UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(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, 2022

☐ 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	Nasdaq Global Select Market
(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, 2022
Xerox Holdings Corporation Common Stock, $1 par value	155,569,686 shares

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 pandemics, such as 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 successfully develop new products, technologies and service offerings and to protect our intellectual property rights; reliance on third parties, including subcontractors, for manufacturing of products and provision of services and the shared service arrangements entered into by us as part of Project Own It; our ability to attract and retain key personnel; 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 or that cyberattacks could result in a shutdown of our systems; 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 and transformation actions; our ability to manage changes in the printing environment like the decline in the volume of printed pages and extension of equipment placements; 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 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; interest rates, cost of borrowing and access to credit markets; the imposition of new or incremental trade protection measures such as tariffs and import or export restrictions; funding requirements associated with our employee pension and retiree health benefit plans; changes in foreign currency exchange rates; 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; and any impacts resulting from the restructuring of our relationship with Fujifilm Holdings Corporation.

Additional risks that may affect Xerox’s operations 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, 2022, and Xerox Holdings Corporation’s and Xerox Corporation’s combined 2021 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 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.

Xerox 2022 Form 10-Q 1

XEROX HOLDINGS CORPORATION

XEROX CORPORATION

FORM 10-Q

June 30, 2022

TABLE OF CONTENTS

 

		Page
Part I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Xerox Holdings Corporation Condensed Consolidated Statements of (Loss) Income	3
	Xerox Holdings Corporation Condensed Consolidated Statements of Comprehensive (Loss) Income	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 (Loss) Income	7
	Xerox Corporation Condensed Consolidated Statements of Comprehensive (Loss) Income	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	42
	Capital Resources and Liquidity	60
	Financial Risk Management	63
	Non-GAAP Financial Measures	64
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 4.	Controls and Procedures	67
Part II — Other Information
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
Signatures		70
Exhibit Index		71

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 2022 Form 10-Q 2

ITEM 1 — FINANCIAL STATEMENTS

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per-share data)	2022		2021		2022		2021
Revenues
Sales	$	667	$	670	$	1,259	$	1,272
Services, maintenance and rentals	1,028		1,067		2,051		2,120
Financing	52		56		105		111
Total Revenues	1,747		1,793		3,415		3,503
Costs and Expenses
Cost of sales	487		468		922		888
Cost of services, maintenance and rentals	677		658		1,356		1,309
Cost of financing	26		28		50		56
Research, development and engineering expenses	84		79		162		153
Selling, administrative and general expenses	459		434		914		882
Restructuring and related costs, net	1		12		19		29
Amortization of intangible assets	10		14		21		29
Other expenses, net	8		1		65		5
Total Costs and Expenses	1,752		1,694		3,509		3,351
(Loss) Income before Income Taxes and Equity Income	(5)		99		(94)		152
Income tax expense (benefit)	1		9		(30)		23
Equity in net income of unconsolidated affiliates	1		1		2		1
Net (Loss) Income	(5)		91		(62)		130
Less: Net loss attributable to noncontrolling interests	(1)		—		(2)		—
Net (Loss) Income Attributable to Xerox Holdings	$	(4)	$	91	$	(60)	$	130
Basic (Loss) Earnings per Share	$	(0.05)	$	0.47	$	(0.43)	$	0.64
Diluted (Loss) Earnings per Share	$	(0.05)	$	0.46	$	(0.43)	$	0.64

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

Xerox 2022 Form 10-Q 3

XEROX HOLDINGS CORPORATION

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

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Net (Loss) Income	$	(5)	$	91	$	(62)	$	130
Less: Net loss attributable to noncontrolling interests	(1)		—		(2)		—
Net (Loss) Income Attributable to Xerox Holdings	(4)		91		(60)		130
Other Comprehensive (Loss) Income, Net(1)
Translation adjustments, net	(287)		54		(359)		3
Unrealized losses, net	(14)		—		(25)		(7)
Changes in defined benefit plans, net	3		16		42		71
Other Comprehensive (Loss) Income, Net Attributable to Xerox Holdings	(298)		70		(342)		67
Comprehensive (Loss) Income, Net	(303)		161		(404)		197
Less: Comprehensive loss, net attributable to noncontrolling interests	(1)		—		(2)		—
Comprehensive (Loss) Income, Net Attributable to Xerox Holdings	$	(302)	$	161	$	(402)	$	197

_____________

(1) Refer to Note 20 - Other Comprehensive (Loss) Income for gross components of Other comprehensive (loss) income, net, reclassification adjustments out of Accumulated other comprehensive loss and related tax effects.

