XEROX CORP

Previous wording

Post sale revenue of $1.2 billion declined 3.2% in actual currency, or 1.2% in constant currency 1, as compared to first quarter 2024. First quarter 2025 post sale revenue included an 8.2-percentage point benefit from the recent acquisition of ITsavvy. Excluding ITsavvy, post-sale revenue declined 11.4% in actual currency. The decline was primarily due to lower managed print services 2 revenue. Reinvention-related actions, and lower financing revenue also contributed to the decline. Excluding these effects, excluding growth in legacy IT Solutions’ backlog 3, post sale revenue declined low single digits.

Current wording

Post-sale revenue of $1.2 billion increased 1.5% in actual currency, or 0.5% in constant currency 1, as compared to second quarter 2024. Second quarter 2025 post-sale revenue included a 10.6-percentage point benefit from the recent acquisition of ITsavvy. Excluding ITsavvy, post-sale revenue declined 9.1% in actual currency. The organic decline was primarily due to lower managed print services 2 revenue, and to a lesser extent, delays in supplies sales associated with recently implemented tariffs. Reinvention-related actions, including the intentional reductions in non-strategic revenue and the effects of geographic and offering simplification, contributed to the decline. Excluding these impacts, organic post-sale revenue declined mid single digits in constant currency 1.

Previous wording

Xerox 2025 Form 10-Q 46

Current wording

Xerox 2025 Form 10-Q 46 completed borrowings in support of the Lexmark acquisition and the benefits of insurance proceeds related to a legal settlement in the second quarter 2024. These impacts were partially offset by lower Selling, administrative and general expenses, primarily reflecting productivity and cost savings related to the Company's Reinvention and lower incentive compensation and benefits costs.

Previous wording

We continue to expect adjusted 1 earnings and EPS accretion associated with the Lexmark Acquisition, despite a slightly higher than expected cost of funding and the potential for incremental tariff expenses. Importantly, based on U.S. tariffs currently proposed, we expect no impact from tariffs on Lexmark’s branded business within a few quarters of acquisition close. Lexmark has a large manufacturing facility in Juarez, Mexico that can support all expected imports of branded product into the U.S. market on a USMCA compliant basis.

Current wording

We continue to expect adjusted 1 earnings and Earnings Per Share accretion associated with the Lexmark Acquisition, despite a slightly higher than expected cost of funding. Based on U.S. tariffs currently proposed, we expect no material impact from tariffs on Lexmark’s results. Lexmark has a large manufacturing facility in Juarez, Mexico that can support all expected imports of branded product into the U.S. market on a USMCA compliant basis. Refer to Note 21 - Subsequent Events in the condensed consolidated financial statements for additional information regarding the acquisition of Lexmark.

Previous wording

Total revenue of $1.46 billion for the three months ended March 31, 2025 decreased 3.0% as compared to the prior year period, including a 6.6-percentage point benefit from the recent acquisition of ITSavvy, partially offset by 1.9-percentage point unfavorable impact from currency. Total revenue reflected a decrease of 3.2% in Post sale revenue, including a 2.0-percentage point unfavorable impact from currency, and a decrease of 2.1% in Equipment sales revenue, including a 1.4-percentage point unfavorable impact from currency.

Current wording

Total revenue of $1.58 billion for second quarter 2025 decreased 0.1% from second quarter 2024, including a 8.2-percentage point benefit from the recent acquisition of ITSavvy, as well as a 1.0-percentage point favorable impact from currency. Total revenue reflected an increase of 1.5% in Post sale revenue, including a 10.6-percentage point benefit from the recent acquisition of ITSavvy, as well as a 1.0-percentage point favorable impact from currency, and a decrease of 5.6% in Equipment sales revenue, including a 1.1-percentage point favorable impact from currency. Total revenue of $3.03 billion for the six months ended June 30, 2025 decreased 1.5% as compared to the prior year period, including a 7.5-percentage point benefit from the recent acquisition of ITSavvy, as well as a 0.4-percentage point unfavorable impact from currency. Total revenue for the six months ended June 30, 2025 reflected a decrease of 0.9% in Post sale revenue, including a 9.4-percentage point benefit from the recent acquisition of ITSavvy including, and a 0.6-percentage point unfavorable impact from currency, and a decrease of 4.0% in Equipment sales revenue, with no impact from currency.

