x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
New York
|
|
16-0468020
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
P.O. Box 4505, 201 Merritt 7
Norwalk, Connecticut
|
|
06851-1056
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(Address of principal executive offices)
|
|
(Zip Code)
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Large accelerated filer
|
x
|
Accelerated filer
|
o
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Non-accelerated filer
(Do not check if smaller reporting company)
|
o
|
Smaller reporting company
|
o
|
Emerging growth company
|
o
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Class
|
|
Outstanding at June 30, 2017
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Common Stock, $1 par value
|
|
254,169,785 shares
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|
Page
|
|
|
||
Item 1.
|
|
|
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||
|
||
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||
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||
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Item 2.
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||
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Item 3.
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||
Item 4.
|
||
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Item 1.
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||
Item 1A.
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||
Item 2.
|
||
Item 3.
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Defaults Upon Senior Securities
|
|
Item 4.
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Mine Safety Disclosures
|
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Item 5.
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Other Information
|
|
Item 6.
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||
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|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions, except per-share data)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Sales
|
|
$
|
1,010
|
|
|
$
|
1,126
|
|
|
$
|
1,946
|
|
|
$
|
2,129
|
|
Services, maintenance and rentals
|
|
1,483
|
|
|
1,585
|
|
|
2,925
|
|
|
3,114
|
|
||||
Financing
|
|
74
|
|
|
82
|
|
|
150
|
|
|
165
|
|
||||
Total Revenues
|
|
2,567
|
|
|
2,793
|
|
|
5,021
|
|
|
5,408
|
|
||||
Costs and Expenses
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
|
619
|
|
|
696
|
|
|
1,186
|
|
|
1,310
|
|
||||
Cost of services, maintenance and rentals
|
|
884
|
|
|
953
|
|
|
1,784
|
|
|
1,903
|
|
||||
Cost of financing
|
|
33
|
|
|
32
|
|
|
66
|
|
|
65
|
|
||||
Research, development and engineering expenses
|
|
106
|
|
|
119
|
|
|
224
|
|
|
245
|
|
||||
Selling, administrative and general expenses
|
|
643
|
|
|
691
|
|
|
1,307
|
|
|
1,392
|
|
||||
Restructuring and related costs
|
|
40
|
|
|
47
|
|
|
160
|
|
|
147
|
|
||||
Amortization of intangible assets
|
|
15
|
|
|
16
|
|
|
29
|
|
|
30
|
|
||||
Other expenses, net
|
|
34
|
|
|
48
|
|
|
88
|
|
|
93
|
|
||||
Total Costs and Expenses
|
|
2,374
|
|
|
2,602
|
|
|
4,844
|
|
|
5,185
|
|
||||
Income before Income Taxes and Equity Income
|
|
193
|
|
|
191
|
|
|
177
|
|
|
223
|
|
||||
Income tax expense
|
|
43
|
|
|
18
|
|
|
19
|
|
|
16
|
|
||||
Equity in net income of unconsolidated affiliates
|
|
20
|
|
|
26
|
|
|
60
|
|
|
60
|
|
||||
Income from Continuing Operations
|
|
170
|
|
|
199
|
|
|
218
|
|
|
267
|
|
||||
Loss from discontinued operations, net of tax
|
|
—
|
|
|
(38
|
)
|
|
(6
|
)
|
|
(73
|
)
|
||||
Net Income
|
|
170
|
|
|
161
|
|
|
212
|
|
|
194
|
|
||||
Less: Net income attributable to noncontrolling interests
|
|
4
|
|
|
3
|
|
|
6
|
|
|
5
|
|
||||
Net Income Attributable to Xerox
|
|
$
|
166
|
|
|
$
|
158
|
|
|
$
|
206
|
|
|
$
|
189
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts Attributable to Xerox:
|
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations
|
|
$
|
166
|
|
|
$
|
196
|
|
|
$
|
212
|
|
|
$
|
262
|
|
Net loss from discontinued operations
|
|
—
|
|
|
(38
|
)
|
|
(6
|
)
|
|
(73
|
)
|
||||
Net Income Attributable to Xerox
|
|
$
|
166
|
|
|
$
|
158
|
|
|
$
|
206
|
|
|
$
|
189
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings (Loss) per Share
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
0.64
|
|
|
$
|
0.75
|
|
|
$
|
0.81
|
|
|
$
|
0.99
|
|
Discontinued operations
|
|
—
|
|
|
(0.15
|
)
|
|
(0.03
|
)
|
|
(0.29
|
)
|
||||
Total Basic Earnings per Share
|
|
$
|
0.64
|
|
|
$
|
0.60
|
|
|
$
|
0.78
|
|
|
$
|
0.70
|
|
Diluted Earnings (Loss) per Share
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
0.63
|
|
|
$
|
0.75
|
|
|
$
|
0.80
|
|
|
$
|
0.98
|
|
Discontinued operations
|
|
—
|
|
|
(0.15
|
)
|
|
(0.02
|
)
|
|
(0.28
|
)
|
||||
Total Diluted Earnings per Share
|
|
$
|
0.63
|
|
|
$
|
0.60
|
|
|
$
|
0.78
|
|
|
$
|
0.70
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
|
$
|
170
|
|
|
$
|
161
|
|
|
$
|
212
|
|
|
$
|
194
|
|
Less: Net income attributable to noncontrolling interests
|
|
4
|
|
|
3
|
|
|
6
|
|
|
5
|
|
||||
Net Income Attributable to Xerox
|
|
166
|
|
|
158
|
|
|
206
|
|
|
189
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Comprehensive Income (Loss), Net
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
Translation adjustments, net
|
|
204
|
|
|
(82
|
)
|
|
337
|
|
|
107
|
|
||||
Unrealized (losses) gains, net
|
|
(14
|
)
|
|
24
|
|
|
(6
|
)
|
|
33
|
|
||||
Changes in defined benefit plans, net
|
|
(29
|
)
|
|
20
|
|
|
(3
|
)
|
|
(92
|
)
|
||||
Other Comprehensive Income (Loss), Net
|
|
161
|
|
|
(38
|
)
|
|
328
|
|
|
48
|
|
||||
Less: Other comprehensive (loss) income, net attributable to noncontrolling interests
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
||||
Other Comprehensive Income (Loss), Net Attributable to Xerox
|
|
161
|
|
|
(37
|
)
|
|
327
|
|
|
49
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive Income, Net
|
|
331
|
|
|
123
|
|
|
540
|
|
|
242
|
|
||||
Less: Comprehensive income, net attributable to noncontrolling interests
|
|
4
|
|
|
2
|
|
|
7
|
|
|
4
|
|
||||
Comprehensive Income, Net Attributable to Xerox
|
|
$
|
327
|
|
|
$
|
121
|
|
|
$
|
533
|
|
|
$
|
238
|
|
(in millions, except share data in thousands)
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,246
|
|
|
$
|
2,223
|
|
Accounts receivable, net
|
|
1,037
|
|
|
961
|
|
||
Billed portion of finance receivables, net
|
|
84
|
|
|
90
|
|
||
Finance receivables, net
|
|
1,278
|
|
|
1,256
|
|
||
Inventories
|
|
944
|
|
|
841
|
|
||
Assets of discontinued operations
|
|
—
|
|
|
1,002
|
|
||
Other current assets
|
|
389
|
|
|
619
|
|
||
Total current assets
|
|
4,978
|
|
|
6,992
|
|
||
Finance receivables due after one year, net
|
|
2,341
|
|
|
2,398
|
|
||
Equipment on operating leases, net
|
|
464
|
|
|
475
|
|
||
Land, buildings and equipment, net
|
|
636
|
|
|
660
|
|
||
Investments in affiliates, at equity
|
|
1,398
|
|
|
1,294
|
|
||
Intangible assets, net
|
|
286
|
|
|
290
|
|
||
Goodwill
|
|
3,893
|
|
|
3,787
|
|
||
Deferred tax assets, long-term
|
|
1,481
|
|
|
1,472
|
|
||
Other long-term assets
|
|
690
|
|
|
683
|
|
||
Total Assets
|
|
$
|
16,167
|
|
|
$
|
18,051
|
|
Liabilities and Equity
|
|
|
|
|
||||
Short-term debt and current portion of long-term debt
|
|
$
|
765
|
|
|
$
|
1,011
|
|
Accounts payable
|
|
1,202
|
|
|
1,126
|
|
||
Accrued compensation and benefits costs
|
|
373
|
|
|
420
|
|
||
Unearned income
|
|
191
|
|
|
187
|
|
||
Liabilities of discontinued operations
|
|
—
|
|
|
1,002
|
|
||
Other current liabilities
|
|
883
|
|
|
908
|
|
||
Total current liabilities
|
|
3,414
|
|
|
4,654
|
|
||
Long-term debt
|
|
4,236
|
|
|
5,305
|
|
||
Pension and other benefit liabilities
|
|
2,281
|
|
|
2,240
|
|
||
Post-retirement medical benefits
|
|
676
|
|
|
698
|
|
||
Other long-term liabilities
|
|
188
|
|
|
193
|
|
||
Total Liabilities
|
|
10,795
|
|
|
13,090
|
|
||
|
|
|
|
|
||||
Commitments and Contingencies (See Note 18)
|
|
|
|
|
|
|
||
Convertible Preferred Stock
|
|
214
|
|
|
214
|
|
||
|
|
|
|
|
||||
Common stock
|
|
254
|
|
|
254
|
|
||
Additional paid-in capital
|
|
3,875
|
|
|
3,858
|
|
||
Retained earnings
|
|
5,004
|
|
|
4,934
|
|
||
Accumulated other comprehensive loss
|
|
(4,010
|
)
|
|
(4,337
|
)
|
||
Xerox shareholders’ equity
|
|
5,123
|
|
|
4,709
|
|
||
Noncontrolling interests
|
|
35
|
|
|
38
|
|
||
Total Equity
|
|
5,158
|
|
|
4,747
|
|
||
Total Liabilities and Equity
|
|
$
|
16,167
|
|
|
$
|
18,051
|
|
|
|
|
|
|
||||
Shares of common stock issued and outstanding
|
|
254,170
|
|
|
253,594
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
170
|
|
|
$
|
161
|
|
|
$
|
212
|
|
|
$
|
194
|
|
Loss from discontinued operations, net of tax
|
|
—
|
|
|
38
|
|
|
6
|
|
|
73
|
|
||||
Income from continuing operations
|
|
170
|
|
|
199
|
|
|
218
|
|
|
267
|
|
||||
Adjustments required to reconcile net income to cash flows from operating activities:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
135
|
|
|
144
|
|
|
268
|
|
|
286
|
|
||||
Provision for receivables
|
|
10
|
|
|
11
|
|
|
23
|
|
|
24
|
|
||||
Provision for inventory
|
|
7
|
|
|
6
|
|
|
12
|
|
|
15
|
|
||||
Net (gain) loss on sales of businesses and assets
|
|
(1
|
)
|
|
3
|
|
|
(1
|
)
|
|
(17
|
)
|
||||
Undistributed equity in net income of unconsolidated affiliates
|
|
10
|
|
|
5
|
|
|
(30
|
)
|
|
(29
|
)
|
||||
Stock-based compensation
|
|
12
|
|
|
7
|
|
|
25
|
|
|
17
|
|
||||
Restructuring and asset impairment charges
|
|
33
|
|
|
43
|
|
|
143
|
|
|
141
|
|
||||
Payments for restructurings
|
|
(67
|
)
|
|
(24
|
)
|
|
(127
|
)
|
|
(45
|
)
|
||||
Defined benefit pension cost
|
|
37
|
|
|
33
|
|
|
99
|
|
|
76
|
|
||||
Contributions to defined benefit pension plans
|
|
(23
|
)
|
|
(34
|
)
|
|
(46
|
)
|
|
(68
|
)
|
||||
Increase in accounts receivable and billed portion of finance receivables
|
|
(63
|
)
|
|
(111
|
)
|
|
(140
|
)
|
|
(160
|
)
|
||||
Collections of deferred proceeds from sales of receivables
|
|
51
|
|
|
74
|
|
|
99
|
|
|
133
|
|
||||
(Increase) decrease in inventories
|
|
(30
|
)
|
|
7
|
|
|
(88
|
)
|
|
(92
|
)
|
||||
Increase in equipment on operating leases
|
|
(50
|
)
|
|
(68
|
)
|
|
(102
|
)
|
|
(130
|
)
|
||||
Decrease in finance receivables
|
|
69
|
|
|
21
|
|
|
134
|
|
|
85
|
|
||||
Collections on beneficial interest from sales of finance receivables
|
|
5
|
|
|
7
|
|
|
11
|
|
|
15
|
|
||||
Decrease (increase) in other current and long-term assets
|
|
14
|
|
|
46
|
|
|
(43
|
)
|
|
9
|
|
||||
Decrease in accounts payable and accrued compensation
|
|
(21
|
)
|
|
(90
|
)
|
|
—
|
|
|
(166
|
)
|
||||
(Decrease) increase in other current and long-term liabilities
|
|
—
|
|
|
(50
|
)
|
|
3
|
|
|
(114
|
)
|
||||
Net change in income tax assets and liabilities
|
|
5
|
|
|
10
|
|
|
(36
|
)
|
|
(22
|
)
|
||||
Net change in derivative assets and liabilities
|
|
44
|
|
|
(66
|
)
|
|
99
|
|
|
(49
|
)
|
||||
Other operating, net
|
|
(4
|
)
|
|
86
|
|
|
12
|
|
|
170
|
|
||||
Net cash provided by operating activities of continuing operations
|
|
343
|
|
|
259
|
|
|
533
|
|
|
346
|
|
||||
Net cash used in operating activities of discontinued operations
|
|
(15
|
)
|
|
(82
|
)
|
|
(95
|
)
|
|
(194
|
)
|
||||
Net cash provided by operating activities
|
|
328
|
|
|
177
|
|
|
438
|
|
|
152
|
|
||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
||||||||
Cost of additions to land, buildings and equipment
|
|
(13
|
)
|
|
(27
|
)
|
|
(30
|
)
|
|
(46
|
)
|
||||
Proceeds from sales of land, buildings and equipment
|
|
—
|
|
|
1
|
|
|
1
|
|
|
20
|
|
||||
Cost of additions to internal use software
|
|
(8
|
)
|
|
(11
|
)
|
|
(17
|
)
|
|
(24
|
)
|
||||
Acquisitions, net of cash acquired
|
|
(65
|
)
|
|
—
|
|
|
(76
|
)
|
|
(18
|
)
|
||||
Other investing, net
|
|
9
|
|
|
3
|
|
|
10
|
|
|
4
|
|
||||
Net cash used in investing activities of continuing operations
|
|
(77
|
)
|
|
(34
|
)
|
|
(112
|
)
|
|
(64
|
)
|
||||
Net cash used in investing activities of discontinued operations
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
(128
|
)
|
||||
Net cash used in investing activities
|
|
(77
|
)
|
|
(67
|
)
|
|
(112
|
)
|
|
(192
|
)
|
||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
||||||||
Net proceeds on short-term debt
|
|
—
|
|
|
249
|
|
|
1
|
|
|
998
|
|
||||
Proceeds from issuance of long-term debt
|
|
2
|
|
|
5
|
|
|
5
|
|
|
9
|
|
||||
Payments on long-term debt
|
|
(2
|
)
|
|
(257
|
)
|
|
(1,330
|
)
|
|
(965
|
)
|
||||
Common stock dividends
|
|
(64
|
)
|
|
(78
|
)
|
|
(145
|
)
|
|
(149
|
)
|
||||
Preferred stock dividends
|
|
(4
|
)
|
|
(6
|
)
|
|
(10
|
)
|
|
(12
|
)
|
||||
Proceeds from issuances of common stock
|
|
—
|
|
|
2
|
|
|
—
|
|
|
3
|
|
||||
Repurchases related to stock-based compensation
|
|
(1
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||||
Distributions to noncontrolling interests
|
|
(11
|
)
|
|
(1
|
)
|
|
(12
|
)
|
|
(12
|
)
|
||||
Proceeds from Conduent
|
|
—
|
|
|
—
|
|
|
161
|
|
|
—
|
|
||||
Other financing
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Net cash used in financing activities
|
|
(80
|
)
|
|
(87
|
)
|
|
(1,338
|
)
|
|
(129
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
|
30
|
|
|
(8
|
)
|
|
35
|
|
|
4
|
|
||||
Increase in cash of discontinued operations
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(20
|
)
|
||||
Increase (decrease) in cash and cash equivalents
|
|
201
|
|
|
(3
|
)
|
|
(977
|
)
|
|
(185
|
)
|
||||
Cash and cash equivalents at beginning of period
|
|
1,045
|
|
|
1,046
|
|
|
2,223
|
|
|
1,228
|
|
||||
Cash and Cash Equivalents at End of Period
|
|
$
|
1,246
|
|
|
$
|
1,043
|
|
|
$
|
1,246
|
|
|
$
|
1,043
|
|
(1)
|
The difference between the $30 out-of-period adjustment recorded in the first quarter 2017 and the revision adjustment of $24 in the revision table for the three months ended March 31, 2017 primarily relates to the additional adjustments subsequently identified as part of the IIC review as described above.
