Xerox 2003 Annual Report Download - page 18

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We Deliver on Commitments
20
03 Report Card
* In an effort to provide investors with additional and more
useful information regarding Xerox’s results as determined by
generally accepted accounting principles (GAAP), the company
is disclosing this non-GAAP earnings measure. The pro-forma
measure excludes the effects of the charges recorded for the
Berger litigation and the write-off of the unamortized 2002 debt
issue costs in order to provide consistency in display with the
2003 full year earnings guidance provided to investors in
November 2002. These 2003 unanticipated charges were not
contemplated when the guidance was provided. In addition, the
pro-forma measure provides a consistent basis in evaluating
Xerox’s 2004 earnings projections. We believe that meaningful
analysis of our financial performance requires an understanding
of the underlying factors and trends in that performance. In
some cases, large factors or events, such as those that occurred
in 2003, distort operational long-term trends. For this reason,
we believe that investors would find a pro-forma earnings
measure, which excludes the effects of the Berger litigation and
write-off of debt issue costs, more useful. Reconciliation to the
related GAAP measure is included below.
Reconciliation of Non-GAAP measure Per/Share
Earnings $ 0.36
Berger Litigation Provision $ 0.17 ($146 million after-tax)
Write-off of debt issue costs $ 0.05 ($45 million after-tax)
Pro-forma earnings $ 0.58
Commitments Results
Maintain minimum $2.5 billion
cash balance of $1 billion
Year-end debt below $12 billion $11.2 billion
Low single-digit equipment 7% growth
sales growth
Modest total revenue declines 1% decline
Gross margin remains in 42%
the 40% – 41% range
SAG as a % of revenue improves 0.9 point improvement
about 2 percentage points
Expect earnings of Reported $0.36
$0.50 – $0.55 Pro-Forma*$0.58
16