Xerox 2015 Annual Report Download - page 37

recognize a material accrual or materially increase an existing accrual, or should any of these matters result in a
final adverse judgment or be settled for significant amounts above any existing accruals, it could have a material
adverse effect on our results of operations, cash flows and financial position in the period or periods in which such
change in determination, judgment or settlement occurs.
Our operations and our products are subject to environmental regulations in each of the jurisdictions in which we
conduct our business and sell our products. Some of our manufacturing operations use, and some of our products
contain, substances that are regulated in various jurisdictions. For example, various countries and jurisdictions have
adopted or are expected to adopt restrictions on the types and amounts of chemicals that may be present in
electronic equipment or other items that we use or sell. If we do not comply with applicable rules and regulations in
connection with the use of such substances and the sale of products containing such substances, then we could be
subject to liability and could be prohibited from selling our products in their existing forms, which could have a
material adverse effect on our results of operations and financial condition. Further, various countries and
jurisdictions have adopted or are expected to adopt, programs that make producers of electrical goods, including
computers and printers, responsible for certain labeling, collection, recycling, treatment and disposal of these
recovered products. If we are unable to collect, recycle, treat and dispose of our products in a cost-effective manner
and in accordance with applicable requirements, it could materially adversely affect our results of operations and
financial condition. Other potentially relevant initiatives throughout the world include proposals for more extensive
chemical registration requirements and/or possible bans on the use of certain chemicals, various efforts to limit
energy use in products and other environmentally related programs impacting products and operations, such as
those associated with climate change accords, agreements and regulations. For example, the European Union's
Energy-Related Products Directive (ERP) has led to the adoption of “implementing measures” or "voluntary
agreements" that require certain classes of products to achieve certain design and/or performance standards, in
connection with energy use and potentially other environmental parameters and impacts. A number of our products
are already required to comply with ERP requirements and further regulations are being developed by the EU
authorities. Another example is the European Union “REACH” Regulation (Registration, Evaluation, Authorization
and Restriction of Chemicals), a broad initiative that requires parties throughout the supply chain to register, assess
and disclose information regarding many chemicals in their products. Depending on the types, applications, forms
and uses of chemical substances in various products, REACH could lead to restrictions and/or bans on certain
chemical usage. Xerox continues its efforts toward monitoring and evaluating the applicability of these and
numerous other regulatory initiatives in an effort to develop compliance strategies. As these and similar initiatives
and programs become regulatory requirements throughout the world and/or are adopted as public or private
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, EPEAT) 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 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.
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