0001770450-19-000006 | 10-Q | XBRL Viewer

Research, development and engineering expenses

^[1],[2]

$ 2,289

$ 2,510

$ 4,495

$ 4,945

Costs and Expenses

Cost of financing

101

180

201

Selling, administrative and general expenses

519

624

1,067

1,252

Restructuring and related costs

149

Amortization of intangible assets

Transaction and related costs, net

Other expenses, net

Total Costs and Expenses

2,089

2,377

4,212

4,678

Income before Income Taxes and Equity Income

200

133

283

267

Income tax expense

Equity in net income (loss) of unconsolidated affiliates

(49)

Net Income

184

114

320

140

Less: Net income attributable to noncontrolling interests

Net Income Attributable to Xerox

$ 181

$ 112

$ 314

$ 135

Basic Earnings per Share:

Basic Earnings per Share (in dollars per share)

$ 0.79

$ 0.42

$ 1.36

$ 0.50

Diluted Earnings per Share:

Diluted Earnings per Share (in dollars per share)

$ 0.77

$ 0.42

$ 1.32

$ 0.50

Sales

Revenues

^[1]

$ 825

$ 927

$ 1,575

$ 1,772

Costs and Expenses

Services, maintenance and rentals

^[1]

552

593

1,016

1,125

Revenues

^[1]

1,403

1,515

2,796

3,034

Costs and Expenses

^[1]

807

883

1,628

1,782

Financing

Revenues

Statement of Comprehensive Income [Abstract]

$ 61

$ 68

$ 124

$ 139

[1]	Certain prior year amounts have been conformed to the current year presentation. Refer to Note 1 - Basis of Presentation for additional information.
[2]	Geographic area data is based upon the location of the subsidiary reporting the revenue.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Net Income

$ 184

$ 114

$ 320

$ 140

Less: Net income attributable to noncontrolling interests

Net Income Attributable to Xerox

181

112

314

135

Other Comprehensive (Loss) Income, Net

Translation adjustments, net

^[1]

(4)

(322)

(146)

Unrealized (losses) gains, net

^[1]

Unrealized (losses) gains, net

^[1]

(3)

Changes in defined benefit plans, net

^[1]

108

Other Comprehensive Income (Loss), Net Attributable to Xerox

^[1]

(235)

(24)

Comprehensive Income (Loss), Net

Comprehensive Income (Loss), Net

189

(121)

365

116

Less: Comprehensive income, net attributable to noncontrolling interests

Comprehensive Income (Loss), Net Attributable to Xerox

$ 186

$ (123)

$ 359

$ 111

[1]	Refer to Note 19 - Other Comprehensive Income (Loss) for gross components of Other Comprehensive Income (Loss), reclassification adjustments out of Accumulated Other Comprehensive Loss and related tax effects.

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)

Jun. 30, 2019

Dec. 31, 2018

Assets

Cash and cash equivalents

$ 712,000,000

$ 1,084,000,000

Accounts receivable, net

1,256,000,000

1,276,000,000

Billed portion of finance receivables, net

108,000,000

105,000,000

Finance receivables, net

1,177,000,000

1,218,000,000

Inventories

788,000,000

818,000,000

Other current assets

196,000,000

194,000,000

Total current assets

4,237,000,000

4,695,000,000

Finance receivables due after one year, net

2,064,000,000

2,149,000,000

Equipment on operating leases, net

399,000,000

442,000,000

Land, buildings and equipment, net

455,000,000

499,000,000

Investments in affiliates, at equity

1,472,000,000

1,403,000,000

Intangible assets, net

212,000,000

220,000,000

Goodwill

3,887,000,000

3,867,000,000

Deferred tax assets

739,000,000

740,000,000

Other long-term assets

1,219,000,000

859,000,000

Total Assets

14,684,000,000

14,874,000,000

Liabilities and Equity

Short-term debt and current portion of long-term debt

866,000,000

961,000,000

Accounts payable

1,052,000,000

1,091,000,000

Accrued compensation and benefits costs

312,000,000

349,000,000

Accrued expenses and other current liabilities

946,000,000

850,000,000

Total current liabilities

3,176,000,000

3,251,000,000

Long-term debt

3,962,000,000

4,269,000,000

Pension and other benefit liabilities

1,502,000,000

1,482,000,000

Post-retirement medical benefits

348,000,000

350,000,000

Other long-term liabilities

490,000,000

269,000,000

Total Liabilities

9,478,000,000

9,621,000,000

Commitments and Contingencies (See Note 21)

Convertible Preferred Stock

214,000,000

Common stock

225,000,000

232,000,000

Additional paid-in capital

3,124,000,000

3,321,000,000

Treasury stock, at cost

(131,000,000)

(55,000,000)

Retained earnings

5,391,000,000

5,072,000,000

Accumulated other comprehensive loss

(3,647,000,000)

(3,565,000,000)

Xerox shareholders’ equity

4,962,000,000

5,005,000,000

Noncontrolling interests

30,000,000

34,000,000

Total Equity

4,992,000,000

5,039,000,000

Total Liabilities and Equity

$ 14,684,000,000

$ 14,874,000,000

Shares of common stock issued (in shares)

224,752,000

231,690,000

Treasury stock (in shares)

(3,965,000)

(2,067,000)

Shares of Common Stock Outstanding (in shares)

220,787,000

229,623,000

XEROX HOLDINGS CORPORATION

Liabilities and Equity

Common stock

$ 100

Common stock shares receivable

^[1]

(100)

Total Equity

$ 0

Shares of Common Stock Outstanding (in shares)

100

Common stock par value (in dollars per share)

$ 1.00

[1]	Shares of Xerox Holdings Corporation common stock have a par value of $1.00 per share. Refer to Note 1 - Basis of Presentation - Corporate Reorganization, for additional information.

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Cash Flows from Operating Activities
Net Income	$ 184	$ 114	$ 320	$ 140
Adjustments required to reconcile Net income to Cash flows from operating activities
Depreciation and amortization	110	138	228	276
Provisions	20	23	42	40
Net gain on sales of businesses and assets	0	(16)	(1)	(32)
Undistributed equity in net income of unconsolidated affiliates	(1)	(16)	(43)	52
Stock-based compensation	15	13	30	29
Restructuring and asset impairment charges	18	34	72	62
Payments for restructurings	(21)	(37)	(54)	(91)
Defined benefit pension cost	32	26	68	53
Contributions to defined benefit pension plans	(36)	(37)	(70)	(75)
(Increase) decrease in accounts receivable and billed portion of finance receivables	(28)	(10)	11	36
Decrease (increase) in inventories	67	16	17	(71)
Increase in equipment on operating leases	(42)	(63)	(72)	(119)
Decrease in finance receivables	38	57	119	142
Decrease in other current and long-term assets	17	38	15	21
(Decrease) increase in accounts payable	(21)	(1)	(55)	43
Decrease in accrued compensation	(11)	(69)	(84)	(101)
Decrease in other current and long-term liabilities	(54)	(5)	(8)	(4)
Net change in income tax assets and liabilities	8	28	(13)	41
Net change in derivative assets and liabilities	2	(17)	10	(23)
Other operating, net	16	19	7	32
Net cash provided by operating activities	313	235	539	451
Cash Flows from Investing Activities
Cost of additions to land, buildings, equipment and software	(16)	(32)	(31)	(50)
Proceeds from sales of businesses and assets	0	16	1	32
Acquisitions, net of cash acquired	(38)	0	(42)	0
Other investing, net	0	1	0	1
Net cash used in investing activities	(54)	(15)	(72)	(17)
Cash Flows from Financing Activities
Net payments on short-term debt	(2)	0	0	(1)
Proceeds from issuance of long-term debt	3	3	5	5
Payments on long-term debt	0	(272)	(406)	(310)
Dividends	(60)	(68)	(122)	(135)
Payments to acquire treasury stock, including fees	(197)	0	(300)	0
Other financing, net	(21)	(2)	(23)	(15)
Net cash used in financing activities	(277)	(339)	(846)	(456)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	8	(28)	7	(19)
Decrease in cash, cash equivalents and restricted cash	(10)	(147)	(372)	(41)
Cash, cash equivalents and restricted cash at beginning of period	786	1,474	1,148	1,368
Cash, Cash Equivalents and Restricted Cash at End of Period	$ 776	$ 1,327	$ 776	$ 1,327

Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

References herein to “we,” “us,” “our,” the “company” and “Xerox” refer to Xerox Corporation and its consolidated subsidiaries unless the context suggests otherwise.

We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with the accounting policies described in our 2018 Annual Report on Form 10-K ("2018 Annual Report") except as noted herein, and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. You should read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements included in our 2018 Annual Report.

In our opinion, all adjustments, which are necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented, have been made. These adjustments consist of normal recurring items. Interim results of operations are not necessarily indicative of the results of the full year.

For convenience and ease of reference, we refer to the financial statement caption “Income before Income Taxes and Equity Income” as “pre-tax income.”

Corporate Reorganization

On March 6, 2019, the Xerox Board of Directors approved a reorganization (the “Reorganization”) of the Company's corporate structure into a holding company structure. The Reorganization was subject to the approval of shareholders, which was obtained at the annual shareholders meeting held May 21, 2019.

On July 31, 2019, Xerox completed the Reorganization, pursuant to which Xerox became a direct, wholly-owned subsidiary of Xerox Holdings Corporation ("Xerox Holdings"). The business operations, directors and executive officers of the Company did not change as a result of the Reorganization.

In this Reorganization, shareholders of Xerox (the predecessor publicly held parent company) became shareholders of Xerox Holdings on a one-for-one basis; maintaining the same number of shares and ownership percentage as held in Xerox immediately prior to the Reorganization. In addition, the individual holder of the shares of Xerox’s Series B Preferred Stock exchanged those shares for the same number of shares of Xerox Holdings Series A Preferred Stock. Each share of Xerox Holdings Series A Preferred Stock has the same designations, rights, powers and preferences, and the same qualifications, limitations and restrictions as the shares of Xerox Series B Preferred Stock, with the addition of certain voting rights. In connection with the Reorganization, Xerox Holdings assumed each of the Xerox stock plans, all unexercised and unexpired options to purchase Xerox common stock and each right to acquire or vest in a share of Xerox common stock, including restricted stock unit awards, performance share awards and deferred stock units that are outstanding under the Xerox stock plans. In addition, Xerox Holdings became a guarantor of Xerox’s existing Credit Facility.

The Reorganization was accounted for as a transaction among entities under common control and is expected to be a tax-free transaction for U.S. federal income tax purposes. Shares of Xerox Holdings common stock will trade on the New York Stock Exchange under the current ticker symbol “XRX”, formerly used by Xerox.

Subsequent to the Reorganization, Xerox Holdings contributed the Xerox Series B Preferred Stock it held to Xerox in exchange for additional capital and Xerox subsequently extinguished the Series B Preferred Stock. The contribution and extinguishment were recorded at carrying value. In addition, the capital structure of Xerox was modified such that its issued and outstanding common shares now held by Xerox Holdings were exchanged for 1,000 shares of Xerox $1 par value common stock. Accordingly, we reclassified approximately $221 from Xerox’s Common stock to Additional paid-in capital.

Since the Reorganization was completed after the end of the second quarter 2019, or June 30, 2019, the accompanying financial statements presented in this filing for both Xerox and Xerox Holdings reflect their ownership structure and consolidated results prior to the Reorganization, or as of June 30, 2019.

Xerox Holdings was formed on March 8, 2019. There was no income statement activity for Xerox Holdings since formation through the period ended June 30, 2019 and thus, no income statement is provided.

Shared Services Arrangement with HCL Technologies

In March 2019, as part of Project Own It, we entered into a shared services arrangement with HCL Technologies (HCL) pursuant to which we are outsourcing certain global administrative and support functions, including, among others, selected information technology and finance functions (excluding accounting). The transition of these functions to HCL is expected to take up to 18 months. HCL is expected to make certain up-front and ongoing investments in software, tools and other technology to consolidate, optimize and automate the transferred functions with the goal of providing improved service levels and significant cost savings. The shared services arrangement with HCL includes a total aggregate spending commitment by us of approximately $1.3 billion over the next 7 years. However, we can terminate the arrangement at any time at our discretion, subject to payment of termination fees that decline over the term or for cause. The spending commitment excludes restructuring and related costs we are expected to incur in connection with the transition of the contemplated functions - refer to Note 12 - Restructuring Programs for additional information. The transfer of employees associated with the HCL arrangement in certain countries is subject to compliance with works council and other employment regulatory requirements in those countries, which may delay the transfer as well as the expected savings from the arrangement.

During the second quarter 2019, we incurred net charges of approximately $30 associated with this arrangement, which only reflects the cost associated with the employees transferred to date. The cost has been allocated to the various functional expense lines in the Condensed Consolidated Income Statement based on an assessment of the nature and amount of the costs incurred for the various transferred functions prior to their transfer to HCL.

Change in Presentation

During first quarter 2019, we realigned portions of our business to support our new revenue strategy. This realignment included the combination and consolidation of certain sales units to better service customers consistently across the company. In connection with that realignment, we changed the classification of revenues and related costs from certain service arrangements to consistently conform the presentation of those amounts among our various business units. Prior year amounts were also revised as follows to conform to the 2019 presentation.



	Three Months Ended June 30, 2018
	As Reported		Change			As Revised
Sales	$	1,017	$	(90	)	$	927
Services, maintenance and rentals	1,425		90			1,515

Cost of sales	$	622	$	(29	)	$	593
Cost of services, maintenance and rentals	854		29			883



	Six Months Ended June 30, 2018
	As Reported		Change			As Revised
Sales	$	1,950	$	(178	)	$	1,772
Services, maintenance and rentals	2,856		178			3,034

Cost of sales	$	1,185	$	(60	)	$	1,125
Cost of services, maintenance and rentals	1,722		60			1,782

The revised presentation does not impact Total Revenues, Total Costs and Expenses or Net Income.

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Accounting Standard Updates to be Adopted:

Financial Instruments - Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments Credit Losses - Measurement of Credit Losses on Financial Instruments, with additional updates being issued in 2018 and 2019. This update requires measurement and recognition of expected credit losses for financial assets. The update impacts financial assets and net investment in leases that are not accounted for at fair value through Net Income. This update is effective for our fiscal year beginning January 1, 2020. We are currently evaluating the impact of the adoption of ASU 2016-13 on our Condensed Consolidated Financial Statements.

Intangibles - Internal-Use Software

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The update provides criteria for determining which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The capitalized implementation costs are required to be expensed over the term of the hosting arrangement. The update also clarifies the presentation requirements for reporting such costs in the entity’s financial statements. This update is effective for our fiscal year beginning January 1, 2020. We are currently evaluating the impact of the adoption of ASU 2018-15 on our Condensed Consolidated Financial Statements.

Accounting Standard Updates Adopted in 2019:

Leases

On January 1, 2019, we adopted ASU 2016-02, Leases (ASC Topic 842). This update, as well as additional amendments and targeted improvements issued in 2018 and early 2019, supersedes existing lease accounting guidance found under ASC 840, Leases (“ASC 840”) and requires the recognition of right-to-use assets and lease obligations by lessees for those leases originally classified as operating leases under prior lease guidance. Effective with the adoption, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition. Short term leases with a term of 12 months or less are not required to be recognized. The update also requires qualitative and quantitative disclosure of key information regarding the amount, timing and uncertainty of cash flows arising from leasing arrangements to increase transparency and comparability among companies. The accounting for lessors does not fundamentally change with this update except for changes to conform and align guidance to the lessee guidance, as well as to the revenue recognition guidance in ASU 2014-09. Some of these conforming changes, such as those related to the definition of lease term and minimum lease payments, resulted in certain lease arrangements, that would have been previously accounted for as operating leases, to be classified and accounted for as sales-type leases with a corresponding up-front recognition of equipment sales revenue.

Upon adoption we applied the transition option, whereby prior comparative periods are not retrospectively presented in the Condensed Consolidated Financial Statements. We also elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components for certain asset classes (real estate lease arrangements for offices and warehouses). Additionally, we made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes. We elected the package of practical expedients from both the Lessee and Lessor prospective, to the extent applicable.

Lessee accounting - the adoption of this update resulted in an increase to assets and related liabilities of approximately $385 (approximately $440 undiscounted) primarily related to leases of facilities. Lessor accounting - the adoption of this update resulted in an increase to equipment sales of approximately $11 in 2019 as compared to 2018.

Refer to Note 3 - Adoption of New Leasing Standard - Xerox as a Lessee and Note 4 - Adoption of New Leasing Standard - Xerox as a Lessor for additional transitional disclosures related to the adoption of this standard.

Financial Instruments - Derivatives

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this update expand and refine hedge accounting for both financial and non-financial risk components, align the recognition and presentation of the effects of hedging instruments with the same income statement line item that the hedged item is reported and include certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. We adopted ASU 2017-12

effective for our fiscal year beginning January 1, 2019, and it did not have a material impact on our financial condition, results of operations or cash flows.

Income Taxes

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. We adopted ASU 2018-02 effective for our fiscal year beginning January 1, 2019 and upon adoption reclassified $127 from Accumulated other comprehensive loss (AOCL) to Retained earnings related to the stranded tax effects resulting from the Tax Cuts and Jobs Act ("Tax Act") enacted in December 2017. The reclassification was primarily related to the stranded tax effects associated with amounts in AOCL from our retirement-related benefit plans. Accordingly, the adoption of this update eliminated the stranded tax effects resulting from the Tax Act. However, because the update only relates to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in Income from continuing operations is not affected.

Other Updates

In 2018, the FASB also issued the following Accounting Standards Updates, which did not have or are not expected to have a material impact on our financial condition, results of operations or cash flows upon adoption. Those updates are as follows:


•	Collaborative Arrangements: ASU 2018-18, (Topic 808) Clarifying the Interaction between Topic 808 and Topic 606. This update is effective for our fiscal year beginning January 1, 2020.


•	Compensation - Retirement Benefits - Defined Benefit Plans - General: ASU 2018-14, (Topic 715-20) Changes to the Disclosure Requirements for Defined Benefit Plans. This update is effective for our fiscal year beginning January 1, 2020.


•	Fair Value Measurement: ASU 2018-13, (Topic 820) Disclosure Framework. This update is effective for our fiscal year beginning January 1, 2020.

•

Investments - Debt Securities and Regulated Operations: ASU 2018-04, (Topics 320 and 980) Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update).

Adoption of New Leasing Standard - Xerox as a Lessee

6 Months Ended

Jun. 30, 2019

Adoption of New Leasing Standard - Xerox as a Lessee

Refer to Note 2 - Recent Accounting Pronouncements - Leases, for additional information related to the adoption of ASU 2016-02, Leases (ASC Topic 842).

Lessee Summary:

We determine at inception whether an arrangement is a lease. Our leases do not include assets of a specialized nature, or the transfer of ownership at the end of the lease, and the exercise of end-of-lease purchase options, which are primarily in our equipment leases, is not reasonably assured at lease inception. Accordingly, the two primary criteria we use to classify transactions as operating or finance leases are: (i) a review of the lease term to determine if it is equal to or greater than 75% of the economic life of the asset, and (ii) a review of the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the asset at the inception of the lease. Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We also assess arrangements for goods or services to determine if the arrangement contains a lease at its inception. This assessment first considers whether there is an implicitly or explicitly identified asset in the arrangement and then whether there is a right to control the use of the asset. If there is an embedded lease within a contract, the company determines the classification of the lease at the lease inception date consistent with standalone leases of assets.

Operating leases are included in Other long-term assets, Accrued expenses and other current liabilities, and Other long-term liabilities in our Condensed Consolidated Balance Sheets. Finance leases are included in Land, buildings and equipment, net, Accrued expenses and other current liabilities, and Other long-term liabilities in our Condensed Consolidated Balance Sheets.

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the implicit rate for most of our leases is not readily determinable, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that we would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term. The rate is dependent on several factors, including the lease term and currency of the lease payments.

Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as we do not have reasonable certainty at lease inception that these options will be exercised. We generally consider the economic life of our operating lease ROU assets to be comparable to the useful life of similar owned assets. We have elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Our leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives.

Lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components. These components are accounted for separately for vehicle and equipment leases. We account for the lease and non-lease components as a single lease component for real estate leases of offices and warehouses.

We review the impairment of our ROU assets consistent with the approach applied for our other long-lived assets. We review the recoverability of our long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. We have elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.

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 leases have remaining terms of up to ten years and a variety of renewal and/or termination options.

The components of lease expense are as follows:



	Three Months Ended			Six Months Ended
	June 30, 2019
Operating lease expense	$	33		$	66
Short-term lease expense	5			10
Variable lease expense⁽¹⁾	12			25
Sublease income	(1		)	(1		)
Total Lease expense	$	49		$	100

_____________


(1)	Variable lease expense is related to our leased real estate for offices and warehouses and primarily includes labor and operational costs as well as taxes and insurance.

Operating leases ROU assets, net and operating lease liabilities were reported in the Condensed Consolidated Balance Sheets as follows:



	June 30, 2019
Other long-term assets	$	319

Accrued expenses and other current liabilities	$	92
Other long-term liabilities	254
Total Operating lease liabilities	$	346

Supplemental information related to operating leases is as follows:



	Three Months Ended		Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	32	$	64
Right-of-use assets obtained in exchange for new lease liabilities ⁽¹⁾	$	14	$	23
Weighted-average remaining lease term			4 years
Weighted-average discount rate			5.63		%

_____________


(1)	Includes the impact of new leases as well as remeasurements and modifications to existing leases.

Maturities and additional information related to operating lease liabilities are as follows:



	June 30, 2019
2019⁽¹⁾	$	61
2020	103
2021	80
2022	66
2023	49
Thereafter	36
Total Lease payments	395
Less: Imputed interest	49
Total Operating lease liabilities	$	346

_____________


(1)	Represents the future minimum operating lease payments expected to be made over the remaining balance of the year.

Finance Leases

Xerox has one finance lease for equipment and related infrastructure within an outsourced warehouse supply arrangement in the U.S. The lease expires in December 2023 and has a remaining lease obligation of $7 as of June 30, 2019 based on a discount rate of 4.07%. The Right-of-use asset balance associated with this finance lease of $8 is included in Land, buildings and equipment, net in the Condensed Consolidated Balance Sheet.

Prior Period Disclosures under ASC 840

For the years ended December 31, 2018 and 2017, operating lease expense, net of sublease income, were $147 and $161, respectively.

Future minimum operating lease commitments that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2018 were as follows:



	December 31, 2018
2019	$	114
2020	88
2021	64
2022	50
2023	36
Thereafter	27
Total Operating lease commitments	$	379

Adoption of New Leasing Standard - Xerox as a Lessee

Refer to Note 2 - Recent Accounting Pronouncements - Leases, for additional information related to the adoption of ASU 2016-02, Leases (ASC Topic 842).

Lessee Summary:

Operating Leases

The components of lease expense are as follows:



	Three Months Ended			Six Months Ended
	June 30, 2019
Operating lease expense	$	33		$	66
Short-term lease expense	5			10
Variable lease expense⁽¹⁾	12			25
Sublease income	(1		)	(1		)
Total Lease expense	$	49		$	100

_____________


(1)	Variable lease expense is related to our leased real estate for offices and warehouses and primarily includes labor and operational costs as well as taxes and insurance.

