FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended: December 31, 1995
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from: ______ to ______
XEROX CORPORATION
(Exact name of registrant as specified in its charter)
1-4471
(Commission file number)
New York 16-0468020
(State of incorporation) (I.R.S. Employer Identification No.)
P.O. Box 1600, Stamford, Connecticut 06904
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 968-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, $1 par value New York Stock Exchange
Chicago Stock Exchange
$3.6875 Ten-Year Sinking Fund Preferred Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes: (X) No: ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
( )
The aggregate market value of the voting stock of the registrant held by non-
affiliates as of February 29, 1996 was: $15,511,301,091.
(Cover Page Continued)
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date:
Class Outstanding at February 29, 1996
Common Stock, $1 Par Value 108,621,646 Shares
Class B Stock, $1 Par Value 1,000 Shares
Documents Incorporated By Reference
Portions of the following documents are incorporated herein by reference:
Part of 10-K in
Document Which Incorporated
Xerox Corporation 1995 Annual Report to Shareholders I & II
Xerox Corporation Notice of 1996 Annual Meeting of III
Shareholders and Proxy Statement (to be filed not
later than 120 days after the close of the fiscal
year covered by this report on Form 10-K).
PART I
Item 1. Business
Overview
Xerox Corporation (Xerox or the Company) is The Document Company and a leader
in the global document market, providing document services that enhance
productivity. References herein to "us" or "our" refer to Xerox and
consolidated subsidiaries unless the context specifically requires otherwise.
We distribute our products in the Western Hemisphere through divisions and
wholly-owned subsidiaries. In Europe, Africa, the Middle East and parts of
Asia including Hong Kong, India and China, we distribute through Rank Xerox
Limited and related companies (Rank Xerox) in which we have an 80 percent
financial interest and The Rank Organisation Plc (RO) has a 20 percent
financial interest. In Japan and other areas of the Pacific Rim, Australia and
New Zealand, document processing products are distributed by Fuji Xerox Co.
Ltd. (Fuji Xerox), an unconsolidated joint venture, which is equally owned by
Fuji Photo Film Company, Ltd. of Japan and Rank Xerox. On February 28, 1995,
we paid RO 620 million pounds sterling, or $972 million, to increase our
financial interest in Rank Xerox to 80 percent from 67 percent.
In January 1996, we announced agreements to sell our remaining property and
casualty insurance units to investor groups led by Kohlberg Kravis Roberts &
Co. (KKR) and existing management for consideration totaling $2.7 billion. We
expect the transactions will close in the middle of this year. As a result,
results from insurance operations are now accounted for as discontinued
operations and all prior periods have been restated. Therefore, the Document
Processing business is the only component of Continuing Operations.
Our Document Processing activities encompass developing, manufacturing,
marketing, servicing and financing a complete range of document processing
products and services designed to make offices around the world more
productive. We believe that documents will play a central role in business,
government, education and other organizations far into the future and that
efficient processing of documents offers significant opportunities for
productivity improvements. The financing of Xerox equipment is generally
carried out by Xerox Credit Corporation (XCC) in the United States and
internationally by foreign financing subsidiaries and divisions in most
countries that we operate. Document Processing operations employed 85,200
people worldwide at year-end 1995.
In 1993, we announced a worldwide Document Processing restructuring program to
significantly reduce the cost base and to improve productivity. Our
objectives were to reduce our worldwide work force by more than 10,000
employees and to close or consolidate a number of facilities. To date, the
activities associated with the 1993 restructuring program have reduced
employment by 12,000 and achieved pre-tax cost savings of approximately $650
million in 1995 and $350 million in 1994. However, we have reinvested a
portion of these savings to reengineer business processes, support the
expansion in growth markets, and mitigate anticipated continuing pricing
pressures.
Continuing Operations - Document Processing
The Document Processing Strategy
We believe that documents represent the knowledge base of an organization and
will play a dynamic and central role in business, government, education and
other organizations far into the future:
- - Increasingly, documents are being created and stored in digital electronic
form.
- - The use of electronically created paper documents will continue to
increase.
As The Document Company, we believe that by helping our customers navigate and
manage the world of documents, we can help them improve their productivity and
grow their businesses. We help customers make documents better, make better
documents, and work better with documents.
We create customer value by providing innovative document technologies,
products, systems, services and solutions that allow our customers to:
- - Move easily within and between the electronic and paper forms of documents.
- - Scan, store, retrieve, view, revise and distribute documents electronically
anywhere in an organization.
- - Print or publish documents on demand, at the point closest to the need,
including those locations of our customers' customers.
- - Integrate the currently separate modes of producing documents, such as the
data center, production publishing and office environments into a seamless,
user-friendly enterprise-wide document systems network - with technology
acting as an enabler.
We have formed alliances to bring together the diverse infrastructures that
currently exist and to nurture the development of an open document services
environment to support complementary products from our partners and customers.
We are working with more than 50 industry organizations to make office,
production and electronic printing an integrated, seamless part of today's
digital work place.
Market Overview
Our total document processing revenues were $16.6 billion in 1995, of which 49
percent were generated in the United States, 33 percent in Europe, and 18
percent in the remainder of the world (excluding the unconsolidated $8.5
billion of Fuji Xerox revenues in Japan and much of the Pacific Rim).
We have traditionally had a strong position in the black-and-white copying
market, which is expected to grow at a rate approximating real economic growth
in North America and Western Europe, and at a faster rate in the developing
countries. The remaining enterprise services market segments, which include
production publishing, electronic printing, color copying and printing and
digital office systems, are expected to grow at a substantially higher rate.
With our many new product introductions over the past five years, our
participation in the global document processing market has been considerably
broadened and is expected to increase. This growth will be driven by the
transfer of document production from offset printing to digital publishing,
the increase in customer requirements for network and distributed printing,
accelerating demand for color documents and the combination of many document
capabilities into digital office systems.
Xerox Focus
We believe that our success is due to our ability to continually improve the
features and performance of our products based on meeting demonstrated
customer needs, competitive pricing levels, our excellent reputation for
performance and service, expanding sales coverage through agents and retail
chains, extending our leadership position in the rapidly growing document
outsourcing business, maintaining our strong market position in emerging
markets and continuing to capitalize on the exploding home office market. As
a result, we believe we are well positioned to participate fully in the
anticipated growth in the market segments in which we compete.
Black-and-White Copying
We estimate that the black-and-white copying market was approximately $35
billion in 1995 and growing. With about $10 billion in copier revenues, we
expect our black-and-white copier business to grow faster than the industry.
We market the broadest line of black-and-white copiers and duplicators in the
industry, ranging from a three copies-per-minute personal copier to a 135
copies-per-minute fully-featured duplicator to special copiers designed for
large engineering and architectural drawings up to 3 feet by 4 feet in size.
