Xerox Holdings Corporation · NASDAQ:XRX
Xerox — Merger or Acquisition (February 2018)
32 slides from Xerox's merger presentation, Feb 9, 2018
Slide 1: Xerox to Combine with Fuji Xerox: Supplemental Transaction Information
Xerox to Combine with Fuji Xerox Supplemental Transaction Information February 2018 Exhibit 1
Slide 2: Additional Information and Where to Find It
Additional Information and Where to Find It This release may be deemed to be solicitation material in respect of the transactions with FUJIFILM Holdings Corporation (“Fujifilm”) described herein (the “Transactions”) and/or the matters to be considered at the Company’s 2018 Annual Meeting of Sharehol
Slide 3: Forward-Looking Statements (cont'd)
Forward-Looking Statements (cont’d) and products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives and anti-corruption laws; the outcome of litigation and regulatory proceedings to which we may be a party; the risk that we do not
Slide 4: Forward-Looking Statements (cont'd)
Forward-Looking Statements (cont’d) In addition, certain of the projected financial information set forth above, such as Adjusted EBITDA, Pro Forma EBITDA, Adjusted Operating Profit, Pro Forma Adjusted Operating Profit and Levered Free Cash Flow, are non-GAAP financial measures. Non-GAAP financial m
Slide 5: Contents
Contents Introduction and Transaction Overview Fuji Xerox Overview and Financial Information Transaction Synergies and Pro Forma Free Cash Flow Transaction Value to Xerox Shareholders Appendix
Slide 6: I. Introduction and Transaction Overview
I. Introduction and Transaction Overview
Slide 7: Xerox and Fuji Xerox – Better Together
Xerox and Fuji Xerox – Better Together Xerox shareholders to receive $2.5 billion special cash dividend (~$9.80/share1) at closing; committed funding in place Xerox shareholders to own 49.9% of combined company; Fujifilm to own 50.1%2 Combined company name will be Fuji Xerox; company will remain lis
Slide 8: Xerox Today: Driving Revenue and Margin Improvement
13% 20% 20% 17% 30% $1,700M+ $1,500M $1,100M $500M Delivery Cost of Production Sales & Contracting G&A Supply Chain & Procurement ~$550M ~$1,225M 2016 2017 Cumulative through 2018 Cumulative Gross Productivity & Cost Savings (Actuals) Original Target Xerox Today: Driving Revenue and Margin Improveme
Slide 9: Transaction Enables Xerox's Next Phase of Value Creation
Transaction Enables Xerox’s Next Phase of Value Creation Xerox’s management and Board of Directors continuously evaluate the company’s financial and strategic alternatives to enhance shareholder value After conducting a comprehensive review over the last year, Xerox’s Board of Directors, in consulta
Slide 10: Existing Joint Venture Agreements Limit Xerox's Strategic Flexibility
Existing Joint Venture Agreements Limit Xerox’s Strategic Flexibility Fuji Xerox Joint Venture Governance and Dividends Joint venture contract establishes rights and obligations of Fujifilm and Xerox in respect of the Fuji Xerox joint venture Fujifilm designates 9 of 12 directors and chooses senior
Slide 11: Transaction Structure
Transaction Structure Current Structure Post-Transaction Structure Xerox Shareholders Xerox NYSE listed “XRX” Fujifilm TSE listed 75% ownership interest 25% ownership interest Fuji Xerox JV Xerox Shareholders Fujifilm TSE listed 49.9% 50.1% New Fuji Xerox NYSE listed “XRX” $2.5B cash dividend On a f
Slide 12: Combination Optimizes Xerox's Competitive Strengths
Combination Optimizes Xerox’s Competitive Strengths Transaction allows both parties to optimize the benefits of their partnership by creating: Strategic Benefits: Common long-term vision and strategic growth development Shared access to critical IP and technology Revenue Drivers: Global manufacturin
Slide 13: Fujifilm: Shareholder and Partner for the Long Term
Fujifilm: Shareholder and Partner for the Long Term Strong culture of innovation and bold new strategies facilitated the successful transformation away from a dependency on photographic film Global demand for photographic film has declined by ~99% since 2000 Fujifilm has aggressively transitioned it
Slide 14: Governance Highlights
Governance Highlights Board Composition Jeff Jacobson will serve as CEO and represent 1 of the 7 Fujifilm Board designees Shigetaka Komori will become Chairman of the Board New Fuji Xerox Board will initially consist of 12 directors; 7 designated by Fujifilm and 5 designated by current Xerox Board T
Slide 15: II. Fuji Xerox Overview and Financial Information
II. Fuji Xerox Overview and Financial Information
Slide 16: Fuji Xerox Today
