
first quarter of 2023.
Xerox 2023 Annual Report 126
Table of Contents
Note 19 - Income and Other Taxes
Loss before income taxes was as follows:
Domestic loss
Foreign income (loss)
Loss before Income Taxes
The components of Income tax benefit were as follows:
Federal Income Taxes
Current
Deferred
Foreign Income Taxes
Current
Deferred
State Income Taxes
Current
Deferred
Income Tax Benefit
Year Ended December 31,
2022
2021
2023
(89) $
61
(28) $
(319) $
(6)
(325) $
(341)
(131)
(472)
Year Ended December 31,
2022
2021
2023
21 $
(65)
18
21
—
(24)
(29) $
(5) $
(16)
23
(2)
6
(9)
(3) $
33
(61)
29
(20)
10
(8)
(17)
$
$
$
$
A reconciliation of the U.S. federal statutory income tax rate to the consolidated effective income tax rate was as
follows:
U.S. federal statutory income tax rate
Nondeductible expenses
Effect of tax law changes
Change in valuation allowance for deferred tax assets
State taxes, net of federal benefit
Audit and other tax return adjustments
Tax-exempt income, credits and incentives
Foreign rate differential adjusted for U.S. taxation of foreign profits(1)
Stock-based compensation
Goodwill impairment
Divestitures
Other
Effective Income Tax Rate
2023
Year Ended December 31,
2022
2021
21.0 %
(32.2) %
— %
15.6 %
(21.9) %
83.0 %
59.0 %
(32.3) %
(13.0) %
— %
25.3 %
(0.9) %
103.6 %
21.0 %
(3.6) %
0.1 %
(2.2) %
0.3 %
(1.6) %
8.7 %
(0.1) %
(0.6) %
(22.0) %
— %
0.9 %
0.9 %
21.0 %
(1.9) %
3.1 %
2.0 %
(0.6) %
5.6 %
4.5 %
(0.9) %
(0.2) %
(29.1) %
— %
0.1 %
3.6 %
_____________
(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.
On a consolidated basis, we paid a total of $51, $50 and $61 in income taxes to federal, foreign and state
jurisdictions during the three years ended December 31, 2023, 2022 and 2021, respectively.
Total income tax expense was allocated to the following items:
Pre-tax loss
Common shareholders' equity:
Changes in defined benefit plans
Cash flow hedges
Translation adjustments
Total Income Tax Expense
Year Ended December 31,
2023
2022
2021
(29) $
(3) $
93
1
—
65 $
70
(1)
—
66 $
(17)
143
(1)
(4)
121
$
$
Xerox 2023 Annual Report 127
Xerox 2023 Annual Report 127
Table of Contents
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. As of December 31, 2023, we do not believe that there are any positions for
which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or
decrease within the next 12 months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at January 1
Additions related to current year
Additions related to prior years positions
Reductions related to prior years positions
Settlements with taxing authorities(1)
Reductions related to lapse of statute of limitations
Currency
Balance at December 31
_____________
(1) The majority of settlements did not result in the utilization of cash.
2023
2022
2021
$
$
110 $
1
57
(14)
(13)
(2)
1
140 $
107 $
3
4
—
—
(3)
(1)
110 $
115
7
—
(14)
7
(7)
(1)
107
Included in the balances at December 31, 2023, 2022 and 2021 are $(31), $1 and $1, 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 $(2), $(1) and $1 accrued for the payment of interest and
penalties associated with unrecognized tax benefits at December 31, 2023, 2022 and 2021, respectively.
In the U.S., we are no longer subject to U.S. federal income tax examinations for years before 2020. 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, 2023 we have not provided deferred taxes on our undistributed pre-1987 E&P of approximately
$310, 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. 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 2023 Annual Report 128
Table of Contents
The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows:
Deferred Tax Assets
Research and development
Post-retirement medical benefits
Net operating losses
Operating reserves, accruals and deferrals
Tax credit carryforwards
Deferred and share-based compensation
Pension
Operating lease liabilities
Other
Subtotal
Valuation allowance
Total
Deferred Tax Liabilities
Finance lease and installment sales
Intangibles and goodwill
Unremitted earnings of foreign subsidiaries
Operating lease ROU assets
Other
Total
Total Deferred Taxes, Net
Reconciliation to the Consolidated Balance Sheets
Deferred tax assets
Deferred tax liabilities(1)
Total Deferred Taxes, Net
December 31,
2023
2021
$
225 $
50
384
215
106
40
147
43
57
1,267
(375)
892 $
36 $
116
25
41
24
242 $
650 $
745 $
(95)
650 $
$
$
$
$
$
$
204
54
380
173
122
26
97
49
33
1,138
(366)
772
72
115
26
46
26
285
487
582
(95)
487
_____________
(1) 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 bases 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 deferred tax assets requiring significant judgment are U.S. tax credit carryforwards with a limited life.
The net change in the total valuation allowance for the years ended December 31, 2023, 2022 and 2021 was an
increase of $9, an increase of $9 and a decrease of $39, 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.
Although realization is not assured, we have concluded that it is more-likely-than-not that the deferred tax assets,
for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of
operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and
projected income from operating activities. The amount of the net deferred tax assets considered realizable,
however, could change in the near term if future income or income tax rates are higher or lower than currently
estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible
temporary differences.
At December 31, 2023, we had tax credit carryforwards of $106 available to offset future income taxes, of which $3
are available to carryforward indefinitely while the majority of the remaining $103 will expire 2024 through 2026 if
not utilized. We also had net operating loss carryforwards for income tax purposes of $392 that will expire 2023
through 2043, if not utilized, and $1.7 billion available to offset future taxable income indefinitely.
Xerox 2023 Annual Report 129
Xerox 2023 Annual Report 129
Table of Contents
Note 20 – Contingencies and Litigation
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, 2023, 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:
Tax contingency - unreserved
Escrow cash deposits
Surety bonds
Letters of credit
Liens on Brazilian assets
December 31,
2023
December 31,
2022
$
375 $
24
104
22
—
340
36
80
63
—
The increase in the unreserved portion of the tax contingency, inclusive of any related interest, was primarily related
to currency and interest. 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, 2023 and 2022. 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 2023 Annual Report 130
Table of Contents
Litigation Matters
Miami Firefighters’ Relief & Pension Fund v. Icahn, et al.:
On December 13, 2019, alleged shareholder Miami Firefighters’ Relief & Pension Fund (Miami Firefighters) filed a
derivative complaint in New York State Supreme Court, New York County on behalf of Xerox Holdings Corporation
(Xerox Holdings) against Carl Icahn and his affiliated entities High River Limited Partnership and Icahn Capital LP
(the Icahn defendants), Xerox Holdings, and all then-current Xerox Holdings directors (the Directors). Xerox
Holdings was named as a nominal defendant in the case but no monetary damages are sought against it. Miami
Firefighters alleges: breach of fiduciary duty of loyalty against the Icahn defendants; breach of contract against the
Icahn defendants (for purchasing HP stock in violation of Icahn’s confidentiality agreement with Xerox Holdings);
unjust enrichment against the Icahn defendants; and breach of fiduciary duty of loyalty against the Directors (for any
consent to the Icahn defendants’ purchases of HP common stock while Xerox Holdings was considering acquiring
HP). Miami Firefighters seeks a judgment of breach of fiduciary duties against the Icahn defendants and the
Directors, and disgorgement to Xerox Holdings of profits Icahn Capital and High River earned from trading in HP
stock. This action was consolidated with a similar action brought by Steven J. Reynolds against the same parties in
the same court. Miami Firefighters’ counsel has been designated as lead counsel in the consolidated action.
Claims asserted against the Directors were later dismissed.
In December 2021, the Xerox Holdings Board approved the formation of a Special Litigation Committee (SLC) to
investigate and evaluate Miami Firefighters' claims and determine the course of action that would be in the best
interests of the Company and its shareholders. The SLC concluded that the claims were without merit and pursuing
them would not be in the best interest of Xerox or its shareholders. The SLC's request that those claims be
dismissed is pending before a New York state appellate court.
Xerox Holdings Corporation v. Factory Mutual Insurance Company and Related Actions:
On March 10, 2021, Xerox Holdings Corporation (Xerox Holdings) filed a complaint for breach of contract and
declaratory judgment against Factory Mutual Insurance Company (FM) in Rhode Island Superior Court, Providence
County seeking insurance coverage for business interruption losses resulting from the coronavirus/COVID-19
pandemic. Xerox Holdings alleges that FM agreed to provide Xerox Holdings with up to $1 billion in per-occurrence
coverage for losses resulting from pandemic-related loss or damage to certain real and other property, including
business interruption loss resulting from insured property damage; that Xerox Holdings’ worldwide actual and
projected losses through the end of 2020 totaled in excess of $300; and that FM incorrectly denied coverage for
those losses. Xerox Holdings seeks full coverage of costs and losses under FM’s policy. Subsidiaries of Xerox
Holdings filed similar complaints and related requests for arbitration in Toronto, London, and Amsterdam for
Canadian, UK and European losses.