Operating leases ROU assets, net and operating lease liabilities were reported in the Condensed Consolidated Balance Sheets as follows:



	June 30, 2019
Other long-term assets	$	319

Accrued expenses and other current liabilities	$	92
Other long-term liabilities	254
Total Operating lease liabilities	$	346

Supplemental information related to operating leases is as follows:



	Three Months Ended		Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	32	$	64
Right-of-use assets obtained in exchange for new lease liabilities ⁽¹⁾	$	14	$	23
Weighted-average remaining lease term			4 years
Weighted-average discount rate			5.63		%

_____________


(1)	Includes the impact of new leases as well as remeasurements and modifications to existing leases.

Maturities and additional information related to operating lease liabilities are as follows:



	June 30, 2019
2019⁽¹⁾	$	61
2020	103
2021	80
2022	66
2023	49
Thereafter	36
Total Lease payments	395
Less: Imputed interest	49
Total Operating lease liabilities	$	346

_____________


(1)	Represents the future minimum operating lease payments expected to be made over the remaining balance of the year.

Finance Leases

Prior Period Disclosures under ASC 840

For the years ended December 31, 2018 and 2017, operating lease expense, net of sublease income, were $147 and $161, respectively.

Future minimum operating lease commitments that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2018 were as follows:



	December 31, 2018
2019	$	114
2020	88
2021	64
2022	50
2023	36
Thereafter	27
Total Operating lease commitments	$	379

Adoption of New Leasing Standard - Xerox as a Lessor

6 Months Ended

Jun. 30, 2019

Adoption of New Leasing Standard - Xerox as a Lessor

Refer to Note 2 - Recent Accounting Pronouncements - Leases, for additional information related to the adoption of ASU 2016-02, Leases (ASC Topic 842).

Lessor Summary:

The following represent updated disclosures to our Revenue Recognition policies as a result of the adoption of ASC Topic 842.

Bundled Lease Arrangements: A portion of our direct sales of equipment to end customers are made through bundled lease arrangements which typically include equipment, services (maintenance and managed services) and financing components where the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term. These arrangements also typically include an incremental, variable component for page volumes in excess of the contractual page volume minimums, which are often expressed in terms of price-per-image or page. Revenues under these bundled lease arrangements are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement. Lease deliverables include the equipment and financing, while the non-lease deliverables generally consist of the services, which include supplies. Consistent with the guidance in ASC 842 and ASC 606, regarding the allocation of fixed and variable consideration, we only consider the fixed payments for purposes of allocation to the lease elements of the contract. The fixed minimum monthly payments are multiplied by the number of months in the contract term to arrive at the total fixed lease payments that the customer is obligated to make over the lease term. Amounts allocated to the equipment and financing elements are then subjected to the accounting estimates noted below under Leases to ensure the values reflect standalone selling prices.

The remainder of any fixed payments, as well as the variable payments, are allocated to non-lease elements because the variable consideration for incremental page volume or usage is considered attributable to the delivery of those elements. The consideration for the non-lease elements is not dependent on the consideration for equipment and vice versa and the consideration for the equipment and services is priced at the appropriate standalone values; therefore, the relative standalone selling price allocation method is not necessary. The revenue associated with the non-lease elements are normally accounted for as a single performance obligation being delivered in a series with delivery being measured as the usage billed to the customer. Accordingly, revenue from these agreements is recognized in a manner consistent with the guidance for Maintenance and Services agreements.

Leases: The two primary accounting provisions we use to classify transactions as sales-type or operating leases are: (i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than 75%); and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease (defined as greater than 90%). Equipment placements included in arrangements meeting these conditions are accounted for as sales-type leases and revenue is recognized in a manner consistent with Equipment. Equipment placements included in arrangements that do not meet these conditions are accounted for as operating leases and revenue is recognized over the term of the lease.

We consider the economic life of most of our products to be five years, since this represents the most frequent contractual lease term for our principal products and only a small percentage of our leases are for original terms longer than five years. There is no significant after-market for our used equipment. We believe five years is representative of the period during which the equipment is expected to be economically usable, with normal service, for the purpose for which it is intended.

We perform an analysis of the stand-alone selling price of equipment based on cash selling prices during the applicable period. The cash selling prices are compared to the range of values determined for our leases. The range of cash selling prices must be reasonably consistent with the lease selling prices in order for us to determine that such lease prices reflects stand-alone value.

Our lease pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon a variety of factors including local prevailing rates in the marketplace and the customer’s credit history, industry and credit class. We reassess our pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace. The pricing interest rates generally equal the implicit rates within the leases, as corroborated by our comparisons of cash to lease selling prices noted above.

Additional Lease Payments: Certain leases may require the customer to pay property taxes and insurance on the equipment. In these instances, the amounts for property taxes and insurance that we invoice to customers and pay to third parties are considered variable payments and are recorded as other revenues and other cost of revenues, respectively. Amounts related to property taxes and insurance are not material. We exclude from variable payments all lessor costs that are explicitly required to be paid directly by a lessee on behalf of the lessor to a third party.

Presentation: Revenue from sales-type leases is presented on a gross basis when the company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business, whereas in transactions where the company enters into a lease for the purpose of generating revenue by providing financing, the profit or loss, if any, is presented on a net basis. In addition, we have elected to account for sales tax and other similar taxes collected from a lessee as lessee costs and therefore we exclude these costs from contract consideration and variable consideration and present revenue net of these costs.

The components of lease income are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Lease income - sales type	$	150	$	172	$	284	$	332
Interest income on lease receivables	61		68		124		139
Lease income - operating leases⁽¹⁾	100		109		204		222
Variable lease income	28		31		55		61
Total Lease income	$	339	$	380	$	667	$	754

_____________


(1)	Operating lease income for the six months ended June 30, 2019 and 2018 exclude service revenues of $30 and $28, respectively, which were reported in operating lease income for the three months ended March 31, 2019 and 2018.

Profit at lease commencement on sales type leases was estimated to be approximately $55 and $70 for the three months ended June 30, 2019 and 2018, respectively, and approximately $120 and $145 for the six months ended June 30, 2019 and 2018, respectively.

Adoption of New Leasing Standard - Xerox as a Lessor

Refer to Note 2 - Recent Accounting Pronouncements - Leases, for additional information related to the adoption of ASU 2016-02, Leases (ASC Topic 842).

Lessor Summary:

The following represent updated disclosures to our Revenue Recognition policies as a result of the adoption of ASC Topic 842.

The components of lease income are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Lease income - sales type	$	150	$	172	$	284	$	332
Interest income on lease receivables	61		68		124		139
Lease income - operating leases⁽¹⁾	100		109		204		222
Variable lease income	28		31		55		61
Total Lease income	$	339	$	380	$	667	$	754

_____________


(1)	Operating lease income for the six months ended June 30, 2019 and 2018 exclude service revenues of $30 and $28, respectively, which were reported in operating lease income for the three months ended March 31, 2019 and 2018.

Adoption of New Leasing Standard - Xerox as a Lessor

Refer to Note 2 - Recent Accounting Pronouncements - Leases, for additional information related to the adoption of ASU 2016-02, Leases (ASC Topic 842).

Lessor Summary:

The following represent updated disclosures to our Revenue Recognition policies as a result of the adoption of ASC Topic 842.

The components of lease income are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Lease income - sales type	$	150	$	172	$	284	$	332
Interest income on lease receivables	61		68		124		139
Lease income - operating leases⁽¹⁾	100		109		204		222
Variable lease income	28		31		55		61
Total Lease income	$	339	$	380	$	667	$	754

_____________


(1)	Operating lease income for the six months ended June 30, 2019 and 2018 exclude service revenues of $30 and $28, respectively, which were reported in operating lease income for the three months ended March 31, 2019 and 2018.

Revenue

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Revenues disaggregated by primary geographic markets, major product lines, and sales channels are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Primary geographical markets⁽¹⁾:
United States	$	1,370	$	1,479	$	2,664	$	2,893
Europe	584		660		1,184		1,336
Canada	130		147		254		291
Other	205		224		393		425
Total Revenues	$	2,289	$	2,510	$	4,495	$	4,945

Major product and services lines:
Equipment	$	504	$	561	$	952	$	1,060
Supplies, paper and other sales	321		366		623		712
Maintenance agreements⁽²⁾	609		671		1,207		1,340
Service arrangements⁽³⁾	637		676		1,272		1,358
Rental and other	157		168		317		336
Financing	61		68		124		139
Total Revenues⁽⁴⁾	$	2,289	$	2,510	$	4,495	$	4,945

Sales channels:
Direct equipment lease⁽⁵⁾	$	150	$	172	$	284	$	332
Distributors & resellers⁽⁶⁾	333		357		648		701
Customer direct	342		398		643		739
Total Sales⁽⁴⁾	$	825	$	927	$	1,575	$	1,772

_____________


(1)	Geographic area data is based upon the location of the subsidiary reporting the revenue.


(2)	Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through our channel partners as Xerox Partner Print Services (XPPS).


(3)	Primarily includes revenues from our Managed Services offerings (formerly our Managed Document Services arrangements). Also includes revenues from embedded operating leases, which were not significant.


(4)	Certain prior year amounts have been revised to conform to the current year presentation. Refer to Note 1 - Basis of Presentation - Change in Presentation, for additional information.


(5)	Primarily reflects direct sales through bundled lease arrangements.


(6)	Primarily reflects sales through our two-tier distribution channels.

Contract Assets and Liabilities: We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time. Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advanced billings for maintenance and other services to be performed and were approximately $134 and $116 at June 30, 2019 and December 31, 2018, respectively. The majority of the balance at June 30, 2019 will be amortized to revenue over approximately the next 30 months.

Contract Costs: Incremental direct costs of obtaining a contract primarily include sales commissions paid to sales people and agents in connection with the placement of equipment with associated post sale services arrangements. These costs are deferred and amortized on the straight-line basis over the estimated contract term, which is currently estimated to be approximately four years. We pay commensurate sales commissions upon customer renewals, therefore our amortization period is aligned to our initial contract term. Incremental direct costs are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Incremental direct costs of obtaining a contract	$	18	$	23	$	36	$	40
Amortization of incremental direct costs	20		23		43		47

The balance of deferred incremental direct costs net of accumulated amortization at June 30, 2019 and December 31, 2018 was $165 and $172, respectively. This amount is expected to be amortized over its estimated period of benefit, which we currently estimate to be approximately four years.

We may also incur costs associated with our services arrangements to generate or enhance resources and assets that will be used to satisfy our future performance obligations included in these arrangements. These costs are considered contract fulfillment costs and are amortized over the contractual service period of the arrangement to cost of services. In addition, we also provide inducements to certain customers in various forms, including contractual credits, which are capitalized and amortized as a reduction of revenue over the term of the contract. As of June 30, 2019 and December 31, 2018 amounts deferred associated with contract fulfillment costs and inducements were $12 and $12, respectively. The related amortization for the three months ended June 30, 2019 and 2018 was $2 and $2, respective and $3 and $3 for the six months ended June 30, 2019 and 2018, respectively.

Acquisitions	6 Months Ended
Acquisitions	Jun. 30, 2019
Business Combinations [Abstract]
Acquisitions	Acquisitions Xerox is focused on increasing its Small and Mid-sized (SMB) coverage through resellers and partners (including multi-brand dealers) and continued distribution acquisitions. During the second quarter of 2019, acquisitions totaled $38 and included Rabbit Copiers, Inc. (Rabbit Office Automation (ROA)), a San Francisco Bay area dealer, and Heritage Business Systems, Inc. (HBS), a Delaware Valley dealer. Both dealers expand our distribution and increase the number of resources in these geographies and provide office technology sales, services and supplies in those markets. The operating results of these acquisitions are not material to our financial statements and are included within our results from the acquisition date. The purchase prices were all cash for 100% ownership of the acquired companies and were primarily allocated to Intangible assets, net and Goodwill. The allocations were based on preliminary management estimates, which are expected to be updated in third quarter 2019 and in certain situations may include input from third-party valuations. Any adjustments to the allocations are not expected to be material.

Supplementary Financial Information

6 Months Ended

Jun. 30, 2019

Supplemental Financial Information [Abstract]

Supplementary Financial Information

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash amounts were as follows:



	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	712	$	1,084
Restricted cash
Litigation deposits in Brazil	64		61
Other restricted cash	—		3
Total Restricted cash	64		64
Cash, cash equivalents and restricted cash	$	776	$	1,148

Restricted cash primarily relates to escrow cash deposits made in Brazil associated with ongoing litigation. As more fully discussed in Note 21 - Contingencies and Litigation, various litigation matters in Brazil require us to make cash deposits to escrow as a condition of continuing the litigation. Restricted cash amounts are classified in our Condensed Consolidated Balance Sheets based on when the cash is expected to be contractually or judicially released.

Restricted cash was reported in the Condensed Consolidated Balance Sheets as follows:



	June 30, 2019		December 31, 2018
Other current assets	$	—	$	1
Other long-term assets	64		63
Total Restricted cash	$	64	$	64

Supplemental Cash Flow Information

Summarized cash flow information is as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Provision for receivables	$	13	$	13	$	27	$	26
Provision for inventory	7		10		15		14
Provision for product warranty	3		3		7		7
Depreciation of buildings and equipment	26		44		53		88
Depreciation and obsolescence of equipment on operating leases	57		63		116		127
Amortization of internal use software	16		19		33		37
Amortization of acquired intangible assets	11		12		26		24
Amortization of customer contract costs⁽¹⁾	22		25		46		50
Cost of additions to land, buildings and equipment	10		17		19		26
Cost of additions to internal use software	6		15		12		24
Common stock dividends	57		64		115		128
Preferred stock dividends	3		4		7		7
Payments to noncontrolling interests	12		1		13		13
Repurchases related to stock-based compensation	9		1		10		2

_____________

(1)

Amortization of customer contract costs are reported in Decrease in other current and long-term assets in the Condensed Consolidated Statements of Cash Flows. Refer to Note 5 - Revenue for additional information on contract costs.

Accounts Receivable, Net

6 Months Ended

Jun. 30, 2019

Accounts Receivable, Net

Accounts receivable, net were as follows:



	June 30, 2019			December 31, 2018
Invoiced	$	992		$	999
Accrued	320			333
Allowance for doubtful accounts	(56		)	(56		)
Accounts receivable, net	$	1,256		$	1,276

Amounts to be invoiced in the subsequent quarter for current services provided are included in amounts accrued.

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. The allowance for uncollectible accounts receivable is determined principally on the basis of past collection experience as well as consideration of current economic conditions and changes in our customer collection trends.

Accounts Receivable Sales Arrangements

Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and liquidity management. The accounts receivable sold are generally short-term trade receivables with payment due dates of less than 60 days. We have one facility in Europe that enables us to sell accounts receivable associated with our distributor network on an ongoing basis, without recourse. Under this arrangement, we sell our entire interest in the related accounts receivable for cash and no portion of the payment is held back or deferred by the purchaser.

Of the accounts receivable sold and derecognized from our balance sheet, $131 and $131 remained uncollected as of June 30, 2019 and December 31, 2018, respectively.

Accounts receivable sales were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Accounts receivable sales⁽¹⁾	$	110	$	128	$	198	$	231
Loss on sales of accounts receivable	—		—		1		1

__________________________

(1)

Customers may also enter into structured-payable arrangements that require us to sell our receivables from that customer to a third-party financial institution, which then makes payments to us to settle the customer's receivable. In these instances, we ensure the sale of the receivables are bankruptcy-remote and the payment made to us is without recourse. The activity associated with these arrangements is not reflected in this disclosure, as payments under these arrangements have not been material and these are customer directed arrangements.

Finance Receivables, Net

Finance receivables include sales-type leases and installment loans arising from the marketing of our equipment. These receivables are typically collateralized by a security interest in the underlying assets. Amounts disclosed below at December 31, 2018 were accounted for under ASC 840, Leases, which was superseded by ASC 842, Leases, adopted on January 1, 2019. Differences upon adoption were not material. Refer to Note 2 - Recent Accounting Pronouncements for additional information.

Finance receivables, net were as follows:



	June 30, 2019			December 31, 2018
Gross receivables	$	3,860		$	4,003
Unearned income	(418		)	(439		)
Subtotal	3,442			3,564
Residual values	—			—
Allowance for doubtful accounts	(93		)	(92		)
Finance receivables, net	3,349			3,472
Less: Billed portion of finance receivables, net	108			105
Less: Current portion of finance receivables not billed, net	1,177			1,218
Finance receivables due after one year, net	$	2,064		$	2,149

A summary of future contractual maturities of our gross finance receivables, including those previously billed is as follows:



	June 30, 2019		December 31, 2018
12 Months⁽¹⁾	$	1,514	$	1,543
24 Months	1,057		1,108
36 Months	715		755
48 Months	405		425
60 Months	151		158
Thereafter	18		14
Total	$	3,860	$	4,003

__________________


(1)	Includes amounts previously billed of $112 and $107 as of June 30, 2019 and December 31, 2018, respectively.

Finance Receivables – Allowance for Credit Losses and Credit Quality

Finance receivables include sales-type leases, direct financing leases and installment loans arising from the marketing of our equipment. Our finance receivable portfolios are primarily in the U.S., Canada and Europe. We generally establish customer credit limits and estimate the allowance for credit losses on a country or geographic basis. Our policy and methodology used to establish our allowance for doubtful accounts has been consistently applied over all periods presented.

The allowance for doubtful finance receivables as well as the related investment in finance receivables were as follows:



Allowance for Credit Losses:	United States			Canada			Europe			Other⁽¹⁾		Total
Balance at December 31, 2018	$	53		$	12		$	25		$	2	$	92
Provision	4			1			4			—		9
Charge-offs	(4		)	(1		)	(3		)	—		(8		)
Recoveries and other⁽²⁾	—			—			—			—		—
Balance at March 31, 2019	$	53		$	12		$	26		$	2	$	93
Provision	4			1			3			—		8
Charge-offs	(5		)	(3		)	(3		)	—		(11		)
Recoveries and other⁽²⁾	1			2			—			—		3
Balance at June 30, 2019	$	53		$	12		$	26		$	2	$	93
Finance receivables as of June 30, 2019 collectively evaluated for impairment ⁽³⁾	$	1,885		$	329		$	1,185		$	43	$	3,442

Balance at December 31, 2017	$	56		$	15		$	35		$	2	$	108
Provision	5			—			4			—		9
Charge-offs	(5		)	(1		)	(4		)	—		(10		)
Recoveries and other⁽²⁾	—			—			1			—		1
Balance at March 31, 2018	$	56		$	14		$	36		$	2	$	108
Provision	4			1			4			—		9
Charge-offs	(4		)	(1		)	(3		)	—		(8		)
Recoveries and other⁽²⁾	—			—			(2		)	—		(2		)
Balance at June 30, 2018	$	56		$	14		$	35		$	2	$	107
Finance receivables as of June 30, 2018 collectively evaluated for impairment⁽³⁾⁽⁴⁾	$	1,973		$	356		$	1,256		$	45	$	3,630

__________________


(1)	Includes developing market countries and smaller units.


(2)	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.


(3)	Total Finance receivables exclude the allowance for credit losses of $93 and $107 at June 30, 2019 and 2018, respectively.


(4)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.

We evaluate our customers based on the following credit quality indicators:

•

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 5%.

•

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 generally in the range of 7% to 10%.

Credit quality indicators are updated at least annually and the credit quality of any given customer can change during the life of the portfolio. Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:



	June 30, 2019								December 31, 2018
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables		Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
Finance and other services	$	168	$	336	$	93	$	597	$	177	$	334	$	88	$	599
Government and education	424		58		18		500		453		63		9		525
Graphic arts	72		121		86		279		82		131		87		300
Industrial	81		83		18		182		86		82		16		184
Healthcare	57		62		17		136		86		48		9		143
Other	57		102		32		191		63		90		42		195
Total United States⁽¹⁾	859		762		264		1,885		947		748		251		1,946
Finance and other services	59		32		18		109		52		33		20		105
Government and education	37		4		3		44		38		3		4		45
Graphic arts	21		26		27		74		22		30		26		78
Industrial	18		11		11		40		16		12		9		37
Other	30		19		13		62		34		21		15		70
Total Canada	165		92		72		329		162		99		74		335
France	212		149		26		387		232		157		29		418
U.K./Ireland	146		81		6		233		150		87		7		244
Central⁽²⁾	182		121		9		312		196		123		8		327
Southern⁽³⁾	58		135		13		206		52		136		17		205
Nordics⁽⁴⁾	28		18		1		47		28		15		2		45
Total Europe⁽⁵⁾	626		504		55		1,185		658		518		63		1,239
Other⁽¹⁾	29		13		1		43		31		13		—		44
Total	$	1,679	$	1,371	$	392	$	3,442	$	1,798	$	1,378	$	388	$	3,564

_____________________________


(1)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.


(2)	Switzerland, Germany, Austria, Belgium and Holland.


(3)	Italy, Greece, Spain and Portugal.


(4)	Sweden, Norway, Denmark and Finland.


(5)	Prior year amounts have been recasted to conform to the current year presentation.

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:



	June 30, 2019
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	16	$	4	$	2	$	22	$	575	$	597	$	11
Government and education	17		3		3		23		477		500		21
Graphic arts	12		1		1		14		265		279		5
Industrial	6		2		1		9		173		182		6
Healthcare	4		2		1		7		129		136		4
Other	5		1		1		7		184		191		3
Total United States	60		13		9		82		1,803		1,885		50
Canada	9		2		1		12		317		329		21
France	5		—		—		5		382		387		12
U.K./Ireland	2		—		—		2		231		233		—
Central⁽²⁾	2		1		1		4		308		312		3
Southern⁽³⁾	2		1		1		4		202		206		7
Nordics⁽⁴⁾	—		—		—		—		47		47		—
Total Europe	11		2		2		15		1,170		1,185		22
Other	3		—		—		3		40		43		—
Total	$	83	$	17	$	12	$	112	$	3,330	$	3,442	$	93

	December 31, 2018
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	15	$	4	$	2	$	21	$	578	$	599	$	11
Government and education	17		4		3		24		501		525		24
Graphic arts	10		1		1		12		288		300		5
Industrial	5		2		1		8		176		184		5
Healthcare	4		2		1		7		136		143		5
Other	5		2		1		8		187		195		4
Total United States⁽¹⁾	56		15		9		80		1,866		1,946		54
Canada	7		2		1		10		325		335		22
France	5		—		—		5		413		418		14
U.K./Ireland	2		—		—		2		242		244		—
Central⁽²⁾	1		1		1		3		324		327		6
Southern⁽³⁾	3		1		1		5		200		205		6
Nordics⁽⁴⁾	—		—		—		—		45		45		—
Total Europe	11		2		2		15		1,224		1,239		26
Other⁽¹⁾	2		—		—		2		42		44		—
Total	$	76	$	19	$	12	$	107	$	3,457	$	3,564	$	102

_____________________________


(1)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.


(2)	Switzerland, Germany, Austria, Belgium and Holland.

(3)Italy, Greece, Spain and Portugal.

(4)Sweden, Norway, Denmark and Finland.

Finance Receivables, Net

6 Months Ended

Jun. 30, 2019

Inventories and Equipment on Operating Leases, Net [Abstract]

Finance Receivables, Net

Accounts Receivable, Net

Accounts receivable, net were as follows:



	June 30, 2019			December 31, 2018
Invoiced	$	992		$	999
Accrued	320			333
Allowance for doubtful accounts	(56		)	(56		)
Accounts receivable, net	$	1,256		$	1,276

Amounts to be invoiced in the subsequent quarter for current services provided are included in amounts accrued.

