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XEROX DOCUMENT PROCESSING INCOME UP 12 PERCENT IN YEAR, 20 PERCENT IN 4TH QUARTER

 -- After Accounting Changes, Special Charges,
 Company Reports Losses In Both Periods --
 STAMFORD, Conn., Jan. 29 /PRNewswire/ -- Income from Xerox Corporation's (NYSE: XRX) core document processing business in 1992 was 12 percent higher than a year ago and up 20 percent in the fourth quarter before special items, the company reported today.
 Document processing income in the full year was $600 million, or $5.36 a primary share, against $537 million, or $4.78 a primary share, in 1991. In the three months ended Dec. 31, it was $226 million, or $2.12 a primary share, compared with $188 million, or $1.76 a primary share, a year earlier.
 After previously announced charges relating to the company's disengagement from its remaining insurance and other financial services businesses and the impact of the adoption of accounting changes, Xerox reported a 1992 loss of $1 billion 20 million, or $11.29 a primary share, against net income of $454 million, or $3.91 a primary share, in 1991.
 On the same basis, the fourth quarter showed a loss of $736 million, or $7.80 a primary share, compared with net income of $91 million, or 73 cents a primary share, a year ago.
 On an analytical basis, the company estimated that, excluding the charges relating to financial services, the 1992 accounting changes and the 1991 work force reduction, earnings were $628 million, or $5.65 a primary share, compared with $555 million, or $4.97 a primary share, in 1991.
 Chairman Comments on Document Processing
 "In spite of the weak economic environment, strong customer acceptance of our innovative new digital products drove the growth in document processing in 1992," said Paul A. Allaire, Xerox chairman and chief executive officer.
 "Sales of the Xerox DocuTech Publishing Series and our state-of-the- art full-color copier have exceeded our expectations and sales of new electronic laser printers are accelerating," he said.
 The Xerox chairman said the company's market share increased in copiers with sales of personal copiers continuing to show "excellent growth."
 Document processing revenues in 1992 increased 6 percent to $14.7 billion from $13.8 billion in 1991. In the fourth quarter, document processing revenues were up 10 percent to $4.2 billion from $3.8 billion a year ago.
 Excluding currency, document processing revenue grew 5 percent in the full year and in the latest quarter increased 7 percent.
 "In the United States, revenue and income grew at a faster pace in the fourth quarter than in the first half of the year," Allaire said, "but revenue and income of our Japanese and certain European operating companies continues to be adversely impacted by weak economic conditions."
 Company's Outlook for 1993
 "Moving into 1993, we expect to see further benefits from favorable customer acceptance of our new products as the DocuTech family continues to penetrate the offset printing market and the color and electronic printing products are rolled out," said Allaire.
 "We will continue to invest in the development and introduction of new products to maintain our premier position in the rapidly changing document processing market.
 "At the same time, we will remain cautious in adding incremental resources until positive economic trends emerge in our major markets.
 "Nevertheless, we believe we are well positioned to realize further growth for our shareholders in 1993," Allaire said.
 He pointed out that the global market for copying, digital publishing, color copying and printing, and electronic printing -- the major product areas of Xerox, The Document Company -- is growing over 10 percent annually.
 "With our broad line of highly competitive products, services and software and our continued focus on customer satisfaction, we are in a good position to achieve improved growth in revenue and profits as the worldwide economies improve," he said.
 Insurance and Other Financial Services
 On Jan. 18, when Xerox announced it was disengaging from its insurance and other financial services businesses, Allaire said that "the action was taken to maximize Xerox shareholder value by concentrating on our document processing business."
 He said the exit from insurance and other financial services "is consistent with our previous actions to reduce the amount of the corporation's resources devoted to those businesses and to downsize, restructure and refocus them to become stronger, stand-alone entities."
 In connection with the operational and legal restructuring of Crum and Forster, the company's property and casualty insurance unit, which was begun in 1992, the related detailed evaluation of its balance sheet and the disengagement decision, Xerox recognized a fourth-quarter after- tax charge of $778 million.
