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Debt
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Debt Debt
Short-term borrowings were as follows:
December 31,
 20232022
Short-term debt and current portion of long-term debt
Xerox Holdings Corporation$— $— 
Xerox Corporation323 300 
Xerox - Other Subsidiaries(1)
244 560 
Total$567 $860 
_____________
(1)Represents subsidiaries of Xerox Corporation.

We classify our debt based on the contractual maturity dates of the underlying debt instruments or as of the earliest put date available to the debt holders. We defer costs associated with debt issuance over the applicable term, or to the first put date in the case of convertible debt or debt with a put feature. These costs are amortized as interest expense in our Consolidated Statements of Income (Loss).
Long-term debt was as follows:
December 31,
 Stated Rate
Weighted Average Interest Rates at December 31, 2023(1) 
20232022
Xerox Holdings Corporation
Senior Notes due 20255.00 %4.95 %$750 $750 
Senior Notes due 20285.50 %5.40 %750 750 
Subtotal - Xerox Holdings Corporation$1,500 $1,500 
Xerox Corporation
Senior Notes due 2023(2)
4.38 %4.63 %$— $300 
Senior Notes due 20243.80 %3.84 %300 300 
Term Loan B due 2029(3)
9.34 %9.65 %550 — 
Senior Notes due 20354.80 %4.84 %250 250 
Senior Notes due 20396.75 %6.78 %350 350 
Subtotal - Xerox Corporation$1,450 $1,200 
Xerox - Other Subsidiaries(3)
United States$102 $790 
Canada77 57 
France182 195 
Subtotal Xerox - Other Subsidiaries$361 $1,042 
Principal debt balance$3,311 $3,742 
Xerox Holdings Corporation - Debt issuance costs(6)(9)
Xerox Corporation - Debt issuance costs(12)(4)
Xerox - Other subsidiaries - Debt issuance costs(1)(5)
Subtotal - Debt issuance costs$(19)$(18)
Unamortized (discount) premium(15)2 
Less: current maturities (567)(860)
Total Long-term Debt$2,710 $2,866 
_____________
(1)Represents the weighted average effective interest rate, which includes the effect of discounts and premiums on issued debt.
(2)As a result of the downgrade of our debt ratings in February 2022, the coupon rate of 4.375% increased by 0.25% to 4.625% effective March 15, 2022.
(3)Represent secured borrowings of Xerox Corporation and its Other subsidiaries. Refer to the Secured Borrowings and Collateral section below for additional information regarding the secured borrowings of Other subsidiaries, which are secured by finance receivables..
Scheduled principal payments due on our long-term debt for the next five years and thereafter are as follows:
2024(1)
2025202620272028ThereafterTotal 
Xerox Holdings Corporation$— $750 $— $— $750 $— $1,500 
Xerox Corporation328 27 41 55 55 944 1,450 
Xerox - Other Subsidiaries(2)

244 102 15 — — — 361 
Total$572 $879 $56 $55 $805 $944 $3,311 
_____________
(1)Current portion of long-term debt maturities for 2024 are $113, $378, $41 and $40 for the first, second, third and fourth quarters, respectively.
(2)Represents subsidiaries of Xerox Corporation.
Xerox Holdings Corporation/Xerox Corporation Intercompany Loan
In February 2021, Xerox Holdings Corporation and Xerox Corporation entered into an Intercompany Loan agreement for the net proceeds of $1,494 contributed by Xerox Holdings Corporation to Xerox Corporation in 2020. The contribution was the result of the net debt proceeds Xerox Holdings Corporation received in connection with the issuance of the Senior Notes.
The intercompany loan was established to mirror the terms of Xerox Holdings Corporation’s 2025 and 2028 Senior Notes, including interest rates and payment dates. The intercompany interest expense also includes a ratable amount to reimburse Xerox Holdings Corporation for its debt issuance costs and premium.
At December 31, 2023 and 2022, the balance of the Intercompany Loan reported in Xerox Corporation’s Consolidated Balance Sheet was $1,497 and $1,496, respectively, which is net of related debt issuance costs, and the intercompany interest payable was $30 and $30, respectively.