Accounts Receivable Sales Arrangements

Of the accounts receivable sold and derecognized from our balance sheet, $131 and $131 remained uncollected as of June 30, 2019 and December 31, 2018, respectively.

Accounts receivable sales were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Accounts receivable sales⁽¹⁾	$	110	$	128	$	198	$	231
Loss on sales of accounts receivable	—		—		1		1

__________________________

(1)

Finance Receivables, Net

Finance receivables, net were as follows:



	June 30, 2019			December 31, 2018
Gross receivables	$	3,860		$	4,003
Unearned income	(418		)	(439		)
Subtotal	3,442			3,564
Residual values	—			—
Allowance for doubtful accounts	(93		)	(92		)
Finance receivables, net	3,349			3,472
Less: Billed portion of finance receivables, net	108			105
Less: Current portion of finance receivables not billed, net	1,177			1,218
Finance receivables due after one year, net	$	2,064		$	2,149

A summary of future contractual maturities of our gross finance receivables, including those previously billed is as follows:



	June 30, 2019		December 31, 2018
12 Months⁽¹⁾	$	1,514	$	1,543
24 Months	1,057		1,108
36 Months	715		755
48 Months	405		425
60 Months	151		158
Thereafter	18		14
Total	$	3,860	$	4,003

__________________


(1)	Includes amounts previously billed of $112 and $107 as of June 30, 2019 and December 31, 2018, respectively.

Finance Receivables – Allowance for Credit Losses and Credit Quality

The allowance for doubtful finance receivables as well as the related investment in finance receivables were as follows:



Allowance for Credit Losses:	United States			Canada			Europe			Other⁽¹⁾		Total
Balance at December 31, 2018	$	53		$	12		$	25		$	2	$	92
Provision	4			1			4			—		9
Charge-offs	(4		)	(1		)	(3		)	—		(8		)
Recoveries and other⁽²⁾	—			—			—			—		—
Balance at March 31, 2019	$	53		$	12		$	26		$	2	$	93
Provision	4			1			3			—		8
Charge-offs	(5		)	(3		)	(3		)	—		(11		)
Recoveries and other⁽²⁾	1			2			—			—		3
Balance at June 30, 2019	$	53		$	12		$	26		$	2	$	93
Finance receivables as of June 30, 2019 collectively evaluated for impairment ⁽³⁾	$	1,885		$	329		$	1,185		$	43	$	3,442

Balance at December 31, 2017	$	56		$	15		$	35		$	2	$	108
Provision	5			—			4			—		9
Charge-offs	(5		)	(1		)	(4		)	—		(10		)
Recoveries and other⁽²⁾	—			—			1			—		1
Balance at March 31, 2018	$	56		$	14		$	36		$	2	$	108
Provision	4			1			4			—		9
Charge-offs	(4		)	(1		)	(3		)	—		(8		)
Recoveries and other⁽²⁾	—			—			(2		)	—		(2		)
Balance at June 30, 2018	$	56		$	14		$	35		$	2	$	107
Finance receivables as of June 30, 2018 collectively evaluated for impairment⁽³⁾⁽⁴⁾	$	1,973		$	356		$	1,256		$	45	$	3,630

__________________


(1)	Includes developing market countries and smaller units.


(2)	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.


(3)	Total Finance receivables exclude the allowance for credit losses of $93 and $107 at June 30, 2019 and 2018, respectively.


(4)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.

We evaluate our customers based on the following credit quality indicators:

•



	June 30, 2019								December 31, 2018
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables		Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
Finance and other services	$	168	$	336	$	93	$	597	$	177	$	334	$	88	$	599
Government and education	424		58		18		500		453		63		9		525
Graphic arts	72		121		86		279		82		131		87		300
Industrial	81		83		18		182		86		82		16		184
Healthcare	57		62		17		136		86		48		9		143
Other	57		102		32		191		63		90		42		195
Total United States⁽¹⁾	859		762		264		1,885		947		748		251		1,946
Finance and other services	59		32		18		109		52		33		20		105
Government and education	37		4		3		44		38		3		4		45
Graphic arts	21		26		27		74		22		30		26		78
Industrial	18		11		11		40		16		12		9		37
Other	30		19		13		62		34		21		15		70
Total Canada	165		92		72		329		162		99		74		335
France	212		149		26		387		232		157		29		418
U.K./Ireland	146		81		6		233		150		87		7		244
Central⁽²⁾	182		121		9		312		196		123		8		327
Southern⁽³⁾	58		135		13		206		52		136		17		205
Nordics⁽⁴⁾	28		18		1		47		28		15		2		45
Total Europe⁽⁵⁾	626		504		55		1,185		658		518		63		1,239
Other⁽¹⁾	29		13		1		43		31		13		—		44
Total	$	1,679	$	1,371	$	392	$	3,442	$	1,798	$	1,378	$	388	$	3,564

_____________________________


(1)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.


(2)	Switzerland, Germany, Austria, Belgium and Holland.


(3)	Italy, Greece, Spain and Portugal.


(4)	Sweden, Norway, Denmark and Finland.


(5)	Prior year amounts have been recasted to conform to the current year presentation.

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:



	June 30, 2019
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	16	$	4	$	2	$	22	$	575	$	597	$	11
Government and education	17		3		3		23		477		500		21
Graphic arts	12		1		1		14		265		279		5
Industrial	6		2		1		9		173		182		6
Healthcare	4		2		1		7		129		136		4
Other	5		1		1		7		184		191		3
Total United States	60		13		9		82		1,803		1,885		50
Canada	9		2		1		12		317		329		21
France	5		—		—		5		382		387		12
U.K./Ireland	2		—		—		2		231		233		—
Central⁽²⁾	2		1		1		4		308		312		3
Southern⁽³⁾	2		1		1		4		202		206		7
Nordics⁽⁴⁾	—		—		—		—		47		47		—
Total Europe	11		2		2		15		1,170		1,185		22
Other	3		—		—		3		40		43		—
Total	$	83	$	17	$	12	$	112	$	3,330	$	3,442	$	93

	December 31, 2018
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	15	$	4	$	2	$	21	$	578	$	599	$	11
Government and education	17		4		3		24		501		525		24
Graphic arts	10		1		1		12		288		300		5
Industrial	5		2		1		8		176		184		5
Healthcare	4		2		1		7		136		143		5
Other	5		2		1		8		187		195		4
Total United States⁽¹⁾	56		15		9		80		1,866		1,946		54
Canada	7		2		1		10		325		335		22
France	5		—		—		5		413		418		14
U.K./Ireland	2		—		—		2		242		244		—
Central⁽²⁾	1		1		1		3		324		327		6
Southern⁽³⁾	3		1		1		5		200		205		6
Nordics⁽⁴⁾	—		—		—		—		45		45		—
Total Europe	11		2		2		15		1,224		1,239		26
Other⁽¹⁾	2		—		—		2		42		44		—
Total	$	76	$	19	$	12	$	107	$	3,457	$	3,564	$	102

_____________________________


(1)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.


(2)	Switzerland, Germany, Austria, Belgium and Holland.

(3)Italy, Greece, Spain and Portugal.

(4)Sweden, Norway, Denmark and Finland.

Inventories and Equipment on Operating Leases, Net

6 Months Ended

Jun. 30, 2019

Inventories and Equipment on Operating Leases, Net

The following is a summary of Inventories by major category:



	June 30, 2019		December 31, 2018
Finished goods	$	659	$	699
Work-in-process	55		49
Raw materials	74		70
Total Inventories	$	788	$	818

The transfer of equipment from our inventories to equipment subject to an operating lease is presented in our Consolidated Statements of Cash Flows in the operating activities section. Equipment on operating leases and similar arrangements consists of our equipment rented to customers and depreciated to estimated salvage value at the end of the lease term. Amounts disclosed below at December 31, 2018 were accounted for under ASC 840, Leases, which was superseded by ASC 842, Leases, adopted on January 1, 2019. Differences upon adoption were not material. Refer to Note 2 - Recent Accounting Pronouncements for additional information.

Equipment on operating leases and the related accumulated depreciation were as follows:



	June 30, 2019			December 31, 2018
Equipment on operating leases	$	1,495		$	1,519
Accumulated depreciation	(1,096		)	(1,077		)
Equipment on operating leases, net	$	399		$	442

Estimated minimum future revenues associated with Equipment on operating leases are as follows:



	June 30, 2019		December 31, 2018
2019⁽¹⁾	$	128	$	260
2020	216		178
2021	132		111
2022	73		61
2023	31		21
Thereafter	6		2
Total	$	586	$	633

_____________


(1)	2019 amount represents the future minimum revenues expected to be earned over the remaining balance of the year.

Total contingent rentals on operating leases, consisting principally of usage charges in excess of minimum contracted amounts, were $28 and $31 for the three months ended June 30, 2019 and 2018, respectively, and $55 and $61 for the six months ended June 30, 2019 and 2018, respectively.

Investment in Affiliates, at Equity

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investment in Affiliates, at Equity

Our Equity in net income (loss) of unconsolidated affiliates was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Fuji Xerox	$	32	$	17	$	75	$	(53	)
Other	2		2		4		4
Total Equity in net income (loss) of unconsolidated affiliates	$	34	$	19	$	79	$	(49	)

Fuji Xerox

Equity in net income (loss) of Fuji Xerox is affected by certain adjustments required to reflect the deferral of profit associated with intercompany sales. These adjustments may result in recorded equity income (loss) that is different from that implied by our 25% ownership interest. In addition, the Equity in net income (loss) of Fuji Xerox for the three months ended June 30, 2019 and 2018 included after-tax restructuring and other charges of $7 and $4, respectively, and $19 and $83 for the six months ended June 30, 2019 and 2018, respectively.

Fuji Xerox recorded a cumulative charge of JPY 12 billion (approximately $110 based on the Yen/U.S. Dollar average exchange rate for the quarter ended March 31, 2018 of 108.07) in their net loss for the quarter ended March 31, 2018 (our first quarter 2018) related to the correction of certain out-of-period adjustments and misstatements. Our recognition of 25% of Fuji Xerox’s net loss for Xerox’s first quarter 2018 included an approximately $28 charge related to these adjustments and misstatements.

Summarized financial information for Fuji Xerox was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Summary of Operations
Revenues	$	2,145	$	2,226	$	4,606	$	4,691
Costs and expenses	1,948		2,098		4,152		4,869
Income (Loss) before Income Taxes	197		128		454		(178		)
Income tax expense	65		50		150		11
Net Income (Loss)	132		78		304		(189		)
Less: Net income attributable to noncontrolling interests	—		1		1		1
Net Income (Loss) – Fuji Xerox	$	132	$	77	$	303	$	(190	)
Weighted Average Exchange Rate⁽¹⁾	109.80		109.05		110.08		108.54

_____________________________

(1)

Represents Yen/U.S. Dollar exchange rate used to translate.

Restructuring Programs

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring Programs

We engage in restructuring actions, including Project Own It, as well as other transformation efforts in order to reduce our cost structure and realign it to the changing nature of our business and to achieve operating efficiencies through a number of opportunities including reduction of our real estate footprint.

During the six months ended June 30, 2019, we recorded net restructuring and asset impairment charges of $72, which included $25 of severance costs related to headcount reductions of approximately 300 employees worldwide, $17 of other contractual termination costs and $46 of asset impairment charges. These costs were partially offset by $16 of net reversals, primarily resulting from changes in estimated reserves from prior period initiatives as well as $2 in favorable adjustments from the early termination of prior period impaired leases.

Information related to restructuring program activity is outlined below:



	Severance and Related Costs			Other Contractual Termination Costs⁽²⁾			Asset Impairments⁽³⁾			Total
Balance at December 31, 2018	$	94		$	1		$	—		$	95
Provision	12			14			36			62
Reversals	(8		)	—			—			(8		)
Net current period charges⁽¹⁾	4			14			36			54
Charges against reserve and currency	(32		)	(1		)	(36		)	(69		)
Balance at March 31, 2019	$	66		$	14		$	—		$	80
Provision	13			3			10			26
Reversals	(6		)	—			(2		)	(8		)
Net current period charges⁽¹⁾	7			3			8			18
Charges against reserve and currency	(17		)	(4		)	(8		)	(29		)
Balance at June 30, 2019	$	56		$	13		$	—		$	69

____________________________


(1)	Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown for restructuring and asset impairment charges.


(2)	Primarily includes additional costs incurred upon the exit from our facilities including decommissioning costs and associated contractual termination costs.


(3)	Primarily related to the exit and abandonment of leased and owned facilities. The charge includes the accelerated write-off of $34 for leased right-of-use asset balances and $12 for owned asset balances upon exit from the facility net of any potential sublease income or other recovery amounts.

The following table summarizes the reconciliation to the Condensed Consolidated Statements of Cash Flows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Charges against reserve and currency	$	(29	)	$	(40	)	$	(98	)	$	(92	)
Effects of foreign currency and other non-cash items	8			3			44			1
Restructuring cash payments	$	(21	)	$	(37	)	$	(54	)	$	(91	)

In connection with our restructuring programs, we also incurred certain related costs as follows:



	Three Months Ended June 30,		Six Months Ended June 30,
	2019		2019
Retention related severance/bonuses⁽¹⁾	$	11	$	20
Contractual severance costs⁽²⁾	—		38
Consulting and other costs⁽³⁾	8		19
Total	$	19	$	77

____________________________


(1)	Includes retention related severance and bonuses for employees expected to continue working beyond their minimum notification period before termination.


(2)	Reflects estimated severance costs we are contractually required to pay on employees transferred (approximately 2,200) as part of the shared service arrangement entered into with HCL Technologies.

(3)

Represents professional support services associated with our business transformation initiatives.

Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

Interest Expense and Income

Interest expense and income were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Interest expense⁽¹⁾	$	59	$	60	$	118	$	123
Interest income⁽²⁾	64		72		131		146

____________


(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.

Financial Instruments

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

Interest Rate Risk Management

We use interest rate swap agreements to manage our interest rate exposure and to achieve a desired proportion of variable and fixed rate debt. These derivatives may be designated as fair value hedges or cash flow hedges depending on the nature of the risk being hedged.

Fair Value Hedges

As of June 30, 2019, pay variable/receive fixed interest rate swaps with notional amounts of $200 and net asset fair value of $2 were designated and accounted for as fair value hedges. The swaps were structured to hedge the fair value of related debt by converting them from fixed rate instruments to variable rate instruments. No ineffective portion was recorded to earnings for the six months ended June 30, 2019.

The following is a summary of our fair value hedges at June 30, 2019:



Debt Instrument	Year First Designated	Notional Amount		Net Fair Value		Weighted Average Interest Rate Paid		Interest Rate Received		Basis	Maturity
Senior Note 2021	2014	$	200	$	2	3.26	%	4.5	%	Libor	2021

Foreign Exchange Risk Management

We are a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts and purchased option contracts, to hedge the following foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities:

•Foreign currency-denominated assets and liabilities


•	Forecasted purchases and sales in foreign currency

At June 30, 2019 and December 31, 2018, we had outstanding forward exchange and purchased option contracts with gross notional values of $1,272 and $1,103 respectively, with terms of less than 12 months. Approximately 82% of the contracts at June 30, 2019 mature within three months, 9% mature in three to six months and 9% in six to twelve months. The associated currency exposures being hedged at June 30, 2019 were materially consistent with our year-end currency exposures. There has not been any material change in our hedging strategy.

Foreign Currency Cash Flow Hedges

We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases, sales and expenses. The net asset fair value of these contracts were $5 and $8 as of June 30, 2019 and December 31, 2018, respectively.

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:



Designation of Derivatives	Balance Sheet Location	June 30, 2019			December 31, 2018
Derivatives Designated as Hedging Instruments
Foreign exchange contracts - forwards	Other current assets	$	6		$	7
	Accrued expenses and other current liabilities	(1		)	—
Foreign currency options	Other current assets	—			1
Interest rate swaps	Other long-term assets	2			—
	Other long-term liabilities	—			(3		)
	Net designated derivative asset	$	7		$	5

Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	2		$	7
	Accrued expenses and other current liabilities	(2		)	(1		)
	Net undesignated derivative asset	$	—		$	6

Summary of Derivatives	Total Derivative assets	$	10		$	15
	Total Derivative liabilities	(3		)	(4		)
	Net Derivative asset	$	7		$	11

Summary of Derivative Instruments Gains (Losses)

Derivative gains and (losses) affect the income statement based on whether such derivatives are designated as hedges of underlying exposures. The following is a summary of derivative gains (losses).

Designated Derivative Instruments Gains (Losses)

The following table provides a summary of gains (losses) on derivative instruments:



	Three Months Ended June 30,						Six Months Ended June 30,
Gain (Loss) on Derivative Instruments	2019			2018			2019			2018
Fair Value Hedges - Interest Rate Contracts
Derivative gain (loss) recognized in interest expense	$	3		$	(1	)	$	5		$	(6	)
Hedged item (loss) gain recognized in interest expense	(3		)	1			(5		)	6

Cash Flow Hedges - Foreign Exchange Forward Contracts and Options
Derivative gain (loss) recognized in OCI (effective portion)	$	3		$	(2	)	$	6		$	10
Derivative gain (loss) reclassified from AOCL to income - Cost of sales (effective portion)	2			—			3			(12		)

During the three and six months ended June 30, 2019 and 2018, no amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or (loss) were included in the assessment of hedge effectiveness. In addition, no amount was recorded for an underlying exposure that did not occur or was not expected to occur.

As of June 30, 2019, a net after-tax gain of $6 was recorded in Accumulated other comprehensive loss associated with our cash flow hedging activity. The entire balance is expected to be reclassified into Net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

Non-Designated Derivative Instruments Gains (Losses)

Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets and liabilities. They are not designated as hedges since there is a natural offset for the remeasurement of the underlying foreign currency-denominated asset or liability.

The following table provides a summary of gains (losses) on non-designated derivative instruments:



Derivatives NOT Designated as Hedging Instruments		Three Months Ended June 30,				Six Months Ended June 30,
Derivatives NOT Designated as Hedging Instruments	Location of Derivative Gain (Loss)	2019		2018		2019		2018
Foreign exchange contracts – forwards	Other expense – Currency (loss) gain, net	$	6	$	18	$	1	$	18

For the three and six months ended June 30, 2019 currency (losses) gains, net were $0 and $(2), respectively, and for the three and six months ended June 30, 2018 were $(1) and $1, respectively. Net currency gains and losses include the mark-to-market adjustments of the derivatives not designated as hedging instruments and the related cost of those derivatives as well as the remeasurement of foreign currency-denominated assets and liabilities and are included in Other expenses, net.

Fair Value of Financial Assets and Liabilities

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

The following table represents assets and liabilities measured at fair value on a recurring basis. The basis for the measurement at fair value in all cases is Level 2 – Significant Other Observable Inputs.



	June 30, 2019		December 31, 2018
Assets
Foreign exchange contracts - forwards	$	8	$	14
Foreign currency options	—		1
Interest rate swaps	2		—
Deferred compensation investments in mutual funds	18		16
Total	$	28	$	31
Liabilities
Foreign exchange contracts - forwards	$	3	$	1
Interest rate swaps	—		3
Deferred compensation plan liabilities	17		16
Total	$	20	$	20

We utilize the income approach to measure the fair value for our derivative assets and liabilities. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices, and therefore are classified as Level 2.

Fair value for our deferred compensation plan investments in mutual funds is based on quoted market prices for those funds. Fair value for deferred compensation plan liabilities is based on the fair value of investments corresponding to employees’ investment selections.

Summary of Other Financial Assets and Liabilities

The estimated fair values of our other financial assets and liabilities were as follows:



	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	712	$	712	$	1,084	$	1,084
Accounts receivable, net	1,256		1,256		1,276		1,276
Short-term debt and current portion of long-term debt	866		870		961		966
Long-term debt	3,962		3,995		4,269		3,922

The fair value amounts for Cash and cash equivalents and Accounts receivable, net, approximate carrying amounts due to the short maturities of these instruments. The fair value of Short-term debt, including the current portion of long-term debt, and Long-term debt was estimated based on the current rates offered to us for debt of similar maturities (Level 2). The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at such date.

Stockholders' Equity Note [Abstract]

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Employee Benefit Plans

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Employee Benefit Plans

The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows:



	Three Months Ended June 30,
	Three Months Ended June 30,
	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Retiree Health
Components of Net Periodic Benefit Costs:	2019			2018			2019			2018			2019			2018
Service cost	$	1		$	—		$	5		$	7		$	1		$	1
Interest cost	28			34			38			38			4			7
Expected return on plan assets	(25		)	(36		)	(58		)	(62		)	—			—
Recognized net actuarial loss (gain)	6			6			12			15			(1		)	—
Amortization of prior service credit	(1		)	(1		)	(1		)	(1		)	(19		)	(1		)
Recognized settlement loss	27			26			—			—			—			—
Defined benefit plans	36			29			(4		)	(3		)	(15		)	7
Defined contribution plans⁽¹⁾	5			10			6			7			n/a			n/a
Net Periodic Benefit Cost (Credit)	41			39			2			4			(15		)	7

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):
Net actuarial loss⁽²⁾	21			12			—			—			—			10
Amortization of net actuarial (loss) benefit	(33		)	(32		)	(12		)	(15		)	1			—
Amortization of prior service credit	1			1			1			1			19			1
Total Recognized in Other Comprehensive Income (Loss)⁽³⁾	(11		)	(19		)	(11		)	(14		)	20			11
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)	$	30		$	20		$	(9	)	$	(10	)	$	5		$	18

	Six Months Ended June 30,
	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Retiree Health
Components of Net Periodic Benefit Costs:	2019			2018			2019			2018			2019			2018
Service cost	$	1		$	1		$	12		$	13		$	1		$	2
Interest cost	58			67			77			77			8			13
Expected return on plan assets	(51		)	(70		)	(118		)	(125		)	—			—
Recognized net actuarial loss (gain)	11			12			22			30			(2		)	—
Amortization of prior service credit	(1		)	(1		)	(1		)	(2		)	(38		)	(2		)
Recognized settlement loss	58			51			—			—			—			—
Defined benefit plans	76			60			(8		)	(7		)	(31		)	13
Defined contribution plans⁽¹⁾	13			19			12			14			n/a			n/a
Net Periodic Benefit Cost (Credit)	89			79			4			7			(31		)	13

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):
Net actuarial loss (gain)⁽²⁾	36			(46		)	—			—			—			10
Amortization of net actuarial loss	(69		)	(63		)	(22		)	(30		)	2			—
Amortization of prior service credit	1			1			1			2			38			2
Total Recognized in Other Comprehensive Income (Loss)⁽³⁾	(32		)	(108		)	(21		)	(28		)	40			12
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)	$	57		$	(29	)	$	(17	)	$	(21	)	$	9		$	25

__________________________


(1)	Prior year amounts have been revised to reflect additional cost for previously excluded plans.


(2)	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.


(3)	Amounts represent the pre-tax effect included within Other Comprehensive Income. Refer to Note 19 - Other Comprehensive Income (Loss) for related tax effects and the after-tax amounts.

Contributions

The following table summarizes cash contributions to our defined benefit pension plans and retiree health benefit plans.



	Six Months Ended June 30,				Year Ended December 31,
	2019		2018		Estimated 2019		2018
U.S. plans	$	13	$	14	$	25	$	27
Non-U.S. plans	57		61		110		117
Total Pension	$	70	$	75	$	135	$	144

Retiree Health	$	16	$	29	$	35	$	57

There are no mandatory contributions required in 2019 for our U.S. tax-qualified defined benefit plans to meet the minimum funding requirements.

