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Xerox Plans $350-$400 Million Q4 Charge, To Reduce Staff by 2400 Employees

Press release from the issuing company

STAMFORD, Conn.--Nov. 19, 2002-- Xerox Corporation announced today that it would take a fourth-quarter pre-tax charge in the range of $350 million to $400 million related to worldwide restructuring actions that will further strengthen the company's operations by reducing costs and improving productivity. The charge includes severance costs for worldwide workforce reductions, implemented through a combination of voluntary programs and layoffs, as well as about $50 million associated with facility consolidations and closings. "For Xerox to continue building momentum in this uncertain economy, we need to accelerate our drive to improve efficiency while delivering competitive products and services to our customers," said Anne M. Mulcahy, Xerox chairman and chief executive officer. "Today's difficult economic challenges require difficult decisions. To serve Xerox best in the long term, we are further aligning our cost structure with the company's leaner, faster and more flexible business model. And, we're doing so in a manner that preserves the strength of our direct sales force and the focus of our research and development investments." In the past two weeks, the company has communicated voluntary and involuntary programs in the U.S. and Canada that are expected to reduce employment by more than 2,400 over the next three months. Workforce reductions in Europe and developing markets are dependent on consultations with workers' councils and other government policies. Xerox has implemented cost-reduction actions in the past two years that account for more than $1 billion in annualized savings resulting in improved margins and lower selling, administrative and general expenses. The restructuring announced today will contribute to the company's target of an additional $1 billion in annualized cost savings. In the third quarter, Xerox reported net income of $105 million. Gross margins of 42 percent improved year over year by 4.4 percentage points. SAG expenses in the third quarter decreased $152 million or 13 percent from third-quarter last year. As of the end of September, Xerox's worldwide employment was 69,900 including 40,900 employees in the United States.