Revolving Credit Facility
In May 2023, Xerox Corporation, as borrower, its parent company, Xerox Holdings Corporation, and certain of its subsidiaries, as guarantors, entered into a five-year asset-based revolving credit agreement (the ABL Facility) with Citibank, N.A., as administrative and collateral agent and several participating lending banks including Citibank N.A. The aggregate outstanding principal amount of the ABL is payable in full at maturity on May 22, 2028, and there are no scheduled principal payments prior to maturity. We deferred approximately $7 of debt issuance costs in connection with the ABL Facility, which will be amortized over the five-year term. Our previous $250 Revolving Credit Facility due July 2024 was terminated prior to entering into the ABL Facility and resulted in a debt extinguishment loss of approximately $1 related to the write-off of deferred debt issuance costs.
Under the ABL Facility, Xerox Corporation may borrow up to the lesser of (x) $300 and (y) a borrowing base calculated based on working capital amounts (Accounts receivable and Inventories) of the loan parties thereunder as set forth in the ABL Facility. The ABL Facility includes an uncommitted accordion feature that allows Xerox Corporation to increase the facility by a total of up to $250, subject to obtaining additional commitments from existing lenders or new lending institutions. The ABL Facility also includes a $100 letter of credit subfacility. Xerox Corporation's borrowings under the ABL Facility are supported by guarantees from Xerox Holdings Corporation and certain of Xerox Corporation's Canadian and English subsidiaries (and, within a specified period following the closing date of the TLB - see below - certain U.S., German and Belgian subsidiaries), and by security interests in substantially all of the working capital assets of Xerox Corporation, Xerox Holdings Corporation, and such Canadian and English subsidiaries (and, within a specified period following the closing date of the TLB (see below), substantially all assets of Xerox Corporation, Xerox Holdings Corporation and such U.S., Canadian and English subsidiaries (subject to certain exceptions and limitations set forth in the TLB), and all finance lease receivables of such German and Belgian subsidiaries).
At Xerox Corporation’s election, the loans under the ABL Facility will bear interest at either:
(1)a fluctuating rate per annum equal to the highest of (A) Citibank’s base rate, (B) a rate of 0.5% in excess of the “NYFRB” rate, and (C) a rate of 1.0% in excess of one-month Term SOFR, provided that such fluctuating rate shall not be less than 0.0%, in each case plus an applicable margin (the loans bearing interest at such fluctuating rate, “ABR Loans”); or
(2)the one-, three-, or six-month period or (as agreed to by the Agent and the Lenders) such other period, as selected by the Xerox Corporation, per annum Term SOFR (plus a 0.10% credit spread adjustment), provided that such rate shall not be less than 0.0%, plus an applicable margin (the loans bearing interest at such rate “Term SOFR Loans”).
The applicable margin for ABR loans ranges from 0.5% to 1.0% depending on the Company’s average excess availability. The applicable margin for Term SOFR loans from 1.5% to 2.0% depending on the Company’s average daily excess availability.
At December 31, 2023, there were no borrowings under the ABL Facility, and no letters of credits were issued under the facility. During 2023, maximum borrowings under the ABL Facility were $220.
The ABL Facility requires the Company to comply with a fixed charge coverage ratio of 1X, as defined in the ABL Facility, measured as of the last day of each fiscal quarter during which excess availability is less than an amount equal to the greater of (A) $22.5 and (B) 10% of the Line Cap (the lesser of the aggregate amount of Revolving Commitments and the then-applicable Borrowing Base). Based on the excess availability at December 31, 2023, the fixed charge coverage ratio measurement was not applicable. The ABL Facility also contains negative covenants governing dividends, investments, indebtedness, and other matters customary for similar facilities. As of December 31, 2023, we were in full compliance with all covenants under the ABL Facility and no Event of Default (as such term is defined in the ABL Facility) had occurred.