The parties have agreed to stay all non-U.S. proceedings pending the outcome of the U.S. litigation. The U.S.
litigation is in abeyance as the Rhode Island Supreme Court prepares to hear another COVID-19 insurance
coverage case against a FM affiliate with overlapping legal issues.
Guarantees, Indemnifications and Warranty Liabilities
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.
Xerox 2023 Annual Report 131
Xerox 2023 Annual Report 131
Table of Contents
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,
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 $241 of guarantees as of December 31, 2023 in the form of letters of
credit or surety bonds issued to i) support certain insurance programs; ii) support our obligations related to the
Brazil tax and labor 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 Credit Facility) is sufficient to allow us to respond to future
requests for proposals that require such credit support.
Xerox 2023 Annual Report 132
Table of Contents
Note 21 - Preferred Stock
Series A Convertible Perpetual Voting Preferred Stock
As of December 31, 2023, 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, 2023, 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, the holder of the 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, 2023).
Xerox 2023 Annual Report 133
Xerox 2023 Annual Report 133
Table of Contents
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, 2023, 14 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 both the prior Xerox Corporation authorized
share repurchase program and the current Xerox Holdings Corporation authorized share repurchase program.
Balance at December 31, 2020
Stock based compensation plans, net
Acquisition of Treasury stock
Cancellation of Treasury stock
Balance at December 31, 2021
Stock based compensation plans, net
Acquisition of Treasury stock
Cancellation of Treasury stock
Balance at December 31, 2022
Stock based compensation plans, net
Acquisition of Treasury stock
Cancellation of Treasury stock
Balance at December 31, 2023
Xerox
Common Stock
Shares
Treasury Stock
Shares
198,386
1,206
—
(31,523)
168,069
1,561
—
(13,849)
155,781
1,608
—
(34,245)
123,144
—
—
40,198
(31,523)
8,675
—
5,174
(13,849)
—
—
34,245
(34,245)
—
At December 31, 2023, 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 2023 Annual Report 134
Table of Contents
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, 2023 and 2022, 6 million and 9 million shares, respectively, were
available for grant of awards.
Stock-based compensation expense was as follows:
Stock-based compensation expense, pre-tax(1)
Income tax benefit recognized in earnings
Year Ended December 31,
2023
2022
2021
$
54 $
10
75 $
11
54
13
____________
(1) 2022 includes $21 associated with the accelerated vesting of all outstanding equity awards, according to the terms of the award agreement,
in connection with the passing of Xerox Holding's former CEO.
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 2021 through 2023 vest on a graded schedule as follows: 33% after one year of service, 33% after two
years of service, and 34% after three years of service from the date of grant.
Performance Share Units
PSU awards are comprised of performance-based components (Earnings per share, Revenue and Free cash flow)
as well as market-based components (Relative Total Shareholder Return (RTSR) and Absolute Share Price). PSUs
granted in 2023 are entirely market-based. PSUs granted in 2022 and 2021 are one-half performance-based and
one-half market-based. The metrics and weightings are as follows:
Performance Metric
Earnings per share
Revenue
Free cash flow
Relative total shareholder return
Absolute share price
Award Year (Metric Weighting)
2023
2022
2021
— %
— %
— %
100 %
— %
100 %
50 %
— %
— %
— %
50 %
100 %
— %
25 %
25 %
— %
50 %
100 %
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.
Performance-Based Component: This PSU component vests contingent upon meeting pre-determined cumulative
performance metrics. The fair value of this PSU component is based upon the grant-date market price for the
underlying stock. Compensation expense is recognized on a straight-line basis over the vesting period, based on
management's estimate of the number of shares expected to vest and based on meeting the performance metrics. If
the cumulative three-year 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.
Market-Based Component: 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 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 PSU will be determined based on the weighted average of Xerox Holdings
Corporation's payout for each of the three performance periods. The Absolute Share Price metric, included as the
Xerox 2023 Annual Report 135
Xerox 2023 Annual Report 135
Table of Contents
market-based component of the 2022 and 2021 PSU grant, is based on Xerox Holdings Corporation's average
closing price for the last 20 trading days of the three-year performance period, inclusive of dividends during that
period. 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 Holdings key valuation input assumptions used in the Monte Carlo simulation relative to
awards granted were as follows:
Term
Risk-free interest rate(1)
Volatility(2)
Weighted average fair value(3)
2023 Award
2022 Award
2021 Award
3 years
3.80 %
52.21 %
3 years
1.09 %
42.07 %
$
23.00
$
27.89
$
3 years
0.20 %
44.76 %
25.80
____________
(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 and Absolute Share Price metrics are compared against total return targets to determine the payout as
follows:
Payout as a Percent of Target
200%
100%
50%
0%
2023 Percentile
Ranking Return
Targets(1)
75th and above
2022 Total
Return Targets(1)
$30.00 and above
50th $
25th $
25.00 $
20.00 $
Below 25th
Below $20.00
2021 Total
Return Targets(1)
$33.00 and above
30.00
27.00
Below $27.00
____________
(1) For performance between the levels described above, the degree of vesting is interpolated on a linear basis.
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.
Xerox 2023 Annual Report 136
Table of Contents
Summary of Stock-based Compensation Activity
Restricted Stock Units
Outstanding at January 1
Granted(1)
Vested(2)
Forfeited
Outstanding at December 31
Performance Shares
Outstanding at January 1
Granted(3)
Vested (2)
Forfeited/Expired (4)
Outstanding at December 31
2023
Weighted
Average Grant
Date Fair Value
2022
Weighted
Average Grant
Date Fair Value
Shares
Shares
2021
Weighted
Average Grant
Date Fair Value
Shares
3,221 $
3,382
(1,593)
(338)
4,672
1,729 $
940
—
(630)
2,039
23.16
16.56
23.73
19.27
18.46
28.38
22.97
—
33.86
24.18
3,161 $
2,444
(1,975)
(409)
3,221
2,818 $
977
(644)
(1,422)
1,729
25.26
21.75
24.56
24.20
23.16
25.47
25.72
27.95
20.98
28.38
3,187 $
1,513
(1,327)
(212)
3,161
2,425 $
1,195
(672)
(130)
2,818
26.48
23.37
26.07
25.06
25.26
26.67
24.67
28.08
26.92
25.47
____________
(1) 2023 includes approximately 445 RSUs associated with a special retention award.
(2) 2022 includes approximately 469 RSUs and 644 PSUs associated with the accelerated vesting of all outstanding equity awards, according
to the terms of the award agreement, in connection with the passing of Xerox Holding's former CEO. No other PSUs vested in 2022.
(3) 2021 includes 60 shares associated with the over-performance of our 2018 PSU grant.
(4) 2022 includes approximately 1,125 PSUs granted in 2019 that were adversely affected permanently by the impacts from the COVID-19
pandemic, and therefore no shares were earned.
Unrecognized compensation cost related to non-vested stock-based awards at December 31, 2023 was as follows:
Awards
Restricted Stock Units
Performance Shares
Stock Options(1)
Total
____________
(1) Reflects CareAR SOs granted in May 2022.