Previous wording

Net loss and adjusted 1 Net (loss) income were as follows:

Current wording

Net (loss) income and adjusted 1 Net (loss) income were as follows:

Previous wording

First quarter 2025 Net loss was $90 million as compared to the first quarter 2024 Net loss of $113 million. Net loss was lower by $23 million primarily reflecting a divestiture of certain direct business operations in Latin America and the exit of certain production print manufacturing operations, both in the prior year. The lower level of (loss) also reflects lower Restructuring and related costs, net, Selling, administrative and general expenses, and Research, development and engineering expenses (RD&E). These positive impacts were partially offset by higher Income tax expense, lower revenues, higher Other expenses, net and lower gross profit. First quarter 2025 adjusted 1 Net loss of $4 million increased by $15 million as compared to the prior year period, primarily reflecting lower revenue and gross profit, as well as higher Other expenses, net. These negative impacts were partially offset by lower Selling, administrative and general expenses, Income tax expense and RD&E.

Current wording

Second quarter 2025 Net (loss) was $106 million as compared to the second quarter 2024 Net Income of $18 million. Net loss was higher by $124 million primarily reflecting lower gross profit, as well as higher Other expenses, net, and Income tax expense, all of which was partially offset by lower Selling, administrative and general expenses, Research, development and engineering expenses (RD&E), and Restructuring and related costs, net. Second quarter 2025 adjusted 1 Net (loss) was $77 million as compared to Net Income of $41 million during the second quarter 2024. Adjusted 1 Net (loss) was higher by $118 million primarily reflecting higher Income tax expense, as well as lower gross profit and revenues, and Other expenses, net. These negative impacts were partially offset by lower Selling, administrative and general expenses, and RD&E.

Previous wording

Cash flows from operating activities during the three months ended March 31, 2025 were a use of $89 million and decreased $10 million as compared to the prior year period. The decrease primarily related to lower net proceeds from the on-going sales of finance receivables under the finance receivables funding agreements, which were partially offset by the timing of working capital 1, and lower finance receivable originations.

Current wording

Cash flows from operating activities during the six months ended June 30, 2025 were a use of $100 million and decreased $144 million as compared to the prior year period. The decrease primarily related to lower net proceeds from the on-going sales of finance receivables under the finance receivables funding agreements, as well as lower profitability, both of which were partially offset by the timing of working capital 1, lower finance receivable originations, the timing of payments for accrued compensation, and lower payments for restructuring.

Previous wording

Cash provided by investing activities during the three months ended March 31, 2025 was $6 million, reflecting $19 million related to the sale of a surplus facility, $3 million related to a change in lease classification for certain vehicles, and $5 million from a divestiture, all of which was partially offset by capital expenditures of $20 million.

Current wording

Cash used in investing activities during the six months ended June 30, 2025 was $12 million, reflecting capital expenditures of $39 million, as well as the investment in a noncontrolling interest of $4 million, both of which were partially offset by $19 million related to the sale of a surplus facility, $5 million related to a change in lease classification for certain vehicles, and $6 million from a divestiture.

Previous wording

Cash used in financing activities during the three months ended March 31, 2025 was $159 million, reflecting net payments of approximately $72 million on secured financing arrangements, approximately $28 million for payments on secured promissory notes, and $7 million on the Term Loan B facility. Dividend payments were $39 million, and other financing, net was $16 million, reflecting $6 million for repurchases related to stock-based compensation, $5 million related to finance leases, and $4 million for payments of financing commitment fees related to the expected acquisition of Lexmark.

