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Report: Improper Xerox Revenue Records

June 28, 2002

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NEW YORK (AP) _ A recent Xerox Corp. audit determined that the company improperly recorded more revenue in the past five years than federal regulators had estimated when they reached an April settlement with the company, The Wall Street Journal reported Friday.

The Securities and Exchange Commission estimated in April that the company improperly listed $3 billion from 1997 through 2000.

But the paper cited unnamed people familiar with a new audit that also looked at 2001 and found that the total amount of improperly recorded revenue over that period could be more than $6 billion.

The paper said Xerox, which ordered the new audit because of the settlement, was likely to file restated financial results for the five years as early as Friday. They are due by Monday.

Xerox spokeswoman Christa Carone declined to comment on the $6 billion figure, the paper said. She said the effect on Xerox’s results from 1997 through 2001 would be a reduction of ``less than $2 billion″ out of the $92.5 billion the company previously reported for the five-year period.

The new audit was conducted by PricewaterhouseCoopers LLP, which took over as Xerox’s auditor after it fired KPMG LLP.

A Pricewaterhouse spokesman declined comment, and KPMG officials have said they stand by their work. KPMG faces civil lawsuits related to its Xerox work.

In April, the SEC said accounting improprieties increased pretax Xerox profits by $1.5 billion from 1997 through 2000.

Without admitting or denying wrongdoing, the copier company settled with the SEC by paying a $10 million civil penalty, the largest levied against a company for financial-reporting violations.

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