XEROX CORP

The following is a summary of our liquidity position:

•As of June 30, 2025 and December 31, 2024, total cash, cash equivalents and restricted cash of Xerox Holdings Corporation were $985 million and $631 million, respectively, and apart from restricted cash of $536 million and $55 million at June 30, 2025 and December 31, 2024, respectively, was readily accessible for use. The increase in total cash, cash equivalents and restricted cash of $354 million primarily reflects net cash provided by in financing activities of $459 million, as well as net cash used in operating activities of $100 million, and cash provided by investing activities of $12 million. The restricted cash of $536 million at June 30, 2025, includes the net proceeds of approximately $492 million from the issuance of $500 aggregate principal amount of 13.500% Senior Secured Second Lien Notes due 2031 (the Second Lien Notes), which were released from escrow upon the consummation of the Lexmark acquisition on July 1, 2025 (the Lexmark Acquisition).

•Total debt at June 30, 2025 was $3,942 million, of which $1,635 million is allocated to and supports the Company's finance assets. The remaining debt of $2,307 million is attributable to the non-financing business and increased from $1,658 million at December 31, 2024. Debt at June 30, 2025 consists of senior secured and unsecured notes, secured promissory notes, and borrowings under a Term Loan B facility. During 2025, we issued $400 million aggregate principal amount of 10.250% Senior Secured First Lien Notes due 2030 (the First Lien Notes) and the Second Lien Notes.

•During 2025, we prepaid approximately $90 million of the Senior Notes due August 2025 (2025 Notes) using proceeds from the First Lien Notes, with the remaining balance of the 2025 Notes of approximately $298 million due in August 2025. We also repaid $95 million of aggregate principal amount of borrowings under Xerox Corporation’s first lien senior secured term loan credit facility (the TLB Facility). Refer to Note 12 - Debt for additional information related to our Debt activity in the first half of 2025.

•In connection with the Lexmark Acquisition, on July 1, 2025, Xerox Holdings Corporation issued $250 million aggregate principal amount of 13.00% Senior Notes due 2030 (the 2030 Notes), and Xerox Corporation made an incremental term loan borrowing of approximately $327 million (Incremental Term Loans) under its TLB Facility. The net proceeds from the 2030 Notes and the Incremental Term Loans were used to fund the Lexmark Acquisition. Additionally, Xerox Holdings Corporation issued $125 million aggregate principal amount of 13.00% Senior Unsecured Notes due 2026 (the 2026 Notes). Refer to Note 21 - Subsequent Events for additional information related to our Debt activity in July 2025.

•As of June 30, 2025, the ABL facility had an available borrowing base of approximately $260, with no borrowings outstanding, and approximately $63 million of letters of credit were issued under the facility. During the six months ended June 30, 2025, the maximum amount outstanding under the ABL Facility was $53 million.

•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, and increase from our original guidance of approximately $70 million, due, in part, to the inclusion of Lexmark. We have the ability to sell finance receivables for additional liquidity.

Cash Flow Analysis

The following summarizes our cash, cash equivalents and restricted cash:

Xerox 2025 Form 10-Q 66

Cash Flows from Operating Activities

Net cash used in operating activities was $100 million for the six months ended June 30, 2025. The $144 million decrease in operating cash from the prior year period was primarily due to the following:

•$142 million decrease in pre-tax income before provisions, divestitures, restructuring and related costs and non-service retirement-related costs.

•$187 million decrease from finance receivables primarily due to lower sales of finance receivables partially offset by a higher level of run-off due to lower originations.

•$113 million increase from accounts payable primarily due to the timing of supplier and vendor payments.

•$42 million increase from accrued compensation due to the timing of payments of lower year-end accruals.

•$23 million increase from lower payments associated with restructuring and related costs.

Cash Flows from Investing Activities

Net cash used in investing activities was $12 million for the six months ended June 30, 2025. The $7 million change from the prior year period was primarily due to higher proceeds from the sale of surplus property and assets in the U.S. and lower noncontrolling investments, partially offset by higher capital expenditures.

