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):
October 12, 2001
XEROX CORPORATION
(Exact name of registrant as specified in its charter)
New York 1-4471 16-0468020
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
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
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Item 5. Other Events
Registrant today announced preliminary third-quarter results that include
an estimated $3.8 billion to $4 billion in revenue and a loss in the range
of 22 to 25 cents per share, before net restructuring charges of 5 cents.
Results were impacted by a number of factors including a reduction of
approximately 9 cents due to currency losses from unhedged exposures, a tax
rate change, and a property insurance deductible related to Sept. 11 losses.
"In many regards, Xerox's performance in July and August exceeded
expectations and we were well positioned to meet our third-quarter targets,"
said Anne M. Mulcahy, Registrant's president and chief executive officer.
"However, the events of Sept. 11 resulted in a significant impact on sales
for the balance of the month - typically the strongest two weeks of the
quarter."
"We continue to aggressively implement our cost-reduction initiatives and
focus on operational improvements. With further progress expected in these
areas, we remain cautiously optimistic for a return to operational
profitability in the fourth quarter," added Mulcahy.
Registrant also reported continued progress in strengthening its liquidity.
After the repayment of approximately $350 million in third-quarter maturing
debt, Registrant had $2.4 billion in cash at the end of September, compared
to $2.2 billion at the close of the second quarter.
Registrant continues to be in full compliance with its debt covenants and
expects the consolidated tangible net worth cushion to be approximately
$200 million.
Registrant will report its full third-quarter results on Oct. 23, 2001.
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Forward-Looking Statements
From time to time Xerox Corporation (the Registrant or the Company) and its
representatives may provide information, whether orally or in writing,
including certain statements in this Current Report on Form 8-K, which are
deemed to be "forward-looking" within the meaning of the Private Securities
Litigation Reform Act of 1995 ("Litigation Reform Act"). These forward-
looking statements and other information relating to the Company are based
on the beliefs of management as well as assumptions made by and information
currently available to management.
The words "anticipate", "believe", "estimate", "expect", "intend", "will",
and similar expressions, as they relate to the Company or the Company's
management, are intended to identify forward-looking statements. Such
statements reflect the current views of the Registrant with respect to
future events and are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated or expected. Factors that could cause actual results
to differ materially include the failure to satisfy closing conditions set
forth in the framework agreement described herein, including the completion
of due diligence and the negotiation of definitive documentation. The
Registrant does not intend to update these forward-looking statements.
In accordance with the provisions of the Litigation Reform Act we are
making investors aware that such "forward-looking" statements, because they
relate to future events, are by their very nature subject to many important
factors which could cause actual results to differ materially from those
contained in the "forward-looking" statements. Such factors include but are
not limited to the following:
Competition - the Registrant operates in an environment of significant
competition, driven by rapid technological advances and the demands of
customers to become more efficient. There are a number of companies
worldwide with significant financial resources which compete with the
Registrant to provide document processing products and services in each of
the markets served by the Registrant, some of whom operate on a global
basis. The Registrant's success in its future performance is largely
dependent upon its ability to compete successfully in its currently-served
markets and to expand into additional market segments.
Transition to Digital - presently black and white light-lens copiers
represent approximately 25% of the Registrant's revenues. This segment of
the market is mature with anticipated declining industry revenues as the
market transitions to digital technology. Some of the Registrant's new
digital products replace or compete with the Registrant's current light-
lens equipment. Changes in the mix of products from light-lens to digital,
and the pace of that change as well as competitive developments could
cause actual results to vary from those expected.
Expansion of Color - color printing and copying represents an important
and growing segment of the market. Printing from computers has both
facilitated and increased the demand for color. A significant part of the
Registrant's strategy and ultimate success in this changing market is its
ability to develop and market machines that produce color copies quickly
and at reduced cost. The Registrant's continuing success in this strategy
depends on its ability to make the investments and commit the necessary
resources in this highly competitive market.