Many of our state-of-the-art products have improved ease of use, reliability,
copy quality, job recovery and ergonomics as well as productivity-enhancing
features, including zoom enlargement and reduction, highlight color, copying
on both sides of the paper, and collating and stapling which allow the
preparation of completed document sets. The innovative copiers we introduced
in 1995 include a high-speed copier for space-conscious offices and one
specially designed to eliminate stress on bindings when books are copied.
We have a strong position with major accounts who demand a consistently high
level of service worldwide. Our competitive advantages include a focus on
customer call response times, diagnostic equipment that is state-of-the-art
and availability of twenty-four-hour-a-day, seven-day-a-week service.
We also are increasing our leadership position in small commercial accounts,
the most competitive copier market segment, through marketing programs such as
sales through independent agents, retail outlets and trade associations like
the American Medical Association, which represents more than two million
current and prospective customers.
The market for commercial copiers is expanding rapidly in emerging countries
in Latin America, Eastern Europe, the Commonwealth of Independent States,
Africa, China and India. 1995 revenues in all of these markets grew faster
than the growth in the developed markets.
Enterprise Services Products
Our enterprise services products fall into four digital product categories:
Production Publishing, Electronic Printing, Color Copying and Printing and
Digital Office Systems.
Production Publishing
The era of production publishing was launched in 1990 when we announced the
DocuTech family which was a major step beyond our traditional reprographics
market into the publishing industry, a $100 billion market with enormous
potential. With more than 10,000 systems installed all over the world, our
production publishing revenues in 1995 were $1.4 billion.
Production publishing technology is increasingly replacing older, traditional
offset printing as customers seek improved productivity and cost savings,
faster turnaround of document preparation, and the ability to print documents
"on demand." We offer the widest range of solutions available in the
marketplace - from dial-up lines through the Internet to state-of-the-art
networks - and we are committed to expanding these print-on-demand solutions
as new technology and applications are developed.
The DocuTech family of digital publishers scans hard copy and converts it into
digital documents, or accepts digital documents directly from networked
personal computers or workstations. A user-friendly electronic cut-and-paste
workstation allows the manipulation of images or the creation of new
documents. For example, in only a few minutes, a page of word-processed text,
received over a network, can be combined with a photograph which is scanned
from hard copy and enhanced electronically: cropped, positioned precisely,
rotated, brightened or sharpened. Digital masters can be prepared in a
fraction of the time necessary to prepare offset plates, thereby allowing fast
turnaround time. DocuTech prints high-resolution (600 dots per inch) pages at
up to 135 impressions per minute. The in-line finisher staples completed sets
or finishes booklets with covers and thermal-adhesive bindings. Because the
finished document can be stored as a digital document, hard copy documents can
be printed on demand, or only as required, thus avoiding the long production
runs and high storage and obsolescence costs associated with offset printing.
The concept of print-on-demand took another major step in 1995 when we
introduced the 6135 Production Publisher. It makes print-for-one publishing
practical; personalized publishing runs can now be as short as one or two
prints.
Electronic Printing
We estimate that the electronic printing market was over $20 billion in 1995
and is expected to grow to $25 billion in 1998.
This market has largely consisted of high-end host-connected printers and low-
end desktop printers. We expect significant future growth for robust, fully
featured printers serving multiple users on networks. This growth will be
driven by the increase in personal computers and workstations on networks,
client-server processing, accelerating growth in the demand for enterprise-
wide distributed printing, and declining electronics costs. These faster,
more reliable printers will print collated multiple sets on both sides of the
paper, insert covers and tabs, and staple or bind; but without the labor-
intensive steps of printing an original and manually preparing the documents
on copiers. In addition, documents can be printed on these printers from
remote data center computers, enabling the efficiencies of distributing
electronically and then printing, rather than printing paper documents and
then distributing them.
We have had a strong position in the high-end, high-volume electronic printing
market segment since 1977. Our high-end electronic printing revenues were
approximately $2 billion in 1995 and we expect this market to grow from almost
$7 billion in 1995 to more than $9 billion in 1998. We are well positioned to
capitalize on the growth in the electronic printing market because of both our
innovative technologies and our understanding of customer requirements for
distributed printing from desktop and host computers. Our goal is to
integrate office, production and data-center electronic printing into a
single, seamless, user-friendly network.
Xerox pioneered and continues to be a worldwide leader in electronic laser
printing, which combines computer, laser, communications and xerographic
technologies. We market a broad line of robust printers with speeds that
range from five pages per minute (ppm) to the industry's fastest cut-sheet
printer at 135 ppm, and continuous-feed production printers at speeds up to
420 ppm. Many of these printers have simultaneous interfaces that can be
connected to multiple host computers as well as local area networks.
Breakthrough technology allows printing, in a single pass through our
highlight color printers, black-and-white plus one customer-changeable color
(as well as shades, textures and mixtures of each) at production speeds up to
92 ppm. Other manufacturers' highlight color printers require additional
passes to add variable color, which increase cost, reduce speed and
reliability and introduce the possibility of color misalignment.
Productivity-enhancing features include printing collated multiple sets on
both sides of the paper, inserting covers and tabs, printing checks with
magnetic ink character recognition (MICR), and stapling; all on cut sheet
plain paper, with sizes up to 11 by 17 inches.
During 1995, we significantly expanded our opportunities with two major new
printer series that will redefine our role in the electronic production
printing industry. With the DocuPrint CF Series family, we entered the market
for very high-volume, continuous-feed printers at speeds up to 420 ppm. The
new DocuPrint IPS Series makes the IBM Advanced Function Presentation (AFP)
architecture directly available to our production printing customers.
Color Copying and Printing
We estimate that the color copying and printing market was $14 billion in 1995
and is expected to grow to $24 billion in 1998. Our revenues from color
products grew 45 percent in 1995 to $600 million.
The use of color originals in the office is accelerating. Independent studies
have concluded that color documents are more effective in communicating
information and that decision maker performance improves with the use of color
documents. The vast majority of industry shipments of workstations and
personal computers have color monitors, creating the need for economical,
convenient and reliable, high-quality color copying and printing.
Xerox entered the digital color market in 1991 with the introduction of the
Xerox 5775 digital copier which is targeted at the production market segment.
The 5775 copies high resolution full color at 7.5 ppm, black-and-white at 30
ppm, and allows the colorizing of black-and-white documents. The Xerox 4700
is a highly cost-efficient, full-color 7.5 ppm electronic printer that also
prints black-and-white at 30 ppm. The 4700 prints complete collated documents
incorporating both black-and-white and color pages in a single step and at
optimum speeds. It offers a broad array of connectivity options for both the
office network and host computer environments. The MajestiK color copier
series, introduced in 1993, offers benchmark copy quality and
price/performance, and prints full color at 6 ppm and black-and-white at 36
ppm. The MajestiK series is targeted at the expanding market for color in the
office. In 1994, we introduced the 4900 color laser printer for networked
office groups printing at up to 1200 by 300 dpi resolution and three ppm for
full color and 12 ppm for black-and-white. During 1995, we introduced the
XPrint family of networked desktop color laser printers using "Intelligent
Color" technology allowing work groups to integrate color and black-and-white
documents on a single printer at up to 600 x 600 dots per inch resolution. We
also introduced the Regal color copier/printer that provides MajestiK color
copy quality at a fast 9 ppm speed for full color copying and printing.