If an event of default occurs under the ABL Facility, the entire principal amount outstanding, together with all accrued unpaid interest and other amounts owed in respect thereof, may be declared immediately due and payable, subject, in certain instances, to the expiration of applicable cure periods.
Term Loan B Credit Facility
In November 2023, Xerox Corporation, as borrower, and its parent company, Xerox Holdings Corporation, and certain of Xerox’s subsidiaries, as guarantors, entered into a first lien term loan Credit Agreement with Jefferies Finance LLC (Jefferies Finance), as Administrative Agent and Collateral Agent, and a syndicate of Lenders providing for a first lien senior secured term loan credit facility (the Term Loan B or “TLB”) to Xerox Corporation of $550, which was fully extended as term loans to Xerox Corporation at closing. The term loans under this facility
included an aggregate Original Issue Discount (OID) of $17 and debt issuance costs of $9 resulting in net proceeds of approximately $524. The OID and debt issuance costs were accordingly deferred and will be amortized over the term of the Loans.
The proceeds of the term loans were used to repay in full the bridge Loan Facility of $555 extended to Xerox under a credit agreement, dated as of September 28, 2023, entered into with Jefferies Finance as Administrative Agent, Collateral Agent and Lender. The Loan Facility was a 5-year agreement with a final maturity date of September 28, 2028 and bore interest at an annual rate of 8.50%. The proceeds from that bridge loan were used to finance the repurchase of an aggregate of approximately 34 million shares of the Company’s common stock from Carl C. Icahn and certain of his affiliates pursuant to the terms of a related purchase agreement as disclosed in Note 22 – Shareholders’ Equity. The repayment of the Loan Facility resulted in a debt extinguishment loss of $7 primarily related to the write-off of deferred debt issuance costs.
Xerox’s obligations under the TLB are supported by, (i) on the closing date thereof, guarantees from the Company and certain of Xerox’s U.S., Canadian and English subsidiaries, and security interests in substantially all of the assets of Xerox, the Company, and such U.S., Canadian and English subsidiaries (subject to certain exceptions and limitations set forth in the TLB), and (ii) within a specified period following such closing date, guarantees from certain of Xerox’s German and Belgium subsidiaries, and security interests in the finance lease receivables of such German and Belgium subsidiaries. Liens in favor of the Lenders under the TLB are subject to an intercreditor agreement entered into on the Closing Date with the Administrative Agent and Collateral Agent under Xerox’s existing ABL Facility, dated as of May 22, 2023.
At Xerox’s election, the term loans will bear interest at a per annum rate of either (1) a fluctuating rate equal to the highest of (A) a rate of 0.5% in excess of the “NYFRB” rate, (B) the “prime rate” and (C) a rate of 1.0% in excess of one-month Term SOFR, plus an applicable margin of 3.00%, or (2) Term SOFR for a one-, three- or six-month interest period or (as agreed to by the Agent and the Lenders) such other period, as selected by the company (provided that such rate shall not be less than 0.50%), plus an applicable margin of 4.00%, for Term SOFR term loans, or 3.00% for ABR term loans. Based on Xerox’s current elections, the $550 of term loans at December 31, 2023 currently bear interest at an average of 9.34% through January 31, 2024, at which time the interest rate will reset based on Xerox’s elections.
The term loans are repayable in full at maturity in November 2029 and amortize at a rate of 5% per annum in 2024 and 2025, 7.5% per annum in 2026 and 10% per annum thereafter. If the term loans are voluntarily prepaid in connection with a repricing transaction within six months of the closing date, a prepayment premium of 1% will apply.
If an event of default occurs under the TLB, the entire principal amount outstanding thereunder, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable, subject, in certain instances, to the expiration of applicable cure periods. The TLB also contains customary excess cash flow and asset sale mandatory prepayments, reporting covenants and negative covenants governing dividends, investments, indebtedness, and other matters that are customary for similar term loan B facilities.
