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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended: December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________________ to _____________
Commission File Number 1-4471
A. Full title of the plan and address of the plan, if different from
that of the issuer named below:
XEROX CORPORATION PROFIT SHARING AND SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Xerox Corporation
P.O. Box 1600
Stamford, Connecticut 06904-1600
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the person who administer the plan have duly caused this actual report
to be signed on its behalf by the undersigned who thereunto duly authorized.
XEROX CORPORATION PROFIT SHARING AND SAVINGS PLAN
Sally Conkright
Plan Administrator
Stamford, Connecticut
Dated June 29, 2000
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Financial Statements and Schedule
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
With Fund Information
December 31, 1999
(In thousands)
Fund Information
Small Balanced Fund
International Company
Stock U.S. Stock Stock Fifty/ More
Fund Fund Fund Fifty Bonds
Assets:
Investment in Master Trust $ 225,051 518,508 217,442 106,073 45,552
Participant notes receivable - - - - -
Total assets 225,051 518,508 217,442 106,073 45,552
Due from (to) other funds (267) (615) (258) (126) (54)
Net assets available for plan
Benefits $ 224,784 517,893 217,184 105,947 45,498
The accompanying notes are an integral part of the financial statements.
Enhanced Xerox
More Bond Income Stock Marketplace Employee
Stocks Fund Fund Fund Window Loan Fund Total
1,199,259 20,596 583,296 402,616 150,370 - 3,468,763
- - - - - 86,788 86,788
1,199,259 20,596 583,296 402,616 150,370 86,788 3,555,551
(1,422) (24) (692) (478) (178) 4,114 -
1,197,837 20,572 582,604 402,138 150,192 90,902 3,555,551
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
With Fund Information
December 31, 1998
(In thousands)
Fund Information
Small Balanced Fund
International Company
Stock U.S. Stock Stock Fifty/ More
Fund Fund Fund Fifty Bonds
Assets:
Investment in Master Trust $ 175,891 404,740 189,184 43,879 19,615
Participant notes receivable - - - - -
Employer contributions 2,402 7,629 3,095 871 376
receivable
Total assets 178,293 412,369 192,279 44,750 19,991
Due from (to) other funds (149) (343) (160) (37) (17)
Net assets available for plan
Benefits $ 178,144 412,026 192,119 44,713 19,974
The accompanying notes are an integral part of the financial statements.
Enhanced Xerox
More Bond Income Stock Marketplace Employee
Stocks Fund Fund Fund Window Loan Fund Total
1,102,063 18,803 692,898 590,564 18,706 - 3,256,343
- - - - - 80,030 80,030
13,575 193 3,179 10,190 353 - 41,863
1,115,638 18,996 696,077 600,754 19,059 80,030 3,378,236
(935) (16) (588) (501) (16) 2,762 -
1,114,703 18,980 695,489 600,253 19,043 82,792 3,378,236
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
With Fund Information
Year ended December 31, 1999
(In thousands)
Fund Information
Small Balanced Fund
International Company
Stock U.S. Stock Stock Fifty/ More
Fund Fund Fund Fifty Bonds
Contributions:
Employer $ - - - - -
Employees' - voluntary 11,854 30,367 13,869 2,751 955
Rollovers from external plans 655 4,434 792 2,432 766
Rollovers from internal plans 3,310 12,444 2,638 38,066 13,686
Total contributions 15,819 47,245 17,299 43,249 15,407
Net income (loss) from Master
Trust investments, net of
administrative expenses 54,334 84,438 51,596 11,449 3,162