Current wording

Cash provided by financing activities during the six months ended June 30, 2025 was $459 million, reflecting proceeds from the issuance of our First Lien Senior Secured Notes of $400 million (First Lien Notes), and the issuance of our Second Lien Senior Secured Notes of $500 million (Second Lien Notes), offset by deferred debt issuance costs of $23 million and discounts of $17 million. Payments on debt reflected $102 million on the Term Loan B facility, $90 million on the 5.000% Senior Notes due in August 2025, $72 million on secured financing arrangements, and $55 million on secured promissory notes. Dividend payments were $58 million, and other financing, net was $29 million, reflecting $15 million for payments of financing commitment fees related to the acquisition of Lexmark, $6 million for repurchases related to stock-based compensation and $7 million related to finance leases.

Previous wording

•We continue to expect operating cash flows to be between $420 million to $470 million, and capital expenditures to be approximately $70 million in 2025.

Current wording

Xerox's 2025 guidance now includes six months of activity associated with the recent Lexmark acquisition, which closed on July 1, 2025. We expect Revenue to grow 16%-17% in constant currency 1. While profitability is expected to improve, the impacts of tariff-related expenses, net of mitigation efforts, and modest Lexmark-related synergies, will result in modestly lower margins. We now expect operating cash flows to be approximately $345 million, which is a decrease from our previous guidance of between $420 million to $470 million. The decrease reflects a higher level of cash tariff expenses and one-time costs associated with the implementation of synergy savings. Additionally, we now expect capital expenditures to be approximately $95 million in 2025, an increase from our original guidance of approximately $70 million, reflecting, in part, the inclusion of Lexmark.

Previous wording

(1)IT Products reflect IT hardware and software solutions provided by the IT Solutions segment. Refer to Reportable Segments - IT Solutions for further information.

Current wording

(1)IT Products reflect IT hardware, software solutions and services provided by the IT Solutions segment. Refer to Reportable Segments - IT Solutions for further information.

Previous wording

(2)Includes financing revenue generated from direct and indirectly financed Xerox equipment sale transactions of $33 million and $42 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

(2)Includes financing revenue generated from direct and indirectly financed Xerox equipment sale transactions of $32 million and $38 million for the three months ended June 30, 2025 and 2024, respectively and $65 million and $80 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

(3)Services, maintenance, rentals and other revenue include IT services support of $58 million and $27 million for the three months ended March 31, 2025 and 2024, respectively, provided by our IT Solutions segment.

Current wording

(3)Services, maintenance, rentals and other revenue include IT services support of $57 million and $28 million for the three months ended June 30, 2025 and 2024, respectively, and $115 million and $55 million for the six months ended June 30, 2025 and 2024, respectively. provided by our IT Solutions segment.

Previous wording

(4)Primarily reflects IT hardware, software solutions and hardware sold by the IT Solutions segment to the Print and Other segment.

Current wording

(4)Primarily reflects IT hardware, software solutions and services sold by the IT Solutions segment to the Print and Other segment.

Previous wording

First quarter 2025 equipment sales revenue decreased at constant currency 1, and included a 0.9-percentage point adverse impact from the exit of certain production print manufacturing operations in the prior year period and the effects of geographic simplification, partially offset by a reduction in backlog 3.

Current wording

Second quarter 2025 equipment sales revenue decreased at constant currency 1 due to lower installations and included a 2.3-percentage point adverse impact from Reinvention-related actions, including the exit of certain production print manufacturing operations in the prior year period.

Previous wording

First quarter 2025 Post sale revenue decreased at constant currency 1 and included an 8.2-percentage point benefit from the recent acquisition of ITsavvy. The decrease was due to a decline in managed print services 2 revenue, driven by lower outsourcing and print service revenue, and lower supplies. Post sale revenue declines also reflect intentional reduction in non-strategic revenue, such as paper and financing income, and the effects of geographic and offering simplification. These impacts were partially offset by higher IT Solutions revenue, driven by the ITsavvy acquisition, and modest growth in digital services revenue.

