Divestitures

12 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Sales of Ownership Interests in Fuji Xerox Co., Ltd. and Xerox International Partners

In November 2019, Xerox Holdings completed a series of transactions to restructure its relationship with FUJIFILM Holdings Corporation (FH), including the sale of its indirect 25% equity interest in Fuji Xerox (FX) for approximately $2.2 billion as well as the sale of its indirect 51% partnership interest in Xerox International Partners (XIP) for approximately $23 (collectively the Sales).

As a result of the Sales and the related strategic shift in our business, the historical financial results of our equity method investment in FX and our XIP business (which was consolidated) for the periods prior to the Sales are reflected as a discontinued operation and as such, their impact is excluded from continuing operations for all periods presented.

The Sales resulted in a pre-tax gain of $629 ($539 after-tax), and included a reclassification from Accumulated other comprehensive loss of $165 (Refer to Note 25 - Other Comprehensive Income (Loss)) as well as approximately $9 of transaction costs and $9 of allocated goodwill associated with our XIP business (Refer to Note 13 - Goodwill and Intangible Assets, Net). The XIP allocated goodwill was based on the relative fair value of our XIP business, as evidenced by the sales price, as compared to the total estimated fair value of Xerox. No Goodwill was allocated for our investment in FX based on consideration of the guidance in ASC 350-20-40-2 and the fact that an equity investment is not considered a business in accordance with ASC 805-10-55, as it was not controlled by Xerox.

The transactions with FH also included an OEM license agreement by and between FX and Xerox, granting FX the right to use specific Xerox Intellectual Property (IP) in providing certain named original equipment manufacturers (OEM’s) with products (such as printer engines) in exchange for a one-time upfront license fee of $77. The license fee is recorded within Rental and other revenues for 2019. In addition, arrangements with FX whereby we purchase

inventory from and sell inventory to FX, will continue after the Sales and, as a result of our Technology Agreement with Fuji Xerox which remains in effect through March 2021, we will continue to receive royalty payments for FX’s use of our Xerox brand trademark, as well as rights to access our patent portfolio in exchange for access to their patent portfolio.

Refer to Note 12 - Investment in Affiliates, at Equity, for additional information on transactions with FX as well as FX's intention to terminate the Technology Agreement effective March 31, 2021.

Summarized financial information for our Discontinued Operations is as follows:


	Year Ended December 31,
	2020		2019		2018
Revenue	$	—	$	79	$	168



Income from operations	$	—	$	176	$	74
Gain on disposal	—		629		—
Income before income taxes	—		805		74
Income tax expense	—		95		10
Income from discontinued operations, net of tax	—		710		64
Income from discontinued operations attributable to noncontrolling interests, net of tax	—		5		9
Income from discontinued operations, attributable to Xerox, net of tax	$	—	$	705	$	55

The following is a summary of selected financial information for our Discontinued Operations:


	Year Ended December 31,
	2020		2019		2018
Cost and Expenses:
Cost of revenues	$	—	$	44	$	110

Other expenses	—		6		9
Total Costs and Expenses	$	—	$	50	$	119
Selected amounts included in Costs and Expenses:
Depreciation and amortization	$	—	$	—	$	—
Restructuring and related costs, net	—		—		1







Other:
Equity in net income of FX	$	—	$	147	$	25
Net income attributable to noncontrolling interest - XIP	—		5		9
Capital expenditures	—		—		—

Refer to Note 12 - Investments in Affiliates, at Equity for additional information regarding FX, including summarized financial information of FX.