SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
July 11, 2002
XEROX CORPORATION
(Exact name of registrant as specified in its charter)
New York 1-4471 16-0468020
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
800 Long Ridge Road
P. O. Box 1600
Stamford, Connecticut 06904-1600
(Address of principal executive offices)(Zip Code)
Registrant's telephone number,
including area code:
(203) 968-3000
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events.
On April 11, 2002, Registrant reached a settlement with the Securities and
Exchange Commission (SEC) relating to matters that had been under investigation
by the SEC since June 2000. In connection with the settlement, Registrant agreed
to restate its financial statements as of and for the years ended December 31,
1997 through 2000 and to undertake a review of its material internal controls
and accounting policies. Registrant also restated its consolidated financial
statements for the first three quarters of 2001. The restated consolidated
financial statements were filed with the SEC in Registrant's Annual Report on
Form 10-K for the Year Ended December 31, 2001 ("2001 Form 10-K Report") and
Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2002
("March 2002 Form 10-Q Report").
The restated consolidated financial statements reflect adjustments which are
corrections of errors made in the application of U.S. generally accepted
accounting principles (GAAP) and include (i) adjustments related to the
application of the provisions of Statement of Financial Accounting Standards No.
13 "Accounting for Leases" and (ii) adjustments that arose as a result of other
errors in the application of GAAP. All dollar and per share amounts have been
revised, as appropriate for the effects of such restatement.
This Current Report on Form 8-K provides key financial data (unaudited) for each
of the quarters in the year ended December 31, 2001 and for the quarter ended
March 31, 2002 which is supplemental to the financial data contained in
Registrant's 2001 Form 10-K Report and Registrant's March 2002 Form 10-Q Report.
FIVE QUARTERS IN REVIEW
(Unaudited)
In millions, except per-share data
2001 2002
------------------------------------------------------- ----------
First Second Third Fourth Full First
Quarter Quarter Quarter Quarter Year Quarter
---------- --------- --------- --------- ------ ----------
Restated Restated Restated
Operations:
Sales $ 1,865 $ 1,858 $ 1,708 $ 2,012 $ 7,443 $ 1,583
Service, outsourcing and rentals 2,134 2,139 2,071 2,092 8,436 2,011
Finance income 292 286 273 278 1,129 264
--------- -------- -------- -------- -------- ----------
Total Revenues $ 4,291 $ 4,283 $ 4,052 $ 4,382 $17,008 $ 3,858
========= ======== ======== ======== ======== ==========
Cost of sales (1) $ 1,377 $ 1,301 $ 1,239 $ 1,253 $ 5,170 $ 1,025
Cost of service, outsourcing and rentals 1,292 1,183 1,183 1,222 4,880 1,159
Equipment financing interest (2) 130 125 107 95 457 92
--------- -------- -------- -------- -------- ----------
Total Cost of Sales (1) $ 2,799 $ 2,609 $ 2,529 $ 2,570 $10,507 $ 2,276
========= ======== ======== ======== ======== ==========
Research and development expenses $ 251 $ 257 $ 257 $ 232 $ 997 $ 230
Selling, administrative and general expenses (3) 1,149 1,220 1,175 1,184 4,728 1,169
Restructuring and asset impairment charges 129 295 63 228 715 146
Gain on sale of half of interest in Fuji Xerox (769) -- -- (4) (773) --
Other expenses, net 93 184 132 64 473 90
Currency (gains) losses, net (4) (64) 13 59 (37) (29) 24
Non-financing interest expense (2) (4) 155 141 48 102 446 81
(Loss) Income before income taxes (benefits),
equity income, minorities' interests,
extraordinary gain, and cumulative effect
of change in accounting principle 646 (272) (98) 89 365 (53)
(Loss) Income before extraordinary gain and
cumulative effect of change in
accounting principle 212 (119) (33) (169) (109) (46)
Net (loss) income $ 227 $ (101) $ (32) $ (165) $ (71) $ (46)
Financial Position:
Cash and cash equivalents $ 2,777 $ 2,176 $ 2,425 $ 3,990 $ 3,990 $ 4,747
Accounts receivable, net 2,105 2,040 2,043 1,896 1,896 1,882
Finance receivables, net 10,393 9,866 9,885 9,678 9,678 9,397
Inventories 1,811 1,625 1,594 1,364 1,364 1,283
Total Assets 28,234 26,539 26,934 27,689 27,689 27,755
2001 2002
-------------------------------------------------------------------
First Second Third Fourth Full First
Quarter Quarter Quarter Quarter Year Quarter
-------- --------- -------- ----------- ----------- ----------
Restated Restated Restated
Consolidated Capitalization:
----------------------------
Short-term debt and current portion of
long-term debt $ 3,303 $ 3,035 $ 3,168 $ 6,637 $ 6,637 $ 6,704
Long-term debt 14,701 13,547 13,593 10,128 10,128 10,712
--------- -------- -------- -------- -------- ----------
Total Debt $ 18,004 $16,582 $16,761 $16,765 $16,765 $ 17,416
========= ======== ======== ======== ======== ==========
Common Shareholders' Equity $ 1,962 $ 1,958 $ 1,978 $ 1,820 $ 1,820 $ 1,713
Total Capitalization(5) $ 21,132 $19,692 $19,882 $20,815 $20,815 $ 21,353
Common Shares Outstanding (in millions):
Average common shares outstanding during the
period for basic (loss) earnings per share 680 701 718 722 704 726
Average common shares outstanding during the
period for diluted (loss) earnings per share 782 701 718 722 704 726
(Loss) Earnings per Share:
--------------------------
Basic (loss) earnings per Share $ 0.32 $(0.14) $ (0.05) $ (0.23) $ (0.12) $(0.06)
Diluted (loss) earnings per Share $ 0.29 $(0.14) $ (0.05) $ (0.23) $ (0.12) $(0.06)
Other data:
Restructuring and asset impairment charges
(after taxes) $ 81 $ 222 $ 47 $ 157 $ 507 $ 101
Gain on sale of half of interest in
Fuji Xerox (after taxes) (300) -- -- (4) (304) --
Currency (gains) losses, net (after taxes) (44) 10 38 (25) (21) 22
(1) Includes inventory charges of $0, $24, $5, $13 and $2, respectively
associated with restructuring actions. These are in addition to all other
inventory charges occurring in the period.