The aggregate intrinsic value of outstanding stock-based awards was as follows:
Awards
Restricted Stock Units
Performance Shares
Unrecognized Compensation
Remaining Weighted-Average
Vesting Period (Years)
$
$
46
17
8
71
1.7
1.8
3.0
86
37
December 31, 2023
$
The intrinsic value and actual tax benefit realized for all vested and exercised stock-based awards was as follows:
Awards
December 31, 2023
December 31, 2022
December 31, 2021
Total Intrinsic
Value
Tax Benefit
Total Intrinsic
Value
Tax Benefit
Total Intrinsic
Value
Tax Benefit
Restricted Stock Units
$
Performance Share Units
25 $
—
5 $
—
39 $
10
6 $
—
30 $
17
5
2
Xerox 2023 Annual Report 137
Xerox 2023 Annual Report 137
Table of Contents
Note 24 – Other Comprehensive (Loss) Income
Other Comprehensive (Loss) Income is comprised of the following:
2023
Year Ended December 31,
2022
2021
Pre-tax
Net of Tax
Pre-tax
Net of Tax
Pre-tax
Net of Tax
Net Translation Adjustments Gains (Losses)
$
191 $
191 $
(376) $
(376) $
(145) $
(141)
Unrealized (Losses) Gains
Changes in fair value of cash flow hedges losses
(18)
(16)
(35)
(27)
(12)
Changes in cash flow hedges reclassed to
earnings(1)
Other losses
Net Unrealized Gains (Losses)
Defined Benefit Plans (Losses) Gains
Net actuarial/prior service (losses) gains
Prior service amortization/curtailment(2)
Actuarial loss amortization/settlement(2)
Other (losses) gains(3)
Changes in Defined Benefit Plans (Losses) Gains
18
—
—
(400)
(10)
35
(49)
(424)
17
—
1
(300)
(8)
26
(49)
(331)
35
(1)
(1)
(373)
(18)
88
62
(241)
26
(1)
(2)
(284)
(14)
66
61
(171)
7
—
(5)
537
(72)
132
35
632
(9)
5
—
(4)
409
(54)
99
35
489
Other Comprehensive (Loss) Income
$
(233) $
(139) $
(618) $
(549) $
482 $
344
_____________
(1) Reclassified to Cost of sales - 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:
Cumulative translation adjustments
Other unrealized losses, net
Benefit plans net actuarial losses and prior service credits
Total Accumulated Other Comprehensive Loss
2023
December 31,
2022
2021
$
$
(2,046) $
(3)
(1,627)
(3,676) $
(2,237) $
(4)
(1,296)
(3,537) $
(1,861)
(2)
(1,125)
(2,988)
We utilize the aggregate portfolio approach for releasing disproportionate income tax effects from AOCL.
Xerox 2023 Annual Report 138
Table of Contents
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):
Basic Loss per Share:
Net Income (Loss)
Accrued dividends on preferred stock
Adjusted Net Loss attributable to common shareholders
Weighted average common shares outstanding
Basic Loss per Share
Diluted Loss per Share:
Net Income (Loss)
Accrued dividends on preferred stock
Adjusted Net Loss attributable to common shareholders
Weighted average common shares outstanding
Common shares issuable with respect to:
Stock options
Restricted stock and performance shares
Convertible preferred stock
Adjusted Weighted average common shares outstanding
$
$
$
$
$
Year Ended December 31,
2023
2022
2021
1 $
(14)
(13) $
(322) $
(14)
(336) $
(455)
(14)
(469)
149,116
156,006
183,168
(0.09) $
(2.15) $
(2.56)
1 $
(14)
(13) $
(322) $
(14)
(336) $
(455)
(14)
(469)
149,116
156,006
183,168
—
—
—
149,116
—
—
—
156,006
—
—
—
183,168
Diluted Loss per Share
$
(0.09) $
(2.15) $
(2.56)
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
Restricted stock and performance shares
Convertible preferred stock
231
6,711
6,742
13,684
586
4,950
6,742
12,278
612
5,979
6,742
13,333
Total Anti-Dilutive Securities
Dividends per Common Share
$
1.00 $
1.00 $
1.00
Xerox 2023 Annual Report 139
Xerox 2023 Annual Report 139
Table of Contents
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure
None.
Item 9A. Controls and Procedures
Xerox Holdings Corporation
Management's Responsibility for Financial Statements
The management of Xerox Holdings Corporation is responsible for the integrity and objectivity of all information
presented in this annual report. The Consolidated Financial Statements were prepared in conformity with
accounting principles generally accepted in the United States of America and include amounts based on
management's best estimates and judgments. Management believes the Consolidated Financial Statements fairly
reflect the form and substance of transactions and that the financial statements fairly represent the financial position
and results of operations of Xerox Holdings Corporation.
The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly
with the independent auditors, PricewaterhouseCoopers LLP, the internal auditors and representatives of
management to review accounting, financial reporting, internal control and audit matters, as well as the nature and
extent of the audit effort. The Audit Committee is responsible for the engagement of the independent auditors. The
independent auditors and internal auditors have access to the Audit Committee.
Evaluation of Disclosure Controls and Procedures
The management of Xerox Holdings Corporation evaluated, with the participation of our principal executive officer
and principal financial officer, or persons performing similar functions, the effectiveness of our disclosure controls
and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the
end of the period covered by this report. Based on this evaluation, our principal executive officer and principal
financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and
procedures were effective to ensure that information we are required to disclose in the reports that we file or submit
under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission’s rules and forms relating to Xerox Holdings
Corporation, including our consolidated subsidiaries, and was accumulated and communicated to Xerox Holdings
Corporation’s management, including the principal executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
The management of Xerox Holdings Corporation is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in the rules promulgated under the Securities Exchange Act
of 1934. Under the supervision and with the participation of our management, including our principal executive,
financial and accounting officers, we have conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in “Internal Control - Integrated Framework (2013)” issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on the above evaluation, management concluded that our internal control over financial reporting was
effective as of December 31, 2023.
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which
appears in Part II, Item 8 of this combined Form 10-K.
Changes in Internal Control over Financial Reporting
In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no
change identified in our internal control over financial reporting that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Xerox 2023 Annual Report 140
Table of Contents
Xerox Corporation
Management's Responsibility for Financial Statements
The management of Xerox Corporation is responsible for the integrity and objectivity of all information presented in
this annual report. The Consolidated Financial Statements were prepared in conformity with accounting principles
generally accepted in the United States of America and include amounts based on management's best estimates
and judgments. Management believes the Consolidated Financial Statements fairly reflect the form and substance
of transactions and that the financial statements fairly represent the financial position and results of operations of
Xerox Corporation.
The Audit Committee of the Xerox Holdings Corporation Board of Directors, which is composed solely of
independent directors, meets regularly with the independent auditors, PricewaterhouseCoopers LLP, the internal
auditors and representatives of management to review accounting, financial reporting, internal control and audit
matters, as well as the nature and extent of the audit effort. The Audit Committee is responsible for the engagement
of the independent auditors. The independent auditors and internal auditors have access to the Audit Committee.
Evaluation of Disclosure Controls and Procedures
The management of Xerox Corporation evaluated, with the participation of our principal executive officer and
principal financial officer, or persons performing similar functions, the effectiveness of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end
of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial
officer have concluded that, as of the end of the period covered by this report, our disclosure controls and
procedures were effective to ensure that information we are required to disclose in the reports that we file or submit
under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission’s rules and forms relating to Xerox
Corporation, including our consolidated subsidiaries, and was accumulated and communicated to Xerox
Corporation’s management, including the principal executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
The management of Xerox Corporation is responsible for establishing and maintaining adequate internal control
over financial reporting, as such term is defined in the rules promulgated under the Securities Exchange Act of
1934. Under the supervision and with the participation of our management, including our principal executive,
financial and accounting officers, we have conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in “Internal Control - Integrated Framework (2013)” issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on the above evaluation, management concluded that our internal control over financial reporting was
effective as of December 31, 2023.
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which
appears in Part II, Item 8 of this combined Form 10-K.
Changes in Internal Control over Financial Reporting
In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no
change identified in our internal control over financial reporting that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a Rule
10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-
K) during the quarterly period covered by this report.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Xerox 2023 Annual Report 141
Xerox 2023 Annual Report 141
Table of Contents
Part III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item, with the exception of the information concerning our executive officers, will be
included in the Company's definitive proxy statement to be filed with the SEC within 120 days after December 31,
2023, in connection with the solicitation of proxies for the Company's 2024 annual meeting of shareholders (the
2024 Proxy Statement), and is incorporated herein by reference.
Executive Officers of Xerox
The following is a list of the executive officers of Xerox, their current ages, their present positions and the year
appointed to their present positions. Each officer is elected to hold office until the meeting of the Board of Directors
held on the day of the next annual meeting of shareholders, subject to the provisions of the By-Laws.
Name
Steven J. Bandrowczak
John G. Bruno
Flor Colón
Jacques-Edouard Gueden
Xavier Heiss
Suzan Morno-Wade
Louis J. Pastor
Mirlanda Gecaj
Present Position
Age
63 Chief Executive Officer
59 President and Chief Operating Officer
60 Chief Legal Officer and Corporate Secretary
58 Chief Channel and Partner Officer
61 Chief Financial Officer
56 Chief Human Resource Officer
39 Chief Transformation and Administrative Officer
50 Chief Accounting Officer
Year Appointed
to Present
Position
2022
2022
2024
2024
2020
2018
2024
2022
Xerox Officer
Since
2018
2022
2024
2021
2015
2018
2024(1)
2022
____________
(1) For additional information regarding Louis J. Pastor's prior work experience at Xerox refer to his biography below.