|
(2)
|
The difference between the aggregate revision to retained earnings and the $90 impact at March 31, 2017 is primarily due to currency and the impact of adjustments recorded directly by Xerox in the first quarter 2017.
|
|
|
Three Months Ended March 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
(1)
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Equity in net income of unconsolidated affiliates
|
|
$
|
16
|
|
|
$
|
24
|
|
|
$
|
40
|
|
|
$
|
121
|
|
|
$
|
6
|
|
|
$
|
127
|
|
Income from Continuing Operations
|
|
24
|
|
|
24
|
|
|
48
|
|
|
627
|
|
|
6
|
|
|
633
|
|
||||||
Net Income (Loss)
|
|
18
|
|
|
24
|
|
|
42
|
|
|
(466
|
)
|
|
6
|
|
|
(460
|
)
|
||||||
Net Income (Loss) Attributable to Xerox
|
|
16
|
|
|
24
|
|
|
40
|
|
|
(477
|
)
|
|
6
|
|
|
(471
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income from continuing operations attributable to Xerox
|
|
$
|
22
|
|
|
$
|
24
|
|
|
$
|
46
|
|
|
$
|
616
|
|
|
$
|
6
|
|
|
$
|
622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic Earnings (Loss) per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.07
|
|
|
$
|
0.10
|
|
|
$
|
0.17
|
|
|
$
|
2.33
|
|
|
$
|
0.03
|
|
|
$
|
2.36
|
|
Total
|
|
$
|
0.05
|
|
|
$
|
0.09
|
|
|
$
|
0.14
|
|
|
$
|
(1.98
|
)
|
|
$
|
0.03
|
|
|
$
|
(1.95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted Earnings (Loss) per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
$
|
0.16
|
|
|
$
|
2.31
|
|
|
$
|
0.02
|
|
|
$
|
2.33
|
|
Total
|
|
$
|
0.05
|
|
|
$
|
0.09
|
|
|
$
|
0.14
|
|
|
$
|
(1.96
|
)
|
|
$
|
0.03
|
|
|
$
|
(1.93
|
)
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Equity in net income of unconsolidated affiliates
|
|
$
|
135
|
|
|
$
|
(26
|
)
|
|
$
|
109
|
|
|
$
|
160
|
|
|
$
|
(18
|
)
|
|
$
|
142
|
|
Income from Continuing Operations
|
|
866
|
|
|
(26
|
)
|
|
840
|
|
|
1,052
|
|
|
(18
|
)
|
|
1,034
|
|
||||||
Net Income
|
|
492
|
|
|
(26
|
)
|
|
466
|
|
|
1,036
|
|
|
(18
|
)
|
|
1,018
|
|
||||||
Net Income Attributable to Xerox
|
|
474
|
|
|
(26
|
)
|
|
448
|
|
|
1,013
|
|
|
(18
|
)
|
|
995
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income from continuing operations attributable to Xerox
|
|
$
|
848
|
|
|
$
|
(26
|
)
|
|
$
|
822
|
|
|
$
|
1,029
|
|
|
$
|
(18
|
)
|
|
$
|
1,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
3.10
|
|
|
$
|
(0.10
|
)
|
|
$
|
3.00
|
|
|
$
|
3.48
|
|
|
$
|
(0.06
|
)
|
|
$
|
3.42
|
|
Total
|
|
$
|
1.69
|
|
|
$
|
(0.10
|
)
|
|
$
|
1.59
|
|
|
$
|
3.43
|
|
|
$
|
(0.06
|
)
|
|
$
|
3.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
3.06
|
|
|
$
|
(0.09
|
)
|
|
$
|
2.97
|
|
|
$
|
3.43
|
|
|
$
|
(0.06
|
)
|
|
$
|
3.37
|
|
Total
|
|
$
|
1.67
|
|
|
$
|
(0.09
|
)
|
|
$
|
1.58
|
|
|
$
|
3.38
|
|
|
$
|
(0.06
|
)
|
|
$
|
3.32
|
|
|
|
Three Months Ended March 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Net Income (Loss)
|
|
$
|
18
|
|
|
$
|
24
|
|
|
$
|
42
|
|
|
$
|
(466
|
)
|
|
$
|
6
|
|
|
$
|
(460
|
)
|
Net Income (Loss) Attributable to Xerox
|
|
16
|
|
|
24
|
|
|
40
|
|
|
(477
|
)
|
|
6
|
|
|
(471
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Translation adjustments, net
|
|
$
|
136
|
|
|
$
|
(3
|
)
|
|
$
|
133
|
|
|
$
|
(346
|
)
|
|
$
|
(1
|
)
|
|
$
|
(347
|
)
|
Other Comprehensive Income (Loss), Net
|
|
170
|
|
|
(3
|
)
|
|
167
|
|
|
(235
|
)
|
|
(1
|
)
|
|
(236
|
)
|
||||||
Other Comprehensive Income (Loss), Net Attributable to Xerox
|
|
169
|
|
|
(3
|
)
|
|
166
|
|
|
(232
|
)
|
|
(1
|
)
|
|
(233
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Comprehensive Income (Loss), Net
|
|
$
|
188
|
|
|
$
|
21
|
|
|
$
|
209
|
|
|
$
|
(701
|
)
|
|
$
|
5
|
|
|
$
|
(696
|
)
|
Comprehensive Income (Loss), Net Attributable to Xerox
|
|
185
|
|
|
21
|
|
|
206
|
|
|
(709
|
)
|
|
5
|
|
|
(704
|
)
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Net Income
|
|
$
|
492
|
|
|
$
|
(26
|
)
|
|
$
|
466
|
|
|
$
|
1,036
|
|
|
$
|
(18
|
)
|
|
$
|
1,018
|
|
Net Income Attributable to Xerox
|
|
474
|
|
|
(26
|
)
|
|
448
|
|
|
1,013
|
|
|
(18
|
)
|
|
995
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Translation adjustments, net
|
|
$
|
(660
|
)
|
|
$
|
9
|
|
|
$
|
(651
|
)
|
|
$
|
(734
|
)
|
|
$
|
6
|
|
|
$
|
(728
|
)
|
Other Comprehensive Loss, Net
|
|
(484
|
)
|
|
9
|
|
|
(475
|
)
|
|
(1,381
|
)
|
|
6
|
|
|
(1,375
|
)
|
||||||
Other Comprehensive Loss, Net Attributable to Xerox
|
|
(483
|
)
|
|
9
|
|
|
(474
|
)
|
|
(1,380
|
)
|
|
6
|
|
|
(1,374
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Comprehensive Income (Loss), Net
|
|
$
|
8
|
|
|
$
|
(17
|
)
|
|
$
|
(9
|
)
|
|
$
|
(345
|
)
|
|
$
|
(12
|
)
|
|
$
|
(357
|
)
|
Comprehensive Loss, Net Attributable to Xerox
|
|
(9
|
)
|
|
(17
|
)
|
|
(26
|
)
|
|
(367
|
)
|
|
(12
|
)
|
|
(379
|
)
|
|
|
As of March 31, 2017
|
|
As of December 31, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||||||||
Investments in affiliates, at equity
|
|
$
|
1,477
|
|
|
$
|
(73
|
)
|
|
$
|
1,404
|
|
|
$
|
1,388
|
|
|
$
|
(94
|
)
|
|
$
|
1,294
|
|
|
$
|
1,382
|
|
|
$
|
(99
|
)
|
|
$
|
1,283
|
|
Total Assets
|
|
15,916
|
|
|
(73
|
)
|
|
15,843
|
|
|
18,145
|
|
|
(94
|
)
|
|
18,051
|
|
|
25,541
|
|
|
(99
|
)
|
|
25,442
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Retained earnings
|
|
$
|
4,987
|
|
|
$
|
(81
|
)
|
|
$
|
4,906
|
|
|
$
|
5,039
|
|
|
$
|
(105
|
)
|
|
$
|
4,934
|
|
|
$
|
9,686
|
|
|
$
|
(111
|
)
|
|
$
|
9,575
|
|
Accumulated other comprehensive loss
|
|
(4,179
|
)
|
|
8
|
|
|
(4,171
|
)
|
|
(4,348
|
)
|
|
11
|
|
|
(4,337
|
)
|
|
(4,642
|
)
|
|
12
|
|
|
(4,630
|
)
|
|||||||||
Xerox shareholders' equity
|
|
4,926
|
|
|
(73
|
)
|
|
4,853
|
|
|
4,803
|
|
|
(94
|
)
|
|
4,709
|
|
|
9,074
|
|
|
(99
|
)
|
|
8,975
|
|
|||||||||
Total Equity
|
|
4,966
|
|
|
(73
|
)
|
|
4,893
|
|
|
4,841
|
|
|
(94
|
)
|
|
4,747
|
|
|
9,117
|
|
|
(99
|
)
|
|
9,018
|
|
|||||||||
Total Liabilities and Equity
|
|
15,916
|
|
|
(73
|
)
|
|
15,843
|
|
|
18,145
|
|
|
(94
|
)
|
|
18,051
|
|
|
25,541
|
|
|
(99
|
)
|
|
25,442
|
|
|
|
Three Months Ended March 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Income (Loss)
|
|
$
|
18
|
|
|
$
|
24
|
|
|
$
|
42
|
|
|
$
|
(466
|
)
|
|
$
|
6
|
|
|
$
|
(460
|
)
|
Income from Continuing Operations
|
|
24
|
|
|
24
|
|
|
48
|
|
|
627
|
|
|
6
|
|
|
633
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Undistributed equity in net income of unconsolidated affiliates
|
|
$
|
(16
|
)
|
|
$
|
(24
|
)
|
|
$
|
(40
|
)
|
|
$
|
(69
|
)
|
|
$
|
(6
|
)
|
|
$
|
(75
|
)
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Income
|
|
$
|
492
|
|
|
$
|
(26
|
)
|
|
$
|
466
|
|
|
$
|
1,036
|
|
|
$
|
(18
|
)
|
|
$
|
1,018
|
|
Income from Continuing Operations
|
|
866
|
|
|
(26
|
)
|
|
840
|
|
|
1,052
|
|
|
(18
|
)
|
|
1,034
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Undistributed equity in net income of unconsolidated affiliates
|
|
$
|
(79
|
)
|
|
$
|
26
|
|
|
$
|
(53
|
)
|
|
$
|
(91
|
)
|
|
$
|
18
|
|
|
$
|
(73
|
)
|
|
|
Three Months Ended March 31, 2016
|
|
Three Months Ended June 30, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Equity in net income of unconsolidated affiliates
|
|
$
|
37
|
|
|
$
|
(3
|
)
|
|
$
|
34
|
|
|
$
|
22
|
|
|
$
|
4
|
|
|
$
|
26
|
|
Income from Continuing Operations
|
|
71
|
|
|
(3
|
)
|
|
68
|
|
|
195
|
|
|
4
|
|
|
199
|
|
||||||
Net Income
|
|
36
|
|
|
(3
|
)
|
|
33
|
|
|
157
|
|
|
4
|
|
|
161
|
|
||||||
Net Income Attributable to Xerox
|
|
34
|
|
|
(3
|
)
|
|
31
|
|
|
154
|
|
|
4
|
|
|
158
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.25
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.24
|
|
|
$
|
0.74
|
|
|
$
|
0.01
|
|
|
$
|
0.75
|
|
Total
|
|
$
|
0.11
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.10
|
|
|
$
|
0.59
|
|
|
$
|
0.01
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.24
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.23
|
|
|
$
|
0.73
|
|
|
$
|
0.02
|
|
|
$
|
0.75
|
|
Total
|
|
$
|
0.11
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.10
|
|
|
$
|
0.58
|
|
|
$
|
0.02
|
|
|
$
|
0.60
|
|
|
|
Three Months Ended September 30, 2016
|
|
Three Months Ended December 31, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Equity in net income of unconsolidated affiliates
|
|
$
|
39
|
|
|
$
|
1
|
|
|
$
|
40
|
|
|
$
|
23
|
|
|
$
|
4
|
|
|
$
|
27
|
|
Income from Continuing Operations
|
|
177
|
|
|
1
|
|
|
178
|
|
|
184
|
|
|
4
|
|
|
188
|
|
||||||
Net Income (Loss)
|
|
185
|
|
|
1
|
|
|
186
|
|
|
(844
|
)
|
|
4
|
|
|
(840
|
)
|
||||||
Net Income (Loss) Attributable to Xerox
|
|
182
|
|
|
1
|
|
|
183
|
|
|
(847
|
)
|
|
4
|
|
|
(843
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic Earnings (Loss) per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.66
|
|
|
$
|
—
|
|
|
$
|
0.66
|
|
|
$
|
0.69
|
|
|
$
|
0.02
|
|
|
$
|
0.71
|
|
Total
|
|
$
|
0.69
|
|
|
$
|
—
|
|
|
$
|
0.69
|
|
|
$
|
(3.37
|
)
|
|
$
|
0.02
|
|
|
$
|
(3.35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted Earnings (Loss) per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.65
|
|
|
$
|
0.01
|
|
|
$
|
0.66
|
|
|
$
|
0.68
|
|
|
$
|
0.02
|
|
|
$
|
0.70
|
|
Total
|
|
$
|
0.68
|
|
|
$
|
0.01
|
|
|
$
|
0.69
|
|
|
$
|
(3.32
|
)
|
|
$
|
0.02
|
|
|
$
|
(3.30
|
)
|
|
|
Three Months Ended March 31, 2015
|
|
Three Months Ended June 30, 2015
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Equity in net income of unconsolidated affiliates
|
|
$
|
34
|
|
|
$
|
(18
|
)
|
|
$
|
16
|
|
|
$
|
29
|
|
|
$
|
(4
|
)
|
|
$
|
25
|
|
Income from Continuing Operations
|
|
189
|
|
|
(18
|
)
|
|
171
|
|
|
210
|
|
|
(4
|
)
|
|
206
|
|
||||||
Net Income
|
|
230
|
|
|
(18
|
)
|
|
212
|
|
|
17
|
|
|
(4
|
)
|
|
13
|
|
||||||
Net Income Attributable to Xerox
|
|
225
|
|
|
(18
|
)
|
|
207
|
|
|
12
|
|
|
(4
|
)
|
|
8
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.64
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.58
|
|
|
$
|
0.73
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.72
|
|
Total
|
|
$
|
0.79
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.72
|
|
|
$
|
0.02
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.63
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.57
|
|
|
$
|
0.72
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.71
|
|
Total
|
|
$
|
0.78
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.71
|
|
|
$
|
0.02
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
|
|
Three Months Ended September 30, 2015
|
|
Three Months Ended December 31, 2015
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||||||||
Equity in net income of unconsolidated affiliates
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
32
|
|
|
$
|
(4
|
)
|
|
$
|
28
|
|
Income from Continuing Operations
|
|
206
|
|
|
—
|
|
|
206
|
|
|
261
|
|
|
(4
|
)
|
|
257
|
|
||||||
Net (Loss) Income
|
|
(31
|
)
|
|
—
|
|
|
(31
|
)
|
|
276
|
|
|
(4
|
)
|
|
272
|
|
||||||
Net (Loss) Income Attributable to Xerox
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
|
271
|
|
|
(4
|
)
|
|
267
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic (Loss) Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.75
|
|
|
$
|
—
|
|
|
$
|
0.75
|
|
|
$
|
0.99
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.97
|
|
Total
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
|
$
|
(0.16
|
)
|
|
$
|
1.05
|
|
|
$
|
(0.02
|
)
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted (Loss) Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.75
|
|
|
$
|
—
|
|
|
$
|
0.75
|
|
|
$
|
0.98
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.96
|
|
Total
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
|
$
|
(0.16
|
)
|
|
$
|
1.04
|
|
|
$
|
(0.02
|
)
|
|
$
|
1.02
|
|
•
|
Service Concession Arrangements:
ASU 2017-10
,
(Topic 853) Determining the Customer of the Operation Services (a consensus of the FASB Emerging Issues Task Force).