Digital Office Systems
Our digital office systems, known as Document Centre Systems, were introduced
in 1995 and bring the production publishing productivity to the office. This
new category of robust and extensible systems combines many capabilities -
printing, scanning, faxing and copying documents - into a single digital
resource that can be accessed from either a personal computer or on a walk-up
basis. With interactive software, a user can easily control the various steps
of the document cycle - document input, management and output - from the
desktop. The seamless integration of services and interoperability will bring
new levels of efficiency to the office. These new systems are a portal to the
network and allow office workers to navigate between digital and paper
documents, share information and knowledge, and collaborate with other members
of their work groups. The multitasking architecture allows Document Centre
Systems to perform multiple functions concurrently.
The two initial models in the Document Centre product family are equipped with
integrated scanners for digital copying and printing services, accessible
either from the PC desktop or from the user interface on the devices
themselves. The Document Centre System 35 is designed for work groups of up
to 50 people, and copies and prints at 35 ppm with resolutions of up to 600 by
2,400 dots per inch. It provides two-sided printing and several document
finishing options. The Document Centre System 20 is targeted for work groups
of up to 20 people, and copies and prints at 20 ppm with 400 dots per inch
resolution. Fax services, from the desktop or at the device, are standard.
Other Products
We also offer a wide range of other document processing products including
ink-jet and electrostatic printers, multifunction products, facsimile
products, scanners, personal computer and workstation software, and integrated
systems solutions.
We also sell cut-sheet paper to our customers for use in their Document
Processing products.
Summary of Revenues by Product Category
The following table summarizes our revenues by major product category. The
revenues for black-and-white copiers and enterprise services products include
equipment and supply sales, service and rental revenues, and finance income.
These revenues exclude the impact of foreign currency exchange rate
fluctuations which are shown combined with the revenues from paper and other
products.
Year ended December 31 (in billions) 1995 1994 1993
Black-and-white copiers $ 9.6 $ 9.5 $ 9.1
Enterprise services products 4.1 3.5 2.9
Paper, other products, currency 2.9 2.1 2.2
Total revenues $16.6 $15.1 $14.2
Xerox Competitive Advantages
Although the document processing industry is highly competitive, we believe
that we enjoy significant competitive advantages because of our dedication to
customer satisfaction, our total quality management processes, our substantial
on-going investment in research and development, and our large direct sales
and service forces.
Customer Satisfaction
Our highest priority is customer satisfaction. Our research shows that
satisfied customers are far more likely to repurchase products and that the
cost of selling a replacement product to a satisfied customer is far less than
selling to a "new" customer. We regularly survey customers on their
satisfaction, measure the results, analyze the root causes of dissatisfaction,
and take steps to correct any problems.
Because of our emphasis on customer satisfaction, we offer a Total
Satisfaction Guarantee, one of the simplest and most comprehensive offered in
any industry: "If you are not satisfied with our equipment, we will replace
it without charge with an identical model or a machine with comparable
features and capabilities." This guarantee applies for three years to
equipment acquired from and continuously maintained by Xerox or its authorized
agents.
Quality
We were an early pioneer in total quality management and are the only company
to have won all three of the following prestigious quality awards: the
Malcolm Baldrige National Quality Award in the United States in 1989, the
European Quality Award in 1992 and the Deming Prize in Japan, won by Fuji
Xerox in 1980. In addition, we have won top quality awards in Argentina,
Australia, Belgium, Brazil, Canada, Colombia, France, Germany, Hong Kong,
India, Ireland, Mexico, the Netherlands, Norway and the United Kingdom. Our
"Leadership Through Quality" program has enabled us to significantly reduce
our costs, accelerate the introduction of new products, improve customer
satisfaction and increase market share. Xerox products have been consistently
rated among the world's best by independent testing organizations.
Research and Development
The Xerox research and development (R&D) program is directed toward the
development of new products and capabilities in support of our document
processing strategy. Our research scientists are deeply involved in the
formulation of corporate strategy and key business decisions. They regularly
meet with customers and have dialogues with our business divisions to ensure
they understand customer requirements and are focused on products that can be
commercialized.
In 1995, R&D expense was $951 million compared with $895 million in 1994 and
$883 million in 1993. We expect to increase our investment in technological
development in 1996 and over the longer term to maintain our premier position
in the rapidly changing document processing market. Our R&D spending is
strategically coordinated with Fuji Xerox. The R&D investment by Fuji Xerox
was approximately $600 million in 1995, bringing the total to approximately
$1.5 billion.
Marketing
Xerox document processing products are principally sold directly to users by
our worldwide sales force of approximately 12,000 employees. We also market
through a network of independent agents, dealers, distributors and value-added
resellers and have arrangements with U.S. retail marketing channels, including
Sears, Office Depot, Office Max, Service Merchandise, Staples, Wal-Mart,
Costco, The Wiz, Price Club and MicroAge, to market low-end products not
generally suited for distribution through our direct sales force. These
products are now sold through approximately 3,000 retail stores.
In 1991, Xerox International Partners (XIP), a 51 percent-owned partnership,
was formed between Xerox and Fuji Xerox to supply printer engines to original
equipment manufacturers. XIP has also contracted to supply printer engines to
resellers.
Service
We have a worldwide service force of approximately 26,000 employees. In our
opinion, this direct service force is a significant competitive advantage:
the service force is continually trained on our new products and the
diagnostic equipment is state-of-the-art. Twenty-four-hour-a-day, seven-day-
a-week service is available in most metropolitan areas in the United States.
We are able to guarantee a consistent level of service nationwide and
worldwide because our service force is not focused exclusively on metropolitan
areas and it does not rely on independent local dealers for service.
Revenues
Revenues from supplies, paper, service, rentals, facilities management and
other revenues, and income from customer financing, which represented 67
percent of total revenues in 1995, are derived from the installed base of
equipment and are therefore less volatile than equipment sales revenues and
provide significant stability to overall revenues. Growth in these revenues
is primarily a function of the growth in our installed population of
equipment, usage and pricing. The balance of our revenues are derived from
equipment sales. These sales, which drive the non-equipment revenues, depend
on the flow of new products and are more affected by economic cycles.
Most of our customers have their equipment serviced by and use supplies sold
by us. The market for cut-sheet paper is highly competitive and revenue
growth is significantly affected by pricing. Our strategy is to charge a
spread over mill wholesale prices. After a number of years of decline, rental
revenues increased slightly in 1995.
