Reuters
UPDATE - Xerox finds small accounting error, to restate
Friday December 20, 5:00 pm ET
(Updates with details, analyst comment, stock activity)
STAMFORD, Conn., Dec 20 (Reuters) - Xerox Corp. (NYSE:XRX - News) said on Friday it discovered a small error in the calculation of interest expense totaling up to $6 million over some 7 quarters, another slip by the office equipment maker dogged by accounting concerns.
The Stamford, Connecticut company, best known for its office copiers and printers, has for several years been plagued with nagging questions about its accounting practices.
Earlier this year, it settled a federal probe of its books by paying a $10 million fine without admitting or denying any wrongdoing. But legal challenges remain, including shareholder lawsuits.
The company on Friday said the new miscalculation, related to a debt instrument and associated interest rate swap agreements, was found during a review process in the adoption of accounting rules.
The error resulted in an after-tax understatement of non-cash interest expense in each of the four quarters of 2001 and for the first three quarters of 2002 totaling about $5 million to $6 million. That represents less than 1 cent per share in each quarter, the company said.
For the full year 2001, Xerox reported interest expense of $903 million. Xerox plans in January to restate its 2001 financial statements and revise 2002 quarterly information to reflect the changes.
Wall Street analysts said that although the restatement is not significant in size, it may contribute to investors' worries that Xerox has not escaped some earlier problems.
"Although the company has made operational progress, we remain concerned that there may be 'another shoe' to fall from prior misconduct, either shareholder litigation, criminal investigation, or pension litigation," said Deutsche Bank analyst Peter Ausnit, in a note to clients.
Shares of Xerox rose on the day, ending at $8.00, up 22 cents, or about 3 percent on the New York Stock Exchange. The shares have vaulted some 80 percent since October, when Xerox posted its second consecutive quarterly profit.
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