 This charge included $288 million related to reserve strengthening at Crum and Forster, $470 million for a partial write-down of insurance and other financial services goodwill, and $20 million for additional adjustments in other financial services.
 As previously announced in connection with the decision to exit financial services, Xerox deconsolidated the results of its insurance and other financial services businesses for 1992 financial reporting.
 Equity in the income of the unconsolidated insurance and other financial services for 1992 was a loss of $818 million, including the restructuring provision. This compares with income of $18 million in 1991.
 In the fourth quarter, equity in the income of these operations was a loss of $830 million as a result of these charges compared with income of $4 million a year ago.
 As a result of deconsolidation accounting, future profits from the financial services businesses, after allocated interest expense, will be deferred, to the extent of net cumulative profits.
 Adoption of FAS 106 and 109
 Xerox also said the company's 1992 results reflected the previously announced adoption of two recent accounting standards from the Financial Accounting Standards Board related to retiree benefits and deferred income taxes.
 FAS 106 requires the cost of post-retirement medical and other benefits to be recognized over an employee's working life, rather than as claims or premiums are paid, the prior practice.
 Adoption of this standard does not impact the amount of cash paid for these benefits, but resulted in a one-time after-tax charge in 1992 of $606 million related to prior years and a 1992 after-tax charge for these benefits of $44 million.
 FAS 109 changes the method of accounting for income taxes. The net impact decreased shareholders' equity by $23 million. The company said it is unlikely that adoption of this standard will have a material impact on future operating results.
 NOTES: Total common shares used to calculate primary earnings per
 share were 95.9 million in 1992 compared with 94.9 million in
 1991.
 Financial statements for the first three quarters of 1992
 have been restated to reflect the adoption of FAS 106 and
 109.
 XEROX CORPORATION
 Financial Summary
 (In millions, except per-share data)
 Periods ended Dec. 31 Full Year
 1992 1991 Percent B/(W) 1991
 Revenues
 Document processing $ 14,681 $ 13,819 6
 Net income (loss)
 document processing,
 before special items $ 600 $ 537 12
 Incremental cost of
 adopting FAS 106 (38) --
 Workforce provision -- (101)
 Income from document
 processing operations 562 436
 Equity in income (loss)
 of IOFS operations (818) 18
 Income (loss) from
 continuing operations (256) 454
 Cum. effect of changes
 in accounting principles (764) --
 Discontinued operations -- --
 Net income (loss) $ (1,020) $ 454
 Primary earnings (loss)
 per share document
 processing, before
 special items $ 5.36 $ 4.78 12
 Incremental cost of
 adopting FAS 106/109 (.21) --
 Workforce provision -- (1.06)
 Income from document
 Processing operations 5.15 3.72
 Equity in income (loss)
 of IOFS operations (8.47) .19
 Income (loss) from
 continuing operations (3.32) 3.91
 XEROX CORPORATION
 Financial Summary
 (In millions, except per share data)
 Three Months Ended 12/31/92 12/31/91 Pct. B/(W) 1991
 Revenues
 Document processing $ 4,225 $ 3,835 10
 Net income (loss)
 Document processing,
 before special items 226 188 20
 Incremental cost of
 adopting FAS 106 (10) --
 Workforce provision -- (101)
 Income from document
 processing operations 216 87
 Equity in income (loss) of
 IOFS operations (830) 4
 Income (loss) from
 continuing operations (614) 91
 Cum. effect of changes in
 accounting principles -- --
 Discontinued operations (122) --
 Net income (loss) (736) 91
 Primary earnings (loss)
 per share:
 Document processing,
 before special items $ 2.12 $ 1.76 20
 Incremental cost of
 adopting FAS 106/109 (.05) --
 Workforce provision -- (1.06)
 Income from document
 processing operations 2.07 .70
 Equity in income (loss) of
 IOFS operations (8.60) .03
 Income (loss) from
 continuing operations (6.53) .73
 Cum. effect of changes in
 accounting principles -- --
 Discontinued operations (1.27) --
 Primary earnings (loss)
 per share (7.80) .73
 NOTE: As a partial result of the adoption of FAS 109, Accounting for Income Taxes, the restatement of the 1992 financial results includes an income tax benefit of $122 million related to discontinued operations in the restated first quarter 1992 results. As a conservative measure, the tax benefit was offset by an increase in the discontinued operations provision in the 1992 fourth quarter. Accordingly, the full year 1992 discontinued operations income (loss) was zero.
 -0- 1/29/93
 /CONTACT: Thomas C. Abbott of Xerox, 203-968-3378/
 (XRX)


CO: Xerox Corporation ST: Connecticut IN: SU: ERN

TM -- NY001 -- 0578 01/29/93 07:07 EST
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Date:Jan 29, 1993
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