Our document outsourcing business provides printing, publishing, duplicating
and related services at almost 4,000 customer locations in 36 countries,
including legal and accounting firms, financial institutions, insurance
agencies and manufacturing companies. Our revenues from these services, which
are largely in the U.S., increased 50 percent to $900 million in 1995.
We offer our document processing customers financing of their purchases of
Xerox equipment primarily through XCC in the United States, largely by wholly-
owned financing subsidiaries in Europe, and through divisions in Canada and
Latin America. Our financing operations have expanded over the past several
years in recognition of customer demand and the associated profit
opportunities.
While competition for this business from banks and other finance companies
remains extensive, we actively market our equipment financing services on the
basis of customer service, convenience and competitive rates. Approximately
80 percent of U.S. equipment sales and 70 percent of European equipment sales
are financed through Xerox. Over time, the growth rate of financing income is
expected to correspond to the growth rate of equipment sales and trends in
interest rates.
International Operations
Our international operations account for 51 percent of Document Processing
revenues. Xerox' largest interest outside the United States is the "Rank
Xerox Companies" in which we have an 80 percent financial interest and The
Rank Organisation Plc (RO) has a 20 percent financial interest. On February
28, 1995, Xerox paid RO 620 million pounds sterling, or $972 million, to
increase the Xerox financial interest in Rank Xerox to about 80 percent from
67 percent. Marketing and manufacturing operations are also conducted through
joint ventures in India and China. Marketing and manufacturing in the
Americas Customer Operations organization are conducted through subsidiaries
or distributors in 40 countries. Marketing and manufacturing in Japan and
other areas of the Pacific Rim, Australia and New Zealand are conducted by
Fuji Xerox.
Xerox' financial results by geographical area for 1995, 1994 and 1993, which
are presented on pages 35, 36, 58 and 59 of the Company's 1995 Annual Report
to Shareholders, is hereby incorporated by reference in this document in
partial answer to this item.
Discontinued Operations - Insurance and Other Financial Services and Third-
Party and Real-Estate
The discussion in the first ten paragraphs under the caption "Insurance and
Other Financial Services" on pages 48 and 49 and under the caption
"Discontinued Operations - Other Financial Services and Third-Party and Real-
Estate" on pages 52 and 53 set forth under the caption "Financial Review" in
the Company's 1995 Annual Report to Shareholders is hereby incorporated by
reference in this document in partial answer to this item.
Property and Casualty Reserves
Overview
Losses from claims and related claims handling and legal expense comprise the
majority of costs from providing insurance products. Therefore, unpaid losses
and loss expenses is generally the largest liability on a property and
casualty insurer's balance sheet. However, because insurance coverage is
provided for situations in which the certainty of loss cannot be predicted,
ultimate losses which will be incurred on policies issued are difficult to
estimate and are subject to constant reevaluation as new information becomes
available. Insurance companies utilize a variety of loss trending and
analysis techniques to estimate anticipated ultimate losses and the time
frames when claims are likely to be reported and paid. These patterns vary
significantly by type of insurance coverage and are affected by the economic,
social, judicial and weather-related/geological conditions in different
geographic areas.
In order to moderate the potential impact of unusually severe or frequent
losses, insurers often cede (i.e., transfer) through reinsurance mechanisms a
portion of their gross policy premiums to reinsurers in exchange for the
reinsurer's agreement to share a portion of the covered losses with the
insurer. Although the ceding of insurance does not discharge the original
insurer from its primary liability to its policyholder, the reinsurer that
accepts the risk assumes an obligation to the original insurer. The ceding
insurer retains a contingent liability with respect to reinsurance ceded to
the extent that the reinsurer might not be able to meet its obligations.
The net liability retained on individual risks varies by product and by the
nature of the risk. Insured liabilities are reinsured either by treaty,
wherein reinsurers agree in advance to provide coverage above retained limits
or for a specified percentage of losses attributable to specific products, or
by facultative arrangements, wherein reinsurance is provided for individual
risks based on individual negotiations.
Reserve provisions are established by the insurer to provide for the estimated
level of claim payments which will be made under the policies it writes. Over
the policy period, as premiums are earned, a portion of the premiums is set
aside as gross loss and loss expense reserves for incurred but not reported
("IBNR") losses in anticipation of claims which will be incurred, net of
anticipated salvage and subrogation. IBNR reserves also include amounts to
supplement case reserves, when established, to provide for potential further
loss development. In addition, gross reserves are established for internal
and external loss adjustment expenses ("LAE") associated with handling the
claims inventory. These expenses are characterized as "allocated LAE" when
they are attributable to a specific claim or series of claims and "unallocated
LAE" when not similarly attributable. When a claim is reported, case reserves
are established on the basis of all pertinent information available at the
time. Legal defense costs that can be assigned to a related claim file and
can be included as part of the loss under the contract are generally
established as part of the gross case reserve. Reinsurance recoverables on
gross reserves are recorded for amounts that are anticipated to be recovered
from reinsurers and are determined in a manner consistent with the liabilities
associated with the reinsured policies. Net reserves are gross reserves less
anticipated reinsurance recoverables (net of uncollectible reinsurance)and
salvage and subrogation on those reserves.
The effect of inflation on gross reserves is considered implicitly when
estimating the liability for unpaid losses and loss expenses. The effect of
inflation on individual case basis reserves reflects the direction of economic
price levels as they affect the individual claims being reserved.
Estimates of the ultimate value of unpaid claims are based in part on
historical data that reflect past inflation, as well as management's
assessment of severity and frequency, industry trends and related costs.
Ridge Re Coverage
Under the terms of the Ridge Re reinsurance coverage and subject to the limits
established for each insurance operating group, Ridge Re will reimburse the
Insurance Companies within their respective insurance operating group for 85%
of net increases, if any, to ultimate net unpaid loss and loss expenses and
uncollectible reinsurance reserves which may develop on its 1992 and prior
accident years as carried at December 31, 1992 (net of all salvage,
subrogation and other recoverables). At December 31, 1995, Ridge Re has
accrued approximately $750 million of the $1,245 million maximum excess of
loss reinsurance coverage estimated to be required based on actuarial
projections. The Ridge Re coverage is guaranteed by XFSI, and, subject to
certain commutation provisions, remains in effect until all 1992 and prior
accident year claims are paid. Cessions to Ridge Re, while beneficial to the
Remaining Talegen insurance operating groups and TRG, do not result in a
benefit to the Insurance segment or consolidated Xerox accounts. The Ridge Re
coverage will continue in effect after the consummation of the sale to the KKR
groups.