Mr. Bandrowczak was appointed Chief Executive Officer of Xerox in 2022 and previously served as President and
Chief Operations Officer of Xerox since 2018. Prior to joining Xerox, Mr. Bandrowczak held leadership positions at
Alight Solutions, Sutherland Global Services and Hewlett-Packard Enterprises.
Mr. Bruno joined Xerox in 2022 as President and Chief Operating Officer, where he is responsible for the Print,
Digital Services, and IT Services business units. Prior to joining Xerox, Mr. Bruno served as Chief Operating Officer
of Aon, a global professional services firm, and Chief Executive Officer of Data & Analytics Services. Prior to AON,
Mr. Bruno was President, Industry & Field Operations and Executive Vice President of Corporate Development for
NCR Corporation. He has also held senior leadership positions with Goldman Sachs, Merrill Lynch, Cisco Systems,
and United Parcel Services.
Ms. Colón joined Xerox in 1999 and was named Executive Vice President, Chief Legal Officer and Corporate
Secretary in 2024, where she is responsible for Legal, Ethics and Compliance, and Environmental, Health, Safety
and Sustainability (EHS&S). Prior to that, Ms. Colón held various leadership positions within Xerox, most recently
serving as Deputy General Counsel, Corporate Secretary and Chief Ethics Officer.
Mr. Gueden was named Executive Vice President and Chief Channel and Partner Officer in 2024. In this role, he
leads Xerox’s indirect business as head of Global Channels and Partner business. Mr. Gueden has held various
senior management roles during his more than 30-year career with Xerox, most recently as President of EMEA
Operations beginning in 2021, where he led the company’s go-to-market teams in Europe, the Middle East, Africa
and Eurasian countries to bring Xerox’s full portfolio of products, services and software to clients and partners.
Mr. Heiss was named Executive Vice President and Chief Financial Officer in 2021. In his role, Mr. Heiss oversees
the company’s finance organization, including global corporate finance strategy, planning and analysis, order to
cash, accounting, treasury, taxes, audit, enterprise risk management, Xerox Financial Services, and investor
relations. Prior to his current role, Mr. Heiss served as Interim Chief Financial Officer beginning in September 2020.
Previously, he was the President of EMEA Operations, and Controller and Chief Financial Officer of Americas
Operations. During his more than 30-year career with Xerox, he has held various finance and sales management
roles in Europe and the U.S.
Ms. Morno-Wade joined Xerox in 2016 and was named Executive Vice President and Chief Human Resources
Officer in 2018. She is responsible for human resources, payroll, security, internal communications, and
philanthropy. Prior to Xerox, Ms. Morno-Wade was Vice President, Compensation, Benefits and HR Operations and
Information Systems at Hess Corporation.
Xerox 2023 Annual Report 142
Table of Contents
Mr. Pastor joined Xerox in 2024 as Executive Vice President and Chief Transformation and Administrative Officer.
Mr. Pastor is responsible for information technology, information security, real estate, the Xerox Reinvention Office,
and Xerox’s Global Business Services organization. Mr. Pastor previously served as Executive Vice President, Chief
Corporate Development Officer and Chief Legal Officer for Xerox until April 2023, after first joining the company in
October 2018 as Executive Vice President and General Counsel.
Ms. Gecaj joined Xerox in 2022 as Vice President and Chief Accounting Officer. Prior to this appointment, Ms. Gecaj
spent five years at Element Solutions Inc., where, she most recently served as Vice President, Global Shared
Service Strategy. Prior to joining Element Solutions, she was a senior manager with PricewaterhouseCoopers.
Item 11. Executive Compensation
The information required by this Item will be included in the 2024 Proxy Statement, and is incorporated herein by
reference, provided, however, that the information included under the heading “Pay Versus Performance” in our
definitive 2024 Proxy Statement is not incorporated herein by reference or subject to the liabilities of Section 18 of
the Securities Exchange Act of 1934, as amended.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The information required by this Item will be included in the 2024 Proxy Statement, and is incorporated herein by
reference.
Item 13. Certain Relationships, Related Transactions and Director Independence
The information required by this Item will be included in the 2024 Proxy Statement, and is incorporated herein by
reference.
Item 14. Principal Accounting Fees and Services
The information required by this Item will be included in the 2024 Proxy Statement, and is incorporated herein by
reference.
Xerox 2023 Annual Report 143
Xerox 2023 Annual Report 143
Table of Contents
Part IV
Item 15. Exhibit and Financial Statement Schedules
(a)
(1) Index to Financial Statements filed as part of this report:
▪ Xerox Holdings Corporation Report of Independent Registered Public Accounting Firm (PCAOB ID
238);
▪ Xerox Corporation Report of Independent Registered Public Accounting Firm (PCAOB ID 238);
▪ Xerox Holdings Corporation Consolidated Statements of Income (Loss) for each of the years in the
three-year period ended December 31, 2023;
▪ Xerox Corporation Consolidated Statements of Income (Loss) for each of the years in the three-year
period ended December 31, 2023;
▪ Xerox Holdings Corporation Consolidated Statements of Comprehensive Loss for each of the three
years in the period ended December 31, 2023;
▪ Xerox Corporation Consolidated Statements of Comprehensive Loss for each of the three years in the
period ended December 31, 2023;
▪ Xerox Holdings Corporation Consolidated Balance Sheets as of December 31, 2023 and 2022;
▪ Xerox Corporation Consolidated Balance Sheets as of December 31, 2023 and 2022;
▪ Xerox Holdings Corporation Consolidated Statements of Cash Flows for each of the three years in the
period ended December 31, 2023;
▪ Xerox Corporation Consolidated Statements of Cash Flows for each of the three years in the period
ended December 31, 2023;
▪ Xerox Holdings Corporation Consolidated Statements of Shareholders' Equity for each of the three
years in the period ended December 31, 2023;
▪ Xerox Corporation Consolidated Statements of Shareholder's Equity for each of the three years in the
period ended December 31, 2023;
▪ Notes to the Consolidated Financial Statements; and
▪ All other schedules are omitted as they are not applicable, or the information required is included in the
financial statements or notes thereto.
(2) Financial Statement Schedules:
▪ Xerox Holdings Corporation Schedule II - Valuation and Qualifying Accounts for each of the three years
in the period ended December 31, 2023;
▪ Xerox Corporation Schedule II - Valuation and Qualifying Accounts for each of the three years in the
period ended December 31, 2023.
(3) Exhibits required to be filed by Item 601 of Regulation S-K: See the Index of Exhibits at pages 147
through 155 inclusive, which is attached to and incorporated into and made a part of this Annual Report.
Xerox 2023 Annual Report 144
Table of Contents
Xerox Holdings Corporation
Schedule II Valuation and Qualifying Accounts
Receivables - Allowance for Doubtful Accounts:
(in millions)
Year Ended December 31, 2023
Accounts Receivable
Finance Receivables
Year Ended December 31, 2022
Accounts Receivable
Finance Receivables
Year Ended December 31, 2021
Accounts Receivable
Finance Receivables
$
$
$
$
$
$
Balance
at beginning
of period
Additions
charged to bad
debt provision (1)
Amounts
charged to
other income
statement
accounts (1)
Deductions
and other, net
of recoveries (2)
Balance
at end
of period
52 $
117
169 $
58 $
118
176 $
69 $
133
202 $
22 $
6
28 $
17 $
26
43 $
8 $
(1)
7 $
6 $
2
8 $
(9) $
2
(7) $
1 $
4
5 $
(16) $
(33)
(49) $
(14) $
(29)
(43) $
(20) $
(18)
(38) $
64
92
156
52
117
169
58
118
176
_____________
(1) Bad debt provisions relate to estimated losses due to credit and similar collectibility issues. Other charges (credits) relate to adjustments to
reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.
(2) Deductions and other, net of recoveries primarily relates to receivable write-offs, but also includes the impact of foreign currency translation
adjustments and recoveries of previously written off receivables.
Deferred Tax Asset Valuation Allowances:
(in millions)
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Balance
at beginning
of period
Additions
charged to
income tax
expense (benefit)
Amounts
credited to
other accounts (1)
Balance
at end
of period
$
$
$
366
357
396
(4)
7
(9)
13 $
2 $
(30) $
375
366
357
_____________
(1) Reflects other increases (decreases) to our valuation allowance, including the effects of currency. These did not affect Income tax benefit in
total as there was a corresponding adjustment to Deferred tax assets or Other comprehensive (loss) income.
