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XEROX THIRD QUARTER NET INCOME UP 11 PERCENT; CAPITAL GAINS OFFSET BY PROVISION FOR RESTRUCTURING UNDER WAY AT INSURANCE UNIT

 XEROX THIRD QUARTER NET INCOME UP 11 PERCENT; CAPITAL GAINS OFFSET
 BY PROVISION FOR RESTRUCTURING UNDER WAY AT INSURANCE UNIT
 STAMFORD, Conn., Oct. 27 /PRNewswire/ -- Xerox Corporation's third quarter net income was $135 million, up 11 percent from $121 million in the comparable period a year ago, the company reported today. Primary earnings per share were $1.18 against $1.06.
 Net income in the first three quarters this year also rose 11 percent to $402 million, or $3.53 primary earnings per share, compared with $363 million, or $3.18 a primary share, in the corresponding 1991 period.
 In the three months ended Sept. 30, revenues totaled $4.5 billion compared with $4.3 billion a year earlier. Nine-month total revenues were $13.1 billion against $12.9 billion a year ago.
 Paul A. Allaire, Xerox chairman and chief executive officer, said that "our document processing strategy, supported by an aggressive new product introduction schedule, is meeting with excellent customer reception, despite the weak economic environment in the United States and deteriorating economies in Europe, Japan and Brazil.
 "We plan to maintain our product development schedule to satisfy the requirements of our customers for quality products and services," said Allaire.
 Allaire also said that "we continue to make substantial progress narrowing the strategic focus of our financial services businesses to create more value for Xerox shareholders."
 In line with a major restructuring plan under way at Crum and Forster Inc., the company's property and casualty insurance unit, Allaire said $444 million in capital gains were realized in the third quarter and a provision of an equal amount was taken in anticipation of required balance sheet strengthening related to future restructuring actions.
 The objectives of the restructuring are to put Crum and Forster into a stronger position to capitalize on its strengths in the marketplace, be better able to serve its customers and improve its overall returns to Xerox shareholders, said Allaire.
 Crum and Forster Actions Outlined
 Stuart B. Ross, chairman and chief executive of Xerox Financial Services, Inc., said that Crum and Forster, under the new team led by Jay Brown, chairman and chief executive officer, is evaluating several alternatives for restructuring of its insurance operations and strengthening its financial position.
 "Further progress toward the restructuring objectives will take place during the balance of this year," Ross said. "Although it is too soon to quantify the amount, Crum and Forster is expected to take additional provisions and add to its reserves in connection with the restructuring in the fourth quarter."
 During the past two years, Crum and Forster sold NAVCO, a specialty personal lines underwriter, and six smaller Crum and Forster companies; withdrew from standard personal property and casualty insurance lines; and substantially repositioned its book of business to concentrate on more profitable lines and geographic segments.
 In addition, staff levels have been reduced by about 30 percent. Crum and Forster has significantly repositioned its investment portfolio. In 1991, it reduced its investment in equities by approximately 75 percent, reinvesting the proceeds in high quality fixed income securities.
 In this past quarter, in support of an anticipated restructuring, Crum and Forster took further action to shorten significantly the duration of its fixed income securities to minimize the effects of interest rate fluctuations on
invested assets. This produced the $444 million of before-tax capital gains.
 "Although much remains to be done, I'm pleased with the progress we are making to improve value for Xerox shareholders through strengthening, repositioning, and restructuring of the Xerox Financial Services businesses," said Ross.
 Document Processing Results
 Third quarter income from the Xerox document processing business was $128 million, a 10 percent gain from $117 million in the comparable 1991 period.
 In the first three quarters of this year, document processing income was $374 million, a 7 percent increase from $349 million in the corresponding period a year ago.
 Document processing operating revenues in the third quarter were $3.6 billion against $3.3 billion a year earlier. In the nine months they were $10.5 billion versus $10 billion.
 Excluding currency, document processing revenues grew 4 percent in the third quarter and 5 percent in the nine-month period.
 Xerox Chairman Allaire said that "in the face of the current challenging economic environment, we were able to balance our resources to support our commitment to bring out competitive new products and deliver profit growth."