This update is effective for our fiscal year beginning January 1, 2018.
|
•
|
Compensation - Stock Compensation:
ASU 2017-09
,
(Topic 718) Scope of Modification Accounting.
This update is effective for our fiscal year beginning January 1, 2018.
|
•
|
Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets:
ASU 2017-05
,
(Subtopic 610-20) Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.
This update is effective for our fiscal year beginning January 1, 2018.
|
•
|
Intangibles - Goodwill and Other:
ASU 2017-04
,
Simplifying the Goodwill Impairment Test
. This update is effective for our fiscal year beginning January 1, 2020, with early adoption permitted.
|
•
|
Business Combinations:
ASU 2017-01
,
Business Combinations (Topic 805) Clarifying the Definition of a Business
. This update is effective for our fiscal year beginning January 1, 2018.
|
•
|
Equity Method Accounting:
ASU 2016-07
,
Equity Method and Joint Venture Accounting (Topic 353), Simplifying the Transition to the Equity Method of Accounting
. This update was effective for our fiscal year beginning January 1, 2017.
|
•
|
Financial Instruments - Classification and Measurement:
ASU 2016-01
,
Financial Instruments - Recognition and Measurement of Financial Instruments and Financial Liabilities.
This update is effective for our fiscal year beginning January 1, 2018.
|
•
|
Inventory:
ASU 2015-11
,
Simplifying the Subsequent Measurement of Inventory,
which was effective for our fiscal year beginning January 1, 2017.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Separation costs
|
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
8
|
|
|
$
|
36
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
|
|
$
|
—
|
|
|
$
|
1,597
|
|
|
$
|
—
|
|
|
$
|
3,268
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services
|
|
—
|
|
|
1,343
|
|
|
—
|
|
|
2,752
|
|
||||
Other expenses
(1)
|
|
—
|
|
|
300
|
|
|
8
|
|
|
611
|
|
||||
Total costs and expenses
|
|
—
|
|
|
1,643
|
|
|
8
|
|
|
3,363
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss before income taxes
|
|
—
|
|
|
(46
|
)
|
|
(8
|
)
|
|
(95
|
)
|
||||
Income tax benefit
|
|
—
|
|
|
8
|
|
|
2
|
|
|
22
|
|
||||
Loss from discontinued operations, net of tax
|
|
$
|
—
|
|
|
$
|
(38
|
)
|
|
$
|
(6
|
)
|
|
$
|
(73
|
)
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Invoiced
|
|
$
|
713
|
|
|
$
|
651
|
|
Accrued
|
|
380
|
|
|
374
|
|
||
Allowance for doubtful accounts
|
|
(56
|
)
|
|
(64
|
)
|
||
Accounts Receivable, Net
|
|
$
|
1,037
|
|
|
$
|
961
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Accounts receivable sales
|
$
|
567
|
|
|
$
|
582
|
|
|
$
|
1,078
|
|
|
$
|
1,174
|
|
Deferred proceeds
|
56
|
|
|
59
|
|
|
108
|
|
|
130
|
|
||||
Loss on sales of accounts receivable
|
3
|
|
|
4
|
|
|
6
|
|
|
8
|
|
||||
Estimated increase (decrease) to operating cash flows
(1)
|
54
|
|
|
(11
|
)
|
|
(11
|
)
|
|
15
|
|
(1)
|
Represents the difference between current and prior period receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and, (iii) currency.
|
Allowance for Credit Losses:
|
|
United States
|
|
Canada
|
|
Europe
|
|
Other
(2)
|
|
Total
|
||||||||||
Balance at December 31, 2016
|
|
$
|
55
|
|
|
$
|
16
|
|
|
$
|
37
|
|
|
$
|
2
|
|
|
$
|
110
|
|
Provision
|
|
4
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
9
|
|
|||||
Charge-offs
|
|
(6
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
(10
|
)
|
|||||
Recoveries and other
(3)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Balance at March 31, 2017
|
|
$
|
53
|
|
|
$
|
16
|
|
|
$
|
40
|
|
|
$
|
2
|
|
|
$
|
111
|
|
Provision
|
|
4
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
6
|
|
|||||
Charge-offs
|
|
(10
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
—
|
|
|
(14
|
)
|
|||||
Recoveries and other
(3)
|
|
1
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
5
|
|
|||||
Balance at June 30, 2017
|
|
$
|
48
|
|
|
$
|
16
|
|
|
$
|
42
|
|
|
$
|
2
|
|
|
$
|
108
|
|
Finance receivables as of June 30, 2017 collectively evaluated for impairment
(4)
|
|
$
|
2,028
|
|
|
$
|
383
|
|
|
$
|
1,336
|
|
|
$
|
64
|
|
|
$
|
3,811
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2015
(1)
|
|
$
|
54
|
|
|
$
|
17
|
|
|
$
|
45
|
|
|
$
|
2
|
|
|
$
|
118
|
|
Provision
|
|
4
|
|
|
1
|
|
|
5
|
|
|
—
|
|
|
10
|
|
|||||
Charge-offs
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
(6
|
)
|
|||||
Recoveries and other
(3)
|
|
1
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
4
|
|
|||||
Balance at March 31, 2016
|
|
$
|
57
|
|
|
$
|
18
|
|
|
$
|
49
|
|
|
$
|
2
|
|
|
$
|
126
|
|
Provision
|
|
—
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
8
|
|
|||||
Charge-offs
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
—
|
|
|
(8
|
)
|
|||||
Recoveries and other
(3)
|
|
—
|
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Balance at June 30, 2016
|
|
$
|
54
|
|
|
$
|
18
|
|
|
$
|
51
|
|
|
$
|
2
|
|
|
$
|
125
|
|
Finance receivables as of June 30, 2016 collectively evaluated for impairment
(4)
|
|
$
|
2,149
|
|
|
$
|
389
|
|
|
$
|
1,424
|
|
|
$
|
64
|
|
|
$
|
4,026
|
|
(1)
|
In the first quarter 2016, as a result of an internal reorganization, a U.S. leasing unit previously classified in Other was reclassified to the U.S. Prior year amounts have been revised to conform to current year presentation.
|
(2)
|
Includes developing market countries and smaller units.
|
(3)
|
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.
|
(4)
|
Total Finance receivables exclude the allowance for credit losses of
$108
and
$125
at
June 30, 2017
and
2016
, respectively.
|
•
|
Investment grade:
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. The rating generally equates to a Standard & Poor's (S&P) rating of BBB- or better. Loss rates in this category are normally less than
1%
.
|
•
|
Non-investment grade:
This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. This rating generally equates to a BB S&P rating. 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 are generally in the range of
2%
to
4%
.
|
•
|
Substandard:
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 investment and non-investment grade 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 are approximately
10%
.
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Investment
Grade
|
|
Non-investment
Grade
|
|
Substandard
|
|
Total
Finance
Receivables
|
|
Investment
Grade
|
|
Non-investment
Grade
|
|
Substandard
|
|
Total
Finance
Receivables
|
||||||||||||||||
Finance and other services
|
$
|
162
|
|
|
$
|
341
|
|
|
$
|
98
|
|
|
$
|
601
|
|
|
$
|
181
|
|
|
$
|
342
|
|
|
$
|
95
|
|
|
$
|
618
|
|
Government and education
|
490
|
|
|
60
|
|
|
8
|
|
|
558
|
|
|
543
|
|
|
57
|
|
|
8
|
|
|
608
|
|
||||||||
Graphic arts
|
116
|
|
|
115
|
|
|
95
|
|
|
326
|
|
|
138
|
|
|
102
|
|
|
107
|
|
|
347
|
|
||||||||
Industrial
|
81
|
|
|
77
|
|
|
24
|
|
|
182
|
|
|
82
|
|
|
78
|
|
|
24
|
|
|
184
|
|
||||||||
Healthcare
|
81
|
|
|
47
|
|
|
16
|
|
|
144
|
|
|
79
|
|
|
47
|
|
|
17
|
|
|
143
|
|
||||||||
Other
|
69
|
|
|
95
|
|
|
53
|
|
|
217
|
|
|
82
|
|
|
103
|
|
|
53
|
|
|
238
|
|
||||||||
Total United States
|
999
|
|
|
735
|
|
|
294
|
|
|
2,028
|
|
|
1,105
|
|
|
729
|
|
|
304
|
|
|
2,138
|
|
||||||||
Finance and other services
|
53
|
|
|
43
|
|
|
21
|
|
|
117
|
|
|
54
|
|
|
43
|
|
|
15
|
|
|
112
|
|
||||||||
Government and education
|
48
|
|
|
5
|
|
|
3
|
|
|
56
|
|
|
52
|
|
|
6
|
|
|
2
|
|
|
60
|
|
||||||||
Graphic arts
|
36
|
|
|
33
|
|
|
30
|
|
|
99
|
|
|
39
|
|
|
37
|
|
|
24
|
|
|
100
|
|
||||||||
Industrial
|
20
|
|
|
12
|
|
|
9
|
|
|
41
|
|
|
21
|
|
|
13
|
|
|
6
|
|
|
40
|
|
||||||||
Other
|
32
|
|
|
26
|
|
|
12
|
|
|
70
|
|
|
33
|
|
|
25
|
|
|
8
|
|
|
66
|
|
||||||||
Total Canada
|
189
|
|
|
119
|
|
|
75
|
|
|
383
|
|
|
199
|
|
|
124
|
|
|
55
|
|
|
378
|
|
||||||||
France
|
191
|
|
|
231
|
|
|
50
|
|
|
472
|
|
|
181
|
|
|
222
|
|
|
51
|
|
|
454
|
|
||||||||
U.K./Ireland
(4)
|
96
|
|
|
155
|
|
|
11
|
|
|
262
|
|
|
95
|
|
|
148
|
|
|
10
|
|
|
253
|
|
||||||||
Central
(1)
|
187
|
|
|
145
|
|
|
18
|
|
|
350
|
|
|
182
|
|
|
148
|
|
|
19
|
|
|
349
|
|
||||||||
Southern
(2)
|
38
|
|
|
150
|
|
|
13
|
|
|
201
|
|
|
36
|
|
|
131
|
|
|
14
|
|
|
181
|
|
||||||||
Nordics
(3)
|
28
|
|
|
22
|
|
|
1
|
|
|
51
|
|
|
26
|
|
|
22
|
|
|
1
|
|
|
49
|
|
||||||||
Total Europe
|
540
|
|
|
703
|
|
|
93
|
|
|
1,336
|
|
|
520
|
|
|
671
|
|
|
95
|
|
|
1,286
|
|
||||||||
Other
|
37
|
|
|
23
|
|
|
4
|
|
|
64
|
|
|
35
|
|
|
15
|
|
|
2
|
|
|
52
|
|
||||||||
Total
|
$
|
1,765
|
|
|
$
|
1,580
|
|
|
$
|
466
|
|
|
$
|
3,811
|
|
|
$
|
1,859
|
|
|
$
|
1,539
|
|
|
$
|
456
|
|
|
$
|
3,854
|
|
(1)
|
Switzerland, Germany, Austria, Belgium and Holland.
|
(2)
|
Italy, Greece, Spain and Portugal.
|
(3)
|
Sweden, Norway, Denmark and Finland.
|
(4)
|
The December 31, 2016 amounts have been revised to conform to 2017 presentation.
|
|
June 30, 2017
|
||||||||||||||||||||||||||
|
Current
|
|
31-90
Days
Past Due
|
|
>90 Days
Past Due
|
|
Total Billed
|
|
Unbilled
|
|
Total
Finance
Receivables
|
|
>90 Days
and
Accruing
|
||||||||||||||
Finance and other services
|
$
|
12
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
14
|
|
|
$
|
587
|
|
|
$
|
601
|
|
|
$
|
10
|
|
Government and education
|
14
|
|
|
—
|
|
|
3
|
|
|
17
|
|
|
541
|
|
|
558
|
|
|
19
|
|
|||||||
Graphic arts
|
14
|
|
|
1
|
|
|
—
|
|
|
15
|
|
|
311
|
|
|
326
|
|
|
6
|
|
|||||||
Industrial
|
4
|
|
|
—
|
|
|
1
|
|
|
5
|
|
|
177
|
|
|
182
|
|
|
5
|
|
|||||||
Healthcare
|
4
|
|
|
—
|
|
|
1
|
|
|
5
|
|
|
139
|
|
|
144
|
|
|
5
|
|
|||||||
Other
|
6
|
|
|
1
|
|
|
1
|
|
|
8
|
|
|
209
|
|
|
217
|
|
|
4
|
|
|||||||
Total United States
|
54
|
|
|
3
|
|
|
7
|
|
|
64
|
|
|
1,964
|
|
|
2,028
|
|
|
49
|
|
|||||||
Canada
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
380
|
|
|
383
|
|
|
9
|
|
|||||||
France
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
469
|
|
|
472
|
|
|
14
|
|
|||||||
U.K./Ireland
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
259
|
|
|
262
|
|
|
—
|
|
|||||||
Central
(1)
|
2
|
|
|
1
|
|
|
1
|
|
|
4
|
|
|
346
|
|
|
350
|
|
|
6
|
|
|||||||
Southern
(2)
|
6
|
|
|
1
|
|
|
1
|
|
|
8
|
|
|
193
|
|
|
201
|
|
|
6
|
|
|||||||
Nordics
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
|
—
|
|
|||||||
Total Europe
|
14
|
|
|
2
|
|
|
2
|
|
|
18
|
|
|
1,318
|
|
|
1,336
|
|
|
26
|
|
|||||||
Other
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
61
|
|
|
64
|
|
|
—
|
|
|||||||
Total
|
$
|
74
|
|
|
$
|
5
|
|
|
$
|
9
|
|
|
$
|
88
|
|
|
$
|
3,723
|
|
|
$
|
3,811
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
December 31, 2016
|
||||||||||||||||||||||||||
|
Current
|
|
31-90
Days
Past Due
|
|
>90 Days
Past Due
|
|
Total Billed
|
|
Unbilled
|
|
Total
Finance
Receivables
|
|
>90 Days
and
Accruing
|
||||||||||||||
Finance and other services
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
17
|
|
|
$
|
601
|
|
|
$
|
618
|
|
|
$
|
11
|
|
Government and education
|
10
|
|
|
4
|
|
|
3
|
|
|
17
|
|
|
591
|
|
|
608
|
|
|
25
|
|
|||||||
Graphic arts
|
13
|
|
|
1
|
|
|
—
|
|
|
14
|
|
|
333
|
|
|
347
|
|
|
5
|
|
|||||||
Industrial
|
4
|
|
|
1
|
|
|
1
|
|
|
6
|
|
|
178
|
|
|
184
|
|
|
5
|
|
|||||||
Healthcare
|
3
|
|
|
1
|
|
|
1
|
|
|
5
|
|
|
138
|
|
|
143
|
|
|
5
|
|
|||||||
Other
|
9
|
|
|
2
|
|
|
1
|
|
|
12
|
|
|
226
|
|
|
238
|
|
|
5
|
|
|||||||
Total United States
|
52
|
|
|
12
|
|
|
7
|
|
|
71
|
|
|
2,067
|
|
|
2,138
|
|
|
56
|
|
|||||||
Canada
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
375
|
|
|
378
|
|
|
8
|
|
|||||||
France
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
451
|
|
|
454
|
|
|
20
|
|
|||||||
U.K./Ireland
|
2
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|
250
|
|
|
253
|
|
|
1
|
|
|||||||
Central
(1)
|
2
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|
346
|
|
|
349
|
|
|
5
|
|
|||||||
Southern
(2)
|
5
|
|
|
1
|
|
|
1
|
|
|
7
|
|
|
174
|
|
|
181
|
|
|
6
|
|
|||||||
Nordics
(3)
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
48
|
|
|
49
|
|
|
1
|
|
|||||||
Total Europe
|
13
|
|
|
3
|
|
|
1
|
|
|
17
|
|
|
1,269
|
|
|
1,286
|
|
|
33
|
|
|||||||
Other
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
49
|
|
|
52
|
|
|
—
|
|
|||||||
Total
|
$
|
71
|
|
|
$
|
15
|
|
|
$
|
8
|
|
|
$
|
94
|
|
|
$
|
3,760
|
|
|
$
|
3,854
|
|
|
$
|
97
|
|
(1)
|
Switzerland, Germany, Austria, Belgium and Holland.
|
(2)
|
Italy, Greece, Spain and Portugal.
|
(3)
|
Sweden, Norway, Denmark and Finland.
