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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):
June 16, 2000
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
Item 5. Other Events
Registrant (or Xerox or the company) today announced that second quarter
underlying earnings per share would be below market expectations and likely in
line with the company's first quarter level. Xerox said its earnings would be
further reduced by significant unexpected provisions in its Mexico business.
A likely shortfall in the sales of high-end printing and publishing products
is more than offsetting expected strong revenue growth from document
outsourcing, color copiers and printers, and products sold through the
company's channels organization. This will result in reduced gross margins,
which are expected to be further affected by a shift to sales of lower-margin
products and services within each product segment.
"The disruptions in customer relationships caused by our sales force
realignment, at a time when competitors have strengthened their product
capabilities, is producing a drag on the second quarter sales of our most
profitable products," said Paul Allaire, Xerox chairman and chief executive
officer. "Our new team is focused on initiatives that will stabilize the
direct sales force, stimulate sales productivity, and streamline the sales
support operations so that we respond more quickly to customer needs and
compress sales cycles -- even though this involves some incremental costs."
Specific financial results for the quarter remain uncertain as performance in
the third month of a quarter typically has the greatest effect on both revenue
and earnings.
Allaire also highlighted signs that Xerox's business is progressing
successfully on several fronts in the quarter, including:
* direct sales force turnover in April and May declined significantly from
first quarter and year-ago levels.
* document outsourcing continues to grow strongly.
* color inkjet and office color printer placements are accelerating.
* performance continues to improve in Brazil and Fuji Xerox.
* the company is responding to market demand by increasing manufacturing
capacity for its new DocuColor 2000 family of digital presses.
Xerox also expects later this month to announce its next-generation of
Document Centre digital multifunction devices, and the company will launch a
new family of technologically advantaged inkjet printers for small and home
offices supported by an aggressive and edgy marketing campaign.
"I am confident of improvements during the second half of the year, but they
will be developing later and to a lesser degree than previously anticipated.
Momentum will accelerate as we enter 2001," Allaire said.
"It will take time to resolve our issues, but they are largely within our
control and will be fixed. We will continue to focus aggressively on our
productivity initiatives and improving cash flow. Our technology, products
and solutions are world-class. Now our execution must -- and will --
improve," he added.
Registrant will announce second quarter earnings on July 26.
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Forward-Looking Statements
From time to time Registrant and its representatives may provide information,
whether orally or in writing, including certain statements in this 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.
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 general
office 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.
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.
Financing Business - a significant portion of the Registrant's profits arise
from the financing of its customers' purchases of the Registrant's equipment.
On average, 75 to 80 percent of equipment sales are financed through the
Registrant. The Registrant's ability to provide such financing at competitive
rates and realize profitable spreads is highly dependent upon its own costs of
borrowing which, in turn, depend upon its credit ratings. The Registrant's
present credit ratings permit ready access to the credit markets. There is no
assurance that these credit ratings can be maintained and/or ready access to
the credit markets can be assured. A downgrade or lowering in such ratings
could reduce the profitability of such financing business and/or make the
Registrant's financing less attractive to customers thus reducing the volume
of financing business done.
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 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.
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.
Restructuring - the Registrant's ability to ultimately reduce pre-tax annual
expenditures by approximately $1.4 billion is dependent upon its ability to
successfully implement the 1998 and 2000 restructuring programs including the
elimination of 14,200 net jobs worldwide (9,000 under 1998 program, 5,200
under 2000 program), the closing and consolidation of facilities, certain
asset write-offs and the successful implementation of process and systems
changes.
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. 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. Our inability to attain a consistent trend of revenue growth could
materially affect the trend of our actual results.
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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
--------------------------------
By: MARTIN S. WAGNER
Assistant Secretary
Dated: June 16, 2000