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

Xerox 2022 Form 10-Q 4

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data in thousands)	June 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	1,151	$	1,840
Accounts receivable (net of allowance of $63 and $58, respectively)	852		818
Billed portion of finance receivables (net of allowance of $3 and $4, respectively)	83		94
Finance receivables, net	1,019		1,042
Inventories	765		696
Other current assets	232		211
Total current assets	4,102		4,701
Finance receivables due after one year (net of allowance of $113 and $114, respectively)	1,845		1,934
Equipment on operating leases, net	226		253
Land, buildings and equipment, net	334		358
Intangible assets, net	223		211
Goodwill	3,217		3,287
Deferred tax assets	539		519
Other long-term assets	1,784		1,960
Total Assets	$	12,270	$	13,223
Liabilities and Equity
Short-term debt and current portion of long-term debt	$	1,108	$	650
Accounts payable	1,207		1,069
Accrued compensation and benefits costs	233		239
Accrued expenses and other current liabilities	867		871
Total current liabilities	3,415		2,829
Long-term debt	2,764		3,596
Pension and other benefit liabilities	1,310		1,373
Post-retirement medical benefits	242		277
Other long-term liabilities	433		481
Total Liabilities	8,164		8,556
Commitments and Contingencies (See Note 22)
Noncontrolling Interests	10		10
Convertible Preferred Stock	214		214
Common stock	155		168
Additional paid-in capital	1,564		1,802
Treasury stock, at cost	—		(177)
Retained earnings	5,484		5,631
Accumulated other comprehensive loss	(3,330)		(2,988)
Xerox Holdings shareholders’ equity	3,873		4,436
Noncontrolling interests	9		7
Total Equity	3,882		4,443
Total Liabilities and Equity	$	12,270	$	13,223
Shares of common stock issued	154,966		168,069
Treasury stock	—		(8,675)
Shares of Common Stock Outstanding	154,966		159,394

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

Xerox 2022 Form 10-Q 5

XEROX HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
(in millions)	2022		2021
Cash Flows from Operating Activities
Net (Loss) Income	$	(62)	$	130
Adjustments required to reconcile Net (loss) income to Cash flows (used in) provided by operating activities
Depreciation and amortization	140		170
Provisions	35		34
Net gain on sales of businesses and assets	(1)		(1)
Stock-based compensation	50		30
Restructuring and asset impairment charges	22		25
Payments for restructurings	(21)		(49)
Non-service retirement-related costs(1)	(11)		(42)
Contributions to retirement plans(1)	(72)		(80)
(Increase) decrease in accounts receivable and billed portion of finance receivables	(49)		37
(Increase) decrease in inventories	(95)		4
Increase in equipment on operating leases	(47)		(63)
Decrease in finance receivables	17		12
Decrease in other current and long-term assets	35		66
Increase (decrease) in accounts payable	172		(33)
Increase in accrued compensation(1)	7		16
(Decrease) increase in other current and long-term liabilities	(48)		92
Net change in income tax assets and liabilities	(76)		2
Net change in derivative assets and liabilities	(6)		(2)
Other operating, net	(9)		(17)
Net cash (used in) provided by operating activities	(19)		331
Cash Flows from Investing Activities
Cost of additions to land, buildings, equipment and software	(29)		(33)
Proceeds from sales of businesses and assets	26		1
Acquisitions, net of cash acquired	(52)		(37)
Other investing, net	(7)		(3)
Net cash used in investing activities	(62)		(72)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	754		—
Payments on long-term debt	(1,133)		(209)
Dividends	(88)		(108)
Payments to acquire treasury stock, including fees	(113)		(413)
Other financing, net	(7)		(17)
Net cash used in financing activities	(587)		(747)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(14)		—
Decrease in cash, cash equivalents and restricted cash	(682)		(488)
Cash, cash equivalents and restricted cash at beginning of period	1,909		2,691
Cash, Cash Equivalents and Restricted Cash at End of Period	$	1,227	$	2,203

_____________

(1)Captions were changed in 2022 to reflect the inclusion of expense and contributions for our Retiree Health plans, which were previously reported as part of the Increase in accrued compensation. There was no change to Net cash (used in) provided by operating activities as a result of the reclassification. Prior year amounts have been revised to conform to this presentation. Refer to Note 16 - Employee Benefit Plans for additional information.