Cash Flows from Financing Activities

Net cash provided by financing activities was $459 million for the six months ended June 30, 2025. The $534 million increase in cash from the prior year period was primarily due to the following:

•$511 million increase from net debt activity. 2025 reflects net proceeds $860 million from Senior Notes issuances offset by payments of $102 million on the Term Loan B facility, $90 million on Senior Notes, $72 million on secured financing arrangements and $55 million on secured promissory notes. The $860 million net proceeds from Senior Notes issuances includes proceeds of $900 million offset by deferred debt issuance costs of $23 million and discounts of $17 million. 2024 reflects proceeds of $500 million on Senior Notes and $400 million on Convertible Senior Notes offset by net payments of $658 million on Senior Notes, deferred debt issuance costs of $15 million from Senior Notes issuances, $178 million on secured financing arrangements and $14 million on the Term Loan B facility. The $658 million net payments on Senior Notes include $300 million on Senior Notes maturing in May 2024 and $362 million for the early redemption of 2025 Senior Notes offset by early redemption premium of $4 million.

•$23 million increase due to no purchases of capped calls in the current year.

•$13 million increase from lower common stock dividends due to dividend reductions.

•Other financing, net includes $15 million of commitment fees related to the Lexmark Acquisition.

Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt activity.

Cash, Cash Equivalents and Restricted Cash

Refer to Note 11 - Supplementary Financial Information in the Condensed Consolidated Financial Statements for additional information regarding Cash, cash equivalents and restricted cash.

Operating Leases

We have operating leases for real estate and vehicles in our domestic and international operations, and for certain equipment in our domestic operations. Additionally, we have identified embedded operating leases within certain supply chain contracts for warehouses, primarily within our domestic operations. Our operating leases have remaining terms of up to ten years and a variety of renewal and/or termination options. As of June 30, 2025 and December 31, 2024, total operating lease liabilities were $193 million and $188 million, respectively.

Finance Leases

Xerox has finance leases for equipment in the U.S. and Europe, as well as for vehicles and related infrastructure, within outsourced warehouse supply arrangements, in the U.S. These leases have remaining maturities up to six years. As of June 30, 2025 and December 31, 2024, total finance lease liabilities were $11 million and $53 million, respectively. The decrease in finance leases since December 31, 2024 is primarily related to the modification of a lease agreement entered into during the first quarter of 2025, which resulted in a change in the lease classification from financing to operating. Accordingly, we remeasured the right of use asset and the corresponding lease liability.

Refer to Note 9 - Lessee in the Condensed Consolidated Financial Statements for additional information regarding our leases accounted for under lessee accounting.

Xerox 2025 Form 10-Q 67

Debt and Customer Financing Activities

The following summarizes our debt:

(1)Represents secured debt issued by subsidiaries of Xerox Corporation as part of the securitization of Finance Receivables in prior year. These securitizations were repaid during the first quarter 2025.

Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt.

Finance Assets and Related Debt

The following represents our total finance assets, net associated with our lease and finance operations:

(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.

Our lease contracts permit customers to pay for equipment over time rather than at the date of installation; therefore, we maintain a certain level of debt (that we refer to as financing debt) to support our investment in these lease contracts, which are reflected in Total finance assets, net. For this financing aspect of our business, we maintain an assumed 7:1 leverage ratio of debt to equity as compared to our finance assets.

Based on this leverage, the following represents the breakdown of total debt between financing debt and core debt:

(1)Finance receivables debt is the basis for our calculation of Equipment financing interest expense, which is included in Cost of services, maintenance, rentals and other in the Condensed Consolidated Statements of Loss.

Sales of Finance Receivables and Third Party Leasing Programs

Refer to Note 7 - Finance Receivables, Net in the Condensed Consolidated Financial Statements for additional information regarding our sales of finance receivables and our third party leasing programs.

Capital Market/Debt Activity

Refer to Note 12 - Debt and Note 21 - Subsequent Events in the Condensed Consolidated Financial Statements for additional information regarding our debt activity.

Xerox 2025 Form 10-Q 68

Liquidity and Financial Flexibility

We manage our worldwide liquidity using internal cash management practices, which are subject to i) the statutes, regulations and practices of each of the local jurisdictions in which we operate, ii) the legal requirements of the agreements to which we are a party, and iii) the policies and cooperation of the financial institutions we utilize to maintain and provide cash management services. Our principal debt maturities are spread over the next five years as follows:

Refer to Note 12 - Debt in the Condensed Consolidated Financial Statements for additional information regarding debt.

Treasury Stock

Xerox Holdings Corporation made no open-market repurchases of its Common Stock during 2025.