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Finished goods
|
$
|
783
|
|
|
$
|
713
|
|
Work-in-process
|
59
|
|
|
47
|
|
||
Raw materials
|
102
|
|
|
81
|
|
||
Total Inventories
|
$
|
944
|
|
|
$
|
841
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Fuji Xerox
|
$
|
18
|
|
|
$
|
23
|
|
|
$
|
55
|
|
|
$
|
53
|
|
Other investments
|
2
|
|
|
3
|
|
|
5
|
|
|
7
|
|
||||
Total Equity in Net Income of Unconsolidated Affiliates
|
$
|
20
|
|
|
$
|
26
|
|
|
$
|
60
|
|
|
$
|
60
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Summary of Operations:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
2,325
|
|
|
$
|
2,450
|
|
|
$
|
4,884
|
|
|
$
|
5,092
|
|
Costs and expenses
|
2,191
|
|
|
2,316
|
|
|
4,543
|
|
|
4,772
|
|
||||
Income before income taxes
|
134
|
|
|
134
|
|
|
341
|
|
|
320
|
|
||||
Income tax expense
|
32
|
|
|
42
|
|
|
76
|
|
|
91
|
|
||||
Net Income
|
102
|
|
|
92
|
|
|
265
|
|
|
229
|
|
||||
Less: Net income – noncontrolling interests
|
1
|
|
|
2
|
|
|
2
|
|
|
4
|
|
||||
Net Income – Fuji Xerox
|
$
|
101
|
|
|
$
|
90
|
|
|
$
|
263
|
|
|
$
|
225
|
|
Weighted Average Exchange Rate
(1)
|
111.01
|
|
|
108.05
|
|
|
112.42
|
|
|
111.93
|
|
(1)
|
Represents Yen/U.S. Dollar exchange rate used to translate.
|
|
Severance and
Related Costs
|
|
Lease Cancellation
and Other Costs
|
|
Asset Impairments
(2)
|
|
Total
|
||||||||
Balance at December 31, 2016
|
$
|
104
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
127
|
|
Provision
|
110
|
|
|
2
|
|
|
—
|
|
|
112
|
|
||||
Reversals
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Net current period charges
(1)
|
108
|
|
|
2
|
|
|
—
|
|
|
110
|
|
||||
Charges against reserve and currency
|
(58
|
)
|
|
(1
|
)
|
|
—
|
|
|
(59
|
)
|
||||
Balance at March 31, 2017
|
$
|
154
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
178
|
|
Provision
|
50
|
|
|
1
|
|
|
—
|
|
|
51
|
|
||||
Reversals
|
(13
|
)
|
|
(5
|
)
|
|
—
|
|
|
(18
|
)
|
||||
Net current period charges
(1)
|
37
|
|
|
(4
|
)
|
|
—
|
|
|
33
|
|
||||
Charges against reserve and currency
|
(43
|
)
|
|
(17
|
)
|
|
—
|
|
|
(60
|
)
|
||||
Balance at June 30, 2017
|
$
|
148
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
151
|
|
(1)
|
Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown for restructuring and asset impairments charges.
|
(2)
|
Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Charges against reserve and currency
|
$
|
(60
|
)
|
|
$
|
(25
|
)
|
|
$
|
(119
|
)
|
|
$
|
(44
|
)
|
Asset impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Effects of foreign currency and other non-cash items
|
(7
|
)
|
|
1
|
|
|
(8
|
)
|
|
(1
|
)
|
||||
Restructuring Cash Payments
|
$
|
(67
|
)
|
|
$
|
(24
|
)
|
|
$
|
(127
|
)
|
|
$
|
(45
|
)
|
Maturity Date
|
|
Coupon
|
|
Principal Amount Exchanged
|
|
4.07% Senior Notes Due March 2022
|
|
Cash Consideration
|
|||||||
Senior Notes due May 15, 2018
|
|
6.350
|
%
|
|
$
|
260
|
|
|
$
|
130
|
|
|
$
|
143
|
|
Senior Notes due March 15, 2019
|
|
2.750
|
%
|
|
94
|
|
|
47
|
|
|
48
|
|
|||
Senior Notes due December 15, 2019
|
|
5.625
|
%
|
|
96
|
|
|
48
|
|
|
56
|
|
|||
Senior Notes due May 15, 2020
|
|
2.800
|
%
|
|
87
|
|
|
44
|
|
|
43
|
|
|||
Senior Notes due August 20, 2020
|
|
3.500
|
%
|
|
38
|
|
|
19
|
|
|
20
|
|
|||
Senior Notes due September 1, 2020
|
|
2.750
|
%
|
|
25
|
|
|
12
|
|
|
12
|
|
|||
Total
|
|
|
|
$
|
600
|
|
|
$
|
300
|
|
|
$
|
322
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest expense
(1)
|
$
|
57
|
|
|
$
|
74
|
|
|
$
|
126
|
|
|
$
|
161
|
|
Interest income
(2)
|
76
|
|
|
84
|
|
|
154
|
|
|
168
|
|
(1)
|
Includes Cost of financing as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income.
|
(2)
|
Includes Finance income as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.
|
Debt Instrument
|
|
Year First Designated
|
|
Notional Amount
|
|
Net Fair Value
|
|
Weighted Average Interest Rate Paid
|
|
Interest Rate Received
|
|
Basis
|
|
Maturity
|
||||||
Senior Note 2021
|
|
2014
|
|
$
|
300
|
|
|
$
|
5
|
|
|
2.69
|
%
|
|
4.5
|
%
|
|
Libor
|
|
2021
|
•
|
Forecasted purchases and sales in foreign currency
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
Gain (Loss) on Derivative Instruments
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Fair Value Hedges - Interest rate contracts
|
|
|
|
|
|
|
|
|
||||||||
Derivative gain recognized in interest expense
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
11
|
|
Hedged item loss recognized in interest expense
|
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(11
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash Flow Hedges - Foreign exchange forward contracts and options
|
|
|
|
|
|
|
|
|
||||||||
Derivative (loss) gain recognized in OCI (effective portion)
|
|
$
|
(22
|
)
|
|
$
|
41
|
|
|
$
|
(13
|
)
|
|
$
|
57
|
|
Derivative (loss) gain reclassified from AOCL to income - Cost of sales (effective portion)
|
|
(4
|
)
|
|
8
|
|
|
(8
|
)
|
|
7
|
|
Derivatives NOT Designated as Hedging Instruments
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
Location of Derivative (Loss) Gain
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||
Foreign exchange contracts – forwards
|
|
Other expense – Currency (loss) gain, net
|
|
$
|
(14
|
)
|
|
$
|
78
|
|
|
$
|
(10
|
)
|
|
$
|
149
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Assets:
|
|
|
|
||||
Foreign exchange contracts - forwards
|
$
|
3
|
|
|
$
|
88
|
|
Interest rate swaps
|
5
|
|
|
4
|
|
||
Deferred compensation investments in mutual funds
|
16
|
|
|
15
|
|
||
Total
|
$
|
24
|
|
|
$
|
107
|
|
Liabilities:
|
|
|
|
||||
Foreign exchange contracts - forwards
|
$
|
59
|
|
|
$
|
39
|
|
Deferred compensation plan liabilities
|
18
|
|
|
17
|
|
||
Total
|
$
|
77
|
|
|
$
|
56
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Cash and cash equivalents
|
$
|
1,246
|
|
|
$
|
1,246
|
|
|
$
|
2,223
|
|
|
$
|
2,223
|
|
Accounts receivable, net
|
1,037
|
|
|
1,037
|
|
|
961
|
|
|
961
|
|
||||
Short-term debt
|
765
|
|
|
781
|
|
|
1,011
|
|
|
1,015
|
|
||||
Long-term debt
|
4,236
|
|
|
4,407
|
|
|
5,305
|
|
|
5,438
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
Pension Benefits
|
|
|
|
|
||||||||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Retiree Health
|
||||||||||||||||||
Components of Net Periodic Benefit Costs:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Interest cost
|
32
|
|
|
34
|
|
|
38
|
|
|
51
|
|
|
7
|
|
|
8
|
|
||||||
Expected return on plan assets
|
(30
|
)
|
|
(35
|
)
|
|
(54
|
)
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial loss
|
6
|
|
|
7
|
|
|
19
|
|
|
17
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service credit
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Recognized settlement loss
|
19
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Defined Benefit Plans
|
27
|
|
|
23
|
|
|
10
|
|
|
10
|
|
|
7
|
|
|
9
|
|
||||||
Defined contribution plans
|
7
|
|
|
8
|
|
|
7
|
|
|
7
|
|
|
n/a
|
|
n/a
|
||||||||
Net Periodic Benefit Cost
|
34
|
|
|
31
|
|
|
17
|
|
|
17
|
|
|
7
|
|
|
9
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss (gain)
(1)
|
12
|
|
|
134
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
(34
|
)
|
||||||
Amortization of prior service credit
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Amortization of net actuarial loss
|
(25
|
)
|
|
(24
|
)
|
|
(19
|
)
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
||||||
Total Recognized in Other Comprehensive Income (Loss)
(2)
|
(12
|
)
|
|
111
|
|
|
(18
|
)
|
|
(16
|
)
|
|
(10
|
)
|
|
(33
|
)
|
||||||
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)
|
$
|
22
|
|
|
$
|
142
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
(3
|
)
|
|
$
|
(24
|
)
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
Pension Benefits
|
|
|
|
|
||||||||||||||||||
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Retiree Health
|
||||||||||||||||||
Components of Net Periodic Benefit Costs:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Service cost
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
15
|
|
|
$
|
16
|
|
|
$
|
2
|
|
|
$
|
3
|
|
Interest cost
|
66
|
|
|
71
|
|
|
77
|
|
|
101
|
|
|
14
|
|
|
16
|
|
||||||
Expected return on plan assets
|
(61
|
)
|
|
(74
|
)
|
|
(107
|
)
|
|
(129
|
)
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial loss
|
11
|
|
|
12
|
|
|
38
|
|
|
34
|
|
|
—
|
|
|
1
|
|
||||||
Amortization of prior service credit
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Recognized settlement loss
|
61
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Defined Benefit Plans
|
78
|
|
|
56
|
|
|
21
|
|
|
20
|
|
|
14
|
|
|
18
|
|
||||||
Defined contribution plans
|
13
|
|
|
15
|
|
|
14
|
|
|
16
|
|
|
n/a
|
|
n/a
|
||||||||
Net Periodic Benefit Cost
|
91
|
|
|
71
|
|
|
35
|
|
|
36
|
|
|
14
|
|
|
18
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss (gain)
(1)
|
20
|
|
|
257
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
(34
|
)
|
||||||
Amortization of prior service credit
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
||||||
Amortization of net actuarial loss
|
(72
|
)
|
|
(58
|
)
|
|
(38
|
)
|
|
(34
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Total Recognized in Other Comprehensive Income
(2)
|
(51
|
)
|
|
200
|
|
|
(36
|
)
|
|
(32
|
)
|
|
(9
|
)
|
|
(33
|
)
|
||||||
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income
|
$
|
40
|
|
|
$
|
271
|
|
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
(15
|
)
|
(1)
|
The net actuarial loss (gain) for U.S. Plans primarily reflects (i) the remeasurement of our primary U.S. pension plans as a result of the payment of periodic settlements and (ii) adjustments for the actuarial valuation results based on January 1st plan census data.
|
(2)
|
Amounts represent the pre-tax effect included within Other comprehensive income (loss). Refer to Note 16 - Other Comprehensive Income (Loss) for related tax effects and the after-tax amounts.
|
|
|
Six Months Ended
June 30, |
|
Year Ended December 31,
|
||||||||||||
|
|
2017
|
|
2016
|
|
Estimated 2017
|
|
2016
|
||||||||
U.S. Plans
|
|
$
|
12
|
|
|
$
|
11
|
|
|
$
|
174
|
|
|
$
|
24
|
|
Non-U.S. Plans
|
|
34
|
|
|
57
|
|
|
176
|
|
|
154
|
|
||||
Total Pension
|
|
$
|
46
|
|
|
$
|
68
|
|
|
$
|
350
|
|
|
$
|
178
|
|
|
|
|
|
|
|
|
|
|
||||||||
Retiree Health
|
|
$
|
32
|
|
|
$
|
30
|
|
|
$
|
63
|
|
|
$
|
61
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
AOCL
(3)
|
|
Xerox
Shareholders’
Equity
|
|
Non-controlling
Interests
|
|
Total
Equity
|
||||||||||||||
Balance at December 31, 2016
|
$
|
254
|
|
|
$
|
3,858
|
|
|
$
|
4,934
|
|
|
$
|
(4,337
|
)
|
|
$
|
4,709
|
|
|
$
|
38
|
|
|
$
|
4,747
|
|
Comprehensive income, net
|
—
|
|
|
—
|
|
|
206
|
|
|
327
|
|
|
533
|
|
|
7
|
|
|
540
|
|
|||||||
Cash dividends declared - common
(1)
|
—
|
|
|
—
|
|
|
(129
|
)
|
|
—
|
|
|
(129
|
)
|
|
—
|
|
|
(129
|
)
|
|||||||
Cash dividends declared - preferred
(2)
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||||
Stock option and incentive plans, net
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|||||||
Balance at June 30, 2017
|
$
|
254
|
|
|
$
|
3,875
|
|
|
$
|
5,004
|
|
|
$
|
(4,010
|
)
|
|
$
|
5,123
|
|
|
$
|
35
|
|
|
$
|
5,158
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
AOCL
(3)
|
|
Xerox
Shareholders’
Equity
|
|
Non-
controlling
Interests
|
|
Total
Equity
|
||||||||||||||
Balance at December 31, 2015
|
$
|
253
|
|
|
$
|
3,777
|
|
|
$
|
9,575
|
|
|
$
|
(4,630
|
)
|
|
$
|
8,975
|
|
|
$
|
43
|
|
|
$
|
9,018
|
|
Comprehensive income, net
|
—
|
|
|
—
|
|
|
189
|
|
|
49
|
|
|
238
|
|
|
4
|
|
|
242
|
|
|||||||
Cash dividends declared - common
(1)
|
—
|
|
|
—
|
|
|
(159
|
)
|
|
—
|
|
|
(159
|
)
|
|
—
|
|
|
(159
|
)
|
|||||||
Cash dividends declared - preferred
(2)
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||||||
Stock option and incentive plans, net
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
|||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
|||||||
Balance at June 30, 2016
|
$
|
253
|
|
|
$
|
3,807
|
|
|
$
|
9,593
|
|
|
$
|
(4,581
|
)
|
|
$
|
9,072
|
|
|
$
|
38
|
|
|
$
|
9,110
|
|
(1)
|
Cash dividends declared on common stock of
$0.25
per share in each quarter of
2017
and
$0.31
per share in each quarter of
2016
.
|
(2)
|
Cash dividends declared on preferred stock of
$20.00
per share in each quarter of
2017
and
2016
.