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

Xerox 2022 Form 10-Q 6

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Revenues
Sales	$	667	$	670	$	1,259	$	1,272
Services, maintenance and rentals	1,028		1,067		2,051		2,120
Financing	52		56		105		111
Total Revenues	1,747		1,793		3,415		3,503
Costs and Expenses
Cost of sales	487		468		922		888
Cost of services, maintenance and rentals	677		658		1,356		1,309
Cost of financing	26		28		50		56
Research, development and engineering expenses	84		79		162		153
Selling, administrative and general expenses	459		434		914		882
Restructuring and related costs, net	1		12		19		29
Amortization of intangible assets	10		14		21		29
Other expenses, net	8		1		65		5
Total Costs and Expenses	1,752		1,694		3,509		3,351
(Loss) Income before Income Taxes and Equity Income	(5)		99		(94)		152
Income tax expense (benefit)	1		9		(30)		23
Equity in net income of unconsolidated affiliates	1		1		2		1
Net (Loss) Income	(5)		91		(62)		130
Less: Net loss attributable to noncontrolling interests	(1)		—		(2)		—
Net (Loss) Income Attributable to Xerox	$	(4)	$	91	$	(60)	$	130

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

Xerox 2022 Form 10-Q 7

XEROX CORPORATION

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

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Net (Loss) Income	$	(5)	$	91	$	(62)	$	130
Less: Net loss attributable to noncontrolling interests	(1)		—		(2)		—
Net (Loss) Income Attributable to Xerox	(4)		91		(60)		130
Other Comprehensive (Loss) Income, Net(1)
Translation adjustments, net	(287)		54		(359)		3
Unrealized losses, net	(14)		—		(25)		(7)
Changes in defined benefit plans, net	3		16		42		71
Other Comprehensive (Loss) Income, Net Attributable to Xerox	(298)		70		(342)		67
Comprehensive (Loss) Income, Net	(303)		161		(404)		197
Less: Comprehensive loss, net attributable to noncontrolling interests	(1)		—		(2)		—
Comprehensive (Loss) Income, Net Attributable to Xerox	$	(302)	$	161	$	(402)	$	197

_____________

(1) Refer to Note 20 - Other Comprehensive (Loss) Income for gross components of Other comprehensive (loss) income, net, reclassification adjustments out of Accumulated other comprehensive loss and related tax effects.

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

Xerox 2022 Form 10-Q 8

XEROX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions)	June 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	1,151	$	1,840
Accounts receivable (net of allowance of $63 and $58, respectively)	852		818
Billed portion of finance receivables (net of allowance of $3 and $4, respectively)	83		94
Finance receivables, net	1,019		1,042
Inventories	765		696
Other current assets	232		211
Total current assets	4,102		4,701
Finance receivables due after one year (net of allowance of $113 and $114, respectively)	1,845		1,934
Equipment on operating leases, net	226		253
Land, buildings and equipment, net	334		358
Intangible assets, net	223		211
Goodwill	3,217		3,287
Deferred tax assets	539		519
Other long-term assets	1,769		1,952
Total Assets	$	12,255	$	13,215
Liabilities and Equity
Short-term debt and current portion of long-term debt	$	1,108	$	650
Accounts payable	1,207		1,069
Accrued compensation and benefits costs	233		239
Accrued expenses and other current liabilities	819		823
Total current liabilities	3,367		2,781
Long-term debt	1,269		2,102
Related party debt	1,495		1,494
Pension and other benefit liabilities	1,310		1,373
Post-retirement medical benefits	242		277
Other long-term liabilities	433		481
Total Liabilities	8,116		8,508
Commitments and Contingencies (See Note 22)
Noncontrolling Interests	10		10
Additional paid-in capital	3,630		3,202
Retained earnings	3,820		4,476
Accumulated other comprehensive loss	(3,330)		(2,988)
Xerox shareholder's equity	4,120		4,690
Noncontrolling interests	9		7
Total Equity	4,129		4,697
Total Liabilities and Equity	$	12,255	$	13,215

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

Xerox 2022 Form 10-Q 9

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
(in millions)	2022		2021
Cash Flows from Operating Activities
Net (Loss) Income	$	(