Xerox to Revise Financial Statement

AP via Excite News ^ | 4-1-2002 | JOHN CHRISTOFFERSEN

[Cagey]

Xerox Corp. said Monday that it will revise several years of financial statements and pay a civil penalty of $10 million under an agreement reached with federal securities regulators.

The proposed agreement, which is subject to the approval of the Securities and Exchange Commission, would settle allegations that have been under investigation since June 2000.

"In the past year, we have made substantial improvements in our operations through a bold and comprehensive turnaround program," said Anne M. Mulcahy, Xerox chairwoman and chief executive officer. "That's why we believe Xerox is best served by putting these issues with the SEC behind us and focusing on restoring the company to good health, sustained profitability and future growth."

The agreement calls for the SEC to file a complaint and a consent order in U.S. District Court for injunctive relief and a civil penalty of $10 million. Xerox would neither admit nor deny allegations that it violated anti-fraud, reporting and other provisions of the securities laws.

The agreement also requires Xerox to restate financial statements for 1997 through 2000 and adjust previously announced 2001 results. The restatement will primarily reflect adjustments in the timing and allocation of lease revenue and could involve a reallocation of equipment sales revenue in excess of $2 billion from 1997 through 2000, Xerox said.

It is unclear what effect the restatement will have on Xerox's bottom line for those years. The company said there will be no impact on the cash that has been received or is contractually due to be received from the leases.

The restatement also will include adjustments that could be more than $300 million due to the establishment and release of certain reserves before 2001 and other miscellaneous items.

To make the adjustments, Xerox said it will request extensions on financial documents filed with the SEC.

The latest adjustments are in addition to restatements Xerox made last year during the SEC probe.

Xerox said it initiated settlement discussions with the SEC last month after the company was notified of the commission's preliminary decision to recommend an enforcement action regarding alleged violations of federal securities laws in connection with Xerox's 1997-2000 financial statements.

The SEC contends that Xerox's revenue-allocation methodology for contracts did not comply with accounting standards. Xerox said it has changed its methodology.

[hove]

IN the last decade....when all of these big corporations were cooking their books and BREAKING THE LAW....where exactly was the SEC. Does anybody really believe the SEC didn't know it was going on all along?

[Rodney King]

OK. Officers lie and break the law in order to get you to buy their stock. Some people do buy based upon the phony earnings. The stock price crashes when reality hits. You've lost a lot. Then, the SEC comes along and forces you along with all of the other shareholders to pay 10 million bucks to them. The con-artists who intentionally broke the law to keep the stock price up so that they could get big bonuses are off the hook, and no charges are filed.

Make sense?

[Tickle Me Pank]

Xerox happens to be a KPMG client, BTW, not Andersen....

[Cagey]

Make sense?

Yes. So this news broke today and Xerox is up over 3% right now. Make sense? Nope.

11.08 0.33 +3.07% 10.51 - 11.15 5,306,400