Current wording

Total post sales revenue for the six months ended June 30, 2025 decreased at constant currency 1, and included a 9.4-percentage point benefit from the recent acquisition of ITsavvy. The organic decline reflected lower managed print services 2 revenue, driven by lower outsourcing and print service revenue, and lower supplies. Post sale revenue declines also reflect intentional reduction in non-strategic revenue, such as paper and financing income, and the effects of geographic and offering simplification. These impacts were partially offset by modest growth in digital services revenue.

Previous wording

Total revenue for the three months ended March 31, 2025 reflected the following:

Current wording

Total revenue for the six months ended June 30, 2025 reflected the following:

Previous wording

Post sale revenue reflects revenues from managed print services 2, supplies, paper and financing. These revenues are associated not only with the population of devices in the field, which is affected by installs and removals, but also by the page volumes generated from the usage of such devices and the revenue per printed page. Post sale revenue also includes revenues from IT Solutions, comprised of IT products and services, Digital services, as well as gains, commissions, and servicing revenue associated with the sale of finance receivables.

Current wording

Post sale revenue primarily reflects revenues from managed print services 2, supplies, paper and financing. These revenues are associated not only with the population of devices in the field, which is affected by installs and removals, but also by the page volumes generated from the usage of such devices and the revenue per printed page. Post sale revenue also includes revenues from IT Solutions, comprised of IT products and services, Digital services, as well as gains, commissions, and servicing revenue associated with the sale of finance receivables.

Previous wording

•Services, maintenance, rentals and other revenue includes maintenance revenue (including bundled supplies), the services portion of our IT Solutions offering, digital services revenue, rentals, financing, and other revenues. For the three months ended March 31, 2025, these revenues decreased 8.1% as compared to first quarter of 2024, which included a 1.7-percentage point adverse impact from currency. First quarter 2025 revenues included a 3.3-percentage point benefit from the recent acquisition of ITsavvy. The decline in constant currency 1 was primarily due to managed print services 2 revenue which declined high-single digits as compared to first quarter 2024, reflecting lower outsourcing and print service revenue, which includes the effects of geographic and offering simplification, and lower financing revenue. Lower financing revenue reflects a continued reduction of the average finance receivable balance in the first quarter 2025 as a result of the sales of finance receivables in recent quarters to HPS Investment Partners (HPS), and De Lage Landen Financial Services Canada Inc., and De Lage Landen Financial Services France Inc. These impacts were partially offset by higher IT Solutions services revenue, driven by the ITsavvy acquisition, and modest growth in digital services revenue.

Current wording

•Services, maintenance, rentals and other revenue includes maintenance and outsourcing revenue (including bundled supplies), the services portion of our IT Solutions offering, digital services revenue, rentals, financing, and other revenues. For the three months ended June 30, 2025, these revenues decreased 5.8% as compared to second quarter of 2024, which included a 1.4-percentage point benefit from currency, as well as a 3.1-percentage point benefit from the recent acquisition of ITsavvy. For the six months ended June 30, 2025 the revenues decreased 6.9% as compared to the prior year period, which included a 0.1-percentage point adverse impact from currency, as well as a 3.2-percentage point benefit from the recent acquisition of ITsavvy. The respective decline in constant currency 1 for both the three and six months ended June 30, 2025 was primarily due to managed print services 2 revenue which declined high-single digits as compared to the respective prior year periods, reflecting lower outsourcing and print service revenue, and the effects of geographic and offering simplification, which had a 2.1-percentage point adverse impact and a 2.5-percentage point adverse impact during the three and six months ended June 30, 2025. The decline is also due to lower financing revenue, which had a 1.9-percentage point adverse impact and a 1.2-percentage point adverse impact during the three and six months ended June 30, 2025, reflecting a continued reduction of the average finance receivable balance in the first half of 2025 as a result of the sales of finance receivables in recent quarters to HPS Investment Partners (HPS), and De Lage Landen Financial Services Canada Inc., and De Lage Landen Financial Services France Inc. For the six months ended June 30, 2025, these impacts were partially offset by modest growth in digital services revenue.