Shareholders' Equity

6 Months Ended

Jun. 30, 2019

Shareholders' Equity

Shareholders’ Equity

(shares in thousands)

For information related to the Reorganization of Xerox and Xerox Holdings, refer to Note 1 - Basis of Presentation - Corporate Reorganization. The shareholders' equity information presented below reflects the activity of Xerox only.



	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL⁽¹⁾			Xerox Shareholders’ Equity			Non-controlling Interests			Total Equity
Balance at March 31, 2019	$	230		$	3,282		$	(103	)	$	5,270		$	(3,652	)	$	5,027		$	36		$	5,063
Comprehensive income, net	—			—			—			181			5			186			3			189
Cash dividends declared - common⁽³⁾	—			—			—			(57		)	—			(57		)	—			(57		)
Cash dividends declared - preferred⁽⁴⁾	—			—			—			(3		)	—			(3		)	—			(3		)
Stock option and incentive plans, net	—			6			—			—			—			6			—			6
Payments to acquire treasury stock, including fees	—			—			(197		)	—			—			(197		)	—			(197		)
Cancellation of treasury stock	(5		)	(164		)	169			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(9		)	(9		)
Balance at June 30, 2019	$	225		$	3,124		$	(131	)	$	5,391		$	(3,647	)	$	4,962		$	30		$	4,992



	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings			AOCL⁽¹⁾			Xerox Shareholders’ Equity			Non- controlling Interests		Total Equity
Balance at March 31, 2018	$	255	$	3,908	$	—	$	4,927		$	(3,537	)	$	5,553		$	29	$	5,582
Cumulative effect of change in accounting principle	—		—		—		3			—			3			—		3
Comprehensive income (loss), net	—		—		—		112			(235		)	(123		)	2		(121		)
Cash dividends declared - common⁽³⁾	—		—		—		(65		)	—			(65		)	—		(65		)
Cash dividends declared - preferred⁽⁴⁾	—		—		—		(3		)	—			(3		)	—		(3		)
Stock option and incentive plans, net	—		12		—		—			—			12			—		12
Balance at June 30, 2018	$	255	$	3,920	$	—	$	4,974		$	(3,772	)	$	5,377		$	31	$	5,408



	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL⁽¹⁾			Xerox Shareholders’ Equity			Non-controlling Interests			Total Equity
Balance at December 31, 2018	$	232		$	3,321		$	(55	)	$	5,072		$	(3,565	)	$	5,005		$	34		$	5,039
Cumulative effect of change in accounting principle⁽²⁾	—			—			—			127			(127		)	—			—			—
Comprehensive income, net	—			—			—			314			45			359			6			365
Cash dividends declared - common⁽³⁾	—			—			—			(115		)	—			(115		)	—			(115		)
Cash dividends declared - preferred⁽⁴⁾	—			—			—			(7		)	—			(7		)	—			(7		)
Stock option and incentive plans, net	—			20			—			—			—			20			—			20
Payments to acquire treasury stock, including fees	—			—			(300		)	—			—			(300		)	—			(300		)
Cancellation of treasury stock	(7		)	(217		)	224			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(10		)	(10		)
Balance at June 30, 2019	$	225		$	3,124		$	(131	)	$	5,391		$	(3,647	)	$	4,962		$	30		$	4,992



	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings			AOCL⁽¹⁾			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2017	$	255	$	3,893	$	—	$	4,856		$	(3,748	)	$	5,256		$	37		$	5,293
Cumulative effect of change in accounting principles	—		—		—		120			—			120			—			120
Comprehensive income (loss), net	—		—		—		135			(24		)	111			5			116
Cash dividends declared - common⁽³⁾	—		—		—		(130		)	—			(130		)	—			(130		)
Cash dividends declared - preferred⁽⁴⁾	—		—		—		(7		)	—			(7		)	—			(7		)
Stock option and incentive plans, net	—		27		—		—			—			27			—			27
Distributions to noncontrolling interests	—		—		—		—			—			—			(11		)	(11		)
Balance at June 30, 2018	$	255	$	3,920	$	—	$	4,974		$	(3,772	)	$	5,377		$	31		$	5,408

_____________________________


(1)	Refer to Note 19 - Other Comprehensive Income (Loss) for the components of AOCL.


(2)	Refer to Note 2 - Recent Accounting Pronouncements - Income Taxes, for additional information related to the adoption of ASU 2018-02.


(3)	Cash dividends declared on common stock for the three and six months ended June 30, 2019 and 2018 were $0.25 per share and $0.50 per share, respectively.


(4)	Cash dividends declared on preferred stock for the three and six months ended June 30, 2019 and 2018 were $20.00 per share and $40.00 per share, respectively.

Treasury Stock

The following is a summary of the purchases of common stock during 2019:



	Shares		Amount
Balance at December 31, 2018	2,067		$	55
Purchases⁽¹⁾	9,246		300
Cancellations	(7,348	)	(224		)
Balance at June 30, 2019	3,965		$	131

_____________________________

(1)

Includes associated fees.

Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

(shares in thousands)

We have a long-term incentive plan whereby eligible employees may be granted restricted stock units (RSUs), performance shares (PSs) and stock options (SOs). We grant stock-based compensation awards in order to continue to attract and retain qualified employees and to better align employees' interests with those of our shareholders. Each of these awards is subject to settlement with newly issued shares of our common stock.

Stock-based compensation expense was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Stock-based compensation expense, pre-tax	$	15	$	13	$	30	$	29
Income tax benefit recognized in earnings	3		3		7		7

The board of directors (the "Board") recently approved a change in the timing of our annual grant of awards from April to January to fully align the grant date with the underlying performance period related to PSs. The following is a summary of the program design and performance metrics effective for our January 2019 grant and grants thereafter, as approved by the Board. Stock options were not awarded under the 2019 grant.

Restricted Stock Units

Compensation expense for RSUs is based upon the grant date market price and is recognized on a straight-line basis over the vesting period, based on management's estimate of the number of shares expected to vest. RSUs vest on a graded schedule as follows: 25% after one year of service, 25% after two years of service, and 50% after three years of service from the date of grant. Shares awarded to employees who are retirement-eligible at the date of grant, become retirement-eligible during the vesting period, or are terminated not-for-cause (e.g. as part of a restructuring initiative), vest based on service provided from the date of grant to the date of separation. Shares granted through June 30, 2019 under this program were 1,265, with a corresponding weighted average grant date fair value of $22.49 per share.

Performance Shares

In connection with the January 2019 grant, the Board approved a change to the PSs performance goals replacing the Total Shareholder Return (TSR) metric with an Absolute Share Price metric focusing on stock price appreciation. The Board retained the Revenue and Free Cash Flow metrics as performance goals as well as the three-year performance period for all measures. The performance metrics are weighted as follows: 25% Revenue, 25% Free Cash Flow and 50% Absolute Share Price. Each PS grant is one-half performance based (Revenue and Free Cash Flow) and one-half market-based (Absolute Share Price). The performance goals are independent of each other and depending on the achievement of these metrics, a recipient of a PS award is entitled to receive a number of shares equal to a percentage, ranging from 0% to 200% of the PS award granted. PSs retain the three-year cliff vesting from the date of grant.

Performance-Based Component

PSs vest contingent upon meeting pre-determined cumulative performance metrics. The fair value of our PSs is based upon the grant-date market price. Compensation expense is recognized on a straight-line basis over the vesting period, based on management's estimate of the number of shares expected to vest. If the cumulative three-year actual results exceed the stated targets, all plan participants have the potential to earn additional shares of common stock up to a maximum overachievement of 100% of the original grant. If the stated targets are not met, any recognized compensation cost would be reversed. Shares granted through June 30, 2019 under this program were 708, with a corresponding weighted average grant date fair value of $22.49 per share.

Market-Based Component

The Absolute Share Price metric is based on Xerox's average closing price for the last 20 trading days of the performance period, inclusive of dividends during the three-year performance period. Payout for this portion of the PS will be determined based on total return targets approved by the compensation committee of the Board. Since this portion of the PS award represents a market condition, a Monte Carlo simulation was used to determine the grant-date fair value.

A summary of the key valuation input assumptions used in the Monte Carlo simulation relative to PS awards granted were as follows:



	Program to Date June 30, 2019
Term	3 years
Risk-free interest rate⁽¹⁾	2.51		%
Dividend yield⁽²⁾	3.97		%
Xerox’s blended volatility⁽³⁾	32.95		%
Weighted average fair value⁽⁴⁾	$	16.16

____________


(1)	The risk-free interest rate was based on the zero-coupon U.S. Treasury yield curve on the valuation date, with a maturity matched to the performance period.


(2)	The dividend yield was calculated as the expected quarterly dividend divided by Xerox’s three-month average stock price as of the valuation date, annualized and continuously compounded.


(3)	Xerox’s volatility is calculated using a blended volatility approach, with 50% weight on Xerox's historical volatility calculated from daily stock returns over a three-year look-back term from the valuation date, and 50% weight on Xerox's implied volatility.


(4)	The weighted average of fair values used to record compensation expense as determined by the Monte Carlo simulation.

The Absolute Share Price is compared against total return targets to determine the payout as follows:



Total Return Targets⁽¹⁾	Payout Percentages
$40.00 and above	200	%
$35.00	100	%
$30.00	50	%
Below $30.00	0	%

____________


(1)	For performance between the levels described above, the degree of vesting is interpolated on a linear basis.

Compensation expense is recognized on a straight-line basis over the vesting period based on the fair value determined by the Monte Carlo simulation and, except in cases of employee forfeiture, cannot be reversed regardless of performance. Shares granted through June 30, 2019 under this program were 708.

Note: Management’s estimate of the number of shares expected to vest at the time of grant reflects an estimate for forfeitures based on our historical forfeiture rate to date. Should actual forfeitures differ from management’s estimate, the activity will be reflected in a subsequent period.

Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss) is comprised of the following:



	Three Months Ended June 30,												Six Months Ended June 30,
	2019						2018						2019						2018
	Pre-tax			Net of Tax			Pre-tax			Net of Tax			Pre-tax			Net of Tax			Pre-tax			Net of Tax
Translation adjustments (losses) gains	$	(5	)	$	(4	)	$	(335	)	$	(322	)	$	32		$	33		$	(151	)	$	(146	)
Unrealized gains (losses)
Changes in fair value of cash flow hedges gains (losses)	3			1			(2		)	(1		)	6			4			10			7
Changes in cash flow hedges reclassed to earnings⁽¹⁾	(2		)	(1		)	—			—			(3		)	(2		)	12			10
Other losses	—			—			(2		)	(2		)	—			—			(3		)	(3		)
Net Unrealized gains (losses)	1			—			(4		)	(3		)	3			2			19			14

Defined benefit plans (losses) gains
Net actuarial/prior service (losses) gains	(21		)	(15		)	(22		)	(16		)	(36		)	(27		)	36			27
Prior service amortization⁽²⁾	(21		)	(16		)	(3		)	(3		)	(40		)	(30		)	(5		)	(4		)
Actuarial loss amortization/settlement⁽²⁾	44			33			47			35			89			67			93			70
Fuji Xerox changes in defined benefit plans, net⁽³⁾	(7		)	(7		)	(3		)	(3		)	2			2			(24		)	(24		)
Other gains (losses)⁽⁴⁾	14			14			77			77			(2		)	(2		)	39			39
Changes in defined benefit plans gains	9			9			96			90			13			10			139			108

Other Comprehensive Income (Loss) Attributable to Xerox	$	5		$	5		$	(243	)	$	(235	)	$	48		$	45		$	7		$	(24	)

_____________________________


(1)	Reclassified to Cost of sales - refer to Note 14 - Financial Instruments for additional information regarding our cash flow hedges.


(2)	Reclassified to Total Net Periodic Benefit Cost - refer to Note 16 - 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.

Accumulated Other Comprehensive Loss (AOCL)

AOCL is comprised of the following:



	June 30, 2019			December 31, 2018
Cumulative translation adjustments	$	(1,990	)	$	(2,023	)
Other unrealized gains, net	6			4
Benefit plans net actuarial losses and prior service credits⁽¹⁾⁽²⁾	(1,663		)	(1,546		)
Total Accumulated other comprehensive loss attributable to Xerox	$	(3,647	)	$	(3,565	)

_____________________________


(1)	Includes our share of Fuji Xerox.

(2)

The change from December 31, 2018 includes $(127) related to the adoption of ASU 2018-02 and the reclassification of stranded tax effects resulting from the Tax Act - refer to Note 2 - Recent Accounting Pronouncements - Income Taxes for additional information.

Earnings per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings per Share

(shares in thousands)

The following table sets forth the computation of basic and diluted earnings per share of common stock:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Basic Earnings per Share
Net Income Attributable to Xerox	$	181		$	112		$	314		$	135
Accrued dividends on preferred stock	(3		)	(3		)	(7		)	(7		)
Adjusted Net income available to common shareholders	$	178		$	109		$	307		$	128
Weighted average common shares outstanding	223,606			254,895			226,040			254,791

Basic Earnings per Share	$	0.79		$	0.42		$	1.36		$	0.50

Diluted Earnings per Share
Net Income Attributable to Xerox	$	181		$	112		$	314		$	135
Accrued dividends on preferred stock	—			(3		)	—			(7		)
Adjusted Net income available to common shareholders	$	181		$	109		$	314		$	128
Weighted average common shares outstanding	223,606			254,895			226,040			254,791
Common shares issuable with respect to:
Stock options	65			—			34			—
Restricted stock and performance shares	4,866			3,052			4,637			2,931
Convertible preferred stock	6,742			—			6,742			—
Adjusted Weighted average common shares outstanding	235,279			257,947			237,453			257,722

Diluted Earnings per Share	$	0.77		$	0.42		$	1.32		$	0.50

The following securities were not included in the computation of diluted earnings per share as they were either contingently issuable shares or shares that if included would have been anti-dilutive:
Stock options	848			1,097			879			1,097
Restricted stock and performance shares	2,357			4,329			2,587			4,450
Convertible preferred stock	—			6,742			—			6,742
Total Anti-Dilutive Securities	3,205			12,168			3,466			12,289

Dividends per Common Share	$	0.25		$	0.25		$	0.50		$	0.50

Contingencies and Litigation

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Litigation

Legal Matters

We are involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; governmental entity contracting; servicing and procurement law; intellectual property law; environmental law; employment law; the Employee Retirement Income Security Act (ERISA); and other laws and regulations. We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing our litigation and regulatory matters using available information. We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs.

Brazil Contingencies

Our Brazilian operations have received or been the subject of numerous governmental assessments related to indirect and other taxes. The tax matters principally relate to claims for taxes on the internal transfer of inventory, municipal service taxes on rentals and gross revenue taxes. We are disputing these tax matters and intend to vigorously defend our positions. Based on the opinion of legal counsel and current reserves for those matters deemed probable of loss, we do not believe that the ultimate resolution of these matters will materially impact our results of operations, financial position or cash flows. Below is a summary of our Brazilian tax contingencies:



	June 30, 2019		December 31, 2018
Tax contingency - unreserved	$	465	$	500
Escrow cash deposits	59		58
Surety bonds	107		106
Letters of credit	93		104
Liens on Brazilian assets	—		—

The decrease in the unreserved portion of the tax contingency, inclusive of any related interest, was primarily related to closed cases, partially offset by currency and interest. With respect to the unreserved tax contingency, the majority has been assessed by management as being remote as to the likelihood of ultimately resulting in a loss to the Company. In connection with the above proceedings, customary local regulations may require us to make escrow cash deposits or post other security of up to half of the total amount in dispute, as well as, additional surety bonds and letters of credit, which include associated indexation. Generally, any escrowed amounts would be refundable and any liens on assets would be removed to the extent the matters are resolved in our favor. We are also involved in certain disputes with contract and former employees. Exposures related to labor matters are not material to the financial statements as of June 30, 2019 and December 31, 2018. We routinely assess all these matters as to the probability of ultimately incurring a liability against our Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable.

Litigation Against the Company

Pending Litigation Relating to the Fuji Transaction:


1.	Deason v. Fujifilm Holdings Corp., et al.; Deason v. Xerox Corp., et al.; In re Xerox Corporation Consolidated Shareholder Litigation:

In February 2018, five complaints (the "Fuji Transaction Shareholder Lawsuits"), including four putative class actions (which have been consolidated), were filed by Xerox shareholders in the Supreme Court of the State of New York, County of New York (the "Court") in connection with the proposed transaction to combine Xerox and Fuji Xerox (the “Fuji Transaction”). All of the complaints name as defendants Xerox, its directors, and FUJIFILM Holdings Corporation (“Fujifilm”). The complaint in one of the actions also names as a defendant Ursula M. Burns, the former Chief Executive Officer of Xerox. The plaintiffs allege, among other things, that Xerox's directors breached their fiduciary duties in negotiating, approving, and purportedly making false and misleading disclosures about the Fuji Transaction, and that Fujifilm aided and abetted those breaches. The complaint in one of the actions further alleges that Xerox and the director defendants engaged in common law fraud by purportedly failing to disclose information about the joint venture agreements between Xerox and Fujifilm. The Fuji Transaction Shareholder Lawsuits seek injunctive relief preventing

the previously proposed transactions, and/or additional disclosures by Xerox’s directors, unspecified damages from Xerox’s directors, costs and attorneys’ fees, as well as other relief.

One of the Fuji Transaction Shareholder Lawsuits was brought by Darwin Deason, a Xerox shareholder ("Deason I"). Another complaint was filed by Mr. Deason against Xerox and its directors in the same Court on March 2, 2018 ("Deason II") alleging that defendants breached their fiduciary duties by refusing Mr. Deason’s request for a waiver of the deadline for nomination of a new slate of Xerox directors. In Deason II, Mr. Deason sought to enjoin Xerox and its directors from enforcing Xerox’s advance notice by-laws, thereby allowing Mr. Deason to proceed with the nominations, as well as costs, fees, and other relief.

On April 27, 2018, the Court issued decisions and orders granting plaintiffs’ preliminary injunction motions, which (i) enjoined Xerox from “taking any further action to consummate the change of control transaction between Xerox and Fuji that was announced on January 31, 2018 pending a final determination of the claims asserted in the underlying action;” (ii) enjoined Xerox from enforcing its advance notice bylaw provision requiring shareholders to nominate directors for election at the 2018 annual shareholder meeting by December 11, 2017; and (iii) required Xerox to waive such advance notice bylaw provision to permit the noticing of a slate of director nominees for election at the 2018 annual shareholder meeting, and denying defendants’ motions to dismiss.

On May 1, 2018, Xerox entered into a Director Appointment, Nomination and Settlement Agreement (the “Initial Settlement Agreement”) with Mr. Deason and Carl C. Icahn and certain of his affiliates who were also Xerox shareholders (the "Icahn Group"), among others, that would have resolved Deason I, Deason II and the pending proxy contest in connection with Xerox’s 2018 Annual Meeting of Shareholders. The Initial Settlement Agreement expired by its terms on May 3, 2018 without becoming effective.

On May 7, 2018, defendants filed with the Supreme Court of the State of New York, Appellate Division, First Judicial Department, notices of appeal of, and motions to stay pending appeal, the lower Court’s decision and order. Defendants also moved the appellate court for interim relief ordering that the appeal be heard on an expedited basis. At a hearing before the appellate court on May 7, 2018, the appellate court ruled that the appeals would be heard on an expedited basis and granted a partial interim stay allowing Xerox and Fujifilm to take steps to seek regulatory approvals related to the Fuji Transaction pending a ruling from the appellate court on defendants’ motions to stay pending appeal.

On May 13, 2018, a second Director Appointment, Nomination and Settlement Agreement (the "Final Settlement Agreement") with respect to Deason I, Deason II and the pending proxy contest in connection with Xerox's 2018 Annual Meeting of Shareholders that was initiated by the Icahn Group was signed on behalf of Mr. Deason, the Icahn Group and all defendants except Fujifilm, and a memorandum of understanding regarding settlement of the putative class case was signed by all defendants except Fujifilm. Pursuant to the settlements, the settling defendants withdrew their appeal and motion to stay in Deason I and Deason II. The settling defendants also withdrew their motion to stay in the putative class case. The Court entered a stipulation of discontinuance as to the settling parties in Deason II on May 14, 2018, and agreed on June 22, 2018 to do the same in Deason I.

On June 14, 2018, Fujifilm filed answers in Deason I and the putative class case, along with cross-claims against the members of the Xerox Board (as constituted before May 13, 2018) and a third-party complaint against Xerox director Jonathan Christodoro, seeking contribution for any potential award against Fujifilm for aiding and abetting purported breaches of fiduciary duties.

On June 19, 2018, the putative class plaintiffs filed a motion for preliminary approval of a stipulation of settlement that would resolve the claims asserted by the plaintiffs in the putative class case against all defendants, other than Fujifilm. Carmen Ribbe, the plaintiff in the below derivative action, and Fujifilm filed oppositions to the motion on July 10, 2018.

On June 22, 2018, the Court entered an order denying a joint motion by the putative class plaintiffs and the settling defendants to dissolve the injunction in the putative class case as against the settling defendants, and entered an order denying Fujifilm’s motion to dissolve the injunctions in the putative class case and Deason I in their entirety.

On July 16, 2018, the Court held a hearing concerning the putative class plaintiffs’ motion for preliminary approval of the settlement in the putative class case. The Court indicated that it was not inclined to consider motions for approval of the settlement prior to considering whether the putative class should be certified.

On August 2, 2018, the Appellate Division entered orders recognizing the Xerox defendants’ withdrawal of their appeal in the Deason cases and denying all appellants’ motions to stay pending determination of appeals in the Deason and putative class cases.

On August 2, 2018, the Appellate Division entered orders (i) at their request, deeming withdrawn the Xerox defendants’ appeal and motion to stay in the Deason cases; (ii) upon their request, deeming withdrawn the Xerox defendants’

motion to stay, pending determination of appeal, the putative class case; and (iii) denying Fujifilm’s motion to stay pending determination of its appeals in the Deason and putative case cases.

On September 21, 2018, putative class plaintiffs filed a motion for certification of a settlement class and a motion to transmit notice of the proposed settlement to the proposed class. On October 17, 2018, derivative plaintiff Carmen Ribbe and Fujifilm filed oppositions to the putative class plaintiffs’ motion to transmit notice to the proposed class. The class has not yet been certified, and preliminary approval has not been granted.

The Appellate Division heard oral argument on September 25, 2018 on Fujifilm’s appeal of the Court’s decision. On October 16, 2018, the Appellate Division entered a decision and order reversing the Court’s rulings, ordering that the claims brought against Fujifilm in the cases by Mr. Deason and the purported class be dismissed, and further ordering that the preliminary injunction of the proposed Fuji Transaction be dissolved (the “Appellate Decision and Order”).

On November 15, 2018, the putative class plaintiffs filed with the Appellate Division a motion seeking the opportunity to reargue Fujifilm’s appeal or, in the alternative, for leave to appeal the Appellate Decision and Order to the New York State Court of Appeals.

On December 6, 2018, pursuant to the Appellate Decision and Order, the Court entered a judgment dismissing the complaints against Fujifilm in Deason I and the putative class case. The Court further issued orders denying the putative class plaintiffs’ motion for class certification, without prejudice to renewing the motion after the outcome of any appeals of the Appellate Decision and Order.

On January 8, 2019, the Court entered an order staying all further proceedings in Deason I and the putative class case until thirty days after exhaustion of appeals, including any appeals to the New York State Court of Appeals, of the Appellate Decision and Order. On January 9, 2019, the Court entered an order denying the putative class plaintiffs’ motion to transmit notice to the proposed class, without prejudice to renewal of their motion at a later time.