Xerox 2023 Annual Report 145
Xerox 2023 Annual Report 145
Table of Contents
Xerox Corporation
Schedule II Valuation and Qualifying Accounts
Receivables - Allowance for Doubtful Accounts:
(in millions)
Year Ended December 31, 2023
Accounts Receivable
Finance Receivables
Year Ended December 31, 2022
Accounts Receivable
Finance Receivables
Year Ended December 31, 2021
Accounts Receivable
Finance Receivables
$
$
$
$
$
$
Balance
at beginning
of period
Additions
charged to bad
debt provision (1)
Amounts
charged to
other income
statement
accounts (1)
Deductions
and other, net
of recoveries (2)
Balance
at end
of period
52 $
117
169 $
58 $
118
176 $
69 $
133
202 $
22 $
6
28 $
17 $
26
43 $
8 $
(1)
7 $
6 $
2
8 $
(9) $
2
(7) $
1 $
4
5 $
(16) $
(33)
(49) $
(14) $
(29)
(43) $
(20) $
(18)
(38) $
64
92
156
52
117
169
58
118
176
_____________
(1) Bad debt provisions relate to estimated losses due to credit and similar collectibility issues. Other charges (credits) relate to adjustments to
reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.
(2) Deductions and other, net of recoveries primarily relates to receivable write-offs, but also includes the impact of foreign currency translation
adjustments and recoveries of previously written off receivables.
Deferred Tax Asset Valuation Allowances:
(in millions)
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Balance
at beginning
of period
Additions
charged to
income tax
expense (benefit)
Amounts
credited to
other accounts (1)
Balance
at end
of period
$
$
$
366
357
396
(4)
7
(9)
13 $
2 $
(30) $
375
366
357
_____________
(1) Reflects other increases (decreases) to our valuation allowance, including the effects of currency. These did not affect Income tax benefit in
total as there was a corresponding adjustment to Deferred tax assets or Other comprehensive (loss) income.
Xerox 2023 Annual Report 146
Table of Contents
Index of Exhibits
Xerox Holdings Corporation
Xerox Corporation
Document and Location
3(a)(1)
3(a)(2)
3(b)(1)
3(b)(2)
4(b)
4(c)
4(d)
4(e)
4(f)
4(g)
4(h)
*10(a)
*10(b)
Restated Certificate of Incorporation of Xerox Corporation's filed with the Department of State of
New York on July 31, 2019.
Incorporated by reference to Exhibit 3.2 to Xerox Corporation's Report on Form 8-K dated July 31,
2019. See SEC File Number 001-04471.
Restated Certificate of Incorporation of Xerox Holdings Corporation filed with the Department of
State of New York on May 19, 2022.
Incorporated by reference to Exhibit 3.2 to Xerox Holdings Corporation's Quarterly Report on
Form 10-Q dated May 19, 2022. See SEC File Number 001-39013.
Second Amended and Restated By-Laws of Xerox Corporation dated February 5, 2024.
Amended and Restated By-Laws of Xerox Holdings Corporation dated February 17, 2022.
Incorporated by reference to Exhibit 3(b)(2) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2022. See SEC File Number 001-39013.
[Reserved]
Form of Indenture dated as of December 4, 2009 between Xerox Corporation and the Bank of
New York Mellon, as trustee, relating to an unlimited amount of senior debt securities.
Incorporated by reference to Exhibit 4(b)(5) to Post-Effective Amendment No. 1 to Xerox
Corporation's Registration Statement No. 333-142900. See SEC File Number 001-04471.
Form of Indenture dated August 6, 2020 among Xerox Holdings Corporation, Xerox Corporation
and U.S. Bank National Association, as Trustee, with respect to Xerox Holdings Corporation’s
5.000% Senior Notes due 2025.
Incorporated by reference to Exhibit 4.1 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Current Report on Form 8-K dated August 6, 2020. See SEC File Numbers 001-39013
and 001-04471.
Form of Indenture dated August 6, 2020 among Xerox Holdings Corporation, Xerox Corporation
and U.S. Bank National Association, as Trustee, with respect to Xerox Holdings Corporation’s
5.500% Senior Notes due 2028.
Incorporated by reference to Exhibit 4.2 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Current Report on Form 8-K dated August 6, 2020. See SEC File Numbers 001-39013
and 001-04471.
Description of Xerox Holdings Corporation Capital Stock.
Incorporated by reference to Exhibit 4(d) to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Annual Report on Form 10-K for the fiscal year ended December 31, 2019. See SEC
File Numbers 001-39013 and 001-04471.
Form of Registration Rights Agreement dated as of April 2021 by and among Xerox Holdings
Corporation, Carl C. Icahn and the named Icahn companies.
Incorporated by reference to Exhibit 4.1 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. See SEC File
Numbers 001-39013 and 001-04471.
Instruments with respect to long-term debt where the total amount of securities authorized
thereunder does not exceed 10 percent of the total assets of Xerox Holdings Corporation and/or
Xerox Corporation, as applicable, and its subsidiaries on a consolidated basis have not been filed.
Xerox Holdings Corporation and/or Xerox Corporation, as applicable, agrees to furnish to the
Commission a copy of each such instrument upon request.
Officer Severance Program, as amended and restated effective February 17, 2021.
Incorporated by reference to Exhibit 10(a)(3) to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Annual Report on Form 10-K for the fiscal year ended December 31,
2020. See SEC File Nos. 001-39013 and 001-04471.
[Reserved]
Xerox 2023 Annual Report 147
Xerox 2023 Annual Report 147
Table of Contents
*10(c)
*10(d)(1)
*10(d)(2)
*10(d)(3)
*10(d)(4)
Compensation Plan Agreement, dated as of July 31, 2019 between Xerox Corporation and Xerox
Holdings Corporation.
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation’s Current Report on Form
8-K Dated July 31, 2019. See SEC File Number 001-39013.
Xerox Corporation's 2004 Equity Compensation Plan for Non-Employee Directors, as amended
and restated as of July 31, 2019 ("2004 ECPNED").
Incorporated by reference to Exhibit 10.3 to Xerox Holdings Corporation's Current Report on Form
8-K dated July 31, 2019. See SEC File Number 001-0447139013.
Form of Agreement under 2004 ECPNED.
Incorporated by reference to Exhibit 10(d)(2) to Xerox Corporation's Quarterly Report on Form 10-
Q for the Quarter ended March 31, 2005. See SEC File Number 001-04471.
Form of Grant Summary under 2004 ECPNED.
Incorporated by reference to Exhibit 10(d)(3) to Xerox Corporation's Quarterly Report on Form 10-
Q for the Quarter ended March 31, 2005. See SEC File Number 001-04471.
Form of DSU Deferral under 2004 ECPNED.
Incorporated by reference to Exhibit 10(d)(4) to Xerox Corporation's Quarterly Report on Form 10-
Q for the Quarter ended March 31, 2005. See SEC File Number 001-04471.
*10(d)(5)
Form of Deferred Stock Unit (“DSU”) Agreement under 2004 ECPNED.
*10(d)(6)
Incorporated by reference to Exhibit 10.13 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019.
See SEC File Nos. 001-39013 and 001-04471.
Form of DSU Award Summary under 2004 ECPNED.
Incorporated by reference to Exhibit 10.14 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019.
See SEC File Nos. 001-39013 and 001-04471.
*10(d)(7)
Form of Restricted Stock Unit ("RSU") Agreement under 2004 ECPNED.
Incorporated by reference to Exhibit 10.15 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019.
See SEC File Nos. 001-39013 and 001-04471.
*10(d)(8)
Form of RSU Award Summary under 2004 ECPNED.
*10(d)(9)
*10(d)(10)
*10(d)(11)
*10(d)(12)
Incorporated by reference to Exhibit 10.16 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019.
See SEC File Nos. 001-39013 and 001-04471.
Xerox Holdings Corporation's 2004 Equity Compensation Plan for Non-Employee Directors, 2021
Amendment and Restatement ("2021 ECPNED")
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation's Current Report on Form
8-K dated May 20, 2021. See SEC File Number 001-39013.
Form of Deferred Stock Unit (“DSU”) Agreement under 2021 ECPNED.
Incorporated by reference to Exhibit 10.9 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended March 31, 2021. See SEC File
Nos. 001-39013 and 001-04471.
Form of DSU Award Summary under 2021 ECPNED.
Incorporated by reference to Exhibit 10.10 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended March 31, 2021.
See SEC File Nos. 001-39013 and 001-04471.
Form of Restricted Stock Unit (“RSU”) Agreement under 2021 ECPNED.
Incorporated by reference to Exhibit 10.11 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended March 31, 2021.
