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Xerox Corporation Michael Herchel ACG2021 Section 008

Xerox Corporation Michael Herchel ACG2021 Section 008. Executive Summary.

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Xerox Corporation Michael Herchel ACG2021 Section 008

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  1. Xerox CorporationMichael HerchelACG2021 Section 008

  2. Executive Summary With the advent of the computer dot-com bust, Xerox was deep in the red. However, by exiting losing markets and selling unneeded assets, Xerox has returned to profitability from a 94 million dollar net loss to a 91 million dollar net income between the years of 2001 and 2002. Xerox’s gross margins have improved and its future is looking brighter. Xerox’s 2002 Annual Report can be found at http://a1851.g.akamaitech.net/f/1851/2996/24h/cache.xerox.com/downloads/usa/en/i/ir_annualreport2002.pdf

  3. Part A. Introduction • Chief Executive Officer: • Anne M. Mulcahy • Location of home office • 800 Long Ridge RoadStamford, CT 06904United States • Ending date of latest fiscal year • December 31, 2002 • Xerox provides document solutions for all types of business. Xerox's products include digital network printers and photocopiers, copy machines, scanners, fax machines, multipass multifunction printers, office supplies, document management software, business consulting and services. • Xerox's main geographic centers of activity are the United States (with 62.5% of Total Revenue) and Europe (with 27.9% of Total Revenue).

  4. Part A. Audit Report • Xerox’s independent auditor is PricewaterHouseCoopers LLP, • PricewaterHouseCoopers, LLP said that in their opinion the financial statements accurately represents the financial position of Xerox at December 31st, 2002 and 2001. The financial statements conform to the generally accepted accounting principles in the United States. Xerox's Financial Statements are the responsibility of Xerox's management, while PricewaterhouseCooper's responsibility is to audit and report on these statements.

  5. Part A. Stock Market Information • The current stock price for XRX as of 2/25/2004 is $13.93 • The twelve month trading range for Xerox’s Stock is $8.40 - $15.54 • Dividend per share: $0.04 • Date of this information: February 25th, 2004 • Your opinion about the company stock as an investment? HOLD

  6. Part B. Industry Situation and Company Plans Xerox’s industry is on a general downturn due to the increased usage of electronic media. For example, people are electing to have their bank statements emailed to them instead of printed and mailed. This cuts directly into Xerox’s production printing (Docutech) revenue. To remain profitable, Xerox must either 1) cut expenses (see the income statement and this article) 2) expand into new markets (See Opportunities for Growth on Page 4 of Xerox’s annual report PDF file in addition to this news article). DocuColor System DocuPrint System

  7. Part C. Income Statement Xerox presents a Multistep Income Statement within the 2002 annual report. The 185 million dollar increase in net income can be attributed to the abandonment of the InkJet business segment, selling assets totaling approximately $2.7 billion, and implementing actions to reduce costs by $1.7 billion.

  8. Part C. Balance Sheet (in millions) Total cash decreased by 28%. This is offset by the total short-term liabilities decreasing by 34%

  9. Part D. Accounting Policies • The consolidated financial statements include the accounts of Xerox Corporation and all of its controlled subsidiary companies. • Xerox sells most of its products and services under bundled contract arrangements, which contain multiple deliverable elements. • Due to Xerox's credit ratings, many of its derivative contracts and several other material contracts require it to post cash collateral or maintain minimum cash balances in escrow. • Xerox sponsors pension plans in various forms and in various countries covering substantially all employees who meet certain eligibility requirements. Significant accounting policies relating to revenue recognition, cash, short-term investments, inventories, and property and equipment Topics of the notes to the financial statements: Note 1 — Summary of Significant Accounting Policies Note 2 — Restructuring Programs Note 3 — Acquisitions Note 4 — Divestitures and Other Sales Note 5 — Receivables, Net Note 6 — Inventories and Equipment on Operating Leases, Net Note 7 — Land, Buildings and Equipment, Net Note 8 — Investments in Affiliates, at Equity Note 9 — Segment Reporting Note 10 — Net Investment in Discontinued Operations Note 11 — Debt Note 12 — Financial Instruments Note 13 — Employee Benefit Plans Note 14 — Income and Other Taxes Note 15 — Litigation, Regulatory Matters and Other Contingencies Note 16 — Preferred Securities Note 17 — Common Stock Note 18 — Earnings Per Share Note 19 — Financial Statements of Subsidiary Guarantors

  10. Part E. Financial AnalysisLiquidity Ratios (in millions, unless otherwise stated)

  11. Part E. Financial AnalysisProfitability Ratios

  12. Part E. Financial AnalysisSolvency Ratio

  13. Part E. Financial AnalysisMarket Strength Ratios

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