On October 31, 2018 and January 3, 2019, respectively, Xerox and the Xerox director defendants in the putative class case filed with the Appellate Division a request and motion seeking an extension, until after any decision regarding approval of settlement of the putative class action, of the deadline by which to perfect their appeal of the Court’s April 27, 2018 decision and order. On May 16, 2019, the Appellate Division entered an order granting the motion and extended the deadline until the October 2019 Term.

On February 21, 2019, the Appellate Division issued an order denying the putative class plaintiffs’ motion seeking to reargue Fujifilm’s appeal or, in the alternative, for leave to appeal the Appellate Decision and Order to the New York State Court of Appeals. No further notice of appeal was filed, and the Appellate Decision and Order became final and unappealable on March 26, 2019.

On May 3, 2019, putative class plaintiffs filed a renewed motion for approval of the form of a notice to putative class members. On May 6, 2019, putative class plaintiffs filed a renewed motion for class certification and notice of motion to approve class settlement and proposed final approval order. On May 24, 2019, the Court entered an order approving the form notice and proposed manner of its dissemination.

On June 6, 2019, the Court entered an order pursuant to which plaintiffs submitted their motion to approve attorneys’ fees and expenses on July 19, 2019; requiring filing of any objections to or opt-outs from the proposed putative class settlement by August 9, 2019; and setting September 6, 2019 for its hearing on putative class plaintiffs’ motion for class certification and settlement approval.

Xerox will vigorously defend these lawsuits to the extent that the proceedings continue as to Xerox. At this time, however, it is premature to make any conclusion regarding the probability of incurring material losses in these lawsuits. Should developments cause a change in our determination as to an unfavorable outcome, or result in a final adverse judgment or settlement, there could be a material adverse effect on our results of operations, cash flows and financial position in the period in which such change in determination, judgment, or settlement occurs.


2.	Ribbe v. Jacobson, et al.:

On April 11, 2019, Carmen Ribbe filed a putative derivative and class action stockholder complaint in the Supreme Court of the State of New York for New York County, naming as defendants Xerox, current Board members Gregory Q. Brown, Joseph J. Echevarria, Cheryl Gordon Krongard, Sara Martinez Tucker, Keith Cozza, Giovanni G. Visentin, Jonathan Christodoro, Nicholas Graziano, and A. Scott Letier, and former Board members Jeffrey Jacobson, William Curt Hunter, Robert J. Keegan, Charles Prince, Ann N. Reese, and Stephen H. Rusckowski. Plaintiff previously filed a putative shareholder derivative lawsuit on May 24, 2018 against certain of these defendants, as well as others, in the same court; that lawsuit was dismissed without prejudice on December 6, 2018. The new complaint includes putative derivative claims on behalf of Xerox for breach of fiduciary duty against the members of the Xerox Board who

approved Xerox’s entry into agreements to settle the Deason and In re Xerox Corporation Consolidated Shareholder Litigation (“XCCSL”) actions (described above). Plaintiff alleges that the settlements ceded control of the Board and the Company to Darwin Deason and Carl C. Icahn without a vote by, or compensation to, other Xerox stockholders; improperly provided certain benefits and releases to the resigning and continuing directors; and subjected Xerox to potential breach of contract damages in an action by Fuji relating to Xerox’s termination of the proposed Fuji Transaction. Plaintiff also alleges that the current Board members breached their fiduciary duties by allegedly rejecting plaintiff’s January 14, 2019 shareholder demand on the Board to remedy harms arising from entry into the Deason and XCCSL settlements. The new complaint further includes direct claims for breach of fiduciary duty on behalf of a putative class of current Xerox stockholders other than Mr. Deason, Mr. Icahn, and their affiliated entities (the “Ribbe Class”) against the defendants for causing Xerox to enter into the Deason and XCCSL settlements, which plaintiff alleges perpetuated control of Xerox by Mr. Icahn and Mr. Deason and denied the voting franchise of Xerox shareholders. Among other things, plaintiff seeks damages in an unspecified amount for the alleged fiduciary breaches in favor of Xerox against defendants jointly and severally; rescission or reformation of the Deason and XCCSL settlements; restitution of funds paid to the resigning directors under the Deason settlement; an injunction against defendants’ engaging in the alleged wrongful practices and equitable relief affording the putative Ribbe Class the ability to determine the composition of the Board; costs and attorneys’ fees; and other further relief as the Court may deem proper.

Defendants accepted service of the complaint as of May 16, 2019. On June 4, 2019, the Court entered an order setting a briefing schedule for defendants’ motions to dismiss the complaint. On July 12, 2019, plaintiff filed a motion to preclude defendants from referencing in their motions to dismiss the formation of, or work by, the committee of the Board established to investigate plaintiff’s shareholder demand. On July 18, 2019, the Court denied plaintiff’s motion and adjourned sine die the deadline by which defendants must file any motions to dismiss the complaint. Xerox will vigorously defend against this matter. At this time, it is premature to make any conclusion regarding the probability of incurring material losses in this litigation. Should developments cause a change in our determination as to an unfavorable outcome, or result in a final adverse judgment or settlement, there could be a material adverse effect on our results of operations, cash flows and financial position in the period in which such change in determination, judgment, or settlement occurs.


3.	Fujifilm Holdings Corp. v. Xerox Corporation:

On June 18, 2018, Fujifilm filed a complaint against Xerox in the U.S. District Court for the Southern District of New York, relating to the Fuji Transaction agreements. The complaint alleges that Xerox: (1) willfully breached the Fuji Transaction agreements by purporting to terminate them to appease Messrs. Icahn and Deason and using as a pretext issues with Fujifilm’s untimely submitted financials, and by settling Deason I and Deason II without notice to or consent by Fujifilm; (2) willfully breached the implied covenant of good faith and fair dealing by failing to support and use best efforts to conclude the Fuji Transaction, thus depriving Fujifilm of the benefit of its bargain; and (3) effected a change in Xerox’s recommendation regarding the Fuji Transaction, entitling Fujifilm to terminate the Fuji Transaction agreements and to receive from Xerox a $183 termination fee. Fujifilm seeks a judgment for damages to be determined at trial in an amount in excess of $1.0 billion plus punitive damages; a declaration regarding the alleged change in recommendation such that Fujifilm may terminate the transaction and Xerox must pay the $183 termination fee and other remedies; costs and attorneys’ fees; and other relief the court may deem appropriate.

At a conference on September 24, 2018, the Court stayed all discovery pending resolution of Xerox’s motion to dismiss. Xerox filed its motion to dismiss on October 1, 2018. On February 22, 2019, following oral argument, the Court denied the motion to dismiss.

On March 12, 2019, the Court entered a scheduling order setting various case deadlines. Xerox filed its answer denying the claims on March 15, 2019. Discovery has commenced and is ongoing. On June 24, 2019, the Court entered a stipulated revised scheduling order extending certain case deadlines.

Xerox believes the lawsuit is meritless and will vigorously defend it. At this time, however, it is premature to make any conclusion regarding the probability of incurring material losses in this litigation. Should developments cause a change in our determination as to an unfavorable outcome, or result in a final adverse judgment or settlement, there could be a material adverse effect on our results of operations, cash flows and financial position in the period in which such change in determination, judgment, or settlement occurs.

All Other Pending Litigation:


1.	State of Texas v. Xerox Corporation, Xerox State Healthcare, LLC, and ACS State Healthcare, LLC:

On May 9, 2014, the State of Texas, via the Texas Office of Attorney General (the “State”), filed a lawsuit in the 53rd Judicial District Court of Travis County, Texas. The lawsuit alleged that Xerox Corporation, Xerox State Healthcare, LLC and ACS State Healthcare (collectively “the Defendants”) violated the Texas Medicaid Fraud Prevention Act in

the administration of ACS State Healthcare’s contract with the Texas Department of Health and Human Services (“HHSC”). Xerox Corporation provided a guaranty of contractual performance with respect to the ACS State Healthcare contract. The State alleged that the Defendants made false representations of material facts regarding the processes, procedures, implementation and results regarding the prior authorization of orthodontic claims. The State sought recovery of actual damages, two times the amount of any overpayments made as a result of alleged unlawful acts, civil penalties, pre- and post-judgment interest and all costs and attorneys’ fees. The State referenced the amount in controversy as exceeding hundreds of millions of dollars. The Defendants filed their Answer in June 2014 denying all allegations. In August 2017, the State of Texas filed a Second Amended Petition, which made substantially similar allegations and sought similar remedies as the original lawsuit. On October 23, 2017, Xerox Corporation filed a Motion for Summary Judgment seeking judgment in Xerox's favor on all claims against it. On July 2, 2018, the Court denied the State of Texas’ motion for a determination of the adequacy of its pleadings as to Xerox or in the alternative, seeking leave to amend its petition to bring additional claims against Xerox.

On February 15, 2019, The State filed, without opposition, its Third Amended Petition against Conduent Business Services, LLC (f/k/a Xerox Business Services, LLC), Conduent State Healthcare, LLC (f/k/a Xerox State Healthcare, LLC, f/k/a ACS State Healthcare, LLC) and Conduent Incorporated (collectively, the “Conduent Entities”) and Xerox Corporation to add claims for breach of contract and negligence. On February 18, 2019, Xerox and the Conduent Entities entered into a Settlement Agreement and Release (“Agreement”) with the State and the HHSC to settle all claims arising from alleged failures by the defendants or Texas Medicaid & Healthcare Partnership to comply with obligations under two contracts between Conduent State Healthcare, LLC and the HHSC entered into in 2003 and 2010. Xerox is not required to make any payment under the Agreement. Pursuant to the terms of the Agreement, the Conduent Entities will pay the State $235.9 payable in installments through no later than July 31, 2021. Also pursuant to the Agreement, all proceedings in the lawsuit are suspended, as confirmed by an order issued by the Court on February 19, 2019, and the State and the HHSC will dismiss the lawsuit with prejudice and release all of the defendants from all of the State’s claims after the settlement amount has been paid in full. No defendant made any admission of liability or wrongdoing in entering into the Agreement.

At Conduent’s request, the parties executed an amendment to the Agreement providing for accelerated payment terms and for one or more Conduent letters of credit to facilitate earlier dismissal of the case.

This matter is a “Conduent Liability”, as defined in the Separation and Distribution Agreement dated as of December 31, 2016 between Xerox Corporation and Conduent Incorporated, for which Conduent is required to indemnify Xerox. Conduent is entitled to direct the defense of this matter.


2.	Oklahoma Firefighters Pension and Retirement System v. Xerox Corporation, Ursula M. Burns, Luca Maestri, Kathryn A. Mikells, Lynn R. Blodgett, Robert K. Zapfel, David H. Bywater and Mary Scanlon:

On October 21, 2016, the Oklahoma Firefighters Pension and Retirement System (“plaintiff”) filed a purported securities class action complaint against Xerox Corporation, Ursula Burns, Luca Maestri, Kathryn Mikells, Lynn Blodgett and Robert Zapfel (collectively, “defendants”) in the U.S. District Court for the Southern District of New York on behalf of the plaintiff and certain purchasers or acquirers of Xerox common stock. The complaint alleged that defendants made false and misleading statements, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5, relating to the operations and prospects of Xerox’s Health Enterprise business. Plaintiff sought, among other things, unspecified monetary damages and attorneys’ fees. Other, similar lawsuits may follow. On December 28, 2016, the Court entered a stipulated order setting out a schedule for amendment of the complaint and for defendants’ response to that complaint following the Court’s appointment of lead plaintiff under the Private Securities Litigation Reform Act. On February 28, 2017, the Court issued an opinion and order appointing the Arkansas Public Employees Retirement System ("APERS") as lead plaintiff. On May 1, 2017, APERS filed an amended complaint, alleging substantially similar claims and seeking substantially similar relief, but adding David Bywater and Mary Scanlon as defendants. On June 30, 2017, defendants moved to dismiss the amended complaint, and the motions were fully briefed on October 13, 2017. On March 20, 2018, the Court entered an opinion and order granting the motions, and on March 23, 2018, the Court entered a judgment of dismissal and closed the case. On April 20, 2018, plaintiffs filed a notice of appeal in the U.S. Court of Appeals for the Second Circuit, and the appeal was fully briefed as of November 28, 2018. The Second Circuit heard oral argument on May 31, 2019. On June 6, 2019, the Second Circuit entered a summary order affirming the district court’s judgment dismissing the complaint.

Guarantees

We have issued or provided approximately $314 of guarantees as of June 30, 2019 in the form of letters of credit or surety bonds issued to i) support certain insurance programs; ii) support our obligations related to the Brazil contingencies; and iii) support certain contracts, primarily with public sector customers, which require us to provide a surety bond as a guarantee of our performance of contractual obligations.

In general, we would only be liable for the amount of these guarantees in the event we defaulted in performing our obligations under each contract; the probability of which we believe is remote. We believe that our capacity in the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support.

Indemnifications

We have indemnified, subject to certain deductibles and limits, the purchasers of businesses or divested assets for the occurrence of specified events under certain of our divestiture agreements. Where appropriate, an obligation for such indemnifications is recorded as a liability. Since the obligated amounts of these types of indemnifications are often not explicitly stated and/or are contingent on the occurrence of future events, the overall maximum amount of the obligation under such indemnifications cannot be reasonably estimated. Other than obligations recorded as liabilities at the time of divestiture, we have not historically made significant payments for these indemnifications. Additionally, under certain of our acquisition agreements, we have provided for additional consideration to be paid to the sellers if established financial targets are achieved post-closing. We have recognized liabilities for these contingent obligations based on an estimate of the fair value of these contingencies at the time of acquisition. Contingent obligations related to indemnifications arising from our divestitures and contingent consideration provided for by our acquisitions are not expected to be material to our financial position, results of operations or cash flows.

Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Accounting Standard Updates to be Adopted and Accounting Standard Updates Adopted

Accounting Standard Updates to be Adopted:

Financial Instruments - Credit Losses

Intangibles - Internal-Use Software

Accounting Standard Updates Adopted in 2019:

Leases

Financial Instruments - Derivatives

effective for our fiscal year beginning January 1, 2019, and it did not have a material impact on our financial condition, results of operations or cash flows.

Income Taxes

Other Updates


•	Collaborative Arrangements: ASU 2018-18, (Topic 808) Clarifying the Interaction between Topic 808 and Topic 606. This update is effective for our fiscal year beginning January 1, 2020.


•	Compensation - Retirement Benefits - Defined Benefit Plans - General: ASU 2018-14, (Topic 715-20) Changes to the Disclosure Requirements for Defined Benefit Plans. This update is effective for our fiscal year beginning January 1, 2020.


•	Fair Value Measurement: ASU 2018-13, (Topic 820) Disclosure Framework. This update is effective for our fiscal year beginning January 1, 2020.

•

Lessee, Leases

Lessee Summary:

Operating Leases

Revenue Recognition, Leases

Lessor Summary:

The following represent updated disclosures to our Revenue Recognition policies as a result of the adoption of ASC Topic 842.

Basis of Presentation Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Change in Presentation

Prior year amounts were also revised as follows to conform to the 2019 presentation.



	Three Months Ended June 30, 2018
	As Reported		Change			As Revised
Sales	$	1,017	$	(90	)	$	927
Services, maintenance and rentals	1,425		90			1,515

Cost of sales	$	622	$	(29	)	$	593
Cost of services, maintenance and rentals	854		29			883



	Six Months Ended June 30, 2018
	As Reported		Change			As Revised
Sales	$	1,950	$	(178	)	$	1,772
Services, maintenance and rentals	2,856		178			3,034

Cost of sales	$	1,185	$	(60	)	$	1,125
Cost of services, maintenance and rentals	1,722		60			1,782

Adoption of New Leasing Standard - Xerox as a Lessee (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of components of lease expense

The components of lease expense are as follows:



	Three Months Ended			Six Months Ended
	June 30, 2019
Operating lease expense	$	33		$	66
Short-term lease expense	5			10
Variable lease expense⁽¹⁾	12			25
Sublease income	(1		)	(1		)
Total Lease expense	$	49		$	100

_____________

(1)

Variable lease expense is related to our leased real estate for offices and warehouses and primarily includes labor and operational costs as well as taxes and insurance.

Schedule of operating leases assets and liabilities

Operating leases ROU assets, net and operating lease liabilities were reported in the Condensed Consolidated Balance Sheets as follows:



	June 30, 2019
Other long-term assets	$	319

Accrued expenses and other current liabilities	$	92
Other long-term liabilities	254
Total Operating lease liabilities	$	346

Schedule of supplemental information related to operating leases

Supplemental information related to operating leases is as follows:



	Three Months Ended		Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	32	$	64
Right-of-use assets obtained in exchange for new lease liabilities ⁽¹⁾	$	14	$	23
Weighted-average remaining lease term			4 years
Weighted-average discount rate			5.63		%

_____________

(1)

Includes the impact of new leases as well as remeasurements and modifications to existing leases.

Schedule of maturities and additional information related to operating lease liabilities

Maturities and additional information related to operating lease liabilities are as follows:



	June 30, 2019
2019⁽¹⁾	$	61
2020	103
2021	80
2022	66
2023	49
Thereafter	36
Total Lease payments	395
Less: Imputed interest	49
Total Operating lease liabilities	$	346

_____________

(1)

Represents the future minimum operating lease payments expected to be made over the remaining balance of the year.

Schedule of future minimum rental payments for operating leases

Future minimum operating lease commitments that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2018 were as follows:



	December 31, 2018
2019	$	114
2020	88
2021	64
2022	50
2023	36
Thereafter	27
Total Operating lease commitments	$	379

Adoption of New Leasing Standard - Xerox as a Lessor (Tables)

6 Months Ended

Jun. 30, 2019

Components of lease income

The components of lease income are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Lease income - sales type	$	150	$	172	$	284	$	332
Interest income on lease receivables	61		68		124		139
Lease income - operating leases⁽¹⁾	100		109		204		222
Variable lease income	28		31		55		61
Total Lease income	$	339	$	380	$	667	$	754

_____________

(1)

Operating lease income for the six months ended June 30, 2019 and 2018 exclude service revenues of $30 and $28, respectively, which were reported in operating lease income for the three months ended March 31, 2019 and 2018

Components of lease income

The components of lease income are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Lease income - sales type	$	150	$	172	$	284	$	332
Interest income on lease receivables	61		68		124		139
Lease income - operating leases⁽¹⁾	100		109		204		222
Variable lease income	28		31		55		61
Total Lease income	$	339	$	380	$	667	$	754

_____________

(1)

Components of lease income

The components of lease income are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Lease income - sales type	$	150	$	172	$	284	$	332
Interest income on lease receivables	61		68		124		139
Lease income - operating leases⁽¹⁾	100		109		204		222
Variable lease income	28		31		55		61
Total Lease income	$	339	$	380	$	667	$	754

_____________

(1)

Revenue (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenues Disaggregated by Primary Geographic Markets, Major Products Lines, and Sales Channels

Revenues disaggregated by primary geographic markets, major product lines, and sales channels are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Primary geographical markets⁽¹⁾:
United States	$	1,370	$	1,479	$	2,664	$	2,893
Europe	584		660		1,184		1,336
Canada	130		147		254		291
Other	205		224		393		425
Total Revenues	$	2,289	$	2,510	$	4,495	$	4,945

Major product and services lines:
Equipment	$	504	$	561	$	952	$	1,060
Supplies, paper and other sales	321		366		623		712
Maintenance agreements⁽²⁾	609		671		1,207		1,340
Service arrangements⁽³⁾	637		676		1,272		1,358
Rental and other	157		168		317		336
Financing	61		68		124		139
Total Revenues⁽⁴⁾	$	2,289	$	2,510	$	4,495	$	4,945

Sales channels:
Direct equipment lease⁽⁵⁾	$	150	$	172	$	284	$	332
Distributors & resellers⁽⁶⁾	333		357		648		701
Customer direct	342		398		643		739
Total Sales⁽⁴⁾	$	825	$	927	$	1,575	$	1,772

_____________


(1)	Geographic area data is based upon the location of the subsidiary reporting the revenue.


(2)	Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through our channel partners as Xerox Partner Print Services (XPPS).


(3)	Primarily includes revenues from our Managed Services offerings (formerly our Managed Document Services arrangements). Also includes revenues from embedded operating leases, which were not significant.


(4)	Certain prior year amounts have been revised to conform to the current year presentation. Refer to Note 1 - Basis of Presentation - Change in Presentation, for additional information.


(5)	Primarily reflects direct sales through bundled lease arrangements.

(6)

Primarily reflects sales through our two-tier distribution channels.

Incremental Direct Costs of Obtaining a Contract

Incremental direct costs are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Incremental direct costs of obtaining a contract	$	18	$	23	$	36	$	40
Amortization of incremental direct costs	20		23		43		47

Supplementary Financial Information (Tables)

6 Months Ended

Jun. 30, 2019

Supplemental Financial Information [Abstract]

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash amounts were as follows:



	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	712	$	1,084
Restricted cash
Litigation deposits in Brazil	64		61
Other restricted cash	—		3
Total Restricted cash	64		64
Cash, cash equivalents and restricted cash	$	776	$	1,148

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash amounts were as follows:



	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	712	$	1,084
Restricted cash
Litigation deposits in Brazil	64		61
Other restricted cash	—		3
Total Restricted cash	64		64
Cash, cash equivalents and restricted cash	$	776	$	1,148

Restricted Cash Balance Sheet Location

Restricted cash was reported in the Condensed Consolidated Balance Sheets as follows:



	June 30, 2019		December 31, 2018
Other current assets	$	—	$	1
Other long-term assets	64		63
Total Restricted cash	$	64	$	64

Supplemental Cash Flow Information

Summarized cash flow information is as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Provision for receivables	$	13	$	13	$	27	$	26
Provision for inventory	7		10		15		14
Provision for product warranty	3		3		7		7
Depreciation of buildings and equipment	26		44		53		88
Depreciation and obsolescence of equipment on operating leases	57		63		116		127
Amortization of internal use software	16		19		33		37
Amortization of acquired intangible assets	11		12		26		24
Amortization of customer contract costs⁽¹⁾	22		25		46		50
Cost of additions to land, buildings and equipment	10		17		19		26
Cost of additions to internal use software	6		15		12		24
Common stock dividends	57		64		115		128
Preferred stock dividends	3		4		7		7
Payments to noncontrolling interests	12		1		13		13
Repurchases related to stock-based compensation	9		1		10		2

_____________

(1)

Accounts Receivable, Net (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of accounts receivable, net

Accounts receivable, net were as follows:



	June 30, 2019			December 31, 2018
Invoiced	$	992		$	999
Accrued	320			333
Allowance for doubtful accounts	(56		)	(56		)
Accounts receivable, net	$	1,256		$	1,276

Schedule of accounts receivables sales

Accounts receivable sales were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Accounts receivable sales⁽¹⁾	$	110	$	128	$	198	$	231
Loss on sales of accounts receivable	—		—		1		1

__________________________

(1)

Finance Receivables, Net (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Financing Receivables, Minimum Payments

Finance Receivables

Finance receivables, net were as follows:



	June 30, 2019			December 31, 2018
Gross receivables	$	3,860		$	4,003
Unearned income	(418		)	(439		)
Subtotal	3,442			3,564
Residual values	—			—
Allowance for doubtful accounts	(93		)	(92		)
Finance receivables, net	3,349			3,472
Less: Billed portion of finance receivables, net	108			105
Less: Current portion of finance receivables not billed, net	1,177			1,218
Finance receivables due after one year, net	$	2,064		$	2,149

A summary of future contractual maturities of our gross finance receivables, including those previously billed is as follows:



	June 30, 2019		December 31, 2018
12 Months⁽¹⁾	$	1,514	$	1,543
24 Months	1,057		1,108
36 Months	715		755
48 Months	405		425
60 Months	151		158
Thereafter	18		14
Total	$	3,860	$	4,003

__________________

(1)

Includes amounts previously billed of $112 and $107 as of June 30, 2019 and December 31, 2018, respectively.

