Xerox Holdings Corporation · NASDAQ:XRX
Xerox — Merger or Acquisition (January 2018)
41 slides from Xerox's merger presentation, Jan 31, 2018
Slide 1: Xerox to Combine with Fuji Xerox
Xerox to Combine with Fuji Xerox Introducing a global leader in innovative print technologies and intelligent work solutions January 31, 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: Safe Harbor (cont'd)
Safe Harbor (cont’d) Forward-Looking Statements (cont’d) funding requirements associated with our employee pension and retiree health benefit plans; the risk that our operations and products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and
Slide 4: What We Are Announcing Today
What We Are Announcing Today Strong Q4 Xerox results with significant improvement across all key metrics, providing positive momentum entering 2018 Xerox and Fuji Xerox to combine, creating a global leader in innovative print technologies and intelligent work solutions
Slide 5: Xerox Q4 and FY17 Results
Xerox Q4 and FY17 Results
Slide 6: Strong Fourth-Quarter Results
Adjusted1 EPS and net income expand year-over-year Equipment turns to growth with increasing demand for new products; strategic growth areas up 5% in CC1 Achieved operating margin gains while supporting future revenue initiatives Continued strong adjusted1 operating cash flow, at higher end of guida
Slide 7: Delivering on Our 2017 Commitments
Delivering on Our 2017 Commitments New Xerox Xerox + Fuji Xerox Combination Year 2 Strategic Transformation savings of $680M exceeded full-year target Enabled investment in the business and offset FY transaction currency headwinds of ~$75M Overachieved on Cost Transformation Drove Revenue Toward Gro
Slide 8: Overachieving on Strategic Transformation
Overachieving on Strategic Transformation MPS = Managed Print Services. Sources of Productivity and Cost Savings Cumulative Gross Productivity & Cost Savings 13% 20% 20% 17% 30% $1,700M+ $1,500M $1,100M $500M Original Target Supply Chain & Procurement Delivery Cost of Production Sales & Contracting
Slide 9: Xerox to Combine with Fuji Xerox
Xerox to Combine with Fuji Xerox
Slide 10: Xerox and Fuji Xerox – Better Together
Xerox and Fuji Xerox – Better Together Combining to lead the evolution of the industry and unleash competitive strengths Notes: Assumes exchange rate of JPY114: US$1. Reflects 2017 actual revenue for Xerox and calendar year 2017 estimated revenue for Fuji Xerox (includes inter-company revenues of ~$
Slide 11: Strategic Value Unlocked
Strategic Value Unlocked Fujifilm and Xerox have 56 years of history as one of the most successful Japan/U.S. cross-border collaborations Enables access to high growth territories Streamlined product portfolio strategy, including launch timing and R&D coordination More efficient R&D and corporate fu
Slide 12: Financial Value Unlocked
Financial Value Unlocked Funded through new Combined Company debt of $2.5B. Based on midpoint of 7 – 8x EBITDA range and 8.5% discount rate. $1.25B Annual cost synergies in 2022 7-8x EBITDA Illustrative industry valuation multiple Post Close Consideration Illustrative Value of Transaction Cost Syner
Slide 13: Compelling Strategic Rationale
Compelling Strategic Rationale 1 Creates a global leader in innovative print technologies and intelligent work solutions with $18 billion in revenue 2 Delivers $1.7 billion in total annual cost savings, with $1.2 billion to be achieved by 2020 3 Accelerates path to revenue growth through enhanced gl
Slide 14: Substantial Value for Xerox Shareholders
Substantial Value for Xerox Shareholders Transaction Consideration $2.5B Cash Dividend (~$9.80/share1) 49.9% of Combined Company Cost Savings Optimized Operating Structure $1.7B+ Total Annual Cost Savings by 2022 $1.2B Annual Cost Savings by 2020 Growth Opportunities Leadership in Key Growth Markets
Slide 15: Fujifilm – Ideal Long-Term Partner
Fujifilm – Ideal Long-Term Partner Japan-based leader in document, imaging and information solutions with strong culture of innovation and transformation Selectively concentrating resources to growth segments through M&A, capital and R&D investments Document Solutions Document-related business activ
Slide 16: Combined Company Facts and Figures
Combined Company Facts and Figures 180+ Countries Broad Global Scale Strong Financial Profile World-Class Innovation $18B+ In Annual Revenue 2020 Return To Revenue Growth 2022 High-teens Operating Margin $1.7B+ Total Annual Cost Savings ~$1B Combined R&D 6,600+ Engineers 6 Innovation Labs $1.5B FCF1
Slide 17: Transaction Summary
Transaction Summary Xerox shareholders to receive $2.5 billion special cash dividend (~$9.80/share1) at closing, for which committed funding has been obtained Xerox shareholders to own 49.9% of Combined Company; Fujifilm to own 50.1% Combined Company will be listed on the NYSE post-transaction under
Slide 18: The New Fuji Xerox
The New Fuji Xerox FUJI Xerox ©)
Slide 19: Compelling Strategic Rationale
Compelling Strategic Rationale 1 Creates a global leader in innovative print technologies and intelligent work solutions with $18 billion in revenue 2 Delivers $1.7 billion in total annual cost savings, with $1.2 billion to be achieved by 2020 3 Accelerates path to revenue growth through enhanced gl
Slide 20: A Global Leader in Innovative Print Technologies and Intelligent Work Solutions
A Global Leader in Innovative Print Technologies and Intelligent Work Solutions Realization of Clear Industry Leadership Printing Revenue ($B)1 NEW FUJI XEROX 2 Notes: Reflects latest fiscal year available for each company; assumes exchange rate of JPY114: US$1. Segments used: HP: Printing; Canon: O
Slide 21: Significant Cost Savings Opportunities