Previous wording

•IT products revenue includes the sale of notebooks, network communications and other endpoint devices, desktop computers and other IT hardware. Software product sales include deployments of cloud and security solutions, endpoint security application suites, operating systems, other applications and network management solutions. First quarter 2025 revenues increased 123.4% as compared to first quarter 2024, and included a 1.2-percentage point benefit from currency. First quarter 2025 revenues included a 143.8-percentage point benefit from the recent acquisition of ITsavvy. Excluding the impact of ITsavvy, IT products revenues decreased 20.4% in actual currency as compared to first quarter 2024 due to growth in legacy IT Solutions’ backlog 3, the timing of large product placements in the prior year, a larger mix of revenue subject to deferred revenue recognition, and lower in-period billings in certain legacy IT Solutions regions.

Current wording

•IT products revenue includes the sale of notebooks, network communications and other endpoint devices, desktop computers and other IT hardware. Software product sales include deployments of cloud and security solutions, endpoint security application suites, operating systems, other applications and network management solutions.

Previous wording

•Supplies, paper and other sales revenue includes unbundled supplies, paper and other sales. For the three months ended March 31, 2025, these revenues decreased 9.7% as compared to the first quarter of 2024, which included a 3.8-percentage point adverse impact from currency. The decline in constant currency 1 primarily reflects lower paper sales as a result of the sale of our European paper business and lower supplies revenue.

Current wording

•Supplies, paper and other sales revenue includes unbundled supplies, paper and other sales. For the three months ended June 30, 2025, these revenues decreased 11.6% as compared to the second quarter of 2024, which included a 0.9-percentage point adverse impact from currency. For the six months ended June 30, 2025, these revenues decreased 10.6% as compared to the prior year period, and included a 2.2-percentage point adverse impact from currency. The respective decline in constant currency 1 for both the three and six months ended June 30, 2025 primarily reflects lower paper sales as a result of the sale of our European paper business and lower supplies revenue.

Previous wording

Equipment sales revenue decreased 2.1% as compared to the first quarter of 2024, which included a 1.4-percentage point adverse impact from currency. The decrease in constant currency 1 was primarily attributable to the exit of certain production print manufacturing operations in the prior year and Reinvention-related actions, including geographic simplification, partially offset by a reduction in backlog 3. Revenue declines for Entry and High-End products were partially offset by growth in Mid-Range.

Current wording

For the six months ended June 30, 2025 Equipment sales revenue decreased 4.0%, with no impact from currency. The decrease in constant currency 1 was primarily attributable to Reinvention-related actions, including the exit of certain production print manufacturing operations in the prior year and geographic simplification. Revenue declines for Entry and High-End products were partially offset by growth in Mid-Range.

Previous wording

First quarter 2025 gross margin of 29.2% decreased 0.3-percentage points as compared to first quarter of 2024, which included a 0.7-percentage point adverse impact related to our recent acquisition of ITsavvy. Excluding the impact of ITsavvy, the increase primarily reflects charges associated with the Company's Reinvention, primarily related to the exit of certain production print manufacturing operations, which had a 0.5-percentage point unfavorable impact on gross margin in the first quarter 2025 as compared to a 2.4-percentage point unfavorable impact on gross margin in the first quarter 2024, and the benefits associated with recent Reinvention-related cost and productivity actions. These benefits were partially offset by lower revenue and gross profit, including lower page volumes, and finance receivable-related fees, product cost increases and tariff-related costs.