Allowance for Credit Losses on Financing Receivables

The allowance for doubtful finance receivables as well as the related investment in finance receivables were as follows:



Allowance for Credit Losses:	United States			Canada			Europe			Other⁽¹⁾		Total
Balance at December 31, 2018	$	53		$	12		$	25		$	2	$	92
Provision	4			1			4			—		9
Charge-offs	(4		)	(1		)	(3		)	—		(8		)
Recoveries and other⁽²⁾	—			—			—			—		—
Balance at March 31, 2019	$	53		$	12		$	26		$	2	$	93
Provision	4			1			3			—		8
Charge-offs	(5		)	(3		)	(3		)	—		(11		)
Recoveries and other⁽²⁾	1			2			—			—		3
Balance at June 30, 2019	$	53		$	12		$	26		$	2	$	93
Finance receivables as of June 30, 2019 collectively evaluated for impairment ⁽³⁾	$	1,885		$	329		$	1,185		$	43	$	3,442

Balance at December 31, 2017	$	56		$	15		$	35		$	2	$	108
Provision	5			—			4			—		9
Charge-offs	(5		)	(1		)	(4		)	—		(10		)
Recoveries and other⁽²⁾	—			—			1			—		1
Balance at March 31, 2018	$	56		$	14		$	36		$	2	$	108
Provision	4			1			4			—		9
Charge-offs	(4		)	(1		)	(3		)	—		(8		)
Recoveries and other⁽²⁾	—			—			(2		)	—		(2		)
Balance at June 30, 2018	$	56		$	14		$	35		$	2	$	107
Finance receivables as of June 30, 2018 collectively evaluated for impairment⁽³⁾⁽⁴⁾	$	1,973		$	356		$	1,256		$	45	$	3,630

__________________


(1)	Includes developing market countries and smaller units.


(2)	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.


(3)	Total Finance receivables exclude the allowance for credit losses of $93 and $107 at June 30, 2019 and 2018, respectively.


(4)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.

Financing Receivable Credit Quality Indicators

Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:



	June 30, 2019								December 31, 2018
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables		Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
Finance and other services	$	168	$	336	$	93	$	597	$	177	$	334	$	88	$	599
Government and education	424		58		18		500		453		63		9		525
Graphic arts	72		121		86		279		82		131		87		300
Industrial	81		83		18		182		86		82		16		184
Healthcare	57		62		17		136		86		48		9		143
Other	57		102		32		191		63		90		42		195
Total United States⁽¹⁾	859		762		264		1,885		947		748		251		1,946
Finance and other services	59		32		18		109		52		33		20		105
Government and education	37		4		3		44		38		3		4		45
Graphic arts	21		26		27		74		22		30		26		78
Industrial	18		11		11		40		16		12		9		37
Other	30		19		13		62		34		21		15		70
Total Canada	165		92		72		329		162		99		74		335
France	212		149		26		387		232		157		29		418
U.K./Ireland	146		81		6		233		150		87		7		244
Central⁽²⁾	182		121		9		312		196		123		8		327
Southern⁽³⁾	58		135		13		206		52		136		17		205
Nordics⁽⁴⁾	28		18		1		47		28		15		2		45
Total Europe⁽⁵⁾	626		504		55		1,185		658		518		63		1,239
Other⁽¹⁾	29		13		1		43		31		13		—		44
Total	$	1,679	$	1,371	$	392	$	3,442	$	1,798	$	1,378	$	388	$	3,564

_____________________________


(1)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.


(2)	Switzerland, Germany, Austria, Belgium and Holland.


(3)	Italy, Greece, Spain and Portugal.


(4)	Sweden, Norway, Denmark and Finland.

(5)

Prior year amounts have been recasted to conform to the current year presentation.

Finance Receivables Aging

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:



	June 30, 2019
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	16	$	4	$	2	$	22	$	575	$	597	$	11
Government and education	17		3		3		23		477		500		21
Graphic arts	12		1		1		14		265		279		5
Industrial	6		2		1		9		173		182		6
Healthcare	4		2		1		7		129		136		4
Other	5		1		1		7		184		191		3
Total United States	60		13		9		82		1,803		1,885		50
Canada	9		2		1		12		317		329		21
France	5		—		—		5		382		387		12
U.K./Ireland	2		—		—		2		231		233		—
Central⁽²⁾	2		1		1		4		308		312		3
Southern⁽³⁾	2		1		1		4		202		206		7
Nordics⁽⁴⁾	—		—		—		—		47		47		—
Total Europe	11		2		2		15		1,170		1,185		22
Other	3		—		—		3		40		43		—
Total	$	83	$	17	$	12	$	112	$	3,330	$	3,442	$	93

	December 31, 2018
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	15	$	4	$	2	$	21	$	578	$	599	$	11
Government and education	17		4		3		24		501		525		24
Graphic arts	10		1		1		12		288		300		5
Industrial	5		2		1		8		176		184		5
Healthcare	4		2		1		7		136		143		5
Other	5		2		1		8		187		195		4
Total United States⁽¹⁾	56		15		9		80		1,866		1,946		54
Canada	7		2		1		10		325		335		22
France	5		—		—		5		413		418		14
U.K./Ireland	2		—		—		2		242		244		—
Central⁽²⁾	1		1		1		3		324		327		6
Southern⁽³⁾	3		1		1		5		200		205		6
Nordics⁽⁴⁾	—		—		—		—		45		45		—
Total Europe	11		2		2		15		1,224		1,239		26
Other⁽¹⁾	2		—		—		2		42		44		—
Total	$	76	$	19	$	12	$	107	$	3,457	$	3,564	$	102

_____________________________


(1)	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.


(2)	Switzerland, Germany, Austria, Belgium and Holland.

(3)Italy, Greece, Spain and Portugal.

(4)Sweden, Norway, Denmark and Finland.

Inventories and Equipment on Operating Leases, Net (Tables)

6 Months Ended

Jun. 30, 2019

Inventories and Equipment on Operating Leases, Net [Abstract]

Inventories

The following is a summary of Inventories by major category:



	June 30, 2019		December 31, 2018
Finished goods	$	659	$	699
Work-in-process	55		49
Raw materials	74		70
Total Inventories	$	788	$	818

Equipment on Operating Leases, Net

Equipment on operating leases and the related accumulated depreciation were as follows:



	June 30, 2019			December 31, 2018
Equipment on operating leases	$	1,495		$	1,519
Accumulated depreciation	(1,096		)	(1,077		)
Equipment on operating leases, net	$	399		$	442

Lessor, Operating Lease, Payments to be Received, Maturity

Estimated minimum future revenues associated with Equipment on operating leases are as follows:



	June 30, 2019		December 31, 2018
2019⁽¹⁾	$	128	$	260
2020	216		178
2021	132		111
2022	73		61
2023	31		21
Thereafter	6		2
Total	$	586	$	633

_____________

(1)

2019 amount represents the future minimum revenues expected to be earned over the remaining balance of the year.

Investment in Affiliates, at Equity (Tables)

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Schedule of equity in net income (loss) of unconsolidated affiliates

Our Equity in net income (loss) of unconsolidated affiliates was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Fuji Xerox	$	32	$	17	$	75	$	(53	)
Other	2		2		4		4
Total Equity in net income (loss) of unconsolidated affiliates	$	34	$	19	$	79	$	(49	)

Schedule of financial information for Fuji Xerox

Summarized financial information for Fuji Xerox was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Summary of Operations
Revenues	$	2,145	$	2,226	$	4,606	$	4,691
Costs and expenses	1,948		2,098		4,152		4,869
Income (Loss) before Income Taxes	197		128		454		(178		)
Income tax expense	65		50		150		11
Net Income (Loss)	132		78		304		(189		)
Less: Net income attributable to noncontrolling interests	—		1		1		1
Net Income (Loss) – Fuji Xerox	$	132	$	77	$	303	$	(190	)
Weighted Average Exchange Rate⁽¹⁾	109.80		109.05		110.08		108.54

_____________________________

(1)

Represents Yen/U.S. Dollar exchange rate used to translate.

Restructuring Programs (Tables)

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring Program Activity

Information related to restructuring program activity is outlined below:



	Severance and Related Costs			Other Contractual Termination Costs⁽²⁾			Asset Impairments⁽³⁾			Total
Balance at December 31, 2018	$	94		$	1		$	—		$	95
Provision	12			14			36			62
Reversals	(8		)	—			—			(8		)
Net current period charges⁽¹⁾	4			14			36			54
Charges against reserve and currency	(32		)	(1		)	(36		)	(69		)
Balance at March 31, 2019	$	66		$	14		$	—		$	80
Provision	13			3			10			26
Reversals	(6		)	—			(2		)	(8		)
Net current period charges⁽¹⁾	7			3			8			18
Charges against reserve and currency	(17		)	(4		)	(8		)	(29		)
Balance at June 30, 2019	$	56		$	13		$	—		$	69

____________________________


(1)	Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown for restructuring and asset impairment charges.


(2)	Primarily includes additional costs incurred upon the exit from our facilities including decommissioning costs and associated contractual termination costs.

(3)

Primarily related to the exit and abandonment of leased and owned facilities. The charge includes the accelerated write-off of $34 for leased right-of-use asset balances and $12 for owned asset balances upon exit from the facility net of any potential sublease income or other recovery amounts.

Reconciliation to the Condensed Consolidated Statements Of Cash Flows

The following table summarizes the reconciliation to the Condensed Consolidated Statements of Cash Flows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Charges against reserve and currency	$	(29	)	$	(40	)	$	(98	)	$	(92	)
Effects of foreign currency and other non-cash items	8			3			44			1
Restructuring cash payments	$	(21	)	$	(37	)	$	(54	)	$	(91	)

Related Restructuring Costs

In connection with our restructuring programs, we also incurred certain related costs as follows:



	Three Months Ended June 30,		Six Months Ended June 30,
	2019		2019
Retention related severance/bonuses⁽¹⁾	$	11	$	20
Contractual severance costs⁽²⁾	—		38
Consulting and other costs⁽³⁾	8		19
Total	$	19	$	77

____________________________


(1)	Includes retention related severance and bonuses for employees expected to continue working beyond their minimum notification period before termination.


(2)	Reflects estimated severance costs we are contractually required to pay on employees transferred (approximately 2,200) as part of the shared service arrangement entered into with HCL Technologies.

(3)

Represents professional support services associated with our business transformation initiatives.

Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule Of Interest Expense And Income

Interest expense and income were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Interest expense⁽¹⁾	$	59	$	60	$	118	$	123
Interest income⁽²⁾	64		72		131		146

____________


(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.

Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

The following is a summary of our fair value hedges at June 30, 2019:



Debt Instrument	Year First Designated	Notional Amount		Net Fair Value		Weighted Average Interest Rate Paid		Interest Rate Received		Basis	Maturity
Senior Note 2021	2014	$	200	$	2	3.26	%	4.5	%	Libor	2021

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:



Designation of Derivatives	Balance Sheet Location	June 30, 2019			December 31, 2018
Derivatives Designated as Hedging Instruments
Foreign exchange contracts - forwards	Other current assets	$	6		$	7
	Accrued expenses and other current liabilities	(1		)	—
Foreign currency options	Other current assets	—			1
Interest rate swaps	Other long-term assets	2			—
	Other long-term liabilities	—			(3		)
	Net designated derivative asset	$	7		$	5

Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	2		$	7
	Accrued expenses and other current liabilities	(2		)	(1		)
	Net undesignated derivative asset	$	—		$	6

Summary of Derivatives	Total Derivative assets	$	10		$	15
	Total Derivative liabilities	(3		)	(4		)
	Net Derivative asset	$	7		$	11

Summary of Gains (Losses) on Derivative Instruments

The following table provides a summary of gains (losses) on derivative instruments:



	Three Months Ended June 30,						Six Months Ended June 30,
Gain (Loss) on Derivative Instruments	2019			2018			2019			2018
Fair Value Hedges - Interest Rate Contracts
Derivative gain (loss) recognized in interest expense	$	3		$	(1	)	$	5		$	(6	)
Hedged item (loss) gain recognized in interest expense	(3		)	1			(5		)	6

Cash Flow Hedges - Foreign Exchange Forward Contracts and Options
Derivative gain (loss) recognized in OCI (effective portion)	$	3		$	(2	)	$	6		$	10
Derivative gain (loss) reclassified from AOCL to income - Cost of sales (effective portion)	2			—			3			(12		)

Summary of Derivatives Not Designated as Hedging Instruments Gains (Losses)

The following table provides a summary of gains (losses) on non-designated derivative instruments:



Derivatives NOT Designated as Hedging Instruments		Three Months Ended June 30,				Six Months Ended June 30,
Derivatives NOT Designated as Hedging Instruments	Location of Derivative Gain (Loss)	2019		2018		2019		2018
Foreign exchange contracts – forwards	Other expense – Currency (loss) gain, net	$	6	$	18	$	1	$	18

Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair value of financial assets and liabilities



	June 30, 2019		December 31, 2018
Assets
Foreign exchange contracts - forwards	$	8	$	14
Foreign currency options	—		1
Interest rate swaps	2		—
Deferred compensation investments in mutual funds	18		16
Total	$	28	$	31
Liabilities
Foreign exchange contracts - forwards	$	3	$	1
Interest rate swaps	—		3
Deferred compensation plan liabilities	17		16
Total	$	20	$	20

Estimated fair values of financial assets and liabilities not measured at fair value on a recurring basis

The estimated fair values of our other financial assets and liabilities were as follows:



	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	712	$	712	$	1,084	$	1,084
Accounts receivable, net	1,256		1,256		1,276		1,276
Short-term debt and current portion of long-term debt	866		870		961		966
Long-term debt	3,962		3,995		4,269		3,922

Components of net periodic benefit cost and other changes in plan assets and benefit obligations

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows:



	Three Months Ended June 30,
	Three Months Ended June 30,
	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Retiree Health
Components of Net Periodic Benefit Costs:	2019			2018			2019			2018			2019			2018
Service cost	$	1		$	—		$	5		$	7		$	1		$	1
Interest cost	28			34			38			38			4			7
Expected return on plan assets	(25		)	(36		)	(58		)	(62		)	—			—
Recognized net actuarial loss (gain)	6			6			12			15			(1		)	—
Amortization of prior service credit	(1		)	(1		)	(1		)	(1		)	(19		)	(1		)
Recognized settlement loss	27			26			—			—			—			—
Defined benefit plans	36			29			(4		)	(3		)	(15		)	7
Defined contribution plans⁽¹⁾	5			10			6			7			n/a			n/a
Net Periodic Benefit Cost (Credit)	41			39			2			4			(15		)	7

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):
Net actuarial loss⁽²⁾	21			12			—			—			—			10
Amortization of net actuarial (loss) benefit	(33		)	(32		)	(12		)	(15		)	1			—
Amortization of prior service credit	1			1			1			1			19			1
Total Recognized in Other Comprehensive Income (Loss)⁽³⁾	(11		)	(19		)	(11		)	(14		)	20			11
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)	$	30		$	20		$	(9	)	$	(10	)	$	5		$	18

	Six Months Ended June 30,
	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Retiree Health
Components of Net Periodic Benefit Costs:	2019			2018			2019			2018			2019			2018
Service cost	$	1		$	1		$	12		$	13		$	1		$	2
Interest cost	58			67			77			77			8			13
Expected return on plan assets	(51		)	(70		)	(118		)	(125		)	—			—
Recognized net actuarial loss (gain)	11			12			22			30			(2		)	—
Amortization of prior service credit	(1		)	(1		)	(1		)	(2		)	(38		)	(2		)
Recognized settlement loss	58			51			—			—			—			—
Defined benefit plans	76			60			(8		)	(7		)	(31		)	13
Defined contribution plans⁽¹⁾	13			19			12			14			n/a			n/a
Net Periodic Benefit Cost (Credit)	89			79			4			7			(31		)	13

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):
Net actuarial loss (gain)⁽²⁾	36			(46		)	—			—			—			10
Amortization of net actuarial loss	(69		)	(63		)	(22		)	(30		)	2			—
Amortization of prior service credit	1			1			1			2			38			2
Total Recognized in Other Comprehensive Income (Loss)⁽³⁾	(32		)	(108		)	(21		)	(28		)	40			12
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)	$	57		$	(29	)	$	(17	)	$	(21	)	$	9		$	25

__________________________


(1)	Prior year amounts have been revised to reflect additional cost for previously excluded plans.


(2)	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.


(3)	Amounts represent the pre-tax effect included within Other Comprehensive Income. Refer to Note 19 - Other Comprehensive Income (Loss) for related tax effects and the after-tax amounts.

Defined Benefit and Retiree Health Pension Plans, actual and expected cash contributions

The following table summarizes cash contributions to our defined benefit pension plans and retiree health benefit plans.



	Six Months Ended June 30,				Year Ended December 31,
	2019		2018		Estimated 2019		2018
U.S. plans	$	13	$	14	$	25	$	27
Non-U.S. plans	57		61		110		117
Total Pension	$	70	$	75	$	135	$	144

Retiree Health	$	16	$	29	$	35	$	57

Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2019

Stockholders' Equity Note [Abstract]

Schedule of Stockholders Equity



	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL⁽¹⁾			Xerox Shareholders’ Equity			Non-controlling Interests			Total Equity
Balance at March 31, 2019	$	230		$	3,282		$	(103	)	$	5,270		$	(3,652	)	$	5,027		$	36		$	5,063
Comprehensive income, net	—			—			—			181			5			186			3			189
Cash dividends declared - common⁽³⁾	—			—			—			(57		)	—			(57		)	—			(57		)
Cash dividends declared - preferred⁽⁴⁾	—			—			—			(3		)	—			(3		)	—			(3		)
Stock option and incentive plans, net	—			6			—			—			—			6			—			6
Payments to acquire treasury stock, including fees	—			—			(197		)	—			—			(197		)	—			(197		)
Cancellation of treasury stock	(5		)	(164		)	169			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(9		)	(9		)
Balance at June 30, 2019	$	225		$	3,124		$	(131	)	$	5,391		$	(3,647	)	$	4,962		$	30		$	4,992



	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings			AOCL⁽¹⁾			Xerox Shareholders’ Equity			Non- controlling Interests		Total Equity
Balance at March 31, 2018	$	255	$	3,908	$	—	$	4,927		$	(3,537	)	$	5,553		$	29	$	5,582
Cumulative effect of change in accounting principle	—		—		—		3			—			3			—		3
Comprehensive income (loss), net	—		—		—		112			(235		)	(123		)	2		(121		)
Cash dividends declared - common⁽³⁾	—		—		—		(65		)	—			(65		)	—		(65		)
Cash dividends declared - preferred⁽⁴⁾	—		—		—		(3		)	—			(3		)	—		(3		)
Stock option and incentive plans, net	—		12		—		—			—			12			—		12
Balance at June 30, 2018	$	255	$	3,920	$	—	$	4,974		$	(3,772	)	$	5,377		$	31	$	5,408



	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL⁽¹⁾			Xerox Shareholders’ Equity			Non-controlling Interests			Total Equity
Balance at December 31, 2018	$	232		$	3,321		$	(55	)	$	5,072		$	(3,565	)	$	5,005		$	34		$	5,039
Cumulative effect of change in accounting principle⁽²⁾	—			—			—			127			(127		)	—			—			—
Comprehensive income, net	—			—			—			314			45			359			6			365
Cash dividends declared - common⁽³⁾	—			—			—			(115		)	—			(115		)	—			(115		)
Cash dividends declared - preferred⁽⁴⁾	—			—			—			(7		)	—			(7		)	—			(7		)
Stock option and incentive plans, net	—			20			—			—			—			20			—			20
Payments to acquire treasury stock, including fees	—			—			(300		)	—			—			(300		)	—			(300		)
Cancellation of treasury stock	(7		)	(217		)	224			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(10		)	(10		)
Balance at June 30, 2019	$	225		$	3,124		$	(131	)	$	5,391		$	(3,647	)	$	4,962		$	30		$	4,992



	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings			AOCL⁽¹⁾			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2017	$	255	$	3,893	$	—	$	4,856		$	(3,748	)	$	5,256		$	37		$	5,293
Cumulative effect of change in accounting principles	—		—		—		120			—			120			—			120
Comprehensive income (loss), net	—		—		—		135			(24		)	111			5			116
Cash dividends declared - common⁽³⁾	—		—		—		(130		)	—			(130		)	—			(130		)
Cash dividends declared - preferred⁽⁴⁾	—		—		—		(7		)	—			(7		)	—			(7		)
Stock option and incentive plans, net	—		27		—		—			—			27			—			27
Distributions to noncontrolling interests	—		—		—		—			—			—			(11		)	(11		)
Balance at June 30, 2018	$	255	$	3,920	$	—	$	4,974		$	(3,772	)	$	5,377		$	31		$	5,408

_____________________________


(1)	Refer to Note 19 - Other Comprehensive Income (Loss) for the components of AOCL.


(2)	Refer to Note 2 - Recent Accounting Pronouncements - Income Taxes, for additional information related to the adoption of ASU 2018-02.


(3)	Cash dividends declared on common stock for the three and six months ended June 30, 2019 and 2018 were $0.25 per share and $0.50 per share, respectively.


(4)	Cash dividends declared on preferred stock for the three and six months ended June 30, 2019 and 2018 were $20.00 per share and $40.00 per share, respectively.

Summary of Treasury Stock Purchases

The following is a summary of the purchases of common stock during 2019:



	Shares		Amount
Balance at December 31, 2018	2,067		$	55
Purchases⁽¹⁾	9,246		300
Cancellations	(7,348	)	(224		)
Balance at June 30, 2019	3,965		$	131

_____________________________

(1)

Includes associated fees.

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Stock-based compensation expense

Stock-based compensation expense was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Stock-based compensation expense, pre-tax	$	15	$	13	$	30	$	29
Income tax benefit recognized in earnings	3		3		7		7

Schedule of key valuation input assumptions

A summary of the key valuation input assumptions used in the Monte Carlo simulation relative to PS awards granted were as follows:



	Program to Date June 30, 2019
Term	3 years
Risk-free interest rate⁽¹⁾	2.51		%
Dividend yield⁽²⁾	3.97		%
Xerox’s blended volatility⁽³⁾	32.95		%
Weighted average fair value⁽⁴⁾	$	16.16

____________


(1)	The risk-free interest rate was based on the zero-coupon U.S. Treasury yield curve on the valuation date, with a maturity matched to the performance period.


(2)	The dividend yield was calculated as the expected quarterly dividend divided by Xerox’s three-month average stock price as of the valuation date, annualized and continuously compounded.


(3)	Xerox’s volatility is calculated using a blended volatility approach, with 50% weight on Xerox's historical volatility calculated from daily stock returns over a three-year look-back term from the valuation date, and 50% weight on Xerox's implied volatility.

(4)

The weighted average of fair values used to record compensation expense as determined by the Monte Carlo simulation.