Significant Cost Savings Opportunities ~$650M ~$400M ~$200M ~$450M $1.7B Total expected cost savings by 2022 Note: Assumes exchange rate of JPY114: US$1. Cost savings incremental to Xerox’s ongoing Strategic Transformation program Leveraging Xerox’s strong track record of productivity enhancements $
Slide 22: $1.7B in Total Annual Cost Savings
$1.7B in Total Annual Cost Savings R&D Eliminate redundancies and optimize footprint of research centers Integrate device controllers Combine print drivers, apps, solutions, MPS2 tools for best of class SG&A Consolidation of central support functions i.e. Finance, HR Optimize selling related costs P
Slide 23: Enhanced Global Leadership
$19B $28B $36B Enhanced Global Leadership Source: IDC and company estimates. Notes: Figures in USD billions. Exchange rate of JPY114: US$1. Market size in 2017 USD; Market share based on 2016 equipment revenues; Asia Pacific market share includes China. DMO is Developing Markets. Represents Total Ad
Slide 24: Dramatically Accelerates Innovation
Dramatically Accelerates Innovation Enables Combined Company to compete in adjacent Industrial Print and Intelligent Work Solutions markets Xerox PARC Yokohama R&D Square Wilson Center for Technology Takematsu Center Nakai Research Center Aubagne Inkjet Center World-Class R&D Driving Innovation Hard
Slide 25: Enhanced Financial Profile
Enhanced Financial Profile Combined Company (Targets) Achieves revenue growth in 2020 Adjusted operating profit margin in the high teens in 2022 $1.5 billion free cash flow1 in 2020 Accretive to EPS in 2020 Revenue Adj. Operating Profit Margin1 Adj. EBITDA less Capex1,3 Adj. EBITDA1,2 Note: Assumes
Slide 26: Capital Structure and Balance Sheet
Capital Structure and Balance Sheet Selected Balance Sheet Items at December 31, 20171 Note: Assumes exchange rate of JPY114: US$1. Reflects 2017 actuals for Xerox and calendar year 2017 estimated revenue for Fuji Xerox. Other post employment benefits reflects retiree health benefits. Finance Assets
Slide 27: Capital Allocation Policy
Capital Allocation Policy Maintain the principles of Xerox’s disciplined return on investment approach Expected to maintain investment grade credit ratings Maintain a substantial liquidity position with cash on hand and committed credit facilities Stronger balance sheet supports credit rating profil
Slide 28: Summary
Summary Strong Q4 and FY17 performance reflects successful execution of our strategic priorities, providing positive momentum as we enter the new chapter of Xerox’s transformation Combining forces with Fuji Xerox to create a global leader in innovative print technologies and intelligent work solutio
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures We have reported our financial results in accordance with generally accepted accounting principles (GAAP). In addition, we have discussed our financial results using the non-GAAP measures described below. We believe these non-GAAP measures allow investors to better unders
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures Restructuring and related costs: Restructuring and related costs include restructuring and asset impairment charges as well as costs associated with our Strategic Transformation program beyond those normally included in restructuring and asset impairment charges. Restruct
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures Other discrete, unusual or infrequent items: In addition, we also excluded the following items given their discrete, unusual or infrequent nature and their impact on our results for the period: Losses on early extinguishment of debt in the first and fourth quarter of 2017
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures Constant Currency To better understand trends in our business, we believe that it is helpful to adjust revenue to exclude the impact of changes in the translation of foreign currencies into U.S. dollars. We refer to this adjusted revenue as “constant currency.” This impac
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures Summary: Management believes that all of these non-GAAP financial measures provide an additional means of analyzing the current period’s results against the corresponding prior period’s results. However, these non-GAAP financial measures should be viewed in addition to, a
Slide 35: Exhibit
Exhibit 2
Slide 36: Introducing the New Fuji Xerox
Introducing the New Fuji Xerox Xerox and Fuji Xerox to combine, creating a global leader in innovative print technologies and intelligent work solutions • Creates substantial value for Xerox employees, customers, • Accelerates path to revenue growth through global reach, business partners and shareh
Slide 37: 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 Sharehold
Slide 38: FUJIFILM Value from Innovation
FUJIFILM Value from Innovation FUJIFILM: CONTINUOUS INNOVATION ACROSS THE GLOBE A History of Innovation Founded in 1934 as a Japanese photographic film manufacturer, Fujifilm has since its inception been committed to developing leading-edge, proprietary technologies by leveraging its photography exp
Slide 39: Highly Diversified Business Portfolio
Highly Diversified Business Portfolio [GRAPHIC APPEARS HERE]Leveraging its unique technological capabilities, Fujifilm has expanded its business portfolio to encompass three diversified segments: Imaging Solutions Information Solutions Document Solutions Six Key Growth Drivers Within these segments,
Slide 40: 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 Sharehold
Slide 41: Forward-looking statements (continued)
risks related to diverting management’s attention from Xerox’s ongoing business operations, (viii) the outcome of any legal proceedings that may be instituted against Xerox, its officers or directors related to the transaction agreements or the transactions and (ix) the possibility that competing of