Subsequent Events

6 Months Ended

Jun. 30, 2025

We have evaluated subsequent events through August 7, 2025, which is the date the financial statements were issued.

Lexmark Acquisition

On July 1, 2025, Xerox Corporation completed its previously announced acquisition of all of the issued and outstanding equity securities of Lexmark International II, LLC (Lexmark) from Ninestar Group Company Limited (the Seller). Total consideration transferred included cash of approximately $841, as well as the assumption of Lexmark's debt of $327.

This acquisition will be accounted for under the guidance of ASC 805-10, as a business combination under the acquisition method. Based upon the timing of this acquisition, the initial accounting for the acquisition is not yet complete as the Company gathers additional information related to the assets acquired and the liabilities assumed. The Company is in the process of obtaining third-party valuations of certain intangible assets. The preliminary application of acquisition accounting to the assets acquired, and liabilities assumed, as well as the results of operations will first be reflected in the Company's consolidated financial statements as of and for the three months ended September 30, 2025.

Debt

On July 1, 2025, Xerox Corporation made an incremental term loan borrowing of approximately $327 (Incremental Term Loans) under its TLB Facility. Substantially all of the net proceeds of the Incremental Term Loans were used to repay (through a cashless settlement) a portion of Lexmark’s outstanding debt.

On July 1, 2025, Xerox Holdings completed its offering of (i) $250 aggregate principal amount of 13.00% Senior Notes due July 2030 (the 2030 Notes) issued by Xerox Holdings and (ii) $125 aggregate principal amount of 13.00% Senior Unsecured Notes due June 2026 (the 2026 Notes) issued by Xerox Holdings. We received net proceeds (after discount, fees and expenses) on the issuance of the 2030 Notes of approximately $245, and net proceeds on the 2026 Notes of approximately $116. The 2030 Notes included associated pre-funded warrant with a fair value of approximately $11. Refer to the Unregistered Sales of Equity Securities section below for additional information regarding these warrants. The 2026 Notes provide the option for Xerox (at its sole discretion) to extend the maturity of approximately $62.5 of the 2026 Notes for an additional six-month period (for a 2% fee on the amount of notes outstanding after the payment on the scheduled maturity date). During the extension period, the 2026 Notes will continue to bear interest at 13.00% per annum.

Xerox used the net proceeds of the 2030 Notes to fund a portion of the purchase price for the Lexmark Acquisition and to repay a portion of Lexmark’s outstanding debt (together with accrued interest and any applicable expenses, fees or premiums) and to pay fees and expenses in connection with the Lexmark Acquisition and the related transactions. The net proceeds of the 2026 Notes will be used for general corporate purposes including, without limitation, funding the realization of synergies associated with the Lexmark Acquisition.

The 2030 Notes are governed by an Indenture, dated as of July 1, 2025 (the 2030 Notes Indenture), among Xerox, certain of Xerox's domestic subsidiaries and U.S. Bank Trust Company, National Association, as trustee. The 2030

Notes are payable quarterly in arrears on April 1, July 1, October 1 and January 1 of each year, beginning on October 1, 2025. The Initial Interest Rate on the 2030 Notes will increase (Interest Rate Step-Up) to the rates (on a per annum basis) set forth below for the period from and including the dates indicated below (each a Step-Up Date) to but excluding the next succeeding Step-up Date, or the stated maturity of the 2030 Notes, as applicable. The 2030 Notes are unconditionally guaranteed on an unsecured basis by Xerox and certain of Xerox’s domestic subsidiaries, with certain of Xerox’s foreign subsidiaries to provide guarantees on a post-closing basis.


Step-Up Date	Interest Rate Step-Up
July 1, 2026	13.500	%
July 1, 2027	14.000	%
October 1, 2027	14.125	%
January 1, 2028	14.250	%
April 1, 2028	14.500	%
July 1, 2028	14.750	%
October 1, 2028	15.000	%
January 1, 2029	15.250	%
April 1, 2029	15.500	%
July 1, 2029	15.750	%
October 1, 2029	16.000	%
January 1, 2030	16.250	%
April 1, 2030	16.500	%
July 1, 2030	16.750	%

The 2026 Notes initially bear interest at a rate of 13.00% per annum, payable quarterly in arrears on April 1, July 1, October 1 and January 1 of each year, beginning on October 1, 2025. The 2026 Notes are governed by an indenture, dated as of July 1, 2025 (the 2026 Notes Indenture), among Xerox, certain of Xerox’s domestic subsidiaries and U.S. Bank Trust Company, National Association, as trustee. Additionally, the 2026 Notes are unconditionally guaranteed on an unsecured basis by Xerox Corporation and certain of Xerox’s domestic subsidiaries, with certain of Xerox’s foreign subsidiaries to provide guarantees on a post-closing basis.

Unregistered Sales of Equity Securities

In connection with the issuance of the 2030 Note, Xerox Holdings issued a pre-funded warrant (the Warrant), exercisable for 2,160,256 shares of Xerox Holdings Corporation’s common stock (Common Stock), at an exercise price of $1.00 per share, of which $0.99 was prefunded, to one of the purchasers of the 2030 Notes. The exercise price and the number of shares of Common Stock issuable upon exercise of the Warrant is subject to appropriate adjustment in the event of certain stock dividends, stock splits, stock combinations, or similar events affecting the Common Stock. The Warrant is exercisable in cash or by means of a cashless exercise and will remain outstanding until exercised.

Tax Law Change

On July 4, 2025, H.R. 1, the One Big Beautiful Bill Act (the Act), was signed into law. The Act includes several tax changes, such as making certain provisions from the Tax Cuts and Jobs Act permanent, updating international tax rules, and reinstating immediate expensing for domestic research expenditures. The Act contains multiple effective dates, with certain provisions applicable beginning in 2025 and others in subsequent years. The Company is currently evaluating the potential impacts of the Act on its consolidated financial statements. These impacts may be material, particularly with respect to the Company’s assessment of its valuation allowance on U.S. deferred tax assets. As of June 30, 2025, our total deferred tax asset balance was $551, which is net of total valuation allowances of $567. The Company will continue to evaluate both the effects of the law and the Company’s operating results, and may adjust its valuation allowance, accordingly, based on whether it is more likely than not that the deferred tax assets will be realized. Any such changes may result in the recognition or reversal of a valuation allowance, which could materially affect income tax expense in the period recognized and future periods. We expect the impacts of the Act to be reflected in the Company's consolidated financial statements as of and for the three months ended September 30, 2025.