|
(3)
|
Refer to Note 16 - Other Comprehensive Income (Loss) for components of AOCL.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
|
|
Pre-tax
|
|
Net of Tax
|
|
Pre-tax
|
|
Net of Tax
|
|
Pre-tax
|
|
Net of Tax
|
|
Pre-tax
|
|
Net of Tax
|
||||||||||||||||
Translation Adjustments Gains (Losses)
|
|
$
|
204
|
|
|
$
|
204
|
|
|
$
|
(80
|
)
|
|
$
|
(82
|
)
|
|
$
|
338
|
|
|
$
|
337
|
|
|
$
|
111
|
|
|
$
|
107
|
|
Unrealized (Losses) Gains:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Changes in fair value of cash flow hedges - (losses) gains
|
|
(22
|
)
|
|
(17
|
)
|
|
41
|
|
|
30
|
|
|
(13
|
)
|
|
(11
|
)
|
|
57
|
|
|
39
|
|
||||||||
Changes in cash flow hedges reclassed to earnings
(1)
|
|
4
|
|
|
2
|
|
|
(8
|
)
|
|
(5
|
)
|
|
8
|
|
|
4
|
|
|
(7
|
)
|
|
(5
|
)
|
||||||||
Other gains (losses)
|
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||
Net Unrealized (Losses) Gains
|
|
(17
|
)
|
|
(14
|
)
|
|
32
|
|
|
24
|
|
|
(4
|
)
|
|
(6
|
)
|
|
49
|
|
|
33
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Defined Benefit Plans (Losses) Gains:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net actuarial losses
|
|
(1
|
)
|
|
(1
|
)
|
|
(100
|
)
|
|
(62
|
)
|
|
(9
|
)
|
|
(6
|
)
|
|
(223
|
)
|
|
(138
|
)
|
||||||||
Prior service amortization
(2)
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(3
|
)
|
||||||||
Actuarial loss amortization/settlement
(2)
|
|
44
|
|
|
30
|
|
|
41
|
|
|
28
|
|
|
110
|
|
|
74
|
|
|
93
|
|
|
63
|
|
||||||||
Fuji Xerox changes in defined benefit plans, net
(3)
|
|
8
|
|
|
8
|
|
|
(25
|
)
|
|
(25
|
)
|
|
21
|
|
|
21
|
|
|
(100
|
)
|
|
(100
|
)
|
||||||||
Other (losses) gains
(4)
|
|
(64
|
)
|
|
(64
|
)
|
|
81
|
|
|
81
|
|
|
(89
|
)
|
|
(89
|
)
|
|
86
|
|
|
86
|
|
||||||||
Changes in Defined Benefit Plans (Losses) Gains
|
|
(16
|
)
|
|
(29
|
)
|
|
(6
|
)
|
|
20
|
|
|
28
|
|
|
(3
|
)
|
|
(149
|
)
|
|
(92
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other Comprehensive Income (Loss)
|
|
171
|
|
|
161
|
|
|
(54
|
)
|
|
(38
|
)
|
|
362
|
|
|
328
|
|
|
11
|
|
|
48
|
|
||||||||
Less: Other comprehensive (loss) income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||
Other Comprehensive Income (Loss) Attributable to Xerox
|
|
$
|
171
|
|
|
$
|
161
|
|
|
$
|
(53
|
)
|
|
$
|
(37
|
)
|
|
$
|
361
|
|
|
$
|
327
|
|
|
$
|
12
|
|
|
$
|
49
|
|
(1)
|
Reclassified to Cost of sales - refer to Note 12 - Financial Instruments for additional information regarding our cash flow hedges.
|
(2)
|
Reclassified to Total Net Periodic Benefit Cost - refer to Note 14 - Employee Benefit Plans for additional information.
|
(3)
|
Represents our share of Fuji Xerox's benefit plan changes.
|
(4)
|
Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits in AOCL.
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Cumulative translation adjustments
|
|
$
|
(1,927
|
)
|
|
$
|
(2,263
|
)
|
Other unrealized losses, net
|
|
(19
|
)
|
|
(13
|
)
|
||
Benefit plans net actuarial losses and prior service credits
(1)
|
|
(2,064
|
)
|
|
(2,061
|
)
|
||
Total Accumulated Other Comprehensive Loss Attributable to Xerox
|
|
$
|
(4,010
|
)
|
|
$
|
(4,337
|
)
|
(1)
|
Includes our share of Fuji Xerox.
|
(1)
|
See the “Non-GAAP Financial Measures” section for an explanation of the non-GAAP financial measure.
|
(2)
|
The difference between the aggregate revision to retained earnings and the $90 impact at March 31, 2017 is primarily due to currency and the impact of adjustments recorded directly by Xerox in the first quarter 2017.
|
|
|
Three Months Ended
June 30, |
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|
|
|
Six Months Ended
June 30, |
||||||||||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
% Change
|
|
CC % Change
|
|
2017
|
|
2016
|
|
% Change
|
|
CC % Change
|
|
% of Total Revenue 2017
|
|
% of Total Revenue 2016
|
||||||||||||||
Equipment sales
|
|
$
|
546
|
|
|
$
|
650
|
|
|
(16.0
|
)%
|
|
(14.6
|
)%
|
|
$
|
1,048
|
|
|
$
|
1,192
|
|
|
(12.1
|
)%
|
|
(10.6
|
)%
|
|
21
|
%
|
|
22
|
%
|
Post sale revenue
|
|
2,021
|
|
|
2,143
|
|
|
(5.7
|
)%
|
|
(3.9
|
)%
|
|
3,973
|
|
|
4,216
|
|
|
(5.8
|
)%
|
|
(3.9
|
)%
|
|
79
|
%
|
|
78
|
%
|
||||
Total Revenue
|
|
$
|
2,567
|
|
|
$
|
2,793
|
|
|
(8.1
|
)%
|
|
(6.4
|
)%
|
|
$
|
5,021
|
|
|
$
|
5,408
|
|
|
(7.2
|
)%
|
|
(5.4
|
)%
|
|
100
|
%
|
|
100
|
%
|
Reconciliation to Condensed Consolidated Statements of Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Sales
|
|
$
|
1,010
|
|
|
$
|
1,126
|
|
|
(10.3
|
)%
|
|
(9.0
|
)%
|
|
$
|
1,946
|
|
|
$
|
2,129
|
|
|
(8.6
|
)%
|
|
(7.0
|
)%
|
|
|
|
|
||
Less: Supplies, paper and other sales
|
|
(464
|
)
|
|
(476
|
)
|
|
(2.5
|
)%
|
|
(1.3
|
)%
|
|
(898
|
)
|
|
(937
|
)
|
|
(4.2
|
)%
|
|
(2.5
|
)%
|
|
|
|
|
||||||
Equipment sales
(1)
|
|
$
|
546
|
|
|
$
|
650
|
|
|
(16.0
|
)%
|
|
(14.6
|
)%
|
|
$
|
1,048
|
|
|
$
|
1,192
|
|
|
(12.1
|
)%
|
|
(10.6
|
)%
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Services, maintenance and rentals
|
|
$
|
1,483
|
|
|
$
|
1,585
|
|
|
(6.4
|
)%
|
|
(4.4
|
)%
|
|
$
|
2,925
|
|
|
$
|
3,114
|
|
|
(6.1
|
)%
|
|
(4.1
|
)%
|
|
|
|
|
||
Add: Supplies, paper and other sales
|
|
464
|
|
|
476
|
|
|
(2.5
|
)%
|
|
(1.3
|
)%
|
|
898
|
|
|
937
|
|
|
(4.2
|
)%
|
|
(2.5
|
)%
|
|
|
|
|
||||||
Add: Financing
|
|
74
|
|
|
82
|
|
|
(9.8
|
)%
|
|
(8.0
|
)%
|
|
150
|
|
|
165
|
|
|
(9.1
|
)%
|
|
(7.4
|
)%
|
|
|
|
|
||||||
Post sale revenue
(1)
|
|
$
|
2,021
|
|
|
$
|
2,143
|
|
|
(5.7
|
)%
|
|
(3.9
|
)%
|
|
$
|
3,973
|
|
|
$
|
4,216
|
|
|
(5.8
|
)%
|
|
(3.9
|
)%
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
North America
|
|
$
|
1,534
|
|
|
$
|
1,654
|
|
|
(7.3
|
)%
|
|
(6.9
|
)%
|
|
$
|
3,007
|
|
|
$
|
3,196
|
|
|
(5.9
|
)%
|
|
(5.9
|
)%
|
|
60
|
%
|
|
59
|
%
|
International
|
|
895
|
|
|
982
|
|
|
(8.9
|
)%
|
|
(4.6
|
)%
|
|
1,747
|
|
|
1,901
|
|
|
(8.1
|
)%
|
|
(3.1
|
)%
|
|
35
|
%
|
|
35
|
%
|
||||
Other
|
|
138
|
|
|
157
|
|
|
(12.1
|
)%
|
|
(12.1
|
)%
|
|
267
|
|
|
311
|
|
|
(14.1
|
)%
|
|
(14.1
|
)%
|
|
5
|
%
|
|
6
|
%
|
||||
Total Revenue
(2)
|
|
$
|
2,567
|
|
|
$
|
2,793
|
|
|
(8.1
|
)%
|
|
(6.4
|
)%
|
|
$
|
5,021
|
|
|
$
|
5,408
|
|
|
(7.2
|
)%
|
|
(5.4
|
)%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Memo:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Managed Document Services
(3)
|
|
$
|
834
|
|
|
$
|
887
|
|
|
(6.0
|
)%
|
|
(3.9
|
)%
|
|
$
|
1,653
|
|
|
$
|
1,723
|
|
|
(4.1
|
)%
|
|
(1.8
|
)%
|
|
33
|
%
|
|
32
|
%
|
(1)
|
Equipment sales revenue in 2016 has been revised to reclassify certain Global Imaging Systems equipment sales to other sales, which are included in Post sale revenue.
|
(2)
|
Refer to the "Geographic Sales Channels and Product and Offerings Definitions" section.
|
(3)
|
Excluding equipment revenue, Managed Document Services (MDS) was $736 million and $754 million, respectively, for the three months ended June 30, 2017 and 2016, representing a decline of 2.4% including 2.2-percentage point negative impact from currency. For the six months ended June 30, 2017 and 2016, excluding equipment revenue, MDS was $1,449 million and $1,480 million, respectively, representing a decline of 2.1% including a 2.2-percentage point negative impact from currency.
|
•
|
Services, maintenance and rentals revenue
includes rental and maintenance revenue (including bundled supplies) as well as the post sale component of the document services revenue from our Managed Document Services (MDS) offerings, and revenues from our Communication and Marketing Solutions (CMS) offerings that transferred to Xerox from the Business Process Outsourcing (BPO) business upon Separation. These revenues declined 6.4%, with a 2.0-percentage point negative impact from currency; the decline at constant currency
1
reflected lower signings and installs in prior periods and the ongoing decline in page volumes.
|
•
|
Supplies, paper and other sales
includes unbundled supplies and other sales. These revenues declined 2.5%, with a 1.2-percentage point negative impact from currency. The decline at constant currency
1
was driven by lower original equipment manufacturer (OEM) supplies as well as lower supplies demand consistent with lower equipment sales in prior periods.
|
•
|
Financing revenue
is generated from financed equipment sale transactions. The 9.8% decline in these revenues reflected a declining finance receivables balance due to lower equipment sales in prior periods, along with a 1.8-percentage point negative impact from currency.
|
•
|
Services, maintenance and rentals revenue
includes rental and maintenance revenue (including bundled supplies) as well as the post sale component of the document services revenue from our Managed Document Services (MDS) offerings, and revenues from our Communication and Marketing Solutions (CMS) offerings that transferred to Xerox from the Business Process Outsourcing (BPO) business upon Separation. These revenues declined 6.1%, with a 2.0-percentage point negative impact from currency; the decline at constant currency
1
reflected lower signings and installs in prior periods and the ongoing decline in page volumes.
|
•
|
Supplies, paper and other sales
includes unbundled supplies and other sales. These revenues declined 4.2%, with a 1.7-percentage point negative impact from currency. The decline at constant currency
1
was driven by lower original equipment manufacturer (OEM) supplies as well as lower supplies demand (both in U.S. and European channels) consistent with lower equipment sales in prior periods, partly offset by higher supplies sales in developing markets which benefited partially from a weak first quarter in 2016.
|
•
|
Financing revenue
is generated from financed equipment sale transactions. The 9.1% decline in these revenues reflected a declining finance receivables balance due to lower equipment sales in prior periods, along with a 1.7-percentage point negative impact from currency.
|
|
|
Three Months Ended
June 30, |
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|
|
|
Six Months Ended
June 30, |
||||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
%
Change
|
|
CC % Change
|
|
2017
|
|
2016
|
|
% Change
|
|
CC % Change
|
|
% of Total Revenue 2017
|
|
% of Total Revenue 2016
|
||||||||
Entry
|
|
$
|
92
|
|
|
$
|
102
|
|
|
(9.8)%
|
|
(8.6)%
|
|
$
|
180
|
|
|
$
|
196
|
|
|
(8.2)%
|
|
(7.1)%
|
|
17%
|
|
17%
|
Mid-range
|
|
342
|
|
|
415
|
|
|
(17.6)%
|
|
(16.3)%
|
|
659
|
|
|
762
|
|
|
(13.5)%
|
|
(12.1)%
|
|
64%
|
|
64%
|
||||
High-end
|
|
106
|
|
|
126
|
|
|
(15.9)%
|
|
(13.9)%
|
|
199
|
|
|
225
|
|
|
(11.6)%
|
|
(9.4)%
|
|
19%
|
|
19%
|
||||
Other
|
|
6
|
|
|
7
|
|
|
NM
|
|
NM
|
|
10
|
|
|
9
|
|
|
NM
|
|
NM
|
|
NM
|
|
NM
|
||||
Equipment sales
(1)
|
|
$
|
546
|
|
|
$
|
650
|
|
|
(16.0)%
|
|
(14.6)%
|
|
$
|
1,048
|
|
|
$
|
1,192
|
|
|
(12.1)%
|
|
(10.6)%
|
|
100%
|
|
100%
|
(1)
|
Equipment sales revenue in 2016 has been revised to reclassify certain Global Imaging Systems equipment sales to other sales, which are included in Post sale Revenue.
|
•
|
24% increase in color multifunction devices, reflecting demand for recently launched products in this space.
|
•
|
10% increase in black-and-white multifunction devices, driven largely by a higher activity for low-end printers in developing markets.
|
•
|
15% decrease in mid-range color installs, reflecting the transition to the new product portfolio, partly offset by growth in developing markets.
|
•
|
14% decrease in mid-range black-and-white, reflecting overall market decline as well as the impact of transitioning to the new product portfolio, partly offset by growth in developing markets.
|
•
|
9% decrease in high-end color systems, as growth from continuous feed color and the recently launched Versant products was offset by a decline in iGen and older entry-production products.
|
•
|
34% decrease in high-end black-and-white systems reflects overall market decline and trends, and higher declines in North America.
|
•
|
19% increase in color multifunction devices, reflecting demand for recently launched products in this space.
|
•
|
6% increase in black-and-white multifunction devices, driven largely by a higher activity for low-end printers in developing markets.
|
•
|
8% decrease in mid-range color installs, reflecting the transition to the new product portfolio, partly offset by growth in developing markets.
|
•
|
19% decrease in mid-range black-and-white, reflecting overall market decline as well as the impact of transitioning to the new product portfolio.
|
•
|
12% decrease in high-end color systems due to timing of installs and upcoming product launches.
|
•
|
30% decrease in high-end black-and-white systems reflects overall market decline and trends and higher declines in North America.
