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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):
April 7, 1998
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
This document consists of 5 pages.
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Forward-Looking Statements
This Current Report on Form 8-K contains statements 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 Registrant are based on the beliefs of management as
well as assumptions made by and information currently available
to management.
The word "will" is intended to identify forward-looking statements.
Such statements reflect the current views of 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. Registrant does not intend to update these
forward-looking statements.
In accordance with the provisions of the Litigation Reform Act,
Registrant is 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 relevant to this
Form 8-K include but are not limited to the following:
Competition - 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 Registrant to provide document processing products
and services in each of the markets served by Registrant, some of
whom operate on a global basis. 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 over half of Registrant's revenues. This segment of the
general office is mature with anticipated declining industry
revenues as the market transitions to digital technology. Some of
Registrant's new digital products replace or compete with
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 - 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 Registrant can obtain
for its products and services may vary from historical levels.
Financing Business - a significant portion of Registrant's profits
arise from the financing of its customers' purchase of Registrant's
equipment. On average, 75 to 80 percent of equipment sales are
financed through Registrant. Registrant's ability to provide such
financing at competitive rates and realize profitable
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spreads is highly dependent upon its own costs of borrowing which,
in turn, depend upon its credit ratings. Significant changes in
such ratings could reduce the profitability of such financing
business and/or make Registrant's financing less attractive to
customers thus reducing the volume of financing business done.
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.
Productivity - 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 and materials
cost inflation and competitive price pressures.
International Operations - Registrant derives approximately half
its revenue from operations outside of the United States. In
addition, Registrant manufactures many of its products and/or
their components outside the United States. Registrant's future
revenue, cost and profit results could be adversely 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. 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 revenues required to
provide anticipated returns from these investments.
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Item 5. Other Events
Registrant Announces Worldwide Restructuring
On April 7, 1998, Registrant announced a worldwide restructuring
to enhance its competitive position and further align its cost
structure with the demands of the digital world. Registrant will
take an after-tax charge of approximately $1 billion against second
quarter earnings to cover the costs of the program, which will
include the elimination of about 9,000 jobs worldwide through
voluntary reductions and layoffs; the closing and consolidation
of facilities; and the write-down of certain assets.
"The markets we serve are growing strongly and transitioning
rapidly to digital technologies," said Xerox Chairman and Chief
Executive Officer Paul A. Allaire. "In the digital world,
profitable revenue growth can only be assured by continuous
significant productivity improvements in all operations and
functions worldwide and we are determined to deliver these
improvements."
"This restructuring is an important and integral part of
implementing our strategy and ensuring that we maintain our
leadership in the digital world," Allaire said. "The continued
adverse currency and pricing climate underscores the importance
of continuous and, in certain areas, dramatic productivity
improvements."
"Xerox has accomplished what few other companies have -- foreseen,
adapted to and led a major transformation in its market," said
Xerox President and Chief Operating Officer G. Richard Thoman.
"As our markets and customer needs continue to change, Xerox
will continue to anticipate and lead. We are focused on being
the best in class in the digital world in all respects. To
enhance our competitive position, we must be competitive in
terms of the cost of our products and infrastructure, the
speed of our response to the marketplace, the service we provide
our customers and the breadth and depth of our distribution
channels."
As a result of a six-month planning process involving
more than 50 teams, Registrant will implement some 150
specific projects. Among them:
- -- Streamline and rationalize worldwide manufacturing,
logistics, distribution and service operations. For example,
Registrant will centralize and consolidate U.S. parts depots
and outsource storage and distribution.
- -- Move from country-centric operations in Europe to a more
"pan-European" structure to provide more efficient customer
support. Registrant will rationalize and consolidate functions
and locations to reduce duplication and to increase speed of
response to the marketplace.
- -- Overhaul administrative processes and associated resources
to achieve significantly greater productivity and speed of
implementation. For example, Registrant will close one of four
geographically-organized U.S. customer administrative centers
with the re-
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maining three re-focused by customer segment,
enabling improved customer support at lower cost.
When fully implemented, the ongoing pre-tax savings from the
initiatives will be approximately $1 billion annually. Initially,
more than half of the savings will be reinvested to implement
process and systems changes in order to enable the restructuring,
and in ongoing efforts to broaden and strengthen marketing
programs and distribution channels to enhance revenue growth.
Paybacks will be spread over three or four years, particularly
in Europe where the process of implementation is more complex.
Sales, administrative and general expenses as a percentage of
revenue will move from the high 20's to the low 20's over time,
driven primarily by large reductions in overhead costs.
Manufacturing and service productivity will also improve.
These benefits will be somewhat offset by slightly lower gross
margins overall due to the increasing proportion of Registrant's
business conducted through indirect sales channels and
outsourcing.
"This repositioning will strengthen us financially and enable
strong cash generation," Allaire said. "We have strong business
momentum. We have exciting market opportunities and excellent
customer acceptance of our broad product line. These
initiatives will underpin the consistent delivery of
double-digit revenue growth and mid- to high teens
earnings-per-share growth. This restructuring is another
step in our sustained strategy to lead the digital document
world and provide superior customer and shareholder value."
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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
By: MARTIN S. WAGNER
Assistant Secretary
Dated: April 8, 1998
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