xrx-20210630

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2021


☐			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)


New York	001-39013	83-3933743
New York	001-04471	16-0468020
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

	P.O. Box 4505, 201 Merritt 7 Norwalk, Connecticut 06851-1056
	(Address of principal executive offices)

(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	XRX	New York Stock Exchange
Title of each class	Trading Symbol	Name of each exchange on which registered

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 (§ 232.405 of this chapter) 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

Xerox Corporation

Large accelerated filer

☒

Large accelerated filer

☐

Accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Smaller reporting company

☐

Emerging growth 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 o Xerox Corporation o

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Xerox Holdings Corporation Yes ☐ No ☒ Xerox Corporation Yes ☐ No ☒



Class						Outstanding at July 31, 2021
Xerox Holdings Corporation Common Stock, $1 par value						178,485,529 shares

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document, 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. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “should”, “targeting”, “projecting”, “driving” and similar expressions, as they relate to us, our performance and/or our technology, are intended to identify forward-looking statements. These statements reflect management’s current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. Such factors include but are not limited to: the effects of the COVID-19 pandemic on our and our customers' businesses and the duration and extent to which this will impact our future results of operations and overall financial performance; our ability to address our business challenges in order to reverse revenue declines, reduce costs and increase productivity so that we can invest in and grow our business; our ability to attract and retain key personnel; changes in economic and political conditions, trade protection measures, licensing requirements and tax laws in the United States and in the foreign countries in which we do business; the imposition of new or incremental trade protection measures such as tariffs and import or export restrictions; changes in foreign currency exchange rates; our ability to successfully develop new products, technologies and service offerings and to protect our intellectual property rights; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term and that civil or criminal penalties and administrative sanctions could be imposed on us if we fail to comply with the terms of such contracts and applicable law; the risk that partners, subcontractors and software vendors will not perform in a timely, quality manner; actions of competitors and our ability to promptly and effectively react to changing technologies and customer expectations; our ability to obtain adequate pricing for our products and services and to maintain and improve cost efficiency of operations, including savings from restructuring actions; the risk that confidential and/or individually identifiable information of ours, our customers, clients and employees could be inadvertently disclosed or disclosed as a result of a breach of our security systems due to cyber attacks or other intentional acts; reliance on third parties, including subcontractors, for manufacturing of products and provision of services; the exit of the United Kingdom from the European Union; our ability to manage changes in the printing environment and expand equipment placements; interest rates, cost of borrowing and access to credit markets; funding requirements associated with our employee pension and retiree health benefit plans; the risk that our operations and products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives and anti-corruption laws; the outcome of litigation and regulatory proceedings to which we may be a party; any impacts resulting from the restructuring of our relationship with Fujifilm Holdings Corporation; and the shared services arrangements entered into by us as part of Project Own It. Additional risks that may affect Xerox’s operations and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of this combined Quarterly Report on Form 10-Q, Xerox Holdings Corporation’s and Xerox Corporation’s combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and Xerox Holdings Corporation’s and Xerox Corporation’s combined 2020 Annual Report on Form 10-K, as well as in 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 Xerox assumes 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 combined Quarterly Report on Form 10-Q (combined Form 10-Q), 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,” 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.

Xerox 2021 Form 10-Q 1

XEROX HOLDINGS CORPORATION

For additional information about Xerox Holdings Corporation and Xerox Corporation and access to our Annual Reports to Shareholders and SEC filings, free of charge, please visit our website at www.xerox.com/investor. The content of our website is not incorporated by reference into this combined Form 10-Q unless expressly noted.

Xerox 2021 Form 10-Q 2

ITEM 1 — FINANCIAL STATEMENTS

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per-share data)	2021		2020		2021		2020
Revenues
Sales	$	670	$	460	$	1,272	$	1,025
Services, maintenance and rentals	1,067		949		2,120		2,185
Financing	56		56		111		115
Total Revenues	1,793		1,465		3,503		3,325
Costs and Expenses
Cost of sales	468		338		888		725
Cost of services, maintenance and rentals	658		533		1,309		1,264
Cost of financing	28		30		56		60
Research, development and engineering expenses	79		76		153		160
Selling, administrative and general expenses	434		426		882		967
Restructuring and related costs, net	12		3		29		44
Amortization of intangible assets	14		10		29		21
Transaction and related costs, net	—		7		—		24
Other expenses, net	1		7		5		30
Total Costs and Expenses	1,694		1,430		3,351		3,295
Income before Income Taxes and Equity Income	99		35		152		30
Income tax expense	9		8		23		7
Equity in net income of unconsolidated affiliates	1		—		1		2


Net Income	91		27		130		25
Less: Net income attributable to noncontrolling interests	—		—		—		—

