Xerox 2014 Annual Report Download - page 35

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procurement requirements, we must comply or potentially face market access limitations that could have a material
adverse effect on our operations and financial condition. Similarly, environmentally driven procurement
requirements voluntarily adopted by customers in the marketplace (e.g., U.S. EPA EnergyStar) are constantly
evolving and becoming more stringent, presenting further market access challenges if our products fail to comply.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. PROPERTIES
We own several manufacturing, engineering and research facilities and lease other facilities. Our principal
manufacturing and engineering facilities, located in New York, California, Oklahoma, Oregon, Canada, U.K., Ireland
and the Netherlands, are used primarily by the Document Technology segment. Our principal research facilities are
located in California, New York, Canada, France and India. The research activities in our principal research centers
benefit all of our operating segments. We lease and own several facilities worldwide to support our Services
segment with larger concentrations of space in Texas, Kentucky, New Jersey, California, Mexico, Guatemala,
Philippines, Jamaica, Romania and India. Our Corporate Headquarters is a leased facility located in Norwalk,
Connecticut.
As a result of implementing our restructuring programs (refer to Note 11 - Restructuring and Asset Impairment
Charges in the Consolidated Financial Statements, which is incorporated here by reference) as well as various
productivity initiatives, several leased and owned properties became surplus. We are obligated to maintain our
leased surplus properties through required contractual periods. We have disposed or subleased certain of these
properties and are actively pursuing the successful disposition of remaining surplus properties.
In December 2014 we announced an agreement to sell our Information Technology Outsourcing (ITO) business to
Atos SE (Atos). The transaction is subject to customary closing conditions and regulatory approval and is expected
to close in the first half of 2015. As part of the announcement, 9,800 Xerox employees, located in 330 facilities in 45
countries, will be transferring to Atos. However, a substantial number of these facilities are customer sites not
leased or owned by Xerox. The following is the expected impact of the ITO divestiture on Xerox's worldwide
property portfolio. ITO occupies about 1.3 million square feet out of 2.8 million square feet in 61 primarily owned or
leased buildings. There are an additional 84 owned or leased buildings in which ITO has 21 or less employees in
each building. These properties are part of the due diligence/closing process and appropriate actions will be agreed
and taken to transfer some properties to the buyer; the buyer will exit some properties and relocate to their property
portfolio; and some properties will be shared.
We also own or lease numerous facilities globally, which house general offices, sales offices, service locations, data
centers, call centers and distributions centers. It is our opinion that our properties have been well maintained, are in
sound operating condition and contain all the necessary equipment and facilities to perform their functions. We
believe that our current facilities are suitable and adequate for our current businesses.
ITEM 3. LEGAL PROCEEDINGS
The information set forth under Note 18 "Contingencies and Litigation" in the Consolidated Financial Statements is
incorporated here by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Xerox 2014 Annual Report 20