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
%
Change
|
|
CC % Change
|
|
2017
|
|
2016
|
|
%
Change
|
|
CC % Change
|
||||||||
Signings
|
|
$
|
643
|
|
|
$
|
700
|
|
|
(8.1)%
|
|
(6.5)%
|
|
$
|
1,155
|
|
|
$
|
1,266
|
|
|
(8.8)%
|
|
(7.1)%
|
•
|
North America, which includes our sales channels in the U.S. and Canada.
|
•
|
International, which includes our sales channels in Europe, Eurasia, Latin America, Middle East, Africa and India.
|
•
|
Other primarily includes our OEM business, as well as sales to and royalties from Fuji Xerox, and our licensing revenue.
|
•
|
“Entry”, which includes A4 devices and desktop printers. Prices in this product group can range from approximately $150 to $3,000.
|
•
|
“Mid-Range”, which includes A3 Office and Light Production devices that generally serve workgroup environments in mid to large enterprises. Prices in this product group can range from approximately $2,000 to $75,000+.
|
•
|
“High-End”, which includes production printing and publishing systems that generally serve the graphic communications marketplace and large enterprises. Prices for these systems can range from approximately $30,000 to $1,000,000+.
|
•
|
Managed Document Services (MDS) revenue, which includes solutions and services that span from managing print to automating processes to managing content. Our primary offerings within MDS are Managed Print Services (including from Global Imaging Systems), as well as workflow automation services, and Centralized Print Services and Solutions (CPS). MDS excludes Communications and Marketing Solutions (CMS).
|
(1)
|
Entry installations exclude OEM sales; including OEM sales, Entry color multifunction devices decreased 10% and 12%, respectively, for the
three and six months ended June 30, 2017
. Entry black-and-white multifunction devices increased 4% for the three months ended June 30, 2017 and were flat for the six months ended June 30, 2017.
|
(2)
|
Mid-range and High-end color installations exclude Fuji Xerox digital front-end sales; including Fuji Xerox digital front-end sales, Mid-range color devices decreased 15% and 8% respectively, for the
three and six months ended June 30, 2017
while High-end color systems decreased 14% and 20%, respectively for the
three and six months ended June 30, 2017
.
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||||
|
|
Reported
|
|
Adjusted
(1)
|
||||||||||||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
B/(W)
|
|
2017
|
|
2016
|
|
B/(W)
|
||||||||||||||
Gross Profit
|
|
$
|
1,031
|
|
|
$
|
1,112
|
|
|
$
|
(81
|
)
|
|
|
$
|
1,045
|
|
|
$
|
1,124
|
|
|
$
|
(79
|
)
|
|
RD&E
|
|
106
|
|
|
119
|
|
|
13
|
|
|
|
102
|
|
|
113
|
|
|
11
|
|
|
||||||
SAG
|
|
643
|
|
|
691
|
|
|
48
|
|
|
|
624
|
|
|
677
|
|
|
53
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equipment Gross Margin
|
|
28.5
|
%
|
|
29.9
|
%
|
|
(1.4
|
)
|
pts.
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
||||||
Post sale Gross Margin
|
|
43.3
|
%
|
|
42.9
|
%
|
|
0.4
|
|
pts.
|
|
44.0
|
%
|
|
43.4
|
%
|
|
0.6
|
|
pts.
|
||||||
Total Gross Margin
|
|
40.2
|
%
|
|
39.8
|
%
|
|
0.4
|
|
pts.
|
|
40.7
|
%
|
|
40.2
|
%
|
|
0.5
|
|
pts.
|
||||||
RD&E as a % of Revenue
|
|
4.1
|
%
|
|
4.3
|
%
|
|
0.2
|
|
pts.
|
|
4.0
|
%
|
|
4.0
|
%
|
|
—
|
|
pts.
|
||||||
SAG as a % of Revenue
|
|
25.0
|
%
|
|
24.7
|
%
|
|
(0.3
|
)
|
pts.
|
|
24.3
|
%
|
|
24.2
|
%
|
|
(0.1
|
)
|
pts.
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pre-tax Income
|
|
$
|
193
|
|
|
$
|
191
|
|
|
$
|
2
|
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|||
Pre-tax Income Margin
|
|
7.5
|
%
|
|
6.8
|
%
|
|
0.7
|
|
pts.
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
||||||
Adjusted Operating Profit
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
342
|
|
|
361
|
|
|
(19
|
)
|
|
||||||
Adjusted Operating Margin
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
13.3
|
%
|
|
12.9
|
%
|
|
0.4
|
|
pts.
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Memo:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non-service retirement-related costs
|
|
$
|
37
|
|
|
$
|
32
|
|
|
$
|
(5
|
)
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
|
Reported
|
|
Adjusted
(1)
|
||||||||||||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
B/(W)
|
|
2017
|
|
2016
|
|
B/(W)
|
||||||||||||||
Gross Profit
|
|
$
|
1,985
|
|
|
$
|
2,130
|
|
|
$
|
(145
|
)
|
|
|
$
|
2,022
|
|
|
$
|
2,159
|
|
|
$
|
(137
|
)
|
|
RD&E
|
|
224
|
|
|
245
|
|
|
21
|
|
|
|
212
|
|
|
231
|
|
|
19
|
|
|
||||||
SAG
|
|
1,307
|
|
|
1,392
|
|
|
85
|
|
|
|
1,257
|
|
|
1,357
|
|
|
100
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equipment Gross Margin
|
|
29.4
|
%
|
|
30.2
|
%
|
|
(0.8
|
)
|
pts.
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
||||||
Post sale Gross Margin
|
|
42.2
|
%
|
|
42.0
|
%
|
|
0.2
|
|
pts.
|
|
43.1
|
%
|
|
42.7
|
%
|
|
0.4
|
|
pts.
|
||||||
Total Gross Margin
|
|
39.5
|
%
|
|
39.4
|
%
|
|
0.1
|
|
pts.
|
|
40.3
|
%
|
|
39.9
|
%
|
|
0.4
|
|
pts.
|
||||||
RD&E as a % of Revenue
|
|
4.5
|
%
|
|
4.5
|
%
|
|
—
|
|
pts.
|
|
4.2
|
%
|
|
4.3
|
%
|
|
0.1
|
|
pts.
|
||||||
SAG as a % of Revenue
|
|
26.0
|
%
|
|
25.7
|
%
|
|
(0.3
|
)
|
pts.
|
|
25.0
|
%
|
|
25.1
|
%
|
|
0.1
|
|
pts.
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pre-tax Income
|
|
$
|
177
|
|
|
$
|
223
|
|
|
$
|
(46
|
)
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|||
Pre-tax Income Margin
|
|
3.5
|
%
|
|
4.1
|
%
|
|
(0.6
|
)
|
pts.
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
||||||
Adjusted Operating Profit
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
616
|
|
|
632
|
|
|
(16
|
)
|
|
||||||
Adjusted Operating Margin
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
12.3
|
%
|
|
11.7
|
%
|
|
0.6
|
|
pts.
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Memo:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non-service retirement-related costs
|
|
$
|
99
|
|
|
$
|
78
|
|
|
$
|
(21
|
)
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(1)
|
See the “Non-GAAP Financial Measures” section for an explanation of the non-GAAP financial measure. In fourth quarter 2016, we began to include Equity in net income of unconsolidated affiliates in the calculation of adjusted operating income and margin. Prior periods have been restated accordingly to conform to current year presentation.
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||||||||||||
(in millions)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
R&D
|
$
|
81
|
|
|
$
|
95
|
|
|
$
|
(14
|
)
|
|
$
|
177
|
|
|
$
|
196
|
|
|
$
|
(19
|
)
|
Sustaining engineering
|
25
|
|
|
24
|
|
|
1
|
|
|
47
|
|
|
49
|
|
|
(2
|
)
|
||||||
Total RD&E Expenses
|
$
|
106
|
|
|
$
|
119
|
|
|
$
|
(13
|
)
|
|
$
|
224
|
|
|
$
|
245
|
|
|
$
|
(21
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Non-financing interest expense
|
$
|
24
|
|
|
$
|
42
|
|
|
$
|
60
|
|
|
$
|
96
|
|
Interest income
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
(3
|
)
|
||||
(Gains) losses on sales of businesses and assets
|
(1
|
)
|
|
3
|
|
|
(1
|
)
|
|
(17
|
)
|
||||
Currency losses (gains), net
|
1
|
|
|
(1
|
)
|
|
4
|
|
|
3
|
|
||||
Litigation matters
|
2
|
|
|
—
|
|
|
2
|
|
|
1
|
|
||||
Loss on sales of accounts receivables
|
3
|
|
|
4
|
|
|
6
|
|
|
8
|
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
All other expenses, net
|
7
|
|
|
2
|
|
|
8
|
|
|
5
|
|
||||
Total Other expenses, net
|
$
|
34
|
|
|
$
|
48
|
|
|
$
|
88
|
|
|
$
|
93
|
|
(1)
|
Refer to the Effective Tax Rate reconciliation table in the "Non-GAAP Financial Measures" section.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total equity in net income of unconsolidated affiliates
|
|
$
|
20
|
|
|
$
|
26
|
|
|
$
|
60
|
|
|
$
|
60
|
|
Fuji Xerox after-tax restructuring costs included in equity income
|
|
3
|
|
|
1
|
|
|
3
|
|
|
1
|
|
(1)
|
Refer to the Net Income and EPS reconciliation table in the "Non-GAAP Financial Measures" section.
|
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||
(in millions)
|
|
2017
|
|
2016
|
|
|||||||
Net cash provided by operating activities of continuing operations
|
|
$
|
533
|
|
|
$
|
346
|
|
|
$
|
187
|
|
Net cash used in operating activities of discontinued operations
|
|
(95
|
)
|
|
(194
|
)
|
|
99
|
|
|||
Net cash provided by operating activities
|
|
438
|
|
|
152
|
|
|
286
|
|
|||
|
|
|
|
|
|
|
||||||
Net cash used in investing activities of continuing operations
|
|
(112
|
)
|
|
(64
|
)
|
|
(48
|
)
|
|||
Net cash used in investing activities of discontinued operations
|
|
—
|
|
|
(128
|
)
|
|
128
|
|
|||
Net cash used in investing activities
|
|
(112
|
)
|
|
(192
|
)
|
|
80
|
|
|||
|
|
|
|
|
|
|
||||||
Net cash used in financing activities
|
|
(1,338
|
)
|
|
(129
|
)
|
|
(1,209
|
)
|
|||
|
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
|
35
|
|
|
4
|
|
|
31
|
|
|||
Increase in cash of discontinued operations
|
|
—
|
|
|
(20
|
)
|
|
20
|
|
|||
Decrease in cash and cash equivalents
|
|
(977
|
)
|
|
(185
|
)
|
|
(792
|
)
|
|||
Cash and cash equivalents at beginning of period
|
|
2,223
|
|
|
1,228
|
|
|
995
|
|
|||
Cash and Cash Equivalents at End of Period
|
|
$
|
1,246
|
|
|
$
|
1,043
|
|
|
$
|
203
|
|
•
|
$166 million increase in accounts payable and accrued compensation primarily related to the year-over-year timing of supplier and vendor payments.
|
•
|
$45 million increase from finance receivables primarily related to a higher level of run-off due to lower originations.
|
•
|
$28 million increase due to lower placements of equipment on operating leases reflecting decreased installs.
|
•
|
$22 million increase from lower defined benefit pension contributions, primarily due to timing as contributions are expected to be approximately $170 million higher than the prior year (Refer to Note 14 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information).
|
•
|
$82 million decrease from higher restructuring payments.
|
•
|
$14 million decrease from accounts receivable primarily due to a reduction in the benefit from the sales of receivables.
|
•
|
$58 million decrease due to acquisitions.
|
•
|
$19 million decrease from lower proceeds from the sale of assets and businesses. Prior year included proceeds from the sale of surplus technology assets.
|
•
|
$23 million increase due to lower capital expenditures (including internal use software).
|
•
|
$1,366 million increase from net debt activity. 2017 reflects payments of $1.0 billion on Senior Notes and net payments of $326 million on the tender and exchange of certain Senior Notes including transaction costs. 2016 reflects net proceeds of $1.0 billion from a Senior Unsecured Term Facility offset by payments of $700 million on Senior Notes and $250 million on Notes.
|
•
|
$161 million decrease reflecting the final cash adjustment with Conduent.
|
(in millions)
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Principal debt balance
(1)
|
|
$
|
5,047
|
|
|
$
|
6,349
|
|
Net unamortized discount
|
|
(38
|
)
|
|
(43
|
)
|
||
Debt issuance costs
|
|
(29
|
)
|
|
(21
|
)
|
||
Fair value adjustments
(2)
|
|
|
|
|
||||
- terminated swaps
|
|
16
|
|
|
27
|
|
||
- current swaps
|
|
5
|
|
|
4
|
|
||
Total Debt
|
|
$
|
5,001
|
|
|
$
|
6,316
|
|
(1)
|
Includes Notes Payable of $5 million and $4 million as of
June 30, 2017
and
December 31, 2016
, respectively.
|
(2)
|
Fair value adjustments include the following - (i) fair value adjustments to debt associated with terminated interest rate swaps, which are being amortized to interest expense over the remaining term of the related notes; and (ii) changes in fair value of hedged debt obligations attributable to movements in benchmark interest rates. Hedge accounting requires hedged debt instruments to be reported inclusive of any fair value adjustment.
|
(in millions)
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Total finance receivables, net
(1)
|
|
$
|
3,703
|
|
|
$
|
3,744
|
|
Equipment on operating leases, net
|
|
464
|
|
|
475
|
|
||
Total Finance Assets, net
(2)
|
|
$
|
4,167
|
|
|
$
|
4,219
|
|
(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 Condensed Consolidated Balance Sheets.
|
(2)
|
The change from
December 31, 2016
includes an increase of $128 million due to currency.
|
(in millions)
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Finance receivables debt
(1)
|
|
$
|
3,240
|
|
|
$
|
3,276
|
|
Equipment on operating leases debt
|
|
406
|
|
|
416
|
|
||
Financing debt
|
|
3,646
|
|
|
3,692
|
|
||
Core debt
|
|
1,355
|
|
|
2,624
|
|
||
Total Debt
|
|
$
|
5,001
|
|
|
$
|
6,316
|
|
(1)
|
Finance receivables debt is the basis for our calculation of "Cost of financing" expense in the Condensed Consolidated Statements of Income.
|
(in millions)
|
|
Amount
|
||
2017 Q3
|
|
$
|
7
|
|
2017 Q4
|
|
2
|
|
|
2018
|
|
747
|
|
|
2019
|
|
967
|
|
|
2020
|
|
1,057
|
|
|
2021
|
|
1,067
|
|
|
2022 and thereafter
|
|
1,200
|
|
|
Total
|
|
$
|
5,047
|
|
•
|
Net income and Earnings per share (EPS)
|
•
|
Effective tax rate
|
•
|
Gross margin, RD&E and SAG (adjusted for non-service retirement-related costs only)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
(in millions; except per share amounts)
|
|
Net Income
|
|
EPS
|
|
Net Income
|
|
EPS
|
|
Net Income
|
|
EPS
|
|
Net Income
|
|
EPS
|
||||||||||||||||
Reported
(1)
|
|
$
|
166
|
|
|
$
|
0.63
|
|
|
$
|
196
|
|
|
$
|
0.75
|
|
|
$
|
212
|
|
|
$
|
0.80
|
|
|
$
|
262
|
|
|
$
|
0.98
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Restructuring and related costs
|
|
40
|
|
|
|
|
47
|
|
|
|
|
160
|
|
|
|
|
147
|
|
|
|
||||||||||||
Amortization of intangible assets
|
|
15
|
|
|
|
|
16
|
|
|
|
|
29
|
|
|
|
|
30
|
|
|
|
||||||||||||
Non-service retirement-related costs
|
|
37
|
|
|
|
|
32
|
|
|
|
|
99
|
|
|
|
|
78
|
|
|
|
||||||||||||
Loss on extinguishment of debt
|
|
—
|
|
|
|
|
—
|
|
|
|
|
13
|
|
|
|
|
—
|
|
|
|
||||||||||||
Income tax adjustments
(2)
|
|
(34
|
)
|
|
|
|
(35
|
)
|
|
|
|
(95
|
)
|
|
|
|
(78
|
)
|
|
|
||||||||||||
Remeasurement of unrecognized tax positions
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(16
|
)
|
|
|
|
—
|
|
|
|
||||||||||||
Restructuring charges - Fuji Xerox
|
|
3
|
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
1
|
|
|
|
||||||||||||
Adjusted
|
|
$
|
227
|
|
|
$
|
0.87
|
|
|
$
|
257
|
|
|
$
|
0.98
|
|
|
$
|
405
|
|
|
$
|
1.54
|
|
|
$
|
440
|
|
|
$
|
1.68
|
|
Dividends on preferred stock used in adjusted EPS calculation
(3)
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
12
|
|
||||||||
Weighted average shares for adjusted EPS
(3)
|
|
|
|
263
|
|
|
|
|
262
|
|
|
|
|
263
|
|
|
|
|
255
|
|
||||||||||||
Fully diluted shares at end of period
(4)
|
|
|
|
263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net Income and EPS from continuing operations attributable to Xerox.
