A few Xerox moments

pms laflame at aaahawk.com
Fri Jun 28 22:06:26 PDT 2002


[I don't get where the surprise comes in, the SEC just concluded a long fraud investigation of Xerox. I assume they go over the books with a fine-toothed comb]

Xerox settles SEC case for $10 mln Largest fraud penalty ever against public company By Ted Griffith, CBS.MarketWatch.com Last Update: 4:23 PM ET April 11, 2002

STAMFORD, Conn. (CBS.MW) -- Xerox concluded a settlement Thursday with the U.S. Securities and Exchange Commission that calls for the copier and printer maker to pay $10 million, the largest financial fraud penalty ever levied against a public company.

In a statement, the SEC said investors were misled by Xerox's "four-year scheme to disguise the company's true operating performance." The agency said Xerox's actions accelerated the company's recognition of equipment revenue by over $3 billion and increased pre-tax earnings by about $1.5 billion.

Under the settlement terms, which were proposed last week, Xerox will pay a $10 million fine and restate financial results dating back to 1997. In addition, Xerox's board agreed to appoint a committee composed entirely of outside directors to review the company's accounting, the SEC said.

The SEC said the fine, the largest ever for financial fraud, reflects the seriousness of the charges and "the company's lack of full cooperation with the investigation." The SEC began its investigation of Xerox's accounting back in June 2000.

"The commission decided very stiff sanctions were warranted in this case," Paul Berger, the agency's associate director of enforcement, said in an interview with CBS.MarketWatch.com.

Xerox said it "neither admits nor denies" the allegations contained in the civil compliant, which was filed in federal district court in New York on Thursday.

Shares of Xerox (XRX: news, chart, profile) fell 24 cents to $9.70.

"The settlement with the commission effectively resolves Xerox's outstanding issues with the SEC," CEO Anne Mulcahy said in a statement.

Individual charges possible

Although the settlement does conclude the agency's case against the company, it appears that the SEC might still bring charges against individual executives as well as Xerox's former auditor KPMG. The Wall Street Journal on Wednesday reported that former Xerox Chairman Paul Allaire and former Chief Financial Officer Barry Romeril as well as a KPMG partner could face civil charges.

Berger didn't confirm that report, but the agency's statement pointedly noted: "The SEC is continuing its investigation of this matter as it relates to other parties."

Berger did say "senior management" was involved with the accounting fraud and he noted that the agency typically includes individual executives and the company's auditor in an investigation of accounting fraud.

To allow time for the restatement of financial results, Stamford, Conn.-based Xerox has received an extension of 75 days, on top of a 15-day extension already received, for the filing of its annual report with the SEC.

Wall Street has been rocked in the last several months by a series of accounting scandals, starting with the collapse of energy trader Enron. Berger said the agency has opened nearly 50 financial fraud investigations since the beginning of the year.

But the enforcement official also sought to offer reassurances to investors about the overall health of the stock market.

"Our markets continue to be the most robust and transparent in the world," Berger said.

Ted Griffith is a reporter for CBS.MarketWatch.com

*********** Report: SEC chief met with Xerox Pitt ignored legal advice amid probe of copier company By William Spain, CBS.MarketWatch.com Last Update: 11:31 AM ET May 18, 2002

WASHINGTON (CBS.MW) -- The head of the Securities and Exchange Commission, already under fire from legislators for alleged conflicts of interest, met with the chairman of Xerox while his agency was investigating the company for fraud, according to a published report.

Citing unnamed sources, a story Saturday in the Washington Post (WPO: news, chart, profile), said that SEC Chairman Harvey Pitt met with Xerox Chairman Anne Mulcahy in December, disregarding the advice of agency lawyers.

The newspaper said that while Mulcahy was told by SEC staffers that she should not raise the topic of the investigation, she "brought it up anyway [and] Pitt listened to her but did not respond."

The meeting was requested by Mulcahy, the paper said, and Pitt agreed to it although he was told that it "could give the appearance of impropriety, not only because Xerox was under investigation but also because the probe focused on financial statements that had been audited by the accounting firm KPMG -- which had been a client of Pitt's when he was in private practice."

In late April, Pitt also met with the head of KPMG, which is also under SEC investigation for its auditing of Xerox, prompting howls of protest from lawmakers and public interest groups.

Through a spokeswoman, Pitt ducked questions about the Xerox meeting, the Post said, and declined even to comment on whether it took place. The company, however, confirmed that it had indeed occurred.

Earlier this year, the SEC filed a fraud case against Xerox, charging that it inflated profits by about $1.5 billion; the company settled the case, paying a $10 million fine in the process.

Shares of Xerox (XRX: news, chart, profile) closed down 4 cents to $8.80 Friday.

William Spain is a reporter for CBS.MarketWatch.com in Chicago.

*************

Monday May 13, 10:32 am Eastern Time Press Release SOURCE: Xerox Corporation Xerox Receives $496 Million in Financing From GE Capital STAMFORD, Conn.--(BUSINESS WIRE)--May 13, 2002--Xerox Corporation (NYSE:XRX - News) continues to make significant progress in strengthening its financial position as it delivers on a strategy to build back value and restore the company to good health.

The company announced today that it received $496 million in financing from GE Capital, secured by portions of Xerox's lease receivables in the U.S., which will be amortized over a period that extends into 2005. Xerox and GE Capital expect to complete additional U.S. monetizations this year while the two companies finalize the agreement for GE Capital to become the primary provider of equipment financing for Xerox customers in the U.S.

