Business Context and Reporting Period
This Form 8-K, dated November 14, 2016, relates to Conduent Incorporated, the future name of Xerox Corporation's Business Process Outsourcing (BPS) Business following a planned spin-off. The filing announces the intent to disclose unaudited pro forma financial statements for the BPS Business for the third fiscal quarter of 2016, reflecting new long-term indebtedness incurred by certain entities in connection with the separation.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. It references Exhibit 99.1, which contains the unaudited pro forma Combined Financial Statements, including statements of loss for the nine months ended September 30, 2015 and 2016, the year ended December 31, 2015, and a balance sheet as of September 30, 2016. Investors are directed to the Conduent Registration Statement on Form 10 and the Form 10-Q for the quarter ended September 30, 2016, for audited and interim results.
Material Changes
The primary material change disclosed is the incurrence of new long-term indebtedness by certain BPS Business entities in connection with the Spin-Off. This filing serves to alert investors to the upcoming disclosure of pro forma financial data that incorporates this new debt structure, which differs from the historical financial results of the BPS Business as a division of Xerox.
Guidance, Outlook, and Risks
The filing contains extensive forward-looking statements regarding the spin-off and future performance, cautioning that actual results may vary materially due to various uncertainties. Key risks identified include:
- Government regulation and changes in tax laws.
- Competitive pressures and changes in interest in outsourced services.
- Ability to obtain adequate pricing and improve cost structures.
- Retention of key employees and technical personnel.
- Loss or failure of significant clients.
- Compliance with laws regarding individually identifiable information and payment card transactions.
- Capital market volatility and access to financing.
- Impact of natural disasters, pandemics, and geopolitical events.
- Lack of an operating history as an independent publicly traded company.
Investor Verification Checklist
- Review Exhibit 99.1 for the specific unaudited pro forma financial statements and the impact of new indebtedness.
- Consult the Conduent Registration Statement on Form 10 and the Form 10-Q for the quarter ended September 30, 2016, for historical audited results and accounting policies.
- Verify the terms and conditions of the new long-term indebtedness incurred for the Spin-Off.
- Assess the risks associated with the transition to an independent public company, particularly regarding client retention and capital market access.