See SEC File Nos. 001-39013 and 001-04471.
*10(d)(13)
Form of RSU Award Summary under 2021 ECPNED.
Incorporated by reference to Exhibit 10.12 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended March 31, 2021.
See SEC File Nos. 001-39013 and 001-04471.
Xerox 2023 Annual Report 148
Table of Contents
*10(e)(1)
*10(e)(2)
*10(e)(3)
*10(e)(4)
*10(e)(5)
*10(e)(6)
*10(e)(7)
*10(e)(8)
*10(e)(9)
*10(e)(10)
*10(e)(11)
*10(e)(12)
*10(e)(13)
*10(e)(14)
*10(e)(15)
*10(e)(16)
Xerox Corporation's 2004 Performance Incentive Plan, as amended and restated as of June 30,
2017 ("2017 PIP").
Incorporated by reference to Exhibit 10(e)(1) to Xerox Corporation's Quarterly Report on Form 10-
Q for the Quarter ended June 30, 2017. See SEC File Number 001-04471.
Amendment No. 1 dated February 1, 2018 to 2017 PIP.
Incorporated by reference to Exhibit 10(e)(18) to Xerox Corporation’s Annual Report on Form 10-K
for the year ended December 31, 2017. See SEC File Number 001-04471.
Form of Omnibus Award Agreement under PIP; ELTIP; PSU & RSU (ratable).
Incorporated by reference to Exhibit 10(e)(32) to Xerox Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2017. See SEC File Number 001-04471.
Form of Award Summary Under PIP; ELTIP; PSU & RSU (ratable).
Incorporated by reference to Exhibit 10(e)(33) to Xerox Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2017. See SEC File Number 001-04471.
Form of Omnibus Award Agreement under PIP; ELTIP; RSU (ratable).
Incorporated by reference to Exhibit 10(e)(34) to Xerox Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2017. See SEC File Number 001-04471.
Form of Award Summary Under PIP; ELTIP; RSU (ratable).
Incorporated by reference to Exhibit 10(e)(35) to Xerox Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2017. See SEC File Number 001-04471.
Form of Omnibus Award Agreement under PIP; ELTIP: Stock Options.
Incorporated by reference to Exhibit 10(e)(36) to Xerox Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2017. See SEC File Number 001-04471.
Form of Award Summary under PIP; ELTIP: Stock Options.
Incorporated by reference to Exhibit 10(e)(37) to Xerox Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2017. See SEC File Number 001-04471.
Amendment No. 2 dated May 14, 2018 to 2017 PIP.
Incorporated by reference to Exhibit 10.5 to Xerox Corporation's Quarterly Report on Form 10-Q
for the Quarter ended June 30, 2018. See SEC File Number 001-04471.
Amendment to CEO Option and Performance Share / Restricted Stock Unit Award Agreements.
Incorporated by reference to Exhibit 10.7 to Xerox Corporation's Quarterly Report on Form 10-Q
for the Quarter ended June 30, 2018. See SEC File Number 001-04471.
Amendment No. 3 dated January 14, 2019 to 2017 PIP.
Incorporated by reference to Exhibit 10(e)(42) to Xerox Corporation’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018. See SEC File Number 001-04471.
Performance Elements for 2019 Executive Long-Term Incentive Program.
Incorporated by reference to Exhibit 10(e)(44) to Xerox Corporation’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018. See SEC File Number 001-04471.
Form of Omnibus Award Agreement under PIP; ELTIP; PSU & RSU (ratable).
Incorporated by reference to Exhibit 10(e)(45) to Xerox Corporation’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018. See SEC File Number 001-04471.
Form of Omnibus Award Agreement under PIP; ELTIP; RSU (ratable).
Incorporated by reference to Exhibit 10(e)(46) to Xerox Corporation’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018. See SEC File Number 001-04471.
Form of Omnibus Award Agreement under PIP; ELTIP; Stock Options.
Incorporated by reference to Exhibit 10.3 to Xerox Corporation's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2019. See SEC File Number 001-04471.
Xerox Corporation's 2004 Performance Incentive Plan, as amended and restated as of July 31,
2019.
Incorporated by reference to Exhibit 10.2 to Xerox Holdings Corporation’s Current Report on Form
8-K dated July 31, 2019. See SEC File No. 001-39013.
Xerox 2023 Annual Report 149
Xerox 2023 Annual Report 149
Table of Contents
*10(e)(17)
Form of Performance Share Unit (“PSU”) Award Agreement under Xerox Corporation 2004
Performance Incentive Plan, as amended.
*10(e)(18)
*10(e)(19)
*10(e)(20)
*10(e)(21)
*10(e)(22)
*10(e)(23)
*10(e)(24)
*10(e)(25)
Incorporated by reference to Exhibit 10.3 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019. See SEC File
Nos. 001-39013 and 001-04471.
Form of Restricted Stock Unit (“RSU”) Award Agreement under Xerox Corporation 2004
Performance Incentive Plan, as amended.
Incorporated by reference to Exhibit 10.4 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019. See SEC File
Nos. 001-39013 and 001-04471.
Form of One-Year RSU Agreement under Xerox Corporation 2004 Performance Incentive Plan, as
amended.
Incorporated by reference to Exhibit 10.5 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019. See SEC File
Nos. 001-39013 and 001-04471.
Form of Two-Year RSU Agreement under Xerox Corporation 2004 Performance Incentive Plan, as
amended.
Incorporated by reference to Exhibit 10.6 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019. See SEC File
Nos. 001-39013 and 001-04471.
Form of Three-Year RSU Agreement under Xerox Corporation 2004 Performance Incentive Plan,
as amended.
Incorporated by reference to Exhibit 10.7 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019. See SEC File
Nos. 001-39013 and 001-04471.
Form of Stock Option Agreement under Xerox Corporation 2005 Performance Incentive Plan, as
amended.
Incorporated by reference to Exhibit 10.8 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019. See SEC File
Nos. 001-39013 and 001-04471.
Form of PSU Award Summary under Xerox Corporation 2004 Performance Incentive Plan, as
amended.
Incorporated by reference to Exhibit 10.9 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019. See SEC File
Nos. 001-39013 and 001-04471.
Form of RSU Award Summaries under Xerox Corporation 2004 Performance Incentive Plan, as
amended.
Incorporated by reference to Exhibit 10.10 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019.
See SEC File Nos. 001-39013 and 001-04471.
Form of Stock Option Award Summary under Xerox Corporation 2004 Performance Incentive
Plan, as amended.
Incorporated by reference to Exhibit 10.11 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019.
See SEC File Nos. 001-39013 and 001-04471.
*10(e)(26)
Performance Elements for 2020 Executive Long-Term Incentive Program.
Incorporated by reference to Exhibit 10(e)(43) to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Annual Report on Form 10-K for the fiscal year ended December 31,
2019. See SEC File Numbers 001-39013 and 001-04471.
Xerox Holdings Corporation Performance Incentive Plan (“XHCPIP”).
*10(f)(1)
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Current Report on Form 8-K dated May 28, 2020. See SEC File Numbers 001-39013
and 001-04471.
Xerox 2023 Annual Report 150
Table of Contents
*10(f)(2)
Form of Omnibus Award Agreement under XHCPIP: PIP; ELTIP; PSU.
Incorporated by reference to Exhibit 10.2 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2020. See SEC File
Nos. 001-39013 and 001-04471.
*10(f)(3)
Form of Omnibus Award Agreement under XHCPIP: PIP; ELTIP; RSUs (ratable).
Incorporated by reference to Exhibit 10.3 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2020. See SEC File
Nos. 001-39013 and 001-04471.
*10(f)(4)
Form of Omnibus Award Agreement under XCHPIP: PIP; ELTIP; 1-year RSUs.
Incorporated by reference to Exhibit 10.4 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2020. See SEC File
Nos. 001-39013 and 001-04471.
*10(f)(5)
Form of Omnibus Award Agreement under XHCPIP: PIP; ELTIP; 2-year RSUs.
*10(f)(6)
*10(f)(7)
Incorporated by reference to Exhibit 10.5 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2020. See SEC File
Nos. 001-39013 and 001-04471.
Form of Omnibus Award Agreement under XHCPIP: PIP; ELTIP; 3-year RSUs.
Incorporated by reference to Exhibit 10.6 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2020. See SEC File
Nos. 001-39013 and 001-04471.
Form of Omnibus Award Agreement under XHCPIP: PIP; ELTIP; Stock Options.
Incorporated by reference to Exhibit 10.7 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2020. See SEC File
Nos. 001-39013 and 001-04471.