Monitoring of Insurance Reserves
Gross and net reserves for business written in both current and prior years is
continually monitored by the Remaining insurance companies, and Talegen senior
management reviews these reserves on a periodic basis. These reserves are
also reviewed and certified on an annual basis by an outside actuary appointed
by the Remaining insurance companies. Overall reserve levels are impacted
primarily by the types and amounts of insurance coverage currently being
written and the trends developing from newly reported claims and claims which
have been paid and closed. Adjustments are made to reserves in the period
they can be reasonably estimated to reflect evolving changes in loss
development patterns and various other factors. Such factors include
increased damage awards by the courts, known changes in judicial
interpretations of legal liability for asbestos-related, environmental and
other latent exposure claims, changes in judicial interpretation of the scope
of coverage provided by general liability and umbrella policies for
"advertising injury," particularly in the area of "unfair competition," and
other recently advanced new theories of liability. Many of these judicial
interpretations are still evolving. Generally, the greater the projected time
to settlement, the greater the complexity of estimating ultimate claim costs
and the more likely that such estimates will change as new information becomes
available.
Use of Reinsurance and Management of Reinsurance Collection
Most of the Remaining insurance companies made significant use of reinsurance
during the 1970's and early 1980's. Since that time, the Remaining insurance
companies have generally increased the portion of business they retain while
reducing the number of reinsurers used for their reinsurance contracts. During
1995 and 1994, excluding the insurance operating groups sold, 85% and 63%,
respectively, of total written premiums ceded to reinsurers were placed with
approximately 30 reinsurers.
Talegen has a reinsurance security committee composed of senior management who
approve those reinsurers with whom Talegen will do business. The criteria
under which such approvals are granted have become increasingly restrictive
over the past several years.
The potential uncollectibility of ceded reinsurance is an industry-wide issue.
With respect to the management of recoveries due from reinsurers, the
Remaining insurance companies operate under common guidelines for the early
identification of potential collection problems and assign these cases to a
specialized group under TRG staffed by "work-out" experts. This unit
aggressively pursues collection of reinsurance recoverables through mediation,
arbitration and, where necessary, litigation to enforce the Remaining
insurance companies contractual rights against reinsurers. Nevertheless,
periodically, it becomes necessary for management to adjust reserves for
potential losses to reflect their ongoing evaluation of developments which
affect recoverability, including the financial difficulties that some
reinsurers can experience. Based upon the review of financial condition and
assessment of other available information, the Remaining insurance companies
maintain a provision for uncollectible amounts due from reinsurers. The
balance of reinsurance recoverable is considered to be valid and collectible.
Statutory and GAAP Reporting of Net Unpaid Losses and Loss Expenses
The liability for unpaid losses and loss expenses required by generally
accepted accounting principles ("GAAP") includes various adjustments from the
liability reported in accordance with Statutory Accounting Practices ("SAP").
Because not all GAAP adjustments can be associated with subsequent
developments of the liabilities on other than an arbitrary basis, developments
on the loss and loss expense reserve development table are prepared in
accordance with SAP. The increase in 1995 in the difference between the GAAP
unpaid loss and loss expense reserve and the corresponding SAP liabilities was
principally caused by the application, by Xerox, of accounting principles
applicable to discontinued operations which did not result in increased
liabilities for SAP purposes at the Insurance operating subsidiary level.
Loss Development Data
In Note 9 on page 59 of the Company's 1995 Annual Report to Shareholders,
which is hereby incorporated by reference in this document in partial answer
to this item, the net liability for unpaid losses and loss expenses is
reconciled for each of the years in the three-year period ended December 31,
1995. Included therein are current year and prior year development data.
As a result of claim activity during 1995 and after reflection of prior
experience, it is management's judgment that the total liability for unpaid
losses and loss expenses at December 31, 1995 is reasonably stated.
The loss and loss expense reserve development table illustrates the
development of statutory balance sheet liabilities for 1985 through 1995 for
the Remaining insurance companies gross of Ridge Re cessions. Unpaid loss and
loss expense reserves and accident year development have been restated to
exclude the reserves of Constitution Reinsurance Corporation and Viking
Insurance Company of Wisconsin, which were sold during 1995. The first line
of the table is the estimated liability for unpaid losses and loss expenses,
net of reinsurance recoverable, recorded at the balance sheet date for each
year. The lower section of the table shows the updated amount of the
previously recorded liability based on experience as of the close of each
succeeding year. The estimate is increased or decreased as more information
becomes known about the claims until all claims are settled. Deficiencies or
redundancies represent aggregate changes in estimates as calculated on a
statutory basis for all prior calendar years. The effect as calculated under
GAAP on income for the latest three years is shown in Note 9 on page 59 of the
Company's 1995 Annual Report to Shareholders, which is hereby incorporated by
reference in this document in partial answer to this item. These changes in
estimates have been reflected in Talegen's calendar year operating results.
As the Remaining insurance companies recognize adjustments to reserves for
changes in loss development patterns and various other factors, such as social
and economic trends and known changes in judicial interpretation of legal
liability, in the period in which they become known, it is not appropriate to
extrapolate future redundancies or deficiencies based solely on this table.
Loss and Loss Expense Reserve Development
Year ended December 31 (in millions) 1985 1986 1987 1988 _
Liability for unpaid losses and loss
expenses - GAAP (net of reinsurance) $ 3,498 $ 4,127 $ 4,824 $ 5,200
Increase (decrease) for GAAP adj. (148) (256) (241) (208)
Liability for unpaid losses and loss
expense - SAP (net of reinsurance) 3,350 3,871 4,583 4,992
Paid (cumulative) as of:
End of year - - - -
One year later 1,169 1,187 1,323 1,246
Two years later 1,986 2,080 2,188 2,269
Three years later 2,596 2,701 2,933 3,043
Four years later 3,056 3,224 3,472 3,854
Five years later 3,450 3,611 4,150 4,053
Six years later 3,729 4,180 4,316 4,432
Seven years later 4,221 4,278 4,571 4,751
Eight years later 4,281 4,476 4,859
Nine years later 4,449 4,720
Ten years later 4,673
Liability estimated as of:
End of year 3,350 3,871 4,583 4,992
One year later 3,397 3,893 4,681 5,052
Two years later 3,826 4,314 4,870 5,247
Three years later 4,051 4,527 5,168 5,171
Four years later 4,311 4,928 5,073 5,953
Five years later 4,681 4,803 5,832 5,903
Six years later 4,644 5,495 5,854 6,029
Seven years later 5,260 5,546 5,959 6,381
Eight years later 5,353 5,673 6,314
Nine years later 5,506 6,045
Ten years later 5,880
(Deficiency) redundancy $(2,530) $(2,174) $(1,731) $(1,389)
End of Year:
Gross liability
Reinsurance recoverable
Net liability
One Year Later:
Gross re-estimated liability
Re-estimated recoverable
Net re-estimated liability
Two Years Later:
Gross re-estimated liability
Re-estimated recoverable
Net re-estimated liability
Three Years Later:
Gross re-estimated liability
Re-estimated recoverable
Net re-estimated liability
Gross cumulative deficiency
1989 1990 1991 1992 1993 1994 1995 _
$ 5,637 $ 5,848 $ 5,743 $ 6,109 $ 5,972 $ 5,618 $ 6,471
(215) (287) (299) (370) (254) (216) (827)
5,422 5,561 5,444 5,739 5,718 5,402 5,644
- - - - - - -
1,560 1,542 1,721 1,080 1,303 1,242
2,635 2,882 2,518 2,153 2,264
3,690 3,412 3,381 2,939
4,018 4,062 4,008
4,508 4,563
4,887
5,422 5,561 5,444 5,739 5,718 5,402 5,644
5,611 5,658 6,340 5,734 5,711 5,944
5,591 6,484 6,274 5,771 6,216
6,408 6,370 6,326 6,230
6,329 6,429 6,747
6,428 6,803
6,770
$(1,348) $(1,242) $(1,303) $ (491) $ (498) $ (542) $ -
$ 9,469 $ 8,526 $ 7,849 $ 8,143
3,730 2,808 2,447 2,499
5,739 5,718 5,402 5,644
9,444 8,590 8,616
3,710 2,879 2,672
5,734 5,711 5,944
9,482 9,316
3,711 3,100
5,771 6,216
10,188
3,958
6,230
$ (719) $ (790) $ (767) $ -
Asbestos-Related, Environmental and Other Latent Exposure Claims
The discussion under the captions "Latent Exposures," "Reserves for the
Remaining Insurance Companies" and "Latent Exposure Reserves" on pages 50
through 52 in the Company's 1995 Annual Report to Shareholders is hereby
incorporated by reference in this document in partial answer to this item.
