Xerox Revises Some Results, but No 'Fictitious' Transactions Found

Xerox (XRX) said a review of its books revealed that some of the company's accounting practices "misapplied" generally accepted accounting principles, but the copier maker's auditors, KPMG, have now certified the financial statements for the last three years.

After the auditor's review and an internal investigation, the company made adjustments to some previously recorded charges for errors and irregularities resulting from accounting issues in Mexico. The adjustments reduced common shareholders' equity by $137 million and consolidated tangible net worth by $76 million as of Dec. 31, 2000.

The company said the adjustments to revenue for the last three years were insignificant, but net income for 2000 increased by $127 million. The adjustments also added $50 million to net income for the latest first quarter.

"After rigorous reviews of Xerox's accounting, no fictitious transactions were found and the company's liquidity is not impacted," the company said in a press release. "Xerox can now continue to focus on effectively executing its turnaround strategy, which remains on track."

Xerox also said it is continuing to make progress in improving its cash position. The company's current worldwide cash balance stands at about $2 billion, following the repayment of most of its second-quarter maturing debt.

The company's shares rose 5% to $9.50 in Instinet action before the opening bell.

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