Schedule of absolute TSR payout as a percentage

The Absolute Share Price is compared against total return targets to determine the payout as follows:



Total Return Targets⁽¹⁾	Payout Percentages
$40.00 and above	200	%
$35.00	100	%
$30.00	50	%
Below $30.00	0	%

____________

(1)

For performance between the levels described above, the degree of vesting is interpolated on a linear basis.

Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Schedule of Other Comprehensive Income

Other Comprehensive Income (Loss) is comprised of the following:



	Three Months Ended June 30,												Six Months Ended June 30,
	2019						2018						2019						2018
	Pre-tax			Net of Tax			Pre-tax			Net of Tax			Pre-tax			Net of Tax			Pre-tax			Net of Tax
Translation adjustments (losses) gains	$	(5	)	$	(4	)	$	(335	)	$	(322	)	$	32		$	33		$	(151	)	$	(146	)
Unrealized gains (losses)
Changes in fair value of cash flow hedges gains (losses)	3			1			(2		)	(1		)	6			4			10			7
Changes in cash flow hedges reclassed to earnings⁽¹⁾	(2		)	(1		)	—			—			(3		)	(2		)	12			10
Other losses	—			—			(2		)	(2		)	—			—			(3		)	(3		)
Net Unrealized gains (losses)	1			—			(4		)	(3		)	3			2			19			14

Defined benefit plans (losses) gains
Net actuarial/prior service (losses) gains	(21		)	(15		)	(22		)	(16		)	(36		)	(27		)	36			27
Prior service amortization⁽²⁾	(21		)	(16		)	(3		)	(3		)	(40		)	(30		)	(5		)	(4		)
Actuarial loss amortization/settlement⁽²⁾	44			33			47			35			89			67			93			70
Fuji Xerox changes in defined benefit plans, net⁽³⁾	(7		)	(7		)	(3		)	(3		)	2			2			(24		)	(24		)
Other gains (losses)⁽⁴⁾	14			14			77			77			(2		)	(2		)	39			39
Changes in defined benefit plans gains	9			9			96			90			13			10			139			108

Other Comprehensive Income (Loss) Attributable to Xerox	$	5		$	5		$	(243	)	$	(235	)	$	48		$	45		$	7		$	(24	)

_____________________________


(1)	Reclassified to Cost of sales - refer to Note 14 - Financial Instruments for additional information regarding our cash flow hedges.


(2)	Reclassified to Total Net Periodic Benefit Cost - refer to Note 16 - 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.

Schedule of Accumulated Other Comprehensive Loss

AOCL is comprised of the following:



	June 30, 2019			December 31, 2018
Cumulative translation adjustments	$	(1,990	)	$	(2,023	)
Other unrealized gains, net	6			4
Benefit plans net actuarial losses and prior service credits⁽¹⁾⁽²⁾	(1,663		)	(1,546		)
Total Accumulated other comprehensive loss attributable to Xerox	$	(3,647	)	$	(3,565	)

_____________________________


(1)	Includes our share of Fuji Xerox.

(2)

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Basic and Diluted Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share of common stock:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Basic Earnings per Share
Net Income Attributable to Xerox	$	181		$	112		$	314		$	135
Accrued dividends on preferred stock	(3		)	(3		)	(7		)	(7		)
Adjusted Net income available to common shareholders	$	178		$	109		$	307		$	128
Weighted average common shares outstanding	223,606			254,895			226,040			254,791

Basic Earnings per Share	$	0.79		$	0.42		$	1.36		$	0.50

Diluted Earnings per Share
Net Income Attributable to Xerox	$	181		$	112		$	314		$	135
Accrued dividends on preferred stock	—			(3		)	—			(7		)
Adjusted Net income available to common shareholders	$	181		$	109		$	314		$	128
Weighted average common shares outstanding	223,606			254,895			226,040			254,791
Common shares issuable with respect to:
Stock options	65			—			34			—
Restricted stock and performance shares	4,866			3,052			4,637			2,931
Convertible preferred stock	6,742			—			6,742			—
Adjusted Weighted average common shares outstanding	235,279			257,947			237,453			257,722

Diluted Earnings per Share	$	0.77		$	0.42		$	1.32		$	0.50

The following securities were not included in the computation of diluted earnings per share as they were either contingently issuable shares or shares that if included would have been anti-dilutive:
Stock options	848			1,097			879			1,097
Restricted stock and performance shares	2,357			4,329			2,587			4,450
Convertible preferred stock	—			6,742			—			6,742
Total Anti-Dilutive Securities	3,205			12,168			3,466			12,289

Dividends per Common Share	$	0.25		$	0.25		$	0.50		$	0.50

Contingencies and Litigation (Tables)

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Brazil Tax Contingencies

Below is a summary of our Brazilian tax contingencies:



	June 30, 2019		December 31, 2018
Tax contingency - unreserved	$	465	$	500
Escrow cash deposits	59		58
Surety bonds	107		106
Letters of credit	93		104
Liens on Brazilian assets	—		—

Tabular disclosure of the loss contingencies that were reported in the period or disclosed as of the balance sheet date.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=118942415&loc=d3e14472-108349

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=118942415&loc=d3e14326-108349

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=118942415&loc=d3e14453-108349

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=118942415&loc=d3e14615-108349

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 460
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=118943654&loc=d3e12021-110248

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=118942415&loc=d3e14394-108349

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=118942415&loc=d3e14435-108349

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=118942415&loc=d3e14557-108349

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 460
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=118943654&loc=d3e12053-110248

+ Details

Basis of Presentation - Corporate Reorganization (Details) - Subsequent Event $ / shares in Units, $ in Millions	Aug. 06, 2019 USD ($) $ / shares shares
Conversion of Stock [Line Items]
Number of shares exchanged for common stock (in shares) \| shares	1,000
Par value (in dollars per share) \| $ / shares	$ 1
Common Stock
Conversion of Stock [Line Items]
Shares exchanged for common stock	$ (221)
Additional Paid-in Capital
Conversion of Stock [Line Items]
Shares exchanged for common stock	$ 221

Basis of Presentation - Shared Services Arrangement (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Long-term Purchase Commitment [Line Items]
Shares services arrangement, commitment amount	$ 1,300
Shared services arrangement, period	7 years
Shared Services Arrangement with HCL Technologies \| Employee Transfers
Long-term Purchase Commitment [Line Items]
Restructuring and related cost incurred	$ 30

Basis of Presentation - Change in Presentation (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

^[1],[2]

$ 2,289

$ 2,510

$ 4,495

$ 4,945

Sales

^[1]

825

927

1,575

1,772

Services, maintenance and rentals

^[1]

552

593

1,016

1,125

^[1]

1,403

1,515

2,796

3,034

^[1]

$ 807

883

$ 1,628

1,782

As Reported | Sales

1,017

1,950

As Reported | Services, maintenance and rentals

622

1,185

1,425

2,856

854

1,722

Change | Sales

(90)

(178)

Change | Services, maintenance and rentals

(29)

(60)

178

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

$ 29

$ 60

[1]	Certain prior year amounts have been conformed to the current year presentation. Refer to Note 1 - Basis of Presentation for additional information.
[2]	Geographic area data is based upon the location of the subsidiary reporting the revenue.

Recent Accounting Pronouncements (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Dec. 31, 2018

Assets

$ 14,684

$ 14,874

Liabilities

(9,478)

$ (9,621)

Equipment sales

^[1],[2]

2,289

$ 2,510

4,495

$ 4,945

ASU 2016-02

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Assets

385

Assets, undiscounted

440

Liabilities

(385)

Liabilities, undiscounted

(440)

Retained Earnings | ASU 2018-02

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Cumulative effect of change in accounting principle

127

AOCL | ASU 2018-02

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Cumulative effect of change in accounting principle

(127)

Equipment

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Equipment sales

$ 504

$ 561

952

$ 1,060

Equipment | ASU 2016-02

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Equipment sales

$ 11

[1]	Certain prior year amounts have been conformed to the current year presentation. Refer to Note 1 - Basis of Presentation for additional information.
[2]	Geographic area data is based upon the location of the subsidiary reporting the revenue.

Adoption of New Leasing Standard - Xerox as a Lessee - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Leases [Abstract]
Remaining terms of leases	10 years	10 years
Remaining lease obligation	$ 7	$ 7
Finance leases, discount rate	4.07%	4.07%
Finance lease, right-of-use asset	$ 8	$ 8
Operating lease expense	$ 33	$ 66	$ 147
Net of sublease income				$ 161

Adoption of New Leasing Standard - Xerox as a Lessee - Components of Lease Expense (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2019

Dec. 31, 2018

Operating lease expense

$ 33

$ 66

$ 147

Short-term lease expense

Variable lease expense

^[1]

Sublease income

(1)

Total Lease expense

$ 49

$ 100

[1]	Variable lease expense is related to our leased real estate for offices and warehouses and primarily includes labor and operational costs as well as taxes and insurance.

Adoption of New Leasing Standard - Xerox as a Lessee - Operating Lease ROU Asset, Net and Operating Lease Liabilities (Details) $ in Millions	Jun. 30, 2019 USD ($)
Leases [Abstract]
Operating lease, Other long-term assets	$ 319
Operating lease, Accrued expenses and other current liabilities	92
Operating lease, Other long-term liabilities	254
Total Operating lease liabilities	$ 346

Adoption of New Leasing Standard - Xerox as a Lessee - Supplemental Information Related to Operating Leases (Details)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

USD ($)

Jun. 30, 2019

USD ($)

Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows

$ 32

$ 64

Right-of-use assets obtained in exchange for new lease liabilities

$ 14

^[1]

$ 23

^[1]

Weighted-average remaining lease term

4 years

Weighted-average discount rate

5.63%

[1]	Includes the impact of new leases as well as remeasurements and modifications to existing leases.

Adoption of New Leasing Standard - Xerox as a Lessee - Maturities and Additional Information Related to Operating Lease Liabilities (Details)
$ in Millions

Jun. 30, 2019

USD ($)

Total Operating lease liabilities

2019

$ 61

^[1]

103

395

Less: Imputed interest

$ 346

[1]	Represents the future minimum operating lease payments expected to be made over the remaining balance of the year.

Adoption of New Leasing Standard - Xerox as a Lessee - Future Minimum Operating Lease Commitments (Details) $ in Millions	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 114
2020	88
2021	64
2022	50
2023	36
Thereafter	27
Total Operating lease commitments	$ 379

Adoption of New Leasing Standard - Xerox as a Lessor - Components of Lease Income (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Lessor, Lease, Description [Line Items]

Economic life of leased product

5 years

Lease income - sales type

$ 150

$ 172

$ 284

$ 332

Interest income on lease receivables

124

139

Lease income - operating leases

^[1]

100

109

204

222

Variable lease income

Total Lease income

339

380

667

754

Profit at lease commencement, sales type leases

^[2],[3]

2,289

2,510

4,495

4,945

120

Profit at lease commencement, sales type leases

145

Services

Lessor, Lease, Description [Line Items]

Lessor, Lease, Description [Line Items]

^[2]

$ 1,403

$ 1,515

2,796

3,034

Services | ASU 2016-02

$ 30

$ 28

[1]	Operating lease income for the six months ended June 30, 2019 and 2018 exclude service revenues of $30 and $28, respectively, which were reported in operating lease income for the three months ended March 31, 2019 and 2018
[2]	Certain prior year amounts have been conformed to the current year presentation. Refer to Note 1 - Basis of Presentation for additional information.
[3]	Geographic area data is based upon the location of the subsidiary reporting the revenue.

Revenue - Disaggregation of Revenue (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

^[1],[2]

$ 2,289

$ 2,510

$ 4,495

$ 4,945

Equipment

Supplies, paper and other sales

504

561

952

1,060

321

366

623

712

Maintenance agreements

^[3]

609

671

1,207

^[4]

1,340

^[4]

Service arrangements

^[5]

637

676

1,272

^[4]

1,358

^[4]

Rental and other

157

168

317

^[4]

336

^[4]

Financing

124

139

Sales

Sales | Direct Equipment Lease

^[1]

825

927

1,575

1,772

Sales | Distributors & resellers

^[6]

150

172

284

332

^[7]

333

357

648

701

Sales | Customer direct

342

398

643

739

United States

^[2]

1,370

1,479

2,664

2,893

Europe

^[2]

584

660

1,184

1,336

Canada

^[2]

130

147

254

291

Other

Supplemental Financial Information [Abstract]

^[2]

$ 205

$ 224

$ 393

$ 425

[1]	Certain prior year amounts have been conformed to the current year presentation. Refer to Note 1 - Basis of Presentation for additional information.
[2]	Geographic area data is based upon the location of the subsidiary reporting the revenue.
[3]	Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through our channel partners as Xerox Partner Print Services (XPPS).
[4]	Certain prior year amounts have been revised to conform to the current year presentation. Refer to Note 1 - Basis of Presentation - Change in Presentation, for additional information.
[5]	Primarily includes revenues from our Managed Services offerings (formerly our Managed Document Services arrangements). Also includes revenues from embedded operating leases, which were not significant.
[6]	Primarily reflects direct sales through bundled lease arrangements.
[7]	Primarily reflects sales through our two-tier distribution channels.

Revenue - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
Revenue - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Revenue, Contract Assets, Liabilities and Costs[Line Items]
Contract liabilities	$ 134		$ 134		$ 116
Contract liability amortization period			30 months
Deferred incremental direct costs, amortization period	4 years		4 years
Deferred incremental direct costs net of accumulated amortization	$ 165		$ 165		172
Contract Fulfillment Costs and Inducements
Revenue, Contract Assets, Liabilities and Costs[Line Items]
Capitalized contract costs, amounts deferred	12		12		$ 12
Capitalized contract costs, amortization	$ 2	$ 2	$ 3	$ 3

Revenue - Incremental Direct Costs (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue from Contract with Customer [Abstract]
Incremental direct costs of obtaining a contract	$ 18	$ 23	$ 36	$ 40
Amortization of incremental direct costs	$ 20	$ 23	$ 43	$ 47

Acquisitions - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Business Acquisition [Line Items]
Acquisitions	$ 38	$ 0	$ 42	$ 0
Rabbit Copiers, Inc. and Heritage Business Systems, Inc.
Business Acquisition [Line Items]
Acquisitions	$ 38
Percentage of ownership acquired	100.00%		100.00%

Supplementary Financial Information - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Supplemental Financial Information [Abstract]
Cash and cash equivalents	$ 712		$ 1,084
Litigation deposits in Brazil	64		61
Other restricted cash	0		3
Total Restricted cash	64		64
Cash, cash equivalents and restricted cash	$ 776	$ 786	$ 1,148	$ 1,327	$ 1,474	$ 1,368

Supplementary Financial Information - Restricted Cash Balance Sheet Location (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Restricted Cash and Cash Equivalents Items [Line Items]
Total Restricted cash	$ 64	$ 64
Other current assets
Restricted Cash and Cash Equivalents Items [Line Items]
Total Restricted cash	0	1
Other long-term assets
Restricted Cash and Cash Equivalents Items [Line Items]
Total Restricted cash	$ 64	$ 63

Supplementary Financial Information - Supplemental Cash Flow Information (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Provision for receivables

$ 13

$ 27

$ 26

Provision for inventory

Provision for product warranty

Depreciation of buildings and equipment

Depreciation and obsolescence of equipment on operating leases

116

127

Amortization of internal use software

Amortization of acquired intangible assets

Amortization of customer contract costs

^[1]

Cost of additions to land, buildings and equipment

Cost of additions to internal use software

Common stock dividends

115

128

Preferred stock dividends

Payments to noncontrolling interests

$ 9

$ 1

$ 10

$ 2

[1]	__________ (1) Amortization of customer contract costs are reported in Decrease in other current and long-term assets in the Condensed Consolidated Statements of Cash Flows. Refer to Note 5 - Revenue for additional information on contract costs.

Accounts Receivable, Net (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, net	$ 1,256	$ 1,276
Accounts Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Invoiced	992	999
Accrued	320	333
Allowance for doubtful accounts	(56)	(56)
Accounts receivable, net	$ 1,256	$ 1,276

Accounts Receivable, Net - Accounts Receivable Sales Arrangements (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Dec. 31, 2018

Accounts Receivable Sales Arrangements [Abstract]

Uncollected accounts receivable sold and derecognized

$ 131

Accounts Receivable

Accounts Receivable Sales Arrangements [Abstract]

Accounts receivable sales

^[1]

110

$ 128

198

$ 231

Loss on sales of accounts receivable

$ 0

$ 1

[1]

Finance Receivables, Net (Details) - USD ($) $ in Millions	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Receivables [Abstract]
Gross receivables	$ 3,860		$ 4,003
Unearned income	(418)		(439)
Subtotal	3,442		3,564
Residual values	0		0
Allowance for doubtful accounts	(93)	$ (93)	(92)	$ (107)	$ (108)	$ (108)
Finance receivables, net	3,349		3,472
Less: Billed portion of finance receivables, net	108		105
Less: Current portion of finance receivables not billed, net	1,177		1,218
Finance receivables due after one year, net	$ 2,064		$ 2,149

Finance Receivables, Net - Summary of Future Contractual Maturities of Gross Finance Receivables (Details) - USD ($)
$ in Millions

Jun. 30, 2019

Dec. 31, 2018

Amounts previously billed

12 Months

^[1]

$ 1,514

$ 1,543

24 Months

1,057

1,108

36 Months

715

755

48 Months

405

425

60 Months

151

158

Thereafter

Total

3,860

4,003

$ 112

$ 107

[1]	Includes amounts previously billed of $112 and $107 as of June 30, 2019 and December 31, 2018, respectively.

Finance Receivables, Net - Allowance for Credit Losses (Details) - USD ($)
$ in Millions

3 Months Ended

Jun. 30, 2019

Mar. 31, 2019

Jun. 30, 2018

Mar. 31, 2018

Jun. 30, 2019

Jun. 30, 2018

Financing Receivable, Allowance for Credit Loss [Roll Forward]

$ 93

$ 92

$ 108

(11)

(8)

(10)

^[1]

(2)

Financing Receivable, Collectively Evaluated for Impairment

107

108

^[2]

$ 3,442

$ 3,630

^[3]

Financing Receivable, Allowance for Credit Loss [Roll Forward]

107

108

107

United States

(5)

(4)

(5)

^[1]

Financing Receivable, Collectively Evaluated for Impairment

^[2]

1,885

1,973

^[3]

Financing Receivable, Allowance for Credit Loss [Roll Forward]

Canada

(3)

(1)

^[1]

Financing Receivable, Collectively Evaluated for Impairment

^[2]

329

356

^[3]

Financing Receivable, Allowance for Credit Loss [Roll Forward]

Europe

(3)

(4)

^[1]

(2)

Financing Receivable, Collectively Evaluated for Impairment

^[2]

1,185

1,256

^[3]

Financing Receivable, Allowance for Credit Loss [Roll Forward]

Other

^[4]

^[4]

^[4]

^[1],[4]

^[4]

Financing Receivable, Collectively Evaluated for Impairment

^[2],[4]

^[3]

Estimated Minimum Future Revenues Associated With Equipment on Operating Leases [Abstract]

^[4]

$ 2

[1]	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.
[2]	Total Finance receivables exclude the allowance for credit losses of $93 and $107 at June 30, 2019 and 2018, respectively.
[3]	As a result of an internal reorganization, XBS amounts, previously classified as Other, were reclassified to the U.S. in first quarter 2019. Prior year amounts have also been reclassified to conform to the current year presentation.
[4]	Includes developing market countries and smaller units.

Inventories and Equipment on Operating Leases, Net - Summary of Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Inventories, net [Abstract]
Finished goods	$ 659	$ 699
Work-in-process	55	49
Raw materials	74	70
Total Inventories	$ 788	$ 818

Inventories and Equipment on Operating Leases, Net - Equipment on Operating Leases and Accumulated Depreciation (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Equipment on operating leases, net	$ 455	$ 499
Equipment on Operating Leases, Net [Abstract]
Equipment on operating leases		1,519
Accumulated depreciation		(1,077)
Equipment on operating leases, net	399	$ 442
Equipment on Operating Leases
Property, Plant and Equipment [Line Items]
Equipment on operating leases	1,495
Accumulated depreciation	(1,096)
Equipment on operating leases, net	$ 399

Inventories and Equipment on Operating Leases, Net - Estimated Minimum Future Revenues Associated with Equipment on Operating Leases (Details) - USD ($)
$ in Millions

Jun. 30, 2019

Dec. 31, 2018

2019

^[1]

$ 128

216

132

$ 586

Operating Leases, Future Minimum Payments Receivable [Abstract]

$ 260

178

111

$ 633

[1]	2019 amount represents the future minimum revenues expected to be earned over the remaining balance of the year.

Inventories and Equipment on Operating Leases, Net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Inventories and Equipment on Operating Leases, Net [Abstract]
Contingent rentals on operating lease, total	$ 28		$ 55
Contingent rentals on operating lease, total		$ 31		$ 61

Investment in Affiliates, at Equity - Equity in Net Income (Loss) of Unconsolidated Affiliates (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Schedule of Equity Method Investments [Line Items]
Total Equity in net income (loss) of unconsolidated affiliates	$ 34	$ 19	$ 79	$ (49)
Fuji Xerox
Schedule of Equity Method Investments [Line Items]
Total Equity in net income (loss) of unconsolidated affiliates	32	17	75	(53)
Other
Schedule of Equity Method Investments [Line Items]
Total Equity in net income (loss) of unconsolidated affiliates	$ 2	$ 2	$ 4	$ 4

Investment in Affiliates, at Equity - Additional Information (Details) - Fuji Xerox
$ in Millions, ¥ in Billions

3 Months Ended

6 Months Ended

Jun. 30, 2019

USD ($)

Jun. 30, 2018

USD ($)

Mar. 31, 2018

USD ($)

Mar. 31, 2018

JPY (¥)

Jun. 30, 2019

USD ($)

Jun. 30, 2018

USD ($)

Schedule of Equity Method Investments [Line Items]

Ownership percentage

25.00%

After-tax restructuring and other charges

$ 7

$ 4

$ 19

$ 83

Weighted Average Exchange Rate

^[1]

109.80

109.05

108.07

110.08

108.54

Parent Company - Fujifilm Holdings Corporation | Restatement Adjustment

Schedule of Equity Method Investments [Line Items]

Out-of-period adjustment - Fuji Xerox

$ 110

¥ 12

Non Parent Equity Investment Owner - Xerox Corporation | Restatement Adjustment

Schedule of Equity Method Investments [Line Items]

Out-of-period adjustment - Fuji Xerox

$ 28

[1]	Represents Yen/U.S. Dollar exchange rate used to translate.

Investment in Affiliates, at Equity - Summary of Fuji Xerox (Details) - Fuji Xerox
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

USD ($)

Jun. 30, 2018

USD ($)

Mar. 31, 2018

Jun. 30, 2019

USD ($)

Jun. 30, 2018

USD ($)

Summary of Operations:

Revenues

$ 2,145

$ 2,226

$ 4,606

$ 4,691

Costs and expenses

1,948

2,098

4,152

4,869

Income (Loss) before Income Taxes

197

128

454

(178)

Income tax expense

150

Net Income (Loss)

132

304

(189)

Less: Net income attributable to noncontrolling interests

Net Income (Loss) – Fuji Xerox

$ 132

$ 77

$ 303

$ (190)

Weighted Average Exchange Rate

^[1]

109.80

109.05

108.07

110.08

108.54

[1]	Represents Yen/U.S. Dollar exchange rate used to translate.

