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):
December 14, 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
Following through on a key tenet in its business turnaround plan, Xerox
Corporation ("Registrant") today announced an agreement to sell its China
operations to Fuji Xerox Co. Ltd. for $550 million cash. The sale is
scheduled to close December 20.
Under the terms of the agreement, the manufacturing, sales and service
functions in China and Hong Kong, including ownership of Xerox (China) Ltd.
and Xerox (Hong Kong) Ltd. will be transferred to Fuji Xerox.
The sale of Xerox China is part of an asset-disposition initiative outlined by
Registrant in October. Registrant's business turnaround program also includes
significant cost reductions and a renewed commitment to its core business
operations.
"Our asset disposition initiative, designed to raise $2 billion to $4 billion,
is on track. The first of those sales, Xerox China operations, is ahead of
schedule. And our $1 billion cost-reduction program is on target," said Paul
A. Allaire, Registrant's chairman and chief executive officer. "We will
announce additional actions that will further improve our liquidity as they
are agreed."
Registrant began marketing products in Hong Kong in 1964 and entered the
market in China in 1980. In 1995, Registrant established Xerox (China)
Limited, to hold the company's mainland China interests, including wholly
owned subsidiaries and joint ventures with Chinese national companies. Xerox
China has approximately 1,500 employees with 1999 sales of $200 million.
"With our unique understanding of the Asia-Pacific marketplace, we are eager
to make the investments that will deliver the latest technology to the Chinese
marketplace, provide a broader range of products and services for Xerox China
customers and offer growth and opportunity for Xerox China employees," said
Masamoto Sakamoto, president, Fuji Xerox.
To drive the business forward, on Jan. 1, 2001 Fuji Xerox will establish a
China Office reporting to Sakamoto.
"This is welcome news for Xerox China customers," said Allan Lin, president
and chief executive officer, Xerox China. "Xerox Corporation has made
investments to build a world-class manufacturing, sales and marketing
organization in China. Fuji Xerox will build on that foundation and ensure
our customers benefit from the next generation of document processing
technologies. And the brand, the commitment to quality and customer
satisfaction will remain unchanged."
Since 1995 Fuji Xerox has been operating a printer manufacturing plant in
Shenzhen, which delivers desktop printers to markets worldwide.
Fuji Xerox is an $8 billion corporation with 30,000 employees in the Asia
Pacific and Pacific Rim regions, including more than 20,000 employees in
Japan. Fuji Xerox is jointly owned by Fuji Photo Film Co., Ltd. and Xerox
Corporation.
Forward-Looking Statements
From time to time the Registrant (or the "Company") and its representatives
may provide information, whether orally or in writing, 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 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. There is no
assurance that the company's credit ratings can be maintained and/or access to
the credit markets can be assured. A downgrade or lowering in such ratings
could restrict access to the credit markets, would reduce the profitability of
such financing business, and/or reduce 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, before reinvestments, 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 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 which in turn are dependent upon
the ability to finance internally or through a third party the customer's
purchases of the Registrant's products. 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.
Liquidity - the Registrant's liquidity is currently provided through its own
cash generation from operations, various financing strategies including
securitizations and utilization of its $7 billion Revolving Credit Agreement
with a group of 58 banks which is available through October, 2002. The
Registrant has embarked upon a process of selling certain assets with the
objective of generating proceeds for the purpose of retiring outstanding debt.
Thus, the Registrant's liquidity is dependent upon its ability to successfully
generate positive cash flow from operations, continuation of securitizations
and other financing alternatives, and completion of asset sales.
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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: December 14, 2000