Current wording

Gross margin for the six months ended June 30, 2025 of 28.9% decreased by 2.4-percentage points as compared to the prior year period, which included a 0.9-percentage point adverse impact related to our recent acquisition of ITsavvy. Excluding the impact of ITsavvy, the decrease primarily reflects lower gross profit, including the adverse impact related to unfavorable product mix, reflecting, in part, lower page volumes, and a 1.4-percentage point adverse impact related to tariff and product-related cost increases. These impacts were partially offset by the benefits associated with Reinvention-related costs, primarily related to the exit of certain production print manufacturing operations, which had a 1.6-percentage point unfavorable impact on gross margin in the prior year period.

Previous wording

First quarter 2025 RD&E as a percentage of revenue of 2.9% decreased 0.4-percentage points as compared to first quarter 2024, as reductions in RD&E spending outpaced revenue declines.

Current wording

Second quarter 2025 RD&E as a percentage of revenue of 2.7% decreased 0.5-percentage points as compared to second quarter 2024. RD&E as a percentage of revenue for the six months ended June 30, 2025 of 2.8% decreased by 0.4-percentage points as compared to the prior year period. The decrease, as compared to the respective prior year periods, reflected reductions in RD&E spending that outpaced revenue declines.

Previous wording

First quarter 2025 SAG as a percentage of revenue of 25.9% decreased by 0.5-percentage points as compared to first quarter 2024, including a 1.0-percentage point benefit from the acquisition of ITsavvy, as reductions in SAG spending outpaced revenue decline.

Current wording

Second quarter 2025 SAG as a percentage of revenue of 23.4% decreased by 1.5-percentage points as compared to second quarter 2024, including a 1.0-percentage point benefit from the acquisition of ITsavvy, as reductions in SAG spending outpaced revenue declines.

Previous wording

First quarter 2025 SAG of $378 million decreased by $19 million as compared to first quarter 2024, primarily reflecting productivity and cost savings related to the Company's Reinvention, lower bad debt expense, and favorable currency. These benefits were partially offset by expenses related to the recent acquisition of ITsavvy, and the expected acquisition of Lexmark, other Reinvention-related investments, as well as advertising and incentive compensation expense.

Current wording

SAG for the six months ended June 30, 2025 of $746 million decreased by $44 million as compared to the prior year period, primarily reflecting productivity and cost savings related to the Company's Reinvention, lower incentive compensation expense, lower bad debt expense, and favorable currency. These benefits were partially offset by expenses related to the recent acquisitions of ITsavvy and Lexmark, other Reinvention-related investments, and higher advertising expense.

Previous wording

The bad debt provision for the first quarter 2025 of $9 million decreased by $6 million as compared to the first quarter 2024 due primarily to a lower finance receivable balance, reflecting sales of finance receivables in recent quarters to HPS Investment Partners and DLL. We continue to monitor developments in future economic conditions, and as a result, our reserves may need to be updated in future periods. As of March 31, 2025, on a trailing twelve-month basis, bad debt expense was 1.7% of total receivables, as compared to approximately 1.5% for the prior year comparable period.

Current wording

The bad debt provision for the second quarter 2025 of $15 million increased by $5 million as compared to second quarter 2024 due primarily to a reserve release in the prior year. The bad debt provision for six months ended June 30, 2025 of $24 million, decreased by $1 million as compared to the prior year period, due to a lower finance receivable balance, reflecting sales of finance receivables in recent quarters to HPS Investment Partners and DLL, which were partially offset by additional reserves on finance receivables. We continue to monitor developments in future economic conditions, and as a result our reserves may need to be updated in future periods. As of June 30, 2025, on a trailing twelve-month basis, bad debt expense was 1.9% of total receivables, as compared to approximately 1.5% for the prior year comparable period.