On May 1, GE Capital Vendor Financial Services and Xerox launched its joint venture, Xerox Capital Services. XCS manages Xerox's customer administration and leasing activities in the U.S., including various financing programs, credit approval, order processing, billing and collections.

In the past year, Xerox has received approximately $2.7 billion in financing from GE Capital, secured by portions of Xerox's lease receivables in the U.S., United Kingdom and Canada.

******************

Monday May 6, 8:00 am Eastern Time Press Release SOURCE: Xerox Corporation Xerox Ranked as One of North America's Most Admired Knowledge Enterprises Winning Practices Available to Customers Through Xerox Global Services STAMFORD, Conn.--(BUSINESS WIRE)--May 6, 2002--Xerox Corporation (NYSE:XRX - News) has been recognized as one of North America's top 10 Most Admired Knowledge Enterprises (MAKE) by Teleos, an independent knowledge management research company.

It marks the fourth time that Xerox's knowledge management practices have earned a top award from Teleos.

Teleos recognized Xerox for its corporate culture supporting knowledge best practices, for managing enterprise capital to create value, for its collaborative corporate knowledge sharing, and for organizational learning. "Xerox has a long history as a champion of managing knowledge for competitive advantage," Teleos stated.

Other North American organizations named to the MAKE list include Accenture, Buckman Laboratories, Clarica Life Insurance, Ernst & Young, General Electric, IBM, McKinsey & Company, Microsoft and the U.S. Navy.

Xerox's research, experience and internal success leveraging its organizational knowledge have helped the company reduce costs and improve business performance.

This practical internal experience is made available externally to customers through Xerox Global Services. Working with customers, Xerox Global Services identifies ways to benefit from improved knowledge and work practice management and develops and implements tailored solutions to realize these opportunities.

"At the core of Xerox's heritage of innovation is a deep understanding of how people, processes and technology interact with each other in the creation of great work," said Tom Dolan, president, Xerox Global Services. "As a result, our practical, results-oriented, knowledge management solutions can help businesses streamline work processes, enable better customer service and grow revenue."

This is the first year a panel of leading knowledge management experts has chosen North American MAKE winners. In 2000, Xerox was named to MAKE's Hall of Fame for being ranked globally among the top 10 most admired knowledge enterprises since the award was created in 1998.

The MAKE program is administered by Teleos in association with the KNOW Network, a Web-based community that shares best knowledge practices.

******** [A steady stream of hype got XRX stock to double over the last year or so and got Mulcahy a juicy pay packet]

http://biz.yahoo.com/n/x/xrx-2.html

Friday June 21, 4:12 pm Eastern Time Associated Press Xerox renegotiates $7 billion credit line

STAMFORD, Connecticut (AP) -- Xerox Corp. (NYSE:XRX - News) has renegotiated a $7 billion revolving line of credit, the latest move aimed at turning around the maker of copiers and printers. The company's shares surged on the news. The company said Friday it has repaid $2.8 billion and extended the maturity date for the remaining $4.2 billion.

"Xerox's strengthened financial position and improved operational performance contributed to our successful renegotiation of the revolver," said Anne M. Mulcahy, Xerox's chairwoman and chief executive officer.

The first loan of $700 million must be repaid by September. Two remaining loans and a revolving line of credit have a final maturity of April 30, 2005.

Following the repayment of the $2.8 billion portion of the revolver and $1.3 billion in debt that matured this quarter, Xerox said it will have about $1.7 billion in cash.

Xerox filed a form Friday with the U.S. Securities and Exchange Commission that includes the terms and conditions of the new revolving line of credit.

Shares of Xerox stock ended Friday trading on the New York Stock Exchange at $8.97 each, up $1.12, or 14 percent.

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Friday June 28, 8:10 pm Eastern Time Reuters Market News Xerox CEO 2001 Package Worth Potential $25 Million

SAN FRANCISCO (Reuters) - Xerox Corp.(NYSE:XRX - News) Chief Executive Anne Mulcahy received a pay package for 2001 that could be worth $25 million in a decade, when included stock options expire, the technology company said on Friday. ADVERTISEMENT

The reported salary was part of a filing by Xerox which showed accounting errors and reclassified more than $6 billion in revenues over five years.

Shares in Xerox closed down almost 13 percent on Friday to $6.97. The shares have fallen 33 percent this year.

Xerox in an annual report filed with securities regulators said that Mulcahy, who got the top job last year, took home $2.25 million in salary and cash bonus, $1.16 million in restricted stock and $87,000 in other compensation.

The CEO also got more than 1.9 million options, including 934,600 with an exercise price of $4.75 per share and 1 million with a $9.25 per share price, that could be worth nearly $22 million in about a decade when they expire.

The exercise prices were based on the value of Xerox stock at time of issue. Mulcahy was promoted to chief executive and chairman last year, and shares of Xerox soared 125 percent in 2001, rising to $10.42 from $4.63 on the New York Stock Exchange.

Xerox, using regulator-mandated calculations assuming 10 percent annual share appreciation, estimated the first set of Mulcahy's options could be worth $7.08 million when they expired at the end of 2010 and the second set could be worth $14.7 million at the end of 2011.

Mulcahy received another 934,600 options on Jan. 1, 2002, which were not part of the 2001 pay.

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