Restructuring Programs - Additional Information (Details)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

USD ($)

Mar. 31, 2019

USD ($)

Jun. 30, 2019

USD ($)

Employees

^[1]

$ 18

$ 54

$ 72

Headcount reductions, number of employees | Employees

300

Early termination of prior period impaired leases

$ 16

Severance and Related Costs

^[1]

Other Contractual Termination Costs

^[1],[2]

^[2]

^[2]

Asset Impairments

^[1]

^[2]

^[3]

^[2]

^[3]

$ 46

^[3]

$ 2

^[2]

$ 0

^[3]

[1]	Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown for restructuring and asset impairment charges.
[2]	Primarily includes additional costs incurred upon the exit from our facilities including decommissioning costs and associated contractual termination costs.
[3]	Primarily related to the exit and abandonment of leased and owned facilities. The charge includes the accelerated write-off of $34 for leased right-of-use asset balances and $12 for owned asset balances upon exit from the facility net of any potential sublease income or other recovery amounts.

Restructuring Programs - Information Related to Restructuring Program Activity (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Mar. 31, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

$ 80

$ 95

(8)

(16)

^[1]

(29)

(69)

$ (40)

(98)

$ (92)

Leased right-of-use asset write-off

^[2]

Owned asset write-off

^[2]

Severance and Related Costs

(6)

(8)

^[1]

(17)

(32)

Other Contractual Termination Costs

^[3]

^[3]

^[3]

^[1],[3]

^[3]

(4)

(1)

^[3]

Asset Impairments

^[2]

^[3]

^[2]

(2)

^[3]

^[2]

^[1]

^[3]

^[2]

(8)

^[3]

(36)

^[2]

$ 0

^[3]

$ 0

^[2]

$ 0

^[3]

[1]	Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown for restructuring and asset impairment charges.
[2]	Primarily related to the exit and abandonment of leased and owned facilities. The charge includes the accelerated write-off of $34 for leased right-of-use asset balances and $12 for owned asset balances upon exit from the facility net of any potential sublease income or other recovery amounts.
[3]	Primarily includes additional costs incurred upon the exit from our facilities including decommissioning costs and associated contractual termination costs.

Restructuring Programs - Summary Of Reconciliation to Statements of Cash Flows (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Restructuring and Related Activities [Abstract]
Charges against reserve and currency	$ (29)	$ (69)	$ (40)	$ (98)	$ (92)
Effects of foreign currency and other non-cash items	8		3	44	1
Restructuring cash payments	$ (21)		$ (37)	$ (54)	$ (91)

Restructuring Programs - Certain Related Costs Incurred in Connection with Restructuring Programs (Details)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

USD ($)

Jun. 30, 2019

USD ($)

employee

Retention related severance/bonuses

$ 19

$ 77

2,200

Contractual severance costs

^[1]

$ 20

Consulting and other costs

^[2]

Summary of Derivative Instruments Gains (Losses) [Abstract]

^[3]

$ 8

$ 19

[1]	Includes retention related severance and bonuses for employees expected to continue working beyond their minimum notification period before termination.
[2]	Reflects estimated severance costs we are contractually required to pay on employees transferred (approximately 2,200) as part of the shared service arrangement entered into with HCL Technologies.
[3]	Represents professional support services associated with our business transformation initiatives.

Debt - Interest Expense and Income (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Debt Disclosure [Abstract]

Interest expense

^[1]

$ 59

$ 60

$ 118

$ 123

Interest income

^[2]

$ 64

$ 72

$ 131

$ 146

[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.

Financial Instruments - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Derivative [Line Items]
Derivative, Notional Amount	$ 1,272		$ 1,272		$ 1,103
Average Maturity of Foreign Exchange Hedging Contracts - within Three Months	82.00%		82.00%
Average Maturity of Foreign Exchange Hedging Contracts - within Three and Six Months	9.00%		9.00%
Average Maturity of Foreign Exchange Hedging Contracts - within Six and Twelve Months	9.00%		9.00%
Net asset fair value	$ (7)		$ (7)		(11)
Net gain recorded in AOCL expected to be reclassified to net income in the future			6
Foreign currency transaction (losses) gains, before tax	0	$ (1)	(2)	$ 1
Senior Note 2021
Derivative [Line Items]
Notional Amount	200		200
Net Fair Value	2		2
Derivatives Designated as Hedging Instruments
Derivative [Line Items]
Net asset fair value	(7)		(7)		(5)
Cash Flow Hedging \| Derivatives Designated as Hedging Instruments
Derivative [Line Items]
Net asset fair value	$ 5		$ 5		$ 8

Financial Instruments - Fair Value Hedges (Details) - Senior Note 2021 $ in Millions	Jun. 30, 2019 USD ($)
Derivative [Line Items]
Notional Amount	$ 200
Net Fair Value	$ 2
Weighted Average Interest Rate Paid	3.26%
Interest Rate Received	4.50%

Financial Instruments - Summary of Derivative Instruments Fair Value (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Net Derivative asset	$ 7	$ 11
Total Derivative assets
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Assets	10	15
Total Derivative liabilities
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Liabilities	(3)	(4)
Derivatives Designated as Hedging Instruments
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Net Derivative asset	7	5
Derivatives Designated as Hedging Instruments \| Other current assets \| Foreign exchange contracts - forwards
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Assets	6	7
Derivatives Designated as Hedging Instruments \| Other current assets \| Foreign currency options
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Assets	0	1
Derivatives Designated as Hedging Instruments \| Accrued expenses and other current liabilities \| Foreign exchange contracts - forwards
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Liabilities	(1)	0
Derivatives Designated as Hedging Instruments \| Other long-term assets \| Interest rate swaps
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Assets	2	0
Derivatives Designated as Hedging Instruments \| Other long-term liabilities \| Interest rate swaps
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Liabilities	0	(3)
Not Designated as Hedging Instrument \| Foreign exchange contracts - forwards
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Net Derivative asset	0	6
Not Designated as Hedging Instrument \| Other current assets \| Foreign exchange contracts - forwards
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Assets	2	7
Not Designated as Hedging Instrument \| Accrued expenses and other current liabilities \| Foreign exchange contracts - forwards
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Derivative Liabilities	$ (2)	$ (1)

Financial Instruments - Summary of Derivative Instruments Gain (Losses) (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Derivative gain (loss) recognized in OCI (effective portion)

$ 3

$ 6

Derivative gain (loss) recognized in OCI (effective portion)

$ (2)

$ 10

Derivative gain (loss) reclassified from AOCL to income - Cost of sales (effective portion)

^[1]

Interest Rate Contract | Fair Value Hedges | Interest Expense

Summary of Derivative Instruments Gains (Losses) [Abstract]

Derivative gain (loss) recognized in interest expense

(1)

(6)

Hedged item (loss) gain recognized in interest expense

(3)

(5)

Foreign exchange contracts - forwards | Cash Flow Hedges

Summary of Derivative Instruments Gains (Losses) [Abstract]

Derivative gain (loss) recognized in OCI (effective portion)

(2)

Foreign exchange contracts - forwards | Cash Flow Hedges | Cost of Sales

Summary of Derivative Instruments Gains (Losses) [Abstract]

Derivative gain (loss) reclassified from AOCL to income - Cost of sales (effective portion)

(12)

Derivative, underlying exposure

$ 0

[1]	Reclassified to Cost of sales - refer to Note 14 - Financial Instruments for additional information regarding our cash flow hedges.

Financial Instruments - Summary of Gains (Losses) Non-designated Derivative Instruments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Foreign exchange contracts - forwards \| Foreign Currency Gain (Loss \| Not Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Gains (losses) on non-designated derivative instruments	$ 6	$ 18	$ 1	$ 18

Fair Value of Financial Assets and Liabilities - Recurring (Details) - Recurring - Level 2 - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Assets
Deferred compensation investments in mutual funds	$ 18	$ 16
Total	28	31
Liabilities
Deferred compensation plan liabilities	17	16
Total	20	20
Foreign exchange contracts - forwards
Assets
Foreign currency contracts - assets	8	14
Liabilities
Foreign currency contracts - liabilities	3	1
Foreign currency options
Assets
Foreign currency contracts - assets	0	1
Interest rate swaps
Assets
Interest rate swaps	2	0
Liabilities
Interest rate swaps	$ 0	$ 3

Fair Value of Financial Assets and Liabilities - Nonrecurring (Details) - Nonrecurring - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 712	$ 1,084
Accounts receivable, net	1,256	1,276
Short-term debt and current portion of long-term debt	866	961
Long-term debt	3,962	4,269
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	712	1,084
Accounts receivable, net	1,256	1,276
Short-term debt and current portion of long-term debt	870	966
Long-term debt	$ 3,995	$ 3,922

Employee Benefit Plans (Details) - USD ($)

3 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Dec. 31, 2018

Dec. 31, 2019

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):

$ 32,000,000

$ 26,000,000

$ 68,000,000

$ 53,000,000

21,000,000

22,000,000

36,000,000

(36,000,000)

^[1]

(44,000,000)

(47,000,000)

(89,000,000)

(93,000,000)

^[1]

21,000,000

3,000,000

40,000,000

5,000,000

Pension Plan

70,000,000

75,000,000

$ 144,000,000

Pension Plan | Forecast

Defined benefit plan, expected future employer contributions

$ 135,000,000

Pension Plan | U.S.

Expected return on plan assets

Service cost

1,000,000

Interest cost

28,000,000

34,000,000

58,000,000

67,000,000

(25,000,000)

(36,000,000)

(51,000,000)

(70,000,000)

Recognized net actuarial loss (gain)

6,000,000

11,000,000

12,000,000

Recognized settlement loss

(1,000,000)

27,000,000

26,000,000

58,000,000

51,000,000

Defined contribution plans

36,000,000

29,000,000

76,000,000

60,000,000

^[2]

5,000,000

10,000,000

13,000,000

19,000,000

Net Periodic Benefit Cost (Credit)

41,000,000

39,000,000

89,000,000

79,000,000

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):

^[3]

21,000,000

12,000,000

36,000,000

(46,000,000)

(33,000,000)

(32,000,000)

(69,000,000)

(63,000,000)

Total Recognized in Other Comprehensive Income

1,000,000

^[4]

(11,000,000)

(19,000,000)

(32,000,000)

(108,000,000)

Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)

30,000,000

20,000,000

57,000,000

(29,000,000)

Pension Plan | U.S. | Forecast

13,000,000

14,000,000

27,000,000

Defined benefit plan, expected future employer contributions

25,000,000

Pension Plan | U.S. | Qualified Plan

Pension Plan | Non-U.S.

Expected return on plan assets

Service cost

5,000,000

7,000,000

12,000,000

13,000,000

Interest cost

38,000,000

77,000,000

(58,000,000)

(62,000,000)

(118,000,000)

(125,000,000)

Recognized net actuarial loss (gain)

12,000,000

15,000,000

22,000,000

30,000,000

Recognized settlement loss

(1,000,000)

(2,000,000)

Defined contribution plans

(4,000,000)

(3,000,000)

(8,000,000)

(7,000,000)

^[2]

6,000,000

7,000,000

12,000,000

14,000,000

Net Periodic Benefit Cost (Credit)

2,000,000

4,000,000

7,000,000

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):

^[3]

(12,000,000)

(15,000,000)

(22,000,000)

(30,000,000)

Total Recognized in Other Comprehensive Income

1,000,000

2,000,000

^[4]

(11,000,000)

(14,000,000)

(21,000,000)

(28,000,000)

Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)

(9,000,000)

(10,000,000)

(17,000,000)

(21,000,000)

Pension Plan | Non-U.S. | Forecast

57,000,000

61,000,000

117,000,000

Defined benefit plan, expected future employer contributions

110,000,000

Retiree Health

Expected return on plan assets

Service cost

1,000,000

2,000,000

Interest cost

4,000,000

7,000,000

8,000,000

13,000,000

Recognized net actuarial loss (gain)

(1,000,000)

(2,000,000)

Recognized settlement loss

(19,000,000)

(1,000,000)

(38,000,000)

(2,000,000)

Net Periodic Benefit Cost (Credit)

(15,000,000)

7,000,000

(31,000,000)

13,000,000

(15,000,000)

7,000,000

(31,000,000)

13,000,000

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):

^[3]

10,000,000

1,000,000

2,000,000

Total Recognized in Other Comprehensive Income

19,000,000

1,000,000

38,000,000

2,000,000

^[4]

20,000,000

11,000,000

40,000,000

12,000,000

Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)

$ 5,000,000

$ 18,000,000

9,000,000

25,000,000

Retiree Health | Forecast

$ 16,000,000

$ 29,000,000

$ 57,000,000

Defined benefit plan, expected future employer contributions

$ 35,000,000

[1]	Reclassified to Total Net Periodic Benefit Cost - refer to Note 16 - Employee Benefit Plans for additional information.
[2]	Prior year amounts have been revised to reflect additional cost for previously excluded plans.
[3]	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.
[4]	Amounts represent the pre-tax effect included within Other Comprehensive Income. Refer to Note 19 - Other Comprehensive Income (Loss) for related tax effects and the after-tax amounts.

Shareholders' Equity (Details) - USD ($)
$ / shares in Units, $ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Cumulative effect of change in accounting principle

$ 5,063

$ 5,582

$ 5,039

$ 5,293

120

Cash dividends declared - common

189

(121)

365

116

^[1]

(57)

(65)

(115)

(130)

Stock option and incentive plans, net

Payments to acquire treasury stock, including fees

(197)

(300)

^[2]

Distributions to noncontrolling interests

(224)

(9)

Dividends per common share (in dollars per share)

$ 4,992

$ 5,408

$ 4,992

$ 5,408

$ 0.25

$ 0.0050

$ 0.50

Dividends per preferred share (in dollars per share)

$ 20.00

$ 40.00

Series B Preferred Stock

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Cash dividends declared - preferred

^[3]

$ (3)

$ (7)

Xerox Shareholders’ Equity

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Cumulative effect of change in accounting principle

5,027

5,553

5,005

5,256

120

Cash dividends declared - common

186

(123)

359

111

^[1]

(57)

(65)

(115)

(130)

Stock option and incentive plans, net

Payments to acquire treasury stock, including fees

(197)

(300)

Xerox Shareholders’ Equity | Series B Preferred Stock

4,962

5,377

4,962

5,377

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Cash dividends declared - preferred

^[3]

(3)

(7)

Common Stock

Increase (Decrease) in Stockholders' Equity [Roll Forward]

230

255

232

255

(5)

(7)

Additional Paid-in Capital

225

255

225

255

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Stock option and incentive plans, net

3,282

3,908

3,321

3,893

(164)

(217)

Increase (Decrease) in Stockholders' Equity [Roll Forward]

3,124

3,920

3,124

3,920

Treasury Stock

Payments to acquire treasury stock, including fees

(103)

(55)

(197)

(300)

169

224

Increase (Decrease) in Stockholders' Equity [Roll Forward]

(131)

Retained Earnings

Cumulative effect of change in accounting principle

5,270

4,927

5,072

4,856

127

^[4]

120

Cash dividends declared - common

181

112

314

135

^[1]

(57)

(65)

(115)

(130)

Retained Earnings | Series B Preferred Stock

5,391

4,974

5,391

4,974

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Cash dividends declared - preferred

^[3]

(3)

(7)

AOCL

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Cumulative effect of change in accounting principle

^[5]

(3,652)

(3,537)

(3,565)

(3,748)

^[4],[5]

(127)

^[5]

(235)

(24)

Non-controlling Interests

^[5]

(3,647)

(3,772)

(3,647)

(3,772)

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Distributions to noncontrolling interests

(9)

Increase (Decrease) In Treasury Stock [Roll Forward]

$ 30

$ 31

$ 30

$ 31

[1]	Cash dividends declared on common stock for the three and six months ended June 30, 2019 and 2018 were $0.25 per share and $0.50 per share, respectively.
[2]	Includes associated fees.
[3]	Cash dividends declared on preferred stock for the three and six months ended June 30, 2019 and 2018 were $20.00 per share and $40.00 per share, respectively.
[4]	Refer to Note 2 - Recent Accounting Pronouncements - Income Taxes, for additional information related to the adoption of ASU 2018-02.
[5]	Refer to Note 19 - Other Comprehensive Income (Loss) for the components of AOCL.

Shareholders' Equity - Treasury Stock (Details) - USD ($)
shares in Thousands, $ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Balance at December 31, 2018 (in shares)

2,067

Balance at December 31, 2018

$ 55

Purchases (in shares)

^[1]

9,246

Purchases

$ 197

$ 300

^[1]

Cancellations (in shares)

(7,348)

Balance at June 30, 2019 (in shares)

$ (224)

3,965

Balance at June 30, 2019

$ 131

[1]	Includes associated fees.

Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Payment Arrangement [Abstract]
Stock-based compensation expense, pre-tax	$ 15	$ 13	$ 30	$ 29
Income tax benefit recognized in earnings	$ 3	$ 3	$ 7	$ 7

Stock-Based Compensation - Additional Information (Details)
shares in Thousands

6 Months Ended

Jun. 30, 2019

trading_day

$ / shares

Minimum

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Performance shares entitlement of original award grant

0.00%

Maximum

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Performance shares entitlement of original award grant

200.00%

Restricted Stock Units (RSUs)

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted (in shares) | shares

1,265

Weighted average grant date fair value (in dollars per share) | $ / shares

$ 22.49

Restricted Stock Units (RSUs) | Graded vesting after year one of service period

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Restricted stock units vest on a granted schedule

25.00%

Restricted Stock Units (RSUs) | Graded vesting after year two of service period

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Restricted stock units vest on a granted schedule

25.00%

Restricted Stock Units (RSUs) | Graded vesting after year three of service period

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Restricted stock units vest on a granted schedule

50.00%

Performance Shares

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Vesting term

3 years

Performance Shares | Total Revenue

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Performance Shares | Free Cash Flow

25.00%

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Performance Shares | Absolute Share Price

25.00%

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Performance Shares | Performance-Based

50.00%

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted (in shares) | shares

708

Weighted average grant date fair value (in dollars per share) | $ / shares

$ 22.49

Performance share maximum overachievement

50.00%

Vesting term

3 years

100.00%

Performance Shares | Market-Based

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted (in shares) | shares

708

Weighted average grant date fair value (in dollars per share) | $ / shares

$ 16.16

^[1]

Total number of trading days of performance period | trading_day

50.00%

Vesting term

3 years

[1]	The weighted average of fair values used to record compensation expense as determined by the Monte Carlo simulation.

Stock-Based Compensation - Summary of Key Valuation Input Assumptions (Details) - Performance Shares

6 Months Ended

Jun. 30, 2019

$ / shares

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Term

3 years

Market-Based

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Term

3 years

Risk-free interest rate

2.51%

^[1]

Dividend yield

3.97%

^[2]

Blended volatility

32.95%

^[3]

Weighted average fair value (in dollars per share)

$ 16.16

^[4]

Historical volatility look back

3 years

Daily Stock Returns | Market-Based

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Blended volatility

50.00%

Implied Volatility | Market-Based

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Blended volatility

50.00%

[1]	The risk-free interest rate was based on the zero-coupon U.S. Treasury yield curve on the valuation date, with a maturity matched to the performance period.
[2]	The dividend yield was calculated as the expected quarterly dividend divided by Xerox’s three-month average stock price as of the valuation date, annualized and continuously compounded.
[3]	Xerox’s volatility is calculated using a blended volatility approach, with 50% weight on Xerox's historical volatility calculated from daily stock returns over a three-year look-back term from the valuation date, and 50% weight on Xerox's implied volatility.
[4]	The weighted average of fair values used to record compensation expense as determined by the Monte Carlo simulation.

Stock-Based Compensation - Absolute Share Price Compared Against Total Return Targets (Details) - Market-Based - Performance Shares

6 Months Ended

Jun. 30, 2019

^[1]

$40.00 and above

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

200.00%

$35.00

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

100.00%

$30.00

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

50.00%

Below $30.00

Translation adjustments (losses) gains, Pre-tax

0.00%

[1]	For performance between the levels described above, the degree of vesting is interpolated on a linear basis.

Other Comprehensive Income (Loss) (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Equity [Abstract]

$ (5)

$ (335)

$ 32

$ (151)

Translation adjustments (losses) gains, Net of Tax

^[1]

(4)

(322)

(146)

Unrealized gains (losses), Pre-tax

Changes in fair value of cash flow hedges gains (losses)

(2)

^[2]

(2)

(3)

Net Unrealized gains (losses)

^[2]

Other losses

(2)

(3)

(4)

Unrealized gains (losses), Net of Tax

Changes in fair value of cash flow hedges gains (losses)

(1)

Changes in fair value of cash flow hedges gains (losses)

^[2]

(1)

(2)

Net Unrealized gains (losses)

^[2]

Other losses

(2)

(3)

^[1]

Net Unrealized gains (losses)

^[1]

(3)

Defined benefit plans (losses) gains

Net actuarial/prior service (losses) gains

(21)

(22)

(36)

Prior service amortization

^[3]

(21)

(3)

(40)

(5)

Actuarial loss amortization/settlement

^[3]

Fuji Xerox changes in defined benefit plans, net

^[4]

(7)

(3)

(24)

Other gains (losses)

^[5]

(2)

Changes in defined benefit plans gains, Pre-tax

139

Defined benefit plans (losses) gains

Net actuarial/prior service (losses) gains

(15)

(16)

(27)

Prior service amortization

^[3]

(16)

(3)

(30)

(4)

Actuarial loss amortization/settlement

^[3]

Fuji Xerox changes in defined benefit plans, net

^[4]

(7)

(3)

(24)

Other gains (losses)

^[5]

(2)

Changes in defined benefit plans gains

^[1]

108

Other Comprehensive Income (Loss) Attributable to Xerox, Pre-tax

(243)

Other Comprehensive Income (Loss), Net Attributable to Xerox

^[1]

$ 5

$ (235)

$ 45

$ (24)

[1]	Refer to Note 19 - Other Comprehensive Income (Loss) for gross components of Other Comprehensive Income (Loss), reclassification adjustments out of Accumulated Other Comprehensive Loss and related tax effects.
[2]	Reclassified to Cost of sales - refer to Note 14 - Financial Instruments for additional information regarding our cash flow hedges.
[3]	Reclassified to Total Net Periodic Benefit Cost - refer to Note 16 - Employee Benefit Plans for additional information.
[4]	Represents our share of Fuji Xerox's benefit plan changes.
[5]	Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits in AOCL.

Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Loss (AOCL) (Details) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Dec. 31, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Cumulative translation adjustments

$ (1,990)

$ (2,023)

Other unrealized gains, net

Benefit plans net actuarial losses and prior service credits

^[1],[2]

(1,663)

(1,546)

Total Accumulated other comprehensive loss attributable to Xerox

(3,647)

$ (3,565)

Adjustment to AOCL

$ 3

$ 120

AOCL

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Adjustment to AOCL

^[3],[4]

(127)

ASU 2018-02 | AOCL

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Adjustment to AOCL

$ (127)

[1]	Includes our share of Fuji Xerox.
[2]	The change from December 31, 2018 includes $(127) related to the adoption of ASU 2018-02 and the reclassification of stranded tax effects resulting from the Tax Act - refer to Note 2 - Recent Accounting Pronouncements - Income Taxes for additional information.
[3]	Refer to Note 19 - Other Comprehensive Income (Loss) for the components of AOCL.
[4]	Refer to Note 2 - Recent Accounting Pronouncements - Income Taxes, for additional information related to the adoption of ASU 2018-02.