Item 2. Properties
The Company owns a total of eleven principal manufacturing and engineering
facilities and leases an additional such facility. The domestic facilities
are located in California, New York and Oklahoma, while the international
facilities are located in Brazil, Canada, England, France, Holland and Mexico.
The Company also has four principal research facilities; two are owned
facilities in New York and Canada, and two are leased facilities in California
and France.
In addition, within the Company, there are numerous facilities which encompass
general offices, sales offices, service locations and distribution centers.
The principal owned facilities are located in the United States, England, and
Mexico. The principal leased facilities are located in the United States,
Brazil, Canada, England, Mexico, France, Germany and Italy.
The Company has closed and downsized numerous facilities as part of the
worldwide Document Processing restructuring program announced in December
1993. The facilities closed or downsized encompass general offices, sales
offices, and distribution centers. The principal closed or downsized domestic
facilities were located in California, Connecticut and Illinois.
The Company's Corporate Headquarters facility, located in Connecticut, is
leased; a training facility, located in Virginia, is owned by the Company. In
the opinion of Xerox management, its properties have been well maintained, are
in sound operating condition and contain all the necessary equipment and
facilities to perform the Company's functions.
Item 3. Legal Proceedings
The information set forth under Note 14 "Litigation" on page 73 of the
Company's 1995 Annual Report to Shareholders is incorporated by reference in
this document in answer to this item.
On July 21, 1993, the Company was notified that it had been named as a
respondent by the United States Environmental Protection Agency ("EPA") in a
unilateral Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") section 106 (a) Administrative Order regarding the Metcoa
Radiation Site in Pulaski, PA. The Order directs the Company and 21 other
companies to perform remedial work at the Site. The order alleges that these
parties are jointly and severally liable to perform the work. Under CERCLA,
a respondent that does not comply with the Order could be subject to a civil
penalty of $25,000 for each day of noncompliance and be liable for punitive
damages at least equal to treble the EPA's cost of cleaning up the Site. The
Company denies that it is liable to perform the work described in the Order.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The information set forth under the following captions on the indicated pages
of the Company's 1995 Annual Report to Shareholders is hereby incorporated by
reference in this document in answer to this Item:
Caption Page No.
Stock Listed and Traded 81
Dividends and Stock Prices 81
Ten Years in Review - Common Shareholders
of Record at Year-End 80 and 81
Item 6. Selected Financial Data
The following information, as of and for the five years ended December 31,
1995, as set forth and included under the caption "Ten Years in Review" on
pages 80 and 81 of the Company's 1995 Annual Report to Shareholders, is hereby
incorporated by reference in this document in answer to this Item:
Revenues
Income (loss) from continuing operations
Primary earnings (loss) per common share from continuing operations
Total assets
Long-term debt
Preferred stock
Dividends declared
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information set forth under the caption "Financial Review" on pages 33-40,
42-45, and 47-53 of the Company's 1995 Annual Report to Shareholders other
than the pictures and captions to the pictures is hereby incorporated by
reference in this document in answer to this Item.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements of Xerox Corporation and subsidiaries
and the notes thereto and the report thereon of KPMG Peat Marwick LLP,
independent auditors, which appear on pages 32, 41, 46, 54-77, and 79 of the
Company's 1995 Annual Report to Shareholders, are hereby incorporated by
reference in this document in answer to this Item. In addition, also included
is the quarterly financial data included under the caption "Quarterly Results
of Operations (Unaudited)" on page 78 of the Company's 1995 Annual Report to
Shareholders.
The financial statement schedule required herein is filed as "Financial
Statement Schedules" pursuant to Item 14 of this Report on Form
10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
The information set forth in "Proposal 1--Election of Directors" in the
Company's Notice of the 1996 Annual Meeting of Shareholders and Proxy
Statement, to be filed pursuant to Regulation 14A not later than 120 days
after the close of the fiscal year covered by this report on Form 10-K, is
hereby incorporated by reference in this document in answer to this Part III.
Executive Officers of Xerox
The following is a list of the executive officers of Xerox, their current
ages, their present positions and the year appointed to their present
positions. There are no family relationships between any of the executive
officers named.
Each officer is elected to hold office until the meeting of the Board of
Directors held on the day of the next annual meeting of shareholders, subject
to the provisions of the By-Laws.
Year
Appointed
to Present Officer
Name Age Present Position Position Since_
Paul A. Allaire* 57 Chairman of the Board, Chief 1991 1983
Executive Officer and Chairman
of the Executive Committee
William F. Buehler 56 Executive Vice President and 1993 1991
Chief Staff Officer
A. Barry Rand 51 Executive Vice President, 1992 1986
Operations
Barry D. Romeril 52 Executive Vice President and 1993 1993
Chief Financial Officer
Stuart B. Ross 58 Executive Vice President; 1990 1979
Chairman and Chief Executive
Officer, Xerox Financial
Services, Inc.