Pricing - the Registrant's ability to succeed is dependent upon its ability
to obtain adequate pricing for its products and services which provide a
reasonable return to shareholders. Depending on competitive market factors,
future prices the Registrant can obtain for its products and services may
vary from historical levels. In addition, pricing actions to offset
currency devaluations may not prove sufficient to offset further
devaluations or may not hold in the face of customer resistance and/or
competition.
Customer Financing Activities - On average, 75 - 80 percent of the
Registrant's equipment sales are financed through the Registrant. To fund
these arrangements, the Registrant must access the credit markets and the
long-term viability and profitability of its customer financing activities
is dependent on its ability to borrow and its cost of borrowing in these
markets. This ability and cost, in turn, is dependent on the Registrant's
credit ratings. Currently the Registrant's credit ratings are such as to
effectively preclude its ready access to capital markets and the Registrant
is currently funding its customer financing activity from available sources
of liquidity, including cash on hand. There is no assurance that the
Registrant will be able to continue to fund its customer financing activity
at present levels. The Registrant is actively seeking third parties to
provide financing to its customers. In the near-term the Registrant's
ability to continue to offer customer financing and be successful in the
placement of its equipment with customers is largely dependent upon
obtaining such third party financing.
Productivity - the Registrant's ability to sustain and improve its profit
margins is largely dependent on its ability to maintain an efficient, cost-
effective operation. Productivity improvements through process
reengineering, design efficiency and supplier cost improvements are
required to offset labor cost inflation and potential materials cost
changes and competitive price pressures.
International Operations - the Registrant derives approximately half its
revenue from operations outside of the United States. In addition, the
Registrant manufactures or acquires many of its products and/or their
components outside the United States. The Registrant's future revenue,
cost and profit results could be affected by a number of factors, including
changes in foreign currency exchange rates, changes in economic conditions
from country to country, changes in a country's political conditions, trade
protection measures, licensing requirements and local tax issues. Our
ability to enter into new foreign exchange contracts to manage foreign
exchange risk is currently severely limited, and we anticipate increased
volatility in our results of operations due to changes in foreign exchange
rates.
New Products/Research and Development - the process of developing new high
technology products and solutions is inherently complex and uncertain. It
requires accurate anticipation of customers' changing needs and emerging
technological trends. The Registrant must then make long-term investments
and commit significant resources before knowing whether these investments
will eventually result in products that achieve customer acceptance and
generate the revenues required to provide anticipated returns from these
investments.
Revenue Growth - the Registrant's ability to attain a consistent trend of
revenue growth over the intermediate to longer term is largely dependent
upon expansion of its equipment sales worldwide and usage growth (i.e., an
increase in the number of images produced by customers). The ability to
achieve equipment sales growth is subject to the successful implementation
of our initiatives to provide industry-oriented global solutions for major
customers and expansion of our distribution channels in the face of global
competition and pricing pressures. The ability to grow usage may be
adversely impacted by the movement towards distributed printing and
electronic substitutes. Our inability to attain a consistent trend of
revenue growth could materially affect the trend of our actual results.
Turnaround Program - In October 2000, the Registrant announced a turnaround
program which includes a wide-ranging plan to generate cash, return to
profitability and pay down debt. The success of the turnaround program is
dependent upon successful and timely sales of assets, restructuring the
cost base, placement of greater operational focus on the core business and
the transfer of the financing of customer equipment purchases to third
parties. Cost base restructuring is dependent upon effective and timely
elimination of employees, closing and consolidation of facilities,
outsourcing of certain manufacturing and logistics operations, reductions
in operational expenses and the successful implementation of process and
systems changes.
The Registrant's liquidity is dependent on the timely implementation and
execution of the various turnaround program initiatives as well as its
ability to generate positive cash flow from operations and various
financing strategies including securitizations. Should the Registrant not
be able to successfully complete the turnaround program, including positive
cash generation on a timely or satisfactory basis, the Registrant will need
to obtain additional sources of funds through other operating improvements,
financing from third parties, or a combination thereof.
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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/ MARTIN S. WAGNER
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By: MARTIN S. WAGNER
Assistant Secretary
Date: October 12, 2001