*10(f)(8)
Description of Leadership Retention Awards and RSU Awards for 2020.
*10(f)(9)
Incorporated by reference to Item 5.02 of Xerox Holdings Corporation’s and Xerox Corporation's
Current Report on Form 8-K dated November 19, 2020. See SEC File Numbers 001-39013 and
001-04471.
Form of Leadership Retention Award under XHCPIP.
Incorporated by reference to Exhibit 10(f)(9) to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Annual Report on Form 10-K for the fiscal year ended December 31,
2020. See SEC File Numbers 001-39013 and 001-04471.
*10(f)(10)
Form of Omnibus Award Agreement under XHCPIP: PIP; ELTIP; RSUs (2-year ratable 50/50).
Incorporated by reference to Exhibit 10(f)(10) to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Annual Report on Form 10-K for the fiscal year ended December 31,
2020. See SEC File Numbers 001-39013 and 001-04471.
*10(f)(11)
Form of Omnibus Award Agreement under XHCPIP: PIP; ELTIP; RSUs (3-year ratable 33/33/34).
Incorporated by reference to Exhibit 10(f)(11) to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Annual Report on Form 10-K for the fiscal year ended December 31,
2020. See SEC File Numbers 001-39013 and 001-04471.
*10(f)(12)
Form of PSU Award Summary under XHCPIP.
*10(f)(13)
*10(f)(14)
Incorporated by reference to Exhibit 10.9 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019. See SEC File
Nos. 001-39013 and 001-04471.
Form of RSU Award Summary under XHCPIP.
Incorporated by reference to Exhibit 10.10 to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Quarterly Report on Form 10-Q for the Quarter ended June 30, 2019.
See SEC File Nos. 001-39013 and 001-04471.
Management Incentive Plan for 2021.
Incorporated by reference to Exhibit 10(f)(14) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2022. See SEC File Number 001-39013.
Xerox 2023 Annual Report 151
Xerox 2023 Annual Report 151
Table of Contents
*10(f)(15)
Performance Elements for 2021 Executive Long-Term Incentive Program.
Incorporated by reference to Exhibit 10(f)(15) to Xerox Holdings Corporation’s and Xerox
Corporation’s combined Annual Report on Form 10-K for the fiscal year ended December 31,
2020. See SEC File Numbers 001-39013 and 001-04471.
*10(f)(16)
Xerox Holdings Corporation Performance Incentive Plan, as amended through October 21, 2021.
*10(f)(17)
*10(f)(18)
*10(f)(19)
*10(f)(20)
*10(f)(21)
*10(f)(22)
*10(f)(23)
*10(f)(24)
*10(f)(25)
*10(f)(26)
*10(f)(27)
*10(f)(28)
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation's and Xerox Corporation’s
Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2021. See SEC File
Numbers 001-39013 and 001-04471.
Form of E-LTIP Performance Share Unit (“PSU”) Award Agreement (2022) under XHCPIP.
Incorporated by reference to Exhibit 10(f)(17) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2022. See SEC File Number 001-39013.
Form of E-LTIP Restricted Stock Unit (“RSU”) Graduated-Vesting Award Agreement (2022) under
XHCPIP.
Incorporated by reference to Exhibit 10(f)(18) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2022. See SEC File Number 001-39013.
Form of E-LTIP RSU Cliff-Vesting Award Agreement (2022) under XHCPIP.
Incorporated by reference to Exhibit 10(f)(19) to Xerox Holdings Corporation's Annual Report on
Form on Form 10-K dated February 23, 2022. See SEC File Number 001-39013.
Form of International Appendix to E-LTIP PSU and RSU Award Agreements (2022) under XHCPIP.
Incorporated by reference to Exhibit 10(f)(20) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2022. See SEC File Number 001-39013.
Management Incentive Plan for 2022.
Incorporated by reference to Exhibit 10(f)(21) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2022. See SEC File Number 001-39013.
Performance Elements for 2022 Executive Long-Term Incentive Program.
Incorporated by reference to Exhibit 10(f)(22) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2022. See SEC File Number 001-39013.
Form of 2023 Restricted Stock Unit Award Agreement, 3-year, cash-settled under XHCPIP,
amended and effective as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(23) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Form of 2023 Restricted Stock Unit Award Agreement, 2-year, cash-settled under XHCPIP,
amended and effective as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(24) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Form of 2023 Performance Stock Unit Award Agreement, cash-settled under XHCPIP, amended
and effective as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(25) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Form of 2023 E-LTIP Restricted Stock Unit Award Agreement, 3-Year under XHCPIP, amended
and effective as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(26) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Form of 2023 E-LTIP Restricted Stock Unit Award Agreement, 2-Year under XHCPIP, amended
and effective as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(27) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Form of 2023 Restricted Stock Unit Award Agreement, 3-year under XHCPIP, amended and
effective as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(28) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Xerox 2023 Annual Report 152
Table of Contents
*10(f)(29)
*10(f)(30)
*10(f)(31)
*10(f)(32)
*10(f)(33)
*10(f)(34)
*10(f)(35)
*10(f)(36)
*10(f)(37)
*10(f)(38)
*10(f)(39)
*10(f)(40)
*10(f)(41)
*10(f)(42)
*10(f)(43)
*10(f)(44)
*10(g)
*10(h)
10(i)
10(j)
Form of 2023 Restricted Stock Unit Award Agreement, 2-year under XHCPIP, amended and
effective as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(29) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Form of 2023 E-LTIP Performance Stock Unit Award Agreement, 2-year under XHCPIP, amended
and effective as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(30) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Form of 2023 Performance Stock Unit Award Agreement under XHCPIP, amended and effective
as of October 21, 2021.
Incorporated by reference to Exhibit 10(f)(31) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Management Incentive Plan for 2023
Incorporated by reference to Exhibit 10(f)(32) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Management Incentive Plan for 2022 Performance Report
Incorporated by reference to Exhibit 10(f)(33) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Performance Elements for 2023 Executive Long-Term Incentive Program
Incorporated by reference to Exhibit 10(f)(34) to Xerox Holdings Corporation's Annual Report on
Form 10-K dated February 23, 2023. See SEC File Number 001-39013.
Performance Elements for 2024 Executive Long-Term Incentive Program
Management Incentive Plan for 2023 Performance
Management Incentive Plan for 2024
Form of 2023 XSIP Performance Stock Unit Award Agreement, cash-settled under XHCPIP,
amended and effective on February 21, 2024.
Form of 2023 XSIP Performance Stock Unit Award Agreement, stock-settled under XHCPIP,
amended and effective on February 21, 2024.
Form of 2023 E-LTIP Performance Stock Unit Award Agreement, under XHCPIP, amended and
effective on February 21, 2024.
Form of 2024 XSIP Performance Stock Unit Award Agreement, cash-settled under XHCPIP,
amended and effective on February 21, 2024.
Form of 2024 XSIP Performance Stock Unit Award Agreement, stock-settled under XHCPIP,
amended and effective on February 21, 2024.
Form of 2024 E-LTIP Performance Stock Unit Award Agreement.
Form of 2024 XSIP Restricted Stock Unit Award Agreement, under XHCPIP, amended and
effective on February 21, 2024.
Compensation Terms for Xavier Heiss, Chief Financial Officer, effective January 1, 2021.
Incorporated by reference to Item 5.02 of Xerox Holdings Corporation's and Xerox Corporation's
combined Current Report on Form 8-K dated December 10, 2020. See SEC File Numbers
001-39013 and 001-04471.
Uniform Rule dated December 17, 2008 for all Deferred Compensation Promised by Xerox
Corporation.
Incorporated by reference to Exhibit 10(r) to Xerox Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 2008. See SEC File Number 001-04471.
Nomination and Standstill Agreement, dated as of January 26, 2021, by and among Xerox
Holdings Corporation, Carl C. Icahn and the other parties named therein.
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation's and Xerox Corporation’s
Current Report on Form 8-K dated January 26, 2021. See SEC File Numbers 001-39013 and
001-04471.
Nomination and Standstill Agreement, dated as of January 26, 2021, by and between Xerox
Holdings Corporation and Darwin Deason.
Incorporated by reference to Exhibit 10.2 to Xerox Holdings Corporation's and Xerox Corporation’s
Current Report on Form 8-K dated January 26, 2021. See SEC File Numbers 001-39013 and
001-04471.
Xerox 2023 Annual Report 153
Xerox 2023 Annual Report 153
Table of Contents
10(k)(1)
Separation and Consulting Services Agreement, by and between the Company and Louie Pastor,
dated April 18, 2023.