Previous wording

Restructuring and related costs, net for the first quarter 2025 resulted in a net credit of $(1) million, as compared to $39 million for the first quarter 2024. First quarter 2025 and 2024 restructuring actions were related to Reinvention initiatives under our Reinvention and other transformation programs to reduce and realign our cost structure to the changing nature of our business, and included the following:

Current wording

Restructuring and related costs, net for the second quarter 2025 was $10 million, as compared to $12 million for the second quarter 2024, and $9 million for the six months ended June 30, 2025, as compared to $51 million in the prior year period. Charges incurred during 2025 and 2024 for restructuring actions were associated with Reinvention initiatives under the Company's Reinvention and other transformation programs to reduce and realign our cost structure to the changing nature of our business, and included the following:

Previous wording

(5)Represents professional support services associated with our business transformation initiatives.

Current wording

(6)Represents professional support services associated with our business transformation initiatives.

Previous wording

First quarter 2025 actions impacted several functional areas, with approximately 30% focused ongross margins improvements, approximately 60% focused on SAG reductions, and the remainder focused on RD&E optimization. First quarter 2024 actions mainly impacted gross margin improvements.

Current wording

Second quarter 2025 actions impacted several functional areas, with approximately 85% focused ongross margin improvements, and the remainder focused on SAG reductions. Second quarter 2024 actions entirely impacted gross margin improvements.

Previous wording

The Restructuring and related costs, net reserve balance for all programs as of March 31, 2025 was $102 million, of which $74 million is expected to be paid over the next twelve months.

Current wording

The Restructuring and related costs, net reserve balance for all programs as of June 30, 2025 was $100 million, of which $68 million is expected to be paid over the next twelve months.

Previous wording

Worldwide employment was approximately 17,600 as of March 31, 2025, an increase of approximately 800 since December 31, 2024. The increase was primarily due to the impact from gross hires, partially offset by impact of the Company's Reinvention, which includes the effects of workforce reduction decisions.

Current wording

Worldwide employment was approximately 16,600 as of June 30, 2025, a decrease of approximately 200 since December 31, 2024. The decrease, primarily due to the impact of the Company's Reinvention, which includes the effects of workforce reduction decisions, was partially offset by gross hires.

Previous wording

When non-financing interest is combined with equipment financing interest expense, total interest expense increased by $2 million as compared to the first quarter 2024. This reflects the impact of higher interest rates on new debt, partially offset by a lower average debt balance.

Current wording

When non-financing interest is combined with equipment financing interest expense, total interest expense for the second quarter 2025 of $78 million increased by $18 million as compared to the second quarter 2024, and total interest expense for the six months ended June 30, 2025 of $133 million increased by $20 million as compared to the prior year period. The increase, as compared to the respective prior year periods, reflects the impact of higher interest rates on new debt. Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt activity and interest expense.

Previous wording

Refer to Note 15 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information regarding service and non-service retirement-related costs.

Current wording

Non-service retirement-related costs for the second quarter 2025 of $19 million were $7 million lower than second quarter 2024, and for the six months ended June 30, 2025 non-service retirement-related costs of $37 million were $12 million lower than the prior year periods. The decrease as compared to the respective prior year periods was primarily due to the absence of settlement expense in the current year. The decrease for the six months ended June 30, 2025 as compared to the prior year period was partially offset by higher interest costs associated with higher discount rates. Refer to Note 15 - Employee Benefit Plans in the Condensed Consolidated Financial Statements for additional information regarding service and non-service retirement-related costs.

Previous wording

For the three months ended March 31, 2025, currency losses, net were $11 million lower as compared to the first quarter 2024. The reduction of losses was driven by lower currency volatility, particularly against the Egyptian pound, in addition to prior period sales of our direct business operations in Argentina, Chile & Peru.