Allan E. Dugan 55 Senior Vice President, 1992 1990
Corporate Strategic Services
John A. Lopiano 57 Senior Vice President; President, 1995 1993
Production Systems Group
Mark B. Myers 57 Senior Vice President, Corporate 1992 1989
Research and Technology
David R. Myerscough 55 Senior Vice President; 1996 1989
Corporate Business Strategy
* Member of Xerox Board of Directors.
Executive Officers of Xerox, Continued
Year
Appointed
to Present Officer
Name Age Present Position Position Since_
Richard S. Paul 54 Senior Vice President and 1992 1989
General Counsel
Brian E. Stern 48 Senior Vice President; President, 1996 1993
Office Document Products Group
Eunice M. Filter 55 Vice President, Treasurer 1990 1984
and Secretary
Philip D. Fishbach 54 Vice President and Controller 1995 1990
James H. Lesko 44 Vice President; President, 1996 1993
Desktop Products Group
Carlos Pascual 50 Vice President; President, 1995 1994
U.S. Customer Operations
Each officer named above, with the exceptions of William F. Buehler and Barry
D. Romeril, has been an officer or an executive of Xerox or its subsidiaries
for at least the past five years.
Prior to joining Xerox in 1991, Mr. Buehler was Vice President, Network
Systems Sales at the American Telephone & Telegraph Company (AT&T). Mr.
Buehler had been affiliated with AT&T since 1964.
Prior to joining Xerox in 1993, Mr. Romeril had been Group Finance Director at
British Telecommunications PLC since 1988. From 1987 to 1988 he was Finance
Director at BTR, Plc.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) and (2) The financial statements, independent auditors' reports
and Item 8 financial statement schedules being filed herewith or
incorporated herein by reference are set forth in the Index to Financial
Statements and Schedule included herein.
(3) The exhibits filed herewith or incorporated herein by reference are
set forth in the Index of Exhibits included herein.
(b) No Current Reports on Form 8-K were filed during the last quarter of the
period covered by this Report.
(c) The management contracts or compensatory plans or arrangements listed
in the Index of Exhibits that are applicable to the executive officers
named in the Summary Compensation Table which appears in Registrant's
1996 Proxy Statement are preceded by an asterisk (*).
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
XEROX CORPORATION
By: /s/ Barry D. Romeril_________
Executive Vice President and
Chief Financial Officer
March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
March 28, 1996
Signature Title
Principal Executive Officer:
Paul A. Allaire /s/ Paul A. Allaire______________
Chairman, Chief Executive Officer
and Director
Principal Financial Officer:
Barry D. Romeril /s/ Barry D. Romeril_____________
Executive Vice President and
Chief Financial Officer
Principal Accounting Officer:
Philip D. Fishbach /s/ Philip D. Fishbach___________
Vice President and Controller
Directors:
/s/ Robert A. Beck Director
/s/ B. R. Inman Director
/s/ Yotaro Kobayashi Director
/s/ Ralph S. Larsen Director
/s/ John D. Macomber Director
/s/ George J. Mitchell Director
/s/ N. J. Nicholas, Jr. Director
/s/ John E. Pepper Director
/s/ Martha R. Seger Director
/s/ Thomas C. Theobald Director
Report of Independent Auditors
To the Board of Directors and Shareholders of Xerox Corporation
Under date of January 24, 1996, we reported on the consolidated balance sheets
of Xerox Corporation and consolidated subsidiaries as of December 31, 1995 and
1994 and the related consolidated statements of income and cash flows for each
of the years in the three-year period ended December 31, 1995, as contained in
the Xerox Corporation 1995 Annual Report to Shareholders on pages 32, 41, 46,
and 54-77. These consolidated financial statements and our report thereon are
incorporated by reference in the 1995 Annual Report on Form 10-K. In
connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedule
listed in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Stamford, Connecticut
January 24, 1996
Index to Financial Statements and Schedule
Financial Statements:
Consolidated statements of income of Xerox Corporation and subsidiaries for
each of the years in the three-year period ended December 31, 1995
Consolidated balance sheets of Xerox Corporation and subsidiaries as of
December 31, 1995 and 1994
Consolidated statements of cash flows of Xerox Corporation and subsidiaries
for each of the years in the three-year period ended December 31, 1995
Notes to consolidated financial statements
Report of Independent Auditors
Quarterly Results of Operations (unaudited)
The above consolidated financial statements, related notes, report
thereon and the quarterly results of operations which appear on pages
32, 41, 46, 54-77, 78, and 79 of the Company's 1995 Annual Report to
Shareholders are hereby incorporated by reference in this document.
Commercial and Industrial (Article 5) Schedule:
II - Valuation and qualifying accounts
All other schedules are omitted as they are not applicable, or the information
required is included in the financial statements or notes thereto.
SCHEDULE II
Valuation and Qualifying Accounts
Year ended December 31, 1995, 1994 and 1993
Additions
Balance at charged to Deductions, Balance
beginning costs and net of at end
(in millions) of period expenses recoveries of period
1995
Allowance for Losses on:
Accounts Receivable $ 79 $ 81 $ 71 $ 89
Finance Receivables 319 227 224 322
Deferred Tax Valuation
Allowance 34 - 14 20
$432 $308 $309 $431
1994
Allowance for Losses on:
Accounts Receivable $ 62 $ 70 $ 53 $ 79
Finance Receivables 300 182 163 319
Deferred Tax Valuation
Allowance 34 - - 34
$396 $252 $216 $432
1993
Allowance for Losses on:
Accounts Receivable $ 68 $ 51 $ 57 $ 62
Finance Receivables 275 199 174 300
Deferred Tax Valuation
Allowance - 34 - 34
$343 $284 $231 $396
Index of Exhibits
Document and Location
(3) (a) (1) Restated Certificate of Incorporation of Registrant filed by the
Department of State of New York on June 10, 1988.
Incorporated by reference to Exhibit 3(a) to Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1988.
(2) Certificate of Amendment dated July 7, 1989 to the Restated
Certificate of Incorporation.
Incorporated by reference to Exhibit 3(a) to Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1989.
(3) Certificate of Amendment dated October 10, 1994 to the Restated
Certificate of Incorporation.
Incorporated by reference to Exhibit 3(a)(3) to Registrant's
Annual Report on Form 10-K for the Year Ended December 31, 1994.
(4) Certificate of Amendment dated October 19, 1995 to the Restated
Certificate of Incorporation.
(b) By-Laws of Registrant, as amended through May 29, 1991.
Incorporated by reference to Exhibit 3(b)(2) to Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1991.
(4) (a) Indenture dated as of January 15, 1990 between Registrant and
BankAmerica National Trust Company (as successor in interest to
Security Pacific National Trust Company (New York)) relating
to unlimited amounts of debt securities which may be issued
from time to time by Registrant when and as authorized by or
pursuant to a resolution of Registrant's Board of Directors.
Incorporated by reference to Exhibit 4(a) to Registration No.
33-33150.
