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 9, 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
Item 5. Other Events
Registrant's Board of Directors today decided to eliminate the payment of
dividends on its common stock. The decision was made in line with
Registrant's turnaround objective to strengthen its liquidity and to restore
long-term value to shareholders and bondholders. Previously, Registrant had
paid a quarterly dividend of 5 cents per share.
"After serious deliberation, the Board of Directors chose to eliminate the
dividend -- a decision that contributes to the progress Xerox is making in
restoring its financial strength and helps to provide the flexibility required
to build on the effective execution of its turnaround plan," said Paul A.
Allaire, Chairman and Chief Executive Officer. "As Xerox returns to
profitability, the Board will consider the reinstatement of dividends."
Today's announcement will reduce Registrant's cash requirement by
approximately $140 million on an annualized basis. This savings is in
addition to the progress Registrant has made in generating cash and
strengthening liquidity through cost reductions, improved working capital
management and the sale of $2 billion in assets. Registrant stated that the
elimination of the dividend is not the result of any unanticipated second
quarter developments.
Registrant's Board of Directors today also chose not to declare the dividend
on the Employee Stock Ownership Program (ESOP) preferred stock, which is used
to service the ESOP debt. Instead, Registrant will make an additional
contribution to the ESOP trust. Previously Registrant had paid a quarterly
dividend of $1.5625 per share on the preferred stock.
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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. 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 30% 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: July 9, 2001