Secured Borrowings and Collateral
Over the past three years, we have entered into secured loan agreements with various financial institutions where we sold finance receivables and rights to payments under our equipment on operating leases. In certain transactions, the sales were made to special purpose entities (SPEs), owned and controlled by Xerox, where the SPEs funded the purchase through amortizing secured loans from the financial institutions. The loans have variable interest rates and expected lives of approximately 2.5 years, with half projected to be repaid within the first year based on collections of the underlying portfolio of receivables. For certain loans, we entered into interest rate hedge agreements to either fix or cap the interest rate over the life of the loan.
The sales of the receivables to the SPEs were structured as "true sales at law," and we have received opinions to that effect from outside legal counsel. However, the transactions were accounted for as secured borrowings as we fully consolidate the SPEs in our financial statements. As a result, the assets of the SPEs are not available to satisfy any of our other obligations. Conversely, the credit holders of these SPEs do not have legal recourse to the Company’s general credit.
Below are the secured assets and obligations held by subsidiaries of Xerox, which are included in our Consolidated Balance Sheets.
Balance at December 31, 2023
Finance Receivables, Net(1)
Equipment on Operating Leases, Net
Secured Debt(2)
Interest Rate(3)
Expected Maturity
United States(4)
January 2022209 — 77 6.82 %2024
September 202189 2 25 6.76 %2024
Total U.S.$298 $2 $102 
Canada(4)(5)
July 2023$86 $— $77 6.74 %2026
France(6)
November 2023$235 $— $182 5.42 %2026
Total$619 $2 $361 
Balance at December 31, 2022
Finance Receivables, Net(1)
Equipment on Operating Leases, Net
Secured Debt(2)
Interest Rate(3)
Expected Maturity
United States(4)
December 2022(7)
$370 $— $247 7.43 %2025
January 2022528 — 407 5.83 %2024
September 2021180 5 136 5.65 %2024
Total U.S.$1,078 $5 $790 
Canada(4)
April 2022$63 $— $57 5.45 %2025
France
December 2022$235 $— $195 3.03 %2025
Total$1,376 $5 $1,042 
_____________
(1)Includes (i) Billed portion of finance receivables, net (ii) Finance receivables, net and (iii) Finance receivables due after one year, net as included in the Consolidated Balance Sheets as of December 31, 2023 and 2022.
(2)Represents principal debt balance and excludes debt issuance costs of $1 and $5 as of December 31, 2023 and 2022, respectively.
(3)Represents the pre-hedged rate - refer to Note 16 - Financial Instruments for additional information regarding hedging of these borrowings.
(4)Secured assets and obligations held by SPEs.
(5)In July 2023, the outstanding balance from the April 2022 loan, was refinanced into a new loan, resulting in additional net proceeds of approximately $52.
(6)In November 2023, the outstanding balance from the December 2022 loan, was refinanced into a new loan, resulting in additional net proceeds of approximately $107.
(7)In the second quarter of 2023, we repaid the remaining balance of $185 early, and incurred a $2 loss on extinguishment.
Interest
Interest paid on our short-term and long-term debt amounted to $201, $201 and $203 for the years ended December 31, 2023, 2022 and 2021, respectively. Interest expense and interest income was as follows:
Year Ended December 31,
 202320222021
Interest expense(1) (2)
$198 $199 $207 
Interest income(3)
207 218 225 
_____________
(1)Includes Equipment financing interest as well as non-financing interest expense included in Other expenses, net in the Consolidated Statements of Income (Loss).
(2)Interest expense of Xerox Corporation included intercompany expense associated with the Xerox Holdings Corporation/Xerox Corporation Intercompany Loan of $80, $80 and $80 for the three years ended December 31, 2023, 2022 and 2021, respectively.
(3)Includes Finance income, as well as other interest income that is included in Other expenses, net in the Consolidated Statements of Income (Loss).
Equipment financing interest is determined based on an estimated cost of funds, applied against the estimated level of debt required to support our net finance receivables. The estimated cost of funds is based on the interest cost associated with actual borrowings determined to be in support of the leasing business. The estimated level of debt continues to be based on an assumed 7 to 1 leverage ratio of debt/equity as compared to our average finance receivable balance during the applicable period.