|
(2)
|
Refer to Effective Tax Rate reconciliation.
|
(3)
|
For those periods that exclude the preferred stock dividend the average shares for the calculations of diluted EPS include 7 million shares associated with our Series A or B convertible preferred stock, as applicable.
|
(4)
|
Represents common shares outstanding at
June 30, 2017
, as well as shares associated with our Series B convertible preferred stock plus potential dilutive common shares used for the calculation of diluted earnings per share for the
second
quarter 2017.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||
(in millions)
|
Pre-Tax Income
|
|
Income Tax Expense
|
|
Effective
Tax Rate |
|
Pre-Tax Income
|
|
Income Tax
Expense
|
|
Effective
Tax Rate |
||||||||||
Reported
(1)
|
$
|
193
|
|
|
$
|
43
|
|
|
22.3
|
%
|
|
$
|
191
|
|
|
$
|
18
|
|
|
9.4
|
%
|
Non-GAAP Adjustments
(2)
|
92
|
|
|
34
|
|
|
|
|
95
|
|
|
35
|
|
|
|
||||||
Adjusted
(3)
|
$
|
285
|
|
|
$
|
77
|
|
|
27.0
|
%
|
|
$
|
286
|
|
|
$
|
53
|
|
|
18.5
|
%
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||
(in millions)
|
Pre-Tax Income
|
|
Income Tax Expense
|
|
Effective
Tax Rate |
|
Pre-Tax Income
|
|
Income Tax
Expense
|
|
Effective
Tax Rate |
||||||||||
Reported
(1)
|
$
|
177
|
|
|
$
|
19
|
|
|
10.7
|
%
|
|
$
|
223
|
|
|
$
|
16
|
|
|
7.2
|
%
|
Non-GAAP Adjustments
(2)
|
301
|
|
|
95
|
|
|
|
|
255
|
|
|
78
|
|
|
|
||||||
Remeasurement of unrecognized tax positions
|
—
|
|
|
16
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Adjusted
(3)
|
$
|
478
|
|
|
$
|
130
|
|
|
27.2
|
%
|
|
$
|
478
|
|
|
$
|
94
|
|
|
19.7
|
%
|
(1)
|
Pre-Tax Income and Income Tax Expense from continuing operations.
|
(2)
|
Refer to Net Income and EPS reconciliation for details.
|
(3)
|
The tax impact on Adjusted Pre-Tax Income from continuing operations is calculated under the same accounting principles applied to the As Reported Pre-Tax Income under ASC 740, which employs an annual effective tax rate method to the results.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||
(in millions)
|
Profit
|
|
Revenue
|
|
Margin
|
|
Profit
|
|
Revenue
|
|
Margin
|
||||||||||
Reported
(1)
|
$
|
193
|
|
|
$
|
2,567
|
|
|
7.5
|
%
|
|
$
|
191
|
|
|
$
|
2,793
|
|
|
6.8
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restructuring and related costs
|
40
|
|
|
|
|
|
|
47
|
|
|
|
|
|
||||||||
Amortization of intangible assets
|
15
|
|
|
|
|
|
|
16
|
|
|
|
|
|
||||||||
Non-service retirement-related costs
|
37
|
|
|
|
|
|
|
32
|
|
|
|
|
|
||||||||
Equity in net income of unconsolidated affiliates
|
20
|
|
|
|
|
|
|
26
|
|
|
|
|
|
||||||||
Restructuring charges - Fuji Xerox
|
3
|
|
|
|
|
|
|
1
|
|
|
|
|
|
||||||||
Other expenses, net
|
34
|
|
|
|
|
|
|
48
|
|
|
|
|
|
||||||||
Adjusted
|
$
|
342
|
|
|
$
|
2,567
|
|
|
13.3
|
%
|
|
$
|
361
|
|
|
$
|
2,793
|
|
|
12.9
|
%
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||
(in millions)
|
Profit
|
|
Revenue
|
|
Margin
|
|
Profit
|
|
Revenue
|
|
Margin
|
||||||||||
Reported
(1)
|
$
|
177
|
|
|
$
|
5,021
|
|
|
3.5
|
%
|
|
$
|
223
|
|
|
$
|
5,408
|
|
|
4.1
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restructuring and related costs
|
160
|
|
|
|
|
|
|
147
|
|
|
|
|
|
||||||||
Amortization of intangible assets
|
29
|
|
|
|
|
|
|
30
|
|
|
|
|
|
||||||||
Non-service retirement-related costs
|
99
|
|
|
|
|
|
|
78
|
|
|
|
|
|
||||||||
Equity in net income of unconsolidated affiliates
|
60
|
|
|
|
|
|
|
60
|
|
|
|
|
|
||||||||
Restructuring charges - Fuji Xerox
|
3
|
|
|
|
|
|
|
1
|
|
|
|
|
|
||||||||
Other expenses, net
|
88
|
|
|
|
|
|
|
93
|
|
|
|
|
|
||||||||
Adjusted
|
$
|
616
|
|
|
$
|
5,021
|
|
|
12.3
|
%
|
|
$
|
632
|
|
|
$
|
5,408
|
|
|
11.7
|
%
|
(1)
|
Pre-Tax Income and revenue from continuing operations.
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
(1)
|
|
Non-service retirement-related costs
|
|
Adjusted
|
|
As Reported
(1)
|
|
Non-service retirement-related costs
|
|
Adjusted
|
||||||||||||
Total Revenue
|
|
$
|
2,567
|
|
|
$
|
—
|
|
|
$
|
2,567
|
|
|
$
|
2,793
|
|
|
$
|
—
|
|
|
$
|
2,793
|
|
Total Gross Profit
|
|
1,031
|
|
|
14
|
|
|
1,045
|
|
|
1,112
|
|
|
12
|
|
|
1,124
|
|
||||||
Post sale revenue
|
|
2,021
|
|
|
—
|
|
|
2,021
|
|
|
2,143
|
|
|
—
|
|
|
2,143
|
|
||||||
Post sale gross profit
|
|
875
|
|
|
14
|
|
|
889
|
|
|
919
|
|
|
12
|
|
|
931
|
|
||||||
RD&E
|
|
106
|
|
|
(4
|
)
|
|
102
|
|
|
119
|
|
|
(6
|
)
|
|
113
|
|
||||||
SAG
|
|
643
|
|
|
(19
|
)
|
|
624
|
|
|
691
|
|
|
(14
|
)
|
|
677
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Gross Margin
|
|
40.2
|
%
|
|
|
|
|
40.7
|
%
|
|
39.8
|
%
|
|
|
|
|
40.2
|
%
|
||||||
Post sale Gross Margin
|
|
43.3
|
%
|
|
|
|
44.0
|
%
|
|
42.9
|
%
|
|
|
|
43.4
|
%
|
||||||||
RD&E as a % of Revenue
|
|
4.1
|
%
|
|
|
|
|
4.0
|
%
|
|
4.3
|
%
|
|
|
|
|
4.0
|
%
|
||||||
SAG as a % of Revenue
|
|
25.0
|
%
|
|
|
|
|
24.3
|
%
|
|
24.7
|
%
|
|
|
|
|
24.2
|
%
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
(1)
|
|
Non-service retirement-related costs
|
|
Adjusted
|
|
As Reported
(1)
|
|
Non-service retirement-related costs
|
|
Adjusted
|
||||||||||||
Total Revenue
|
|
$
|
5,021
|
|
|
$
|
—
|
|
|
$
|
5,021
|
|
|
$
|
5,408
|
|
|
$
|
—
|
|
|
$
|
5,408
|
|
Total Gross Profit
|
|
1,985
|
|
|
37
|
|
|
2,022
|
|
|
2,130
|
|
|
29
|
|
|
2,159
|
|
||||||
Post sale revenue
|
|
3,973
|
|
|
—
|
|
|
3,973
|
|
|
4,216
|
|
|
—
|
|
|
4,216
|
|
||||||
Post sale gross profit
|
|
1,676
|
|
|
37
|
|
|
1,713
|
|
|
1,771
|
|
|
29
|
|
|
1,800
|
|
||||||
RD&E
|
|
224
|
|
|
(12
|
)
|
|
212
|
|
|
245
|
|
|
(14
|
)
|
|
231
|
|
||||||
SAG
|
|
1,307
|
|
|
(50
|
)
|
|
1,257
|
|
|
1,392
|
|
|
(35
|
)
|
|
1,357
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Gross Margin
|
|
39.5
|
%
|
|
|
|
40.3
|
%
|
|
39.4
|
%
|
|
|
|
39.9
|
%
|
||||||||
Post sale Gross Margin
|
|
42.2
|
%
|
|
|
|
43.1
|
%
|
|
42.0
|
%
|
|
|
|
42.7
|
%
|
||||||||
RD&E as a % of Revenue
|
|
4.5
|
%
|
|
|
|
4.2
|
%
|
|
4.5
|
%
|
|
|
|
4.3
|
%
|
||||||||
SAG as a % of Revenue
|
|
26.0
|
%
|
|
|
|
25.0
|
%
|
|
25.7
|
%
|
|
|
|
25.1
|
%
|
(1)
|
Revenue and costs from continuing operations.
|
|
|
Three Months Ended March 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
(1)
|
|
Adjustment
(3)
|
|
As Adjusted
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
||||||||||||
Adjusted Net income
|
|
$
|
154
|
|
|
$
|
24
|
|
|
$
|
178
|
|
|
$
|
921
|
|
|
$
|
6
|
|
|
$
|
927
|
|
Adjusted Diluted earnings per share
|
|
0.58
|
|
|
0.09
|
|
|
0.67
|
|
|
3.50
|
|
|
0.03
|
|
|
3.53
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted Operating profit
(2)
|
|
$
|
250
|
|
|
$
|
24
|
|
|
$
|
274
|
|
|
$
|
1,345
|
|
|
$
|
6
|
|
|
$
|
1,351
|
|
Adjusted Operating margin
|
|
10.2
|
%
|
|
|
|
11.2
|
%
|
|
12.5
|
%
|
|
|
|
12.5
|
%
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
||||||||||||||||||||
(in millions)
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
||||||||||||
Adjusted Net income
|
|
$
|
978
|
|
|
$
|
(26
|
)
|
|
$
|
952
|
|
|
$
|
1,148
|
|
|
$
|
(18
|
)
|
|
$
|
1,130
|
|
Adjusted Diluted earnings per share
|
|
3.55
|
|
|
(0.10
|
)
|
|
3.45
|
|
|
3.83
|
|
|
(0.06
|
)
|
|
3.77
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted Operating profit
(2)
|
|
$
|
1,461
|
|
|
$
|
(26
|
)
|
|
$
|
1,435
|
|
|
$
|
1,688
|
|
|
$
|
(18
|
)
|
|
$
|
1,670
|
|
Adjusted Operating margin
|
|
12.7
|
%
|
|
|
|
12.5
|
%
|
|
13.3
|
%
|
|
|
|
13.2
|
%
|
|
|
Three Months Ended March 31, 2016
|
|
Three Months Ended June 30, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
||||||||||||
Adjusted Net income
|
|
$
|
186
|
|
|
$
|
(3
|
)
|
|
$
|
183
|
|
|
$
|
253
|
|
|
$
|
4
|
|
|
$
|
257
|
|
Adjusted Diluted earnings per share
|
|
0.70
|
|
|
(0.01
|
)
|
|
0.69
|
|
|
0.97
|
|
|
0.01
|
|
|
0.98
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted Operating profit
(2)
|
|
$
|
274
|
|
|
$
|
(3
|
)
|
|
$
|
271
|
|
|
$
|
357
|
|
|
$
|
4
|
|
|
$
|
361
|
|
Adjusted Operating margin
|
|
10.5
|
%
|
|
|
|
10.4
|
%
|
|
12.8
|
%
|
|
|
|
12.9
|
%
|
|
|
Three Months Ended September 30, 2016
|
|
Three Months Ended December 31, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
||||||||||||
Adjusted Net income
|
|
$
|
222
|
|
|
$
|
1
|
|
|
$
|
223
|
|
|
$
|
260
|
|
|
$
|
4
|
|
|
$
|
264
|
|
Adjusted Diluted earnings per share
|
|
0.84
|
|
|
—
|
|
|
0.84
|
|
|
0.99
|
|
|
0.01
|
|
|
1.00
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted Operating profit
(2)
|
|
$
|
330
|
|
|
$
|
1
|
|
|
$
|
331
|
|
|
$
|
384
|
|
|
$
|
4
|
|
|
$
|
388
|
|
Adjusted Operating margin
|
|
12.6
|
%
|
|
|
|
12.6
|
%
|
|
14.0
|
%
|
|
|
|
14.2
|
%
|
|
|
Three Months Ended March 31, 2015
|
|
Three Months Ended June 30, 2015
|
||||||||||||||||||||
(in millions)
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
||||||||||||
Adjusted Net income
|
|
$
|
229
|
|
|
$
|
(18
|
)
|
|
$
|
211
|
|
|
$
|
225
|
|
|
$
|
(4
|
)
|
|
$
|
221
|
|
Adjusted Diluted earnings per share
|
|
0.79
|
|
|
(0.06
|
)
|
|
0.73
|
|
|
0.80
|
|
|
(0.02
|
)
|
|
0.78
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted Operating profit
(2)
|
|
$
|
343
|
|
|
$
|
(18
|
)
|
|
$
|
325
|
|
|
$
|
353
|
|
|
$
|
(4
|
)
|
|
$
|
349
|
|
Adjusted Operating margin
|
|
12.2
|
%
|
|
|
|
11.6
|
%
|
|
12.1
|
%
|
|
|
|
11.9
|
%
|
|
|
Three Months Ended September 30, 2015
|
|
Three Months Ended December 31, 2015
|
||||||||||||||||||||
(in millions)
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
|
As Reported
(1)
|
|
Adjustment
|
|
As Adjusted
|
||||||||||||
Adjusted Net income
|
|
$
|
239
|
|
|
$
|
—
|
|
|
$
|
239
|
|
|
$
|
285
|
|
|
$
|
(4
|
)
|
|
$
|
281
|
|
Adjusted Diluted earnings per share
|
|
0.88
|
|
|
—
|
|
|
0.88
|
|
|
1.09
|
|
|
(0.01
|
)
|
|
1.08
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted Operating profit
(2)
|
|
$
|
372
|
|
|
$
|
—
|
|
|
$
|
372
|
|
|
$
|
393
|
|
|
$
|
(4
|
)
|
|
$
|
389
|
|
Adjusted Operating margin
|
|
13.4
|
%
|
|
|
|
13.4
|
%
|
|
13.3
|
%
|
|
|
|
13.2
|
%
|
(1)
|
Income and Diluted EPS from continuing operations attributable to Xerox.
|
(2)
|
As Reported Adjusted Operating profit excludes Fuji Xerox restructuring charges. As Reported Adjusted Operating Profit for the three months ended March 31, 2017 also reflects the reversal of the $30 million out-of-period adjustment recoded in the first quarter 2017.
|
(3)
|
The difference between the $30 million out-of-period adjustment recorded in first quarter 2017 and the revision adjustment of $24 million, primarily relates to the additional adjustments subsequently identified as part of the IIC review.
|
(a)
|
Sales of Unregistered Securities during the Quarter ended
June 30, 2017
|
a.
|
Securities issued on
April 28, 2017
: Registrant issued
2,457
DSUs, representing the right to receive shares of Common stock, par value
$1
per share, at a future date.
|
b.
|
No underwriters participated. The shares were issued to each of the non-employee Directors of Registrant: Jonathan Christodoro, Joseph Echevarria, Richard J. Harrington, William Curt Hunter, Robert J. Keegan, Cheryl Krongard, Charles Prince, Ann N. Reese, Stephen H. Rusckowski and Sara Martinez Tucker.
|
c.
|
The DSUs were issued at a deemed purchase price of
$29.54
per DSU (aggregate price
$72,580
), based upon the market value on the date of record, in payment of the dividend equivalents due to DSU holders pursuant to Registrant’s 2004 Equity Compensation Plan for Non-Employee Directors.
|
d.
|
Exemption from registration under the Act was claimed based upon Section 4(2) as a sale by an issuer not involving a public offering.
|
(b)
|
Issuer Purchases of Equity Securities during the Quarter ended
June 30, 2017
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
(2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum That May Be Purchased under the Plans or Programs
|
|||
April 1 through 30
|
10,926
|
|
|
$
|
29.35
|
|
|
n/a
|
|
n/a
|
May 1 through 31
|
—
|
|
|
—
|
|
|
n/a
|
|
n/a
|
|
June 1 through 30
|
—
|
|
|
—
|
|
|
n/a
|
|
n/a
|
|
Total
|
10,926
|
|
|
|
|
|
|
|
(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 costs.
|
3(a)
|
|
Restated Certificate of Incorporation of Registrant filed with the Department of State of New York on February 21, 2013, as amended by the Certificates of Amendment of Certificate of Incorporation filed with the Department of State of the State of New York on December 23, 2016 and June 14, 2017.
|
3(b)
|
|
By-Laws of Registrant as amended through August 15, 2016.
|
|
|
Incorporated by reference to Exhibit 3(b) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016. See SEC File Number 001-04471.
|
10(e)(1)
|
|
Registrant's 2004 Performance Incentive Plan, as amended and restated as of June 30, 2017.
|
10(e)(2)
|
|
Performance Elements for 2017 Executive Long-Term Incentive Program
|
12
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
31(a)
|
|
Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
31(b)
|
|
Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
32
|
|
Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
101.INS
|
|
XBRL Instance Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Linkbase.
|
XEROX CORPORATION
(Registrant)
|
|
|
|
By:
|
/
S
/ J
OSEPH
H. M
ANCINI
, J
R
.
|
|
Joseph H. Mancini, Jr.