(b) Indenture dated as of December 1, 1991 between Registrant and
Citibank, N.A. relating to unlimited amounts of debt securities
which may be issued from time to time by Registrant when and
as authorized by or pursuant to a resolution of Registrant's
Board of Directors.
Incorporated by reference to Exhibit 4(a) to Registration No.
33-44597.
(c) Indenture dated as of March 1, 1988, as supplemented by the First
Supplemental Indenture dated as of July 1, 1988, between Xerox
Credit Corporation (XCC) and The First National Bank of Chicago
relating to unlimited amounts of debt securities which may be
issued from time to time by XCC when and as authorized by XCC's
Board of Directors or the Executive Committee of the Board of
Directors.
Incorporated by reference to Exhibit 4(a) to XCC's Registration
Statement No. 33-20640 and to Exhibit 4(a)(2) to XCC's Current
Report on Form 8-K dated July 13, 1988.
(d) Indenture dated as of March 1, 1989, as supplemented by the First
Supplemental Indenture dated as of October 1, 1989, between XCC
and Citibank, N.A. relating to unlimited amounts of debt
securities which may be issued from time to time by XCC when and
as authorized by XCC's Board of Directors or Executive Committee
of the Board of Directors.
Incorporated by reference to Exhibit 4(a) to XCC's Registration
Statement No. 33-27525 and to Exhibit 4(a)(2) to XCC's
Registration Statement No. 33-31367.
(e) Indenture dated as of October 1, 1991, as supplemented by the
First Supplemental Indenture dated as of May 1, 1992, between XCC
and Citibank, N.A. relating to unlimited amounts of debt
securities which may be issued from time to time by XCC when and
as authorized by XCC's Board of Directors or Executive Committee
of the Board of Directors.
Incorporated by reference to Exhibit 4(a) to XCC's Registration
Statement No. 33-43470.
(f) Indenture dated as of May 1, 1994, between XCC and State Street
Bank and Trust Company (formerly, The First National Bank of
Boston) relating to unlimited amounts of debt securities which may
be issued from time to time by XCC when and as authorized by XCC's
Board of Directors or Executive Committee of the Board of
Directors.
Incorporated by reference to Exhibit 4(a) to XCC's Registration
Statement No. 33-53533 and to Exhibits 4(a)(1) and 4(a)(2) to
XCC's Registration Statement No. 33-43470.
(g) Indenture dated as of October 2, 1995, between XCC and State
Street Bank and Trust Company relating to unlimited amounts of
debt securities which may be issued from time to time by XCC when
and as authorized by XCC's Board of Directors or Executive
Committee of the Board of Directors.
Incorporated by reference to Exhibit 4(a) to XCC's Registration
Statement No. 33-61481.
(h) Instruments with respect to long-term debt where the total amount
of securities authorized thereunder does not exceed 10% of the
total assets of the Registrant and its subsidiaries on a
consolidated basis have not been filed. The Registrant agrees to
furnish to the Commission a copy of each such instrument upon
request.
(10) The management contracts or compensatory plans or arrangements
listed below that are applicable to the executive officers named
in the Summary Compensation Table which appears in Registrant's
1996 Proxy Statement are preceded by an asterisk (*).
*(a) Registrant's 1976 Executive Long-Term Incentive Plan, as amended
through February 4, 1991.
Incorporated by reference to Exhibit (10)(a) to the Registrant's
Annual Report on Form 10-K for the Year Ended December 31, 1991.
*(b) Registrant's 1991 Long-Term Incentive Plan, as amended through
July 15, 1991.
Incorporated by reference to Exhibit 10(b) to Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1991.
(c) Registrant's Retirement Income Plan for Directors, as amended
through October 2, 1989.
Incorporated by reference to Exhibit 10(n) to Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended September
30, 1989.
*(d) Description of Registrant's Annual Performance Incentive Plan.
*(e) Registrant's 1993 Restatement of Unfunded Retirement Income
Guarantee Plan.
Incorporated by reference to Exhibit 10(e) to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
(f) Consent Order To Cease and Desist. In the Matter of Xerox
Corporation, Before the Federal Trade Commission, Docket No.
8909 dated 3/29/75.
Incorporated by reference to Exhibit I to Registrant's Report on
Form 8-K for July 1975.
*(g) 1993 Restatement of Registrant's Unfunded Supplemental Retirement
Plan.
Incorporated by reference to Exhibit 10(g) to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
(h) Registrant's 1981 Deferred Compensation Plan, 1985
Restatement, as amended through April 2, 1990.
Incorporated by reference to Exhibit 10(h) to Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended March 31,
1990.
(i) Registrant's Restricted Stock Plan for Directors, as amended
through February 7, 1994.
Incorporated by reference to Exhibit 10(i) to Registrant's Annual
Report on Form 10-K for the Year Ended December 31, 1993.
*(j) Form of severance agreement entered into and to be entered into
with various executive officers.
Incorporated by reference to Exhibit 10(j) to Registrant's
Quarterly Report on Form 10-Q for the Quarter ended June 30,
1989.
*(k) Registrant's Contributory Life Insurance Plan.
Incorporated by reference to Exhibit 10(s) to Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1989.
(l) 1996 Amendment and Restatement of Registrant's 1989 Deferred
Compensation Plan for Directors.
*(m) 1993 Amendment and Restatement of Registrant's 1989 Deferred
Compensation Plan for Executives.
Incorporated by reference to Exhibit 10(m) to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
*(n) Executive Performance Incentive Plan.
Incorporated by reference to Registrant's Notice of the 1995
Annual Meeting of Shareholders and Proxy Statement pursuant to
Regulation 14A.
(o) Stock Purchase Agreement dated as of January 17, 1996 among
Registrant, Xerox Financial Services, Inc. (XFSI) and New Talegen
Holdings Corporation and Talegen Acquisition Corporation. This
Agreement is for the sale of Talegen Holdings, Inc. and its
subsidiaries. Copies of the exhibits to the Agreement will be
furnished upon request. Copies of the schedules to the Agreement
will be furnished to the Commission upon request.
(p) Stock Purchase Agreement dated as of January 17, 1996 among
Registrant, XFSI and TRG Acquisition Corporation. This Agreement
is for the sale of The Resolution Group, Inc. Copies of the
exhibits to the Agreement will be furnished upon request. Copies
of the schedules to the Agreement will be furnished to the
Commission upon request.
(11) Statement re computation of per share earnings.
(12) Computation of Ratio of Earnings to Fixed charges.
(13) Pages 32 through 81 of Registrant's 1995 Annual Report
to Shareholders.
(21) Subsidiaries of the Registrant.
(23) Consent of KPMG Peat Marwick LLP.
(28) P Schedule P of Annual Statements to State Regulatory Authorities.
Incorporated by reference to Exhibit (28) on the Form SE of
Registrant dated March 26, 1996.