Current wording

Second quarter 2025 currency losses, net were $1 million lower than the second quarter 2024, while for the six months ended June 30, 2025, currency losses, net were $12 million lower as compared to the prior year period. The reduction of losses for the three and six months ended June 30, 2025 as compared to the respective prior year periods was driven by lower currency volatility, particularly against the Egyptian pound, in addition to prior period sales of our direct business operations in Argentina, Chile & Peru.

Previous wording

First quarter 2025 commitment fee expense primarily reflects fees associated with the recently completed private offering of $400 million in aggregate principal amount of 10.250% Senior Secured First Lien Notes and $400 million aggregate principal amount of 13.500% Senior Secured Second Lien Notes Due in 2031.

Current wording

Commitment fee expense for the three and six months ended June 30, 2025 primarily reflects fees associated with the recently completed Lexmark acquisition financing which includes: the private offering of $400 million in aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030; $500 million aggregate principal amount of 13.500% Senior Secured Second Lien Notes due 2031; $250 million aggregate principal amount of 13.00% Senior Notes due 2030; and an incremental term loan borrowing of $327 million under the First Lien Term Loan Credit Agreement.

Previous wording

Gain on early extinguishment of debt

Current wording

Loss (Gain) on early extinguishment of debt

Previous wording

First quarter 2024 gain on early extinguishment of debt of $3 million reflects a $4 million gain on the repayment of Senior Notes (via tender offer) in the first quarter of 2024, partially offset by a loss of approximately $1 million on the write-off of deferred debt issuance costs.

Current wording

The loss on early extinguishment of debt for the three and six months ended June 30, 2025 of $4 million reflects the write-off of deferred debt issuance costs and unamortized discount, as well as other extinguishment costs related to the repayment of Senior Notes. The (gain) on early extinguishment of debt of $3 million for the six months ended June 30, 2024 reflects a $4 million gain on the repayment of Senior Notes (via tender offer) in the first quarter of 2024, partially offset by a loss of approximately $1 million on the write-off of deferred debt issuance costs.

Previous wording

The gain on the release of contingent consideration of $5 million for the three months ended March 31, 2024 reflects a reserve release related to earn-out provisions which were not met, in connection with a prior acquisition.

Current wording

The gain on the release of contingent consideration of $5 million for the three and six months ended June 30, 2024 reflects a reserve release related to earn-out provisions which were not met, in connection with a prior acquisition.

Previous wording

First quarter 2025 pre-tax loss margin of 4.6% increased 5.4-percentage points, as compared to first quarter of 2024 pre-tax loss margin of 10.0% and included a 0.6-percentage point benefit from the recent acquisition of ITsavvy. The improvement in the first quarter 2025 is a result of the sales of certain direct business operations in Latin America, resulting in a net disposal loss of $54 million in the first quarter 2024, as well as lower Restructuring and related costs, net, and lower Selling, administrative and general expenses associated with productivity and cost savings related to the Company's Reinvention. These benefits were partially offset by higher Other expenses, net, primarily reflecting fees associated with the recently completed private offering of Senior Secured Notes, and lower revenue and associated gross profit.

Current wording

Pre-tax (loss) margin for the six months ended June 30, 2025 of (4.2)% decreased 0.1-percentage points as compared to the prior year period pre-tax (loss) margin of (4.1)% and included a 0.6-percentage point benefit from the recent acquisition of ITsavvy. The decrease as compared to the prior year period is primarily due to lower gross profit, including unfavorable product mix and product cost increases. In addition, Other expenses, net, included higher non-financing interest expense related to recently completed borrowings in support of the financing related to recently completed debt offerings, as well as commitment fees associated with those debt offerings and insurance proceeds related to a legal settlement in the second quarter 2024. These impacts were partially offset by lower Selling, administrative and general expenses, lower Restructuring and related costs, net, and lower Research, development and engineering expenses, primarily reflecting productivity and cost savings related to the Company's Reinvention, as well as lower incentive compensation and benefits costs. 2024 reflected the sales of certain direct business operations in Latin America, resulting in a net disposal loss of $54 million.