(2) Third quarter 2001 interest expense includes a net gain of $46 from the
mark-to-market valuation of interest rate swaps required to be recorded as
a result of applying Statement of Financial Accounting Standard No. 133
"Derivatives and Hedging" (SFAS No. 133) accounting rules. Similarly,
fourth quarter 2001 interest expense reflects a net loss of $17 from the
mark-to-market valuation of interest rate swaps in accordance with SFAS No.
133 accounting rules. The overall decline in interest expense beginning in
the third quarter 2001 primarily reflects lower interest rates as compared
to prior periods.
(3) Includes bad debt expense of $84, $93, $151, $110 and $103, respectively.
(4) Included in Other expenses, net.
(5) Calculated as the total of short term debt and current portion of long term
debt, long term debt, deferred ESOP benefits, minorities' interest in equity
of subsidiaries, obligation for equity put options, Company-obligated,
mandatorily redeemable preferred securities of subsidiary trusts holding
solely subordinated debentures of the Company, preferred stock, common
stock, including additional paid in capital, retained earnings and
accumulated other comprehensive loss.
Segment data is as follows:
2001 (6) 2002
---------------------------------------------- -------
First Second Third Fourth Full First
Quarter Quarter Quarter Quarter Year Quarter
------- ------- ------- ------- ---- -------
Revenue:
--------
Production $1,449 $1,484 $1,391 $1,559 $ 5,883 $1,318
Office 1,741 1,732 1,641 1,796 6,910 1,638
DMO 504 512 487 523 2,026 448
SOHO 123 96 111 80 410 70
Other 474 459 422 424 1,779 384
------ ------ ------ ------ ------- ------
Total Revenue $4,291 $4,283 $4,052 $4,382 $17,008 $3,858
====== ====== ====== ====== ======= ======
Segment profit (loss):
----------------------
Production $ 112 $ 101 $ 73 $ 180 $ 466 $ 105
Office 47 98 63 157 365 91
DMO (70) 5 (12) (48) (125) (5)
SOHO (79) (84) (54) 22 (195) 27
Other (1) (42) (101) 35 (109) (112)
---- ---- --- ---- ---- ----
Total segment profit (loss) $ 9 $ 78 $ (31) $ 346 $ 402 $ 106
====== ====== ====== ====== ======= ======
Segment margin:
---------------
Production 7.7% 6.8% 5.2% 11.5% 7.9% 8.0%
Office 2.7% 5.7% 3.8% 8.7% 5.3% 5.6%
DMO (13.9)% 1.0% (2.5)% (9.2)% (6.2)% (1.1)%
SOHO (64.2)% (87.5)% (48.6)% 27.5% (47.6)% 38.6%
Other (0.2)% (9.2)% (23.9)% 8.3% (6.1)% (29.2)%
Total segment margin 0.2% 1.8% (0.8)% 7.9% 2.4% 2.7%
(6) For purposes of comparability, 2001 segment information has been adjusted to
reflect a change in measurement of segment profit or loss that was enacted in
2002. The nature of the changes related primarily to corporate expense and other
allocations associated with internal reorganizations made in 2002, as well as
decisions concerning direct applicability of certain overhead expenses to the
segments. The adjustments increased (decreased) full year 2001 revenues as
follows: Production-($16), Office - ($16), DMO - ($1), SOHO -$3 and Other- $30.
The full year 2001 segment profit was increased (decreased) as follows:
Production - $12, Office - $24, DMO - $32, SOHO - $2 and Other - ($70).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly authorized this report to be signed on its behalf by the undersigned
duly authorized.
XEROX CORPORATION
/s/ GARY R. KABURECK
----------------------------
By: GARY R. KABURECK
Assistant Controller and
Chief Accounting Officer
Date: July 11, 2002