Net Income Attributable to Xerox Holdings	$	91	$	27	$	130	$	25









Basic Earnings per Share	$	0.47	$	0.11	$	0.64	$	0.08





Diluted Earnings per Share	$	0.46	$	0.11	$	0.64	$	0.08

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

Xerox 2021 Form 10-Q 3

XEROX HOLDINGS CORPORATION

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020		2021		2020
Net Income	$	91	$	27	$	130	$	25
Less: Net income attributable to noncontrolling interests	—		—		—		—

Net Income Attributable to Xerox Holdings	91		27		130		25

Other Comprehensive Income (Loss), Net(1)
Translation adjustments, net	54		25		3		(172)
Unrealized (losses) gains, net	—		(2)		(7)		3
Changes in defined benefit plans, net	16		80		71		134


Other Comprehensive Income (Loss), Net Attributable to Xerox Holdings	70		103		67		(35)




Comprehensive Income (Loss), Net Attributable to Xerox Holdings	$	161	$	130	$	197	$	(10)

(1) Refer to Note 18 - Other Comprehensive Income (Loss) for gross components of Other comprehensive income (loss), net, reclassification adjustments out of Accumulated other comprehensive loss and related tax effects.

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

Xerox 2021 Form 10-Q 4

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(in millions, except share data in thousands)	June 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	2,124	$	2,625
Accounts receivable (net of allowance of $68 and $69, respectively)	846		883
Billed portion of finance receivables (net of allowance of $3 and $4, respectively)	89		99
Finance receivables, net	1,057		1,082
Inventories	815		843

Other current assets	244		251
Total current assets	5,175		5,783
Finance receivables due after one year (net of allowance of $130 and $129, respectively)	1,971		1,984
Equipment on operating leases, net	271		296
Land, buildings and equipment, net	372		407

Intangible assets, net	230		237
Goodwill	4,104		4,071
Deferred tax assets	491		508
Other long-term assets	1,496		1,455
Total Assets	$	14,110	$	14,741
Liabilities and Equity
Short-term debt and current portion of long-term debt	$	642	$	394
Accounts payable	935		983
Accrued compensation and benefits costs	263		261


Accrued expenses and other current liabilities	851		840
Total current liabilities	2,691		2,478
Long-term debt	3,597		4,050
Pension and other benefit liabilities	1,436		1,566
Post-retirement medical benefits	340		340
Other long-term liabilities	537		497
Total Liabilities	8,601		8,931

Commitments and Contingencies (See Note 20)
Convertible Preferred Stock	214		214

Common stock	189		198

Additional paid-in capital	2,214		2,445
Treasury stock, at cost	(159)		—
Retained earnings	6,308		6,281
Accumulated other comprehensive loss	(3,265)		(3,332)
Xerox Holdings shareholders’ equity	5,287		5,592
Noncontrolling interests	8		4
Total Equity	5,295		5,596
Total Liabilities and Equity	$	14,110	$	14,741

Shares of common stock issued	188,817		198,386
Treasury stock	(6,641)		—
Shares of Common Stock Outstanding	182,176		198,386

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

Xerox 2021 Form 10-Q 5

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020		2021		2020
Cash Flows from Operating Activities
Net Income	$	91	$	27	$	130	$	25


Adjustments required to reconcile Net income to Cash flows from operating activities
Depreciation and amortization	84		88		170		182
Provisions	14		21		34		101

Net gain on sales of businesses and assets	(1)		—		(1)		(1)

Stock-based compensation	14		13		30		24
Restructuring and asset impairment charges	4		(2)		25		27
Payments for restructurings	(22)		(17)		(49)		(52)
Defined benefit pension cost	(2)		13		(2)		37
Contributions to defined benefit pension plans	(34)		(31)		(69)		(64)
(Increase) decrease in accounts receivable and billed portion of finance receivables	(55)		262		37		428
Decrease (increase) in inventories	22		(99)		4		(225)
Increase in equipment on operating leases	(35)		(23)		(63)		(55)
(Increase) decrease in finance receivables	(25)		97		12		190
Decrease (increase) in other current and long-term assets	48		1		66		(15)
Decrease in accounts payable	(2)		(210)		(33)		(159)
Increase (decrease) in accrued compensation	1		(21)		(35)		(129)
Increase (decrease) in other current and long-term liabilities	127		(92)		92		(130)
Net change in income tax assets and liabilities	(4)		13		2		3
Net change in derivative assets and liabilities	(5)		(10)		(2)		(2)
Other operating, net	(6)		4		(17)		22


Net cash provided by operating activities	214		34		331		207
Cash Flows from Investing Activities
Cost of additions to land, buildings, equipment and software	(16)		(19)		(33)		(42)
Proceeds from sales of businesses and assets	1		—		1		2


Acquisitions, net of cash acquired	(37)		—		(37)		(193)


Other investing, net	(3)		1		(3)		1


Net cash used in investing activities	(55)		(18)		(72)		(232)
Cash Flows from Financing Activities

