STAMFORD, Conn., June 28, 2002 Xerox Corporation (NYSE: XRX) announced that it expects to file today the company¹s 2001 10-K, which includes a restatement for the years 1997 through 2000 as well as adjustments to previously announced 2001 results. The restatement, required under the company¹s previously announced settlement agreement with the Securities and Exchange Commission, primarily reflects changes to the company¹s lease accounting under Statement of Financial Accounting Standards No. 13. As a result, adjustments have been made to the timing and allocation of equipment, service, rental and finance revenue streams. Approximately $1.9 billion of revenue that was recognised over past years has been reversed and will be recognised in the company's future results, beginning in 2002. The monetary value of customers¹ contracts has not changed and there is no impact on the cash that has been received or is contractually due to be received.
For 1997 through 2001, the company reversed $6.4 billion of previously recorded equipment sale revenue offset by $5.1 billion of revenue that has been recognised and reported during the same period as service, rental, document outsourcing and financing revenues. Revenues for 1997-2001 have been reduced by 2 percent to $91 billion.
The reversal of equipment sale revenue was larger than initially expected primarily due to a change in the company¹s lease accounting in Latin America from equipment sales to rental.
In addition to the reallocation of revenues, the restatement includes a $368 million reduction in pre-tax income primarily due to the timing of the establishment and release of certain reserves, including restructuring reserves and the timing of recognition of interest income on tax refunds.
In total, pre-tax income over this five-year period declined by $1.4 billion from previously reported amounts. Shareholders equity was reduced by $1.3 billion as of year-end 2001.
"Xerox today closes a difficult chapter in the company¹s history. With the filing of the 2001 10-K, we will have resolved the company¹s accounting issues with the SEC and completed the restatement. And, we are firm in our resolve to ensure the highest integrity of the company¹s financial reporting," said Anne M. Mulcahy, Xerox chairman and chief executive officer. "At the same time, we continue to improve our operations and bring innovative technology to market. Our new management team has put the past behind us. We are sharply focused on the future where we are well positioned to capture profitable growth opportunities, creating greater value for our customers and shareholders."
Overall, the total adjustments in the restatement reduce full-year revenues and pre-tax income for 1997, 1998 and 1999 while increasing revenues and pre-tax income for 2000 and 2001. Total revenue on a restated basis for 2001 was $17 billion and the net loss was $71 million or 12 cents per share.
The company noted that the restatement has no impact on the new credit facility announced last week with the exception of an update to the financial covenants reflecting the final restated numbers.
Xerox also confirmed that it expects to file on July 1 its first-quarter 2002 10-Q, incorporating revisions to the preliminary results reported on April 24. The company is scheduled to report its second-quarter 2002 earnings on July 25.
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Media Contact:
Christa Carone, Xerox Corporation, 585-423-5074, christa.carone@usa.xerox.com, on June 28: 203-968-3086
NOTE TO EDITORS:
For more information about Xerox, visit www.xerox.com/news. XEROX®, The Document Company® and the digital X® are trademarks of XEROX CORPORATION.
This release contains forward-looking statements and information relating to Xerox that are based on our beliefs as well as assumptions made by and information currently available to us. The words "anticipate," "believe," "estimate," "expect," "intend," "will" and similar expressions, as they relate to us, are intended to identify forward-looking statements. Actual results could differ materially from those projected in such forward-looking statements. Information concerning certain factors that could cause actual results to differ materially is included in the company's Form 10-K being filed today with the SEC.
Contactpersonen Nederland:
Xerox (Nederland) B.V., Patty de Jong, PR & Communications, 020 - 656 3462 / patty.de.jong@nld.xerox.com
VerkroostPR, Herman Verkroost, 033 - 480 86 52 / hav@verkroostpr.nl