10(k)(2)
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Current Report on Form 8-K dated April 21, 2023. See SEC File Numbers 001-39013
and 001-04471.
Termination of Consulting Services, dated December 29, 2023, by and between Xerox Holdings
Corporation and Louie Pastor.
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation’s and Xerox Corporation’s
Current Report on Form 8-K dated December 29, 2023. See SEC File Numbers 001-39013 and
001-04471.
10(k)(3)
Offer Letter, dated December 29, 2023, by and between Xerox Corporation and Louie Pastor.
10(l)
Incorporated by reference to Exhibit 10.2 to Xerox Holdings Corporation’s and Xerox Corporation’s
Current Report on Form 8-K dated December 29, 2023. See SEC File Numbers 001-39013 and
001-04471.
Form of Change in Control Severance Agreement, effective January 1, 2024, as approved by the
Compensation Committee of the Board of Directors of Xerox Holdings Corporation.
Incorporated by reference to Exhibit 10.3 to Xerox Holdings Corporation’s and Xerox Corporation’s
Current Report on Form 8-K dated December 29, 2023. See SEC File Numbers 001-39013 and
001-04471.
10(m)
Form of Indemnification Agreement.
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Quarterly Report on Form 10-Q dated November 2, 2022. See SEC File Number
001-39013 and 001-04471.
Credit Agreement, dated as of November 17, 2023, by and among XEROX CORPORATION, a
New York corporation, XEROX HOLDINGS CORPORATION, a New York corporation, and each
other Guarantor party thereto, the lenders party thereto and Jefferies Finance LLC, as
administrative agent and collateral agent.
Incorporated by reference to Exhibit 10.1 to Xerox Holding Corporation’s and Xerox Corporation’s
combined Current Report on Form 8-K dated November 17, 2023. See SEC File Numbers
001-39013 and 001-04471.
Credit Agreement, dated as of July 7, 2022, among Xerox Corporation, Xerox Holdings
Corporation, certain Lenders signatory thereto, and Citibank, N.A., as administrative agent.
Incorporated by reference to Exhibit 4.2 to Xerox Holdings Corporation’s and Xerox Corporation’s
combined Current Report on Form 8-K dated July 13, 2022. See SEC File Numbers 001-39013
and 001-04471.
Credit Agreement, dated May 22, 2023, by and among Xerox Corporation, a New York
Corporation, Xerox Holdings Corporation, a New York corporation, and each other Guarantor party
thereto, the lenders and issuing banks party thereto and Citibank, N.A., as administrative agent
and collateral agent.
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation's and Xerox Corporation's
combined Current Report on Form 8-K dated May 23, 2023. See SEC File Number 001-39013.
Purchase Agreement dated September 28, 2023 by and between the Company and the Icahn
Parties.
Incorporated by reference to Exhibit 10.1 to Xerox Holdings Corporation's and Xerox Corporation's
combined Current Report on Form 8-K dated September 28, 2023. See SEC File Number
001-39013.
Company Code of Ethics
Company Insider Trading Policy
Subsidiaries of Registrant.
Consent of PricewaterhouseCoopers LLP re Xerox Holdings Corporation.
Consent of PricewaterhouseCoopers LLP re Xerox Corporation.
Certification of Xerox Holdings Corporation CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
Certification of Xerox Corporation CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
Certification of Xerox Holdings Corporation CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
Certification of Xerox Corporation CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
10(n)
10(o)
10(p)
10(q)
14
19
21
23(a)
23(b)
31(a)(1)
31(a)(2)
31(b)(1)
31(b)(2)
Xerox 2023 Annual Report 154
Table of Contents
32(a)
32(b)
97
101.INS
101.SCH
101.CAL
101.LAB
101.PRE
101.DEF
104
*
Certification of Xerox Holdings Corporation CEO and CFO pursuant to 18 U.S.C. §1350 as
adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
Certification of Xerox Corporation CEO and CFO pursuant to 18 U.S.C. §1350 as adopted
pursuant to §906 of the Sarbanes-Oxley Act of 2002.
Company Clawback Policy
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Calculation Linkbase Document
Inline XBRL Taxonomy Label Linkbase Document
Inline XBRL Taxonomy Presentation Linkbase Document
Inline XBRL Taxonomy Definition Document
The Cover Page Interactive Data File (formatted as Inline iXBRL and contained in Exhibit 101)
Indicates a management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
None
Xerox 2023 Annual Report 155
Xerox 2023 Annual Report 155
Table of Contents
Signatures
Xerox Holdings Corporation
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
XEROX HOLDINGS CORPORATION
/s/ STEVEN J. BANDROWCZAK
Steven J. Bandrowczak
Chief Executive Officer
February 23, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the date indicated.
February 23, 2024
Signature
Principal Executive Officer:
/s/ STEVEN J. BANDROWCZAK
Steven J. Bandrowczak
Principal Financial Officer:
/S/ XAVIER HEISS
Xavier Heiss
Principal Accounting Officer:
/S/ MIRLANDA GECAJ
Mirlanda Gecaj
Directors:
/S/ A. SCOTT LETIER
A. Scott Letier
/S/ PHILIP GIORDONO
Philip Giordano
/S/ NICHELLE MAYNARD-ELLIOTT
Nichelle Maynard-Elliott
/S/ MARGARITA PALÁU-HERNÁNDEZ
Margarita Paláu-Hernández
Title
Chief Executive Officer and Director
Executive Vice President and Chief Financial Officer
Vice President and Chief Accounting Officer
Chairman and Director
Director
Director
Director
Xerox 2023 Annual Report 156
Table of Contents
Signatures
Xerox Corporation
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
XEROX CORPORATION
/s/ STEVEN J. BANDROWCZAK
Steven J. Bandrowczak
Chief Executive Officer
February 23, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the date indicated.
February 23, 2024
Signature
Principal Executive Officer:
/s/ STEVEN J. BANDROWCZAK
Steven J. Bandrowczak
Principal Financial Officer:
/S/ XAVIER HEISS
Xavier Heiss
Principal Accounting Officer:
/S/ MIRLANDA GECAJ
Mirlanda Gecaj
Directors:
/S/ A. SCOTT LETIER
A. Scott Letier
/S/ PHILIP GIORDONO
Philip Giordano
/S/ NICHELLE MAYNARD-ELLIOTT
Nichelle Maynard-Elliott
/S/ MARGARITA PALÁU-HERNÁNDEZ
Margarita Paláu-Hernández
Title
Chief Executive Officer and Director
Executive Vice President and Chief Financial Officer
Vice President and Chief Accounting Officer
Chairman and Director
Director
Director
Director
Xerox 2023 Annual Report 157
Xerox 2023 Annual Report 157
FYI
Shareholder Information
For investor information, including comprehensive earnings
releases: https://investors.xerox.com/
For shareholder services, call 800.828.6396 (TDD: 800.368.0328)
or 781.575.3222; or write to Computershare Trust Company, N.A.,
PO BOX 43078, Providence, RI 02940-3078; or via online access at
www.computershare.com.
Electronic Delivery Enrollment: Xerox offers shareholders
the convenience of electronic delivery, including immediate
receipt of the Proxy Statement and Annual Report and online
proxy voting.
Registered Shareholders, visit: www.computershare.com/
investor. You are a registered shareholder if you have your stock
certificate in your possession or if the shares are being held
by our transfer agent, Computershare.
Beneficial Shareholders, visit: http://enroll.icsdelivery.com/
xrx. You are a beneficial shareholder if you maintain your
position in Xerox within a brokerage account.
Investor Relations Contact: investorrelations@xerox.com
A D D I T I O N A L I N F O R M AT I O N
Independent Auditors
PricewaterhouseCoopers LLP
263 Tresser Boulevard, Suite 800
Stamford, CT 06901
203.539.3000
2023 Corporate Social Responsibility Report:
https://www.xerox.com/en-us/about/corporate-social-
responsibility
Global Diversity and Inclusion Programs and EE0-1 Reports:
https://www.xerox.com/en-us/jobs/diversity/policies-and-
strategies
Minority and Women-Owned Business Suppliers:
www.xerox.com/supplierdiversity
Ethics Helpline:
• Online submission tool: www.xeroxethicshelpline.com
• Phone numbers: U.S. and Canada: 866.XRX.0001;
International numbers located at: www.xerox.com/ethics
Environment, Health, Safety and Sustainability:
www.xerox.com/environment
Governance:
www.xerox.com/governance
Xerox Holdings Corporation
201 Merritt 7
Norwalk, CT 06851-1056
United States
www.xerox.com
© 2024 Xerox Holdings Corporation.
All rights reserved. BR40064