Xerox says restatement reduces revenues by $1.9 bn

By : |June 29, 2002 0



NEW YORK: Xerox Corp. on Friday said revenues for the five-year period ending
2001 have been reduced by 2 percent to $91 billion, as a result of restatement
related to a change in accounting methodology.

"Approximately $1.9 billion of revenue that was recognized over past
years has been reversed and will be recognized in the company’s future results,
beginning in 2002," Xerox said.

Xerox expects later to file federal documents restating its financial figures
for the years 1997 through 2000 as well as adjustments to previously announced
2001 results. It said pretax income over this five-year period declined by $1.4
billion from previously reported amounts.

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
recognized and reported during the same period as service, rental, document
outsourcing and financing revenues.

The reversal of equipment sale revenue was larger than initially expected
primarily due to a change in the company’s lease accounting in Latin America
from equipment sales to rental, Xerox said.

Fitch expects to cut Xerox ratings
Fitch Ratings said on Friday it expects to cut its ratings on Xerox Corp. and
its units by at least one notch, following the company’s disclosure that it
would restate five years of results to reclassify more than $6 billion in
revenues.

Fitch said it expects to downgrade Xerox and its subsidiaries’ "BB"
senior unsecured rating, its second-highest junk rating, and its
"B-plus" convertible trust preferred rating by at least one notch.

"A final rating action, which we expect to release next week, is pending
a detailed review of the company’s 10K and 10Q statements," expected to be
filed shortly, Fitch said.

The rating outlook remains negative, reflecting the company’s weakened credit
protection measures, significant debt maturities for the next three years and
reduced access to the capital markets, Fitch said.

(C) Reuters Limited.

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