 New products launched in the last 24 months include the DocuTech Publishing Series, the Xerox color copier and the new line of laser printers.
 Insurance and Other Financial Services Results
 Third quarter earnings from the operating units of insurance and other financial services were $49 million compared with $51 million a year ago. In the first three quarters of the year, earnings were $164 million against $141 million.
 After interest and headquarters expense, third quarter income from these units was $7 million compared with $4 million a year earlier. Nine-month income was $28 million compared with $14 million.
 Xerox Financial Services Chairman Ross, said that "our asset management and investment banking units continued to benefit from strong markets, a higher level of mutual fund management fees and capital gains at Xerox Life.
 "However," he said, "Crum and Forster's earnings followed the pattern in the property and casualty industry market, which suffers from inadequate price levels, higher losses from catastrophes and increasing pressures on reinsurance capacity."
 Crum and Forster's third quarter results included $30 million in net pre-tax losses from hurricanes Andrew, principally in Florida and Louisiana, and Iniki in Hawaii.
 Consistent with the objective of improving shareholder value, Ross called attention to the agreement signed earlier this month to sell The Van Kampen Merritt Companies, Inc., to Clayton, Dubilier & Rice, Inc., and Van Kampen Merritt management for $360 million. This transaction, expected to close early in 1993, will yield a pre-tax gain of approximately $100 million.
 In 1990, Xerox Financial Services discontinued its real estate and third party financing operations, significantly reducing its investment in these operations.
 XEROX CORPORATION
 Financial Summary
 (In millions, except per-share data)
 Percent
 Third Quarter 1992 1991 B/(W) 1991
 Revenues
 Document Processing $3,598 $3,329 8
 Insurance and Other
 Financial Services 889 948 (6)
 Total $4,47 $4,277 5
 Net Income
 Document Processing 128 117 10
 Insurance and Other
 Financial Services
 -Operating Units 49 51 (4)
 -Interest and
 Headquarters Expense (42) (47) 9
 Total Insurance and
 Other Financial Services 7 4 (A)
 Net Income 135 121 11
 Primary Earnings
 per Share 1.18 1.06 11
 Fully Diluted
 Earnings per Share 1.15 1.03 12
 XEROX CORPORATION
 Financial Summary
 (In millions, except per-share data)
 Percent
 Nine months year-to-date 1992 1991 B/(W) 1991
 Revenues
 Document Processing 10,456 9,984 5
 Insurance and Other
 Financial Services 2,686 2,922 (8)
 Total 13,142 12,906 2
 Net Income
 Document Processing 374 349 7
 Insurance and Other
 Financial Services
 -Operating Units 164 141 17
 -Interest and
 Headquarters
 Expense (136) (127) (8)
 Total Insurance and
 Other Financial Services 28 14 (A)
 Net Income 402 363 11
 Primary Earnings
 per Share 3.53 3.18 11
 Fully Diluted
 Earnings per Share 3.44 3.12 10
 (A) Calculation not meaningful.
 Income from Insurance and Other Financial Services includes allocated interest expense.
 Consolidated and Insurance and Other Financial Services revenues for 1992 and 1991 have been restated to exclude realized capital gains, which are now reported separately from operating revenues.
 -0- 10/27/92
 /NOTE TO EDITORS: Third quarter earnings per share on a fully diluted basis were $1.15 compared with $1.03 a year ago. In the first nine months, they were $3.44 against $3.12.
 Total common shares used to calculate primary earnings per share were 97.0 million in the 1992 third quarter and 94.6 million in the 1991 third quarter.
 Consolidated and insurance and other financial services revenues for 1992 year-to-date and 1991 have been restated to exclude realized capital gains, which are now reported separately from operating revenues./
 /CONTACT: Thomas C. Abbott, 203-968-3378, or Judd B. Everhart, 203-968-3572, both of Xerox/
 (XRX) CO: Xerox Corporation ST: Connecticut IN: SU: ERN


SM -- NY009 -- 5139 10/27/92 07:06 EST
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