Xerox filed federal documents restating its financial figures for the years 1997 through 2000 as well as adjustments to previously announced results from last year. It said pretax income over this five-year period declined by US$1.4 billion from previously reported amounts.
"With the filing of the 2001 10-K, we will have resolved the company's accounting issues with the SEC and completed the restatement," said Anne Mulcahy, Xerox chairman and CEO.
Xerox said the restatement was larger by some US$3 billion than predicted because of a change in its lease accounting in Latin America, where revenues originally booked as sales-type leases -- under which customers were contractually bound over time -- will now be recorded as rentals.
The SEC had alleged Xerox used a variety of what it called "accounting actions" to disguise its true operating performance. The SEC on Friday did not immediately have a comment on the scope of Xerox's restatement.
The restatement comes one week after Xerox refinanced US$7 billion in debt, and follows the rollout of new products. With the refinancing completed, the company had hoped to return its focus to its machines.
The data was prepared by Xerox and PricewaterhouseCoopers LLP, which took over as its auditor in October after longtime auditor KPMG LLP was fired. KPMG on Friday stood by its audit of Xerox, and said the restatement defied "economic reality."
Separately, GE Capital, the finance arm of conglomerate General Electric Co on Friday said its financing relationship with Xerox would remain unchanged.
The restatement does not lift the shroud of concerns from Xerox. Several former executives, including retired chairman Paul Allaire, are still being investigated by the SEC, and the company faces a number of shareholder lawsuits.
"The challenge for Mulcahy ... is to put through crystal clear finances with no surprises in the future," Gartner's Lundy said. "Any firm that puts through anything with any irregularities, they are just going to get nailed."
Earlier this week, WorldCom disclosed it had falsely booked ordinary expenses, which allowed it to report US$1.38 billion in net income last year, instead of a loss.
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