Proceeds from issuance of long-term debt	—		3		—		5
Payments on long-term debt	(114)		(313)		(209)		(313)
Dividends	(54)		(57)		(108)		(115)



Payments to acquire treasury stock, including fees	(251)		—		(413)		—



Other financing, net	(10)		(5)		(17)		(9)
Net cash used in financing activities	(429)		(372)		(747)		(432)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	12		5		—		(24)

Decrease in cash, cash equivalents and restricted cash	(258)		(351)		(488)		(481)
Cash, cash equivalents and restricted cash at beginning of period	2,461		2,665		2,691		2,795
Cash, Cash Equivalents and Restricted Cash at End of Period	$	2,203	$	2,314	$	2,203	$	2,314

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

Xerox 2021 Form 10-Q 6

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020		2021		2020
Revenues
Sales	$	670	$	460	$	1,272	$	1,025
Services, maintenance and rentals	1,067		949		2,120		2,185
Financing	56		56		111		115
Total Revenues	1,793		1,465		3,503		3,325
Costs and Expenses
Cost of sales	468		338		888		725
Cost of services, maintenance and rentals	658		533		1,309		1,264
Cost of financing	28		30		56		60
Research, development and engineering expenses	78		76		152		160
Selling, administrative and general expenses	430		426		877		967
Restructuring and related costs, net	12		3		29		44
Amortization of intangible assets	13		10		27		21
Transaction and related costs, net	—		7		—		24
Other expenses, net	2		7		6		30
Total Costs and Expenses	1,689		1,430		3,344		3,295
Income before Income Taxes and Equity Income	104		35		159		30
Income tax expense	9		8		23		7
Equity in net income of unconsolidated affiliates	1		—		1		2


Net Income	96		27		137		25
Less: Net income attributable to noncontrolling interests	—		—		—		—

Net Income Attributable to Xerox	$	96	$	27	$	137	$	25

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

Xerox 2021 Form 10-Q 7

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020		2021		2020
Net Income	$	96	$	27	$	137	$	25
Less: Net income attributable to noncontrolling interests	—		—		—		—

Net Income Attributable to Xerox	96		27		137		25

Other Comprehensive Income (Loss), Net(1)
Translation adjustments, net	54		25		3		(172)
Unrealized (losses) gains, net	—		(2)		(7)		3
Changes in defined benefit plans, net	16		80		71		134


Other Comprehensive Income (Loss), Net Attributable to Xerox	70		103		67		(35)




Comprehensive Income (Loss), Net Attributable to Xerox	$	166	$	130	$	204	$	(10)

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

Xerox 2021 Form 10-Q 8

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(in millions)	June 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	2,124	$	2,625
Accounts receivable (net of allowance of $68 and $69, respectively)	846		883
Billed portion of finance receivables (net of allowance of $3 and $4, respectively)	89		99
Finance receivables, net	1,057		1,082
Inventories	815		843

Other current assets	250		251
Total current assets	5,181		5,783
Finance receivables due after one year (net of allowance of $130 and $129, respectively)	1,971		1,984
Equipment on operating leases, net	271		296
Land, buildings and equipment, net	372		407

Intangible assets, net	224		229
Goodwill	4,102		4,068
Deferred tax assets	491		508
Other long-term assets	1,492		1,455
Total Assets	$	14,104	$	14,730
Liabilities and Equity
Short-term debt and current portion of long-term debt	$	642	$	394
Accounts payable	935		983
Accrued compensation and benefits costs	263		261



Accrued expenses and other current liabilities	797		750
Total current liabilities	2,637		2,388
Long-term debt	2,103		2,557
Related party debt	1,494		—
Pension and other benefit liabilities	1,436		1,566
Post-retirement medical benefits	340		340
Other long-term liabilities	535		494
Total Liabilities	8,545		7,345

Commitments and Contingencies (See Note 20)



Additional paid-in capital	3,404		4,879

Retained earnings	5,412		5,834
Accumulated other comprehensive loss	(3,265)		(3,332)
Xerox shareholder's equity	5,551		7,381
Noncontrolling interests	8		4
Total Equity	5,559


		Page
Part I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Xerox Holdings Corporation Condensed Consolidated Statements of Income	3
	Xerox Holdings Corporation Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Xerox Holdings Corporation Condensed Consolidated Balance Sheets	5
	Xerox Holdings Corporation Condensed Consolidated Statements of Cash Flows	6
	Xerox Corporation Condensed Consolidated Statements of Income	7
	Xerox Corporation Condensed Consolidated Statements of Comprehensive Income (Loss)	8
	Xerox Corporation Condensed Consolidated Balance Sheets	9
	Xerox Corporation Condensed Consolidated Statements of Cash Flows	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
	Capital Resources and Liquidity	55
	Financial Risk Management	59
	Non-GAAP Financial Measures	60
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63
Part II — Other Information
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	66
Signatures		67
Exhibit Index		68