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
|
3(a)
|
|
Restated Certificate of Incorporation of Registrant filed with the Department of State of New York on February 21, 2013, as amended by the Certificates of Amendment of Certificate of Incorporation filed with the Department of State of the State of New York on December 23, 2016 and June 14, 2017.
|
3(b)
|
|
By-Laws of Registrant as amended through August 15, 2016.
|
|
|
Incorporated by reference to Exhibit 3(b) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016. See SEC File Number 001-04471.
|
10(e)(1)
|
|
Registrant's 2004 Performance Incentive Plan, as amended and restated as of June 30, 2017.
|
10(e)(2)
|
|
Performance Elements for 2017 Executive Long-Term Incentive Program
|
12
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
31(a)
|
|
Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
31(b)
|
|
Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
|
32
|
|
Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
101.INS
|
|
XBRL Instance Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Linkbase.
|
|
|
|
|
|
CR
1
= CR
0
x
|
OS
1
|
|
OS
0
|
|
|
|
|
|
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such dividend or distribution;
|
|
|
|
|
|
CR
1
|
=
|
the Conversion Rate in effect immediately after the Record Date for such dividend or distribution;
|
|
|
|
|
|
OS
0
|
=
|
the number of shares of Common Stock Outstanding at the Close of Business on the Record Date for such dividend or distribution; and
|
|
|
|
|
|
OS
1
|
=
|
the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such dividend or distribution.
|
|
|
|
|
|
|
CR
1
= CR
0
x
|
|
OS
1
|
|
|
OS
0
|
|
|
|
|
|
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the effective date of such subdivision or combination;
|
|
|
|
|
|
CR
1
|
=
|
the Conversion Rate in effect immediately after the effective date of such subdivision or combination;
|
|
|
|
|
|
OS
0
|
=
|
the number of shares of Common Stock Outstanding at the Close of Business on the effective date of such subdivision or combination; and
|
|
|
|
|
|
OS
1
|
=
|
the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such subdivision or combination.
|
|
|
|
|
|
|
CR' = CR
0
X
|
|
OS
0
+ X
|
|
|
|
OS
0
+ Y
|
|
|
|
|
|
|
|
|
|
|
|
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such distribution;
|
|
|
|
|
|
|
|
CR'
|
=
|
the Conversion Rate in effect immediately after the Record Date for such distribution;
|
|
|
|
|
|
|
|
OS
0
|
=
|
the number of shares of Common Stock Outstanding at the Close of Business on the Record Date for such distribution;
|
|
|
|
|
|
|
|
X
|
=
|
the total number of shares of Common Stock issuable pursuant to such rights or warrants; and
|
|
|
|
|
|
|
|
Y
|
=
|
the number of shares of Common Stock equal to (x) the aggregate price payable to exercise such rights or warrants divided by (y) the Current Market Price of the Common Stock.
|
|
|
|
CR' =
|
CR
0
X
|
SP
0
|
|
|
SP
0
– FMV
|
|
|
|
|
|
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such distribution;
|
|
|
|
CR'
|
=
|
the Conversion Rate in effect immediately after the Record Date for such distribution;
|
|
|
|
SP
0
|
=
|
the Current Market Price of the Common Stock; and
|
|
|
|
FMV
|
=
|
the Fair Market Value on the Record Date for such distribution of the Distributed Property, expressed as amount per share of Common Stock.
|
|
|
|
CR' = CR
0
|
X
|
(FMV + MP
0
)
|
|
|
MP
0
|
|
|
|
|
|
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such distribution;
|
|
|
|
|
|
|
CR'
|
=
|
the Conversion Rate in effect immediately after the Record Date for such distribution;
|
|
|
|
FMV
|
=
|
the average of the Closing Prices of the capital stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock over the 10 consecutive Trading Day period beginning on, and including, the effective date of the Spin-Off (the “
Spin-Off Valuation Period
”); and
|
|
|
|
MP
0
|
=
|
the average of the Closing Prices of the Common Stock over the Spin-Off Valuation Period.
|
|
|
|
CR' = CR
0
|
X
|
SP
0
|
|
|
SP
0
– DIV
|
|
|
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such dividend or distribution;
|
|
|
|
CR
1
|
=
|
the Conversion Rate in effect immediately after the Record Date for such dividend or distribution;
|
|
|
|
SP
0
|
=
|
the Current Market Price of the Common Stock; and
|
|
|
|
DIV
|
=
|
the amount in cash per share of Common Stock of the dividend or distribution, as determined pursuant to the following sentences. If any adjustment is required to be made as set forth in this Subdivision 13(j)(vi) as a result of a distribution (1) that is a regularly scheduled quarterly dividend, such adjustment would be based on the amount by which such dividend exceeds the Dividend Threshold Amount or (2) that is not a regularly scheduled quarterly dividend, such adjustment would be based on the full amount of such distribution. The Dividend Threshold Amount is subject to adjustment on an inversely proportional basis whenever the Conversion Rate is adjusted;
provided
that no adjustment shall be made to the Dividend Threshold Amount for any adjustment made to the Conversion Rate as described under this Subdivision 13(j)(vi).
|
|
|
|
|
|
|
|
|
|
|
|
CR
1
= CR
0
x
|
FMV + (SP
1
x OS
1
)
|
|
|
|
SP
1
x OS
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Make-Whole Acquisition Stock Price
|
|||||||||||||||||
Make-Whole Acquisition
Effective Date |
$8.72
|
$10.00
|
$12.00
|
$14.00
|
$14.46
|
$16.00
|
$18.00
|
$20.00
|
$22.00
|
$24.00
|
$26.00
|
$28.00
|
$30.00
|
$32.00
|
$34.00
|
$36.00
|
$38.00
|
$40.00
|
February 1, 2010
|
24.7913
|
23.6268
|
17.6972
|
13.9064
|
13.3093
|
11.3104
|
9.4138
|
7.9597
|
6.8038
|
5.8595
|
5.0727
|
4.4068
|
3.8368
|
3.3445
|
2.9161
|
2.5415
|
2.2124
|
1.9225
|
February 1, 2011
|
24.7913
|
22.0079
|
16.0166
|
12.3338
|
11.7769
|
9.9124
|
8.2031
|
6.9243
|
5.9232
|
5.1125
|
4.4392
|
3.8697
|
3.3813
|
2.9580
|
2.5883
|
2.2634
|
1.9767
|
1.7226
|
February 1, 2012
|
24.7913
|
20.3361
|
14.1073
|
10.4610
|
9.9415
|
8.2023
|
6.6990
|
5.6236
|
4.8061
|
4.1552
|
3.6187
|
3.1663
|
2.7780
|
2.4406
|
2.1447
|
1.8834
|
1.6513
|
1.4446
|
February 1, 2013
|
24.7913
|
18.7311
|
11.9829
|
8.2258
|
7.7398
|
6.1127
|
4.8531
|
4.0299
|
3.4382
|
2.9797
|
2.6061
|
2.2916
|
2.0214
|
1.7860
|
1.5788
|
1.3949
|
1.2309
|
1.0838
|
February 1, 2014
|
24.7913
|
17.6267
|
9.7394
|
5.4758
|
5.0124
|
3.4610
|
2.5458
|
2.0743
|
1.7728
|
1.5452
|
1.3585
|
1.1998
|
1.0627
|
0.9427
|
0.8369
|
0.7428
|
0.6586
|
0.5829
|
February 1, 2015 and thereafter
|
24.7913
|
16.9727
|
7.4564
|
0.8113
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
(1)
|
surrender the shares of Series B Preferred Stock to the Corporation;
|
(2)
|
if required, furnish appropriate endorsements and transfer documents; and
|
(3)
|
if required, pay all transfer or similar taxes.
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such dividend or distribution;
|
CR
1
|
=
|
the Conversion Rate in effect immediately after the Record Date for such dividend or distribution;
|
OS
0
|
=
|
the number of shares of Common Stock Outstanding at the Close of Business on the Record Date for such dividend or distribution; and
|
OS
1
|
=
|
the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such dividend or distribution.
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the effective date of such subdivision or combination;
|
CR
1
|
=
|
the Conversion Rate in effect immediately after the effective date of such subdivision or combination;
|
OS
0
|
=
|
the number of shares of Common Stock Outstanding at the Close of Business on the effective date of such subdivision or combination; and
|
OS
1
|
=
|
the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such subdivision or combination.
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such distribution;
|
CR
'
|
=
|
the Conversion Rate in effect immediately after the Record Date for such distribution;
|
OS
0
|
=
|
the number of shares of Common Stock Outstanding at the Close of Business on the Record Date for such distribution;
|
X
|
=
|
the total number of shares of Common Stock issuable pursuant to such rights or warrants; and
|
Y
|
=
|
the number of shares of Common Stock equal to (x) the aggregate price payable to exercise such rights or warrants divided by (y) the Current Market Price of the Common Stock.
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such distribution;
|
CR'
|
=
|
the Conversion Rate in effect immediately after the Record Date for such distribution;
|
SP
0
|
=
|
the Current Market Price of the Common Stock; and
|
FMV
|
=
|
the Fair Market Value on the Record Date for such distribution of the Distributed Property, expressed as amount per share of Common Stock.
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such distribution;
|
CR'
|
=
|
the Conversion Rate in effect immediately after the Record Date for such distribution;
|
FMV
|
=
|
the average of the Closing Prices of the capital stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock over the 10 consecutive Trading Day period beginning on, and including, the effective date of the Spin-Off (the “
Spin-Off Valuation Period
”); and
|
MP
0
|
=
|
the average of the Closing Prices of the Common Stock over the Spin-Off Valuation Period.
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Record Date for such dividend or distribution;
|
CR
1
|
=
|
the Conversion Rate in effect immediately after the Record Date for such dividend or distribution;
|
SP
0
|
=
|
the Current Market Price of the Common Stock; and
|
DIV
|
=
|
the amount in cash per share of Common Stock of the dividend or distribution, as determined pursuant to the following sentences. If any adjustment is required to be made as set forth in this Subdivision 14(j)(vi) as a result of a distribution (1) that is a regularly scheduled quarterly dividend, such adjustment would be based on the amount by which such dividend exceeds the Dividend Threshold Amount or (2) that is not a regularly scheduled quarterly dividend, such adjustment would be based on the full amount of such distribution. The Dividend Threshold Amount is subject to adjustment on an inversely proportional basis whenever the Conversion Rate is adjusted;
provided
that no adjustment shall be made to the Dividend Threshold Amount for any adjustment made to the Conversion Rate as described under this Subdivision 14(j)(vi).
|
CR
0
|
=
|
the Conversion Rate in effect at the Close of Business on the Expiration Date;
|
CR
1
|
=
|
the Conversion Rate in effect immediately after the Expiration Date;
|
FMV
|
=
|
the Fair Market Value, on the Expiration Date, of the aggregate value of all cash and any other consideration paid or payable for shares of Common Stock validly tendered or exchanged and not withdrawn as of the Expiration Date;
|
OS
1
|
=
|
the number of shares of Common Stock outstanding immediately after the last time tenders or exchanges may be made pursuant to such tender offer or exchange offer (the “
Expiration Time
”);
|
OS
0
|
=
|
the number of shares of Common Stock outstanding immediately prior to the Expiration Time; and
|
SP
1
|
=
|
the average of the Closing Price of Common Stock during the ten consecutive Trading Day period commencing on the Trading Day immediately after the Expiration Date.
|
|
Make-Whole Acquisition Stock Price
|
||||
Make-Whole Acquisition Effective Date
|
$6.00
|
$6.68
|
$8.00
|
$9.00
|
$9.75
|
February 1, 2015 and thereafter
|
16.8550
|
12.6052
|
6.5538
|
3.2978
|
0.0000
|
|
|
|
|
XEROX CORPORATION
45 Glover Avenue
|
|
|
P. O. Box 4505
Norwalk, CT 06856-4505
Attention: General Counsel
|
|
XEROX CORPORATION
|
|
|
|
|
|
By:
|
Darrell L. Ford
|
|
Executive Vice President and
Chief Human Resources Officer
|
1)
|
Amortization of acquisition-related intangibles;
|
2)
|
Non-service related defined benefit pension and retiree health costs;
|
3)
|
Restructuring charges, including our share of Fuji Xerox restructuring costs;
|
4)
|
Separation and related costs;
|
5)
|
Items individually identified within Other Expenses, net, (except for interest, currency and asset sales) and to the extent the amount is greater than $10 million pre-tax. If any such item qualifies for separate line item disclosure on the face of the consolidated statement of income in accordance with Generally Accepted Accounting Principles consistently applied, then such item will also warrant adjustment;
|
6)
|
Gains/(losses) from the settlement of tax audits or changes in enacted tax law (to the extent the amount is greater than $10 million pre-tax);
|
7)
|
Non-cash write-offs or impairments, except for assets acquired or developed within the past 3 years of the balance sheet date (to the extent the amount is greater than $10 million pre-tax);
|
8)
|
Gains/(losses) resulting from acts of war, terrorism or natural disasters (to the extent the amount is greater than $10 million pre-tax);
|
9)
|
Impact of share repurchases greater than two percent of adjusted EPS as defined above;
|
10)
|
Our share of the after-tax effects of adjustments 5) through 8) incurred by Fuji Xerox (to the extent our share is greater than $2.5 million).
|
1)
|
With the exception of cash payments for restructurings, cash flow impacts (inflows and outflows) resulting from the EPS adjustments as identified above, regardless of whether the cash flow impact and the EPS impact are in the same fiscal year;
|
2)
|
Cash payments for restructurings in excess of or less than the amount reported as current restructuring reserves in the preceding year’s Annual Report;
|
3)
|
Pension contributions in excess of or less than the planned amounts for each year;
|
4)
|
Impact of changes in receivables factoring programs as compared to total amount factored at December 31, 2016 ($480 million net of the deferred purchase price).
|
1)
|
Impacts of any individual acquisition in excess of $500 million purchase price;
|
2)
|
Impacts of a divestiture with revenue equal to or greater than $100 million;
|
3)
|
Effects of a change in accounting principle as identified within the Company’s consolidated financial statements or MD&A.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Xerox Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ J
EFFREY
J
ACOBSON
|
|
Jeffrey Jacobson
Principal Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Xerox Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ W
ILLIAM
F
.
O
SBOURN,
J
R.
|
|
William F. Osbourn, Jr.
Principal Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/
S
/ J
EFFREY
J
ACOBSON
|
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Jeffrey Jacobson
Chief Executive Officer
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August 7, 2017
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/
S
/ W
ILLIAM
F. O
SBOURN,
J
R.
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William F. Osbourn, Jr.
Chief Financial Officer
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August 7, 2017
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