Japan South Korea Taiwan Hong Kong The Philippines Vietnam Cambodia New Zealand Australia Indonesia Singapore Malaysia Thailand Myanmar Laos China Fuji Xerox Today N.A. (2%) Market CAGR (2016-2020) Europe (3%) DMO (3%) % Total FX Revenue¹ Sales to Xerox Japan ~0% China² +6% Other APAC +4% 8% 51% 23%
Slide 17: Fuji Xerox Revenue by Segment Today
Fuji Xerox Revenue by Segment Today Office Products and Printers Helps customers address various business challenges related to documents and communications Supplies office products such as multifunction devices and printers to large companies and small and medium-sized businesses Provides cloud-bas
Slide 18: Fuji Xerox Market Leadership in Key Segments
Fuji Xerox Market Leadership in Key Segments Today A3 MFP Market ($B)1 Japan MPS Market ($B)2 Color Production Market ($B)3 CAGR: (1.6%) CAGR: 15.3% Leader in A3 MFP Leader in Japan MPS Leader in Color Production Japan: (4.4)% Asia Pacific: 2.5% China: 15.3% 54% #1 Market Share Market Position 51% #
Slide 19: Fuji Xerox Historical Growth Trajectory
Fuji Xerox Historical Growth Trajectory Source: Fujifilm filings and Xerox management. Notes: Dollars in billions. Assumes exchange rate of JPY114: US$1 across all years. 2010-2014 are pre-restatement, while 2015-2017 reflects restatement. All figures represents actual currency. 1. Represents compon
Slide 20: Fuji Xerox 2018E Adj. EBITDA
Source: Xerox and Fuji Xerox management. Notes:Dollars in billions. Assumes exchange rate of JPY114: US$1. Adj. EBITDA excludes restructuring costs and non-service retirement costs. Fuji Xerox 2018E Adj. EBITDA Calendar Year End
Slide 21: III. Transaction Synergies and Pro Forma Free Cash Flow
III. Transaction Synergies and Pro Forma Free Cash Flow
Slide 22: Key Highlights
Key Highlights Source: Xerox management. Note: Assumes exchange rate of JPY114: US$1. 1. Excluding one-time restructuring costs. $1.25 billion of transaction cost synergies that flow directly to Adj. Operating Profit Normalized1 Free Cash Flow of $2.0 billion+ by 2022 Revenue opportunity of at least
Slide 23: Sources of $1.25 Billion Transaction Cost Synergies
Sources of $1.25 Billion Transaction Cost Synergies % of Total Annual Cost Savings by Category ~27% ~58% ~80% 100% ~47% ~81% ~100% 100% ~20% ~56% ~76% 100% Source: Xerox management. Note: Assumes exchange rate of JPY114: US$1. R&D (~$200M) SG&A (~$400M) COGS (~$650M) Consolidate manufacturing of con
Slide 24: Identified Revenue Capture Opportunities
Identified Revenue Capture Opportunities Significant growth opportunity via share gains and penetration of ~$100 billion production and industrial printing segment Additional opportunities to further diversify business leveraging strength of combined relationships globally Enhanced innovation, strat
Slide 25: Fujifilm's Commitment to Delivering Transaction Synergies and Cost Savings
Fujifilm’s Commitment to Delivering Transaction Synergies and Cost Savings “Jeff Jacobson and I are committed to the successful combination of Xerox and Fuji Xerox and to realizing the full potential of the new company. We are focused on delivering the cost synergies that will come from integration
Slide 26: FCF Expected to Increase by >2x vs. Xerox Today
FCF Expected to Increase by >2x vs. Xerox Today Levered FCF Cash Impact of Restructuring ~$0.4B ~$1.7–1.9B ~$0.3B ~$2.1–2.3B ~10% CAGR Selected Drivers of FCF Generation <$0.1B Selected Offsets to FCF Generation ~$1.6–1.8B ~$1.9–2.1B ~$0.1B 1 Expected improved revenue trajectory with positive growth
Slide 27: IV. Transaction Value to Xerox Shareholders
IV. Transaction Value to Xerox Shareholders
Slide 28: Relative Ownership Analysis
Relative Ownership Analysis Source: Xerox management, Fuji Xerox management and FactSet. Notes: Dollars in billions, except share prices. Assumes exchange rate of JPY114: US$1. Based on calendar year end. Numbers may not sum due to rounding. Reflects $193M of Net Cash, $33M of Non-Controlling Intere
Slide 29: Value of Transaction Synergies
Value of Transaction Synergies Source: Xerox management. Notes: Dollars in billions, except share prices. Assumes exchange rate of JPY114: US$1. Based on calendar year end. 1. Based on 4.5 year discounting period and 8.5% discount rate. 2. Reflects 254.6M basic shares, 6.0M RSUs and PSUs, and 6.7M s
Slide 30: V. Appendix
V. Appendix FUJI Xerox ©)
Slide 31: Xerox and Fuji Xerox Financial Profile (Pre-Synergies)
Xerox and Fuji Xerox Financial Profile (Pre-Synergies) Pro Forma Interco. Elim. Fuji Xerox Xerox 2018E Pro Forma Interco. Elim. Fuji Xerox Xerox 2017A Revenue Adj. EBITDA1 Adj. Op. Profit1,2 CAPEX (Including Equipment on Operating Lease) $10.3 $9.5 ($1.7) $18.0 $10.0 $9.6 ($1.7) $17.9 $3.0 -- $1.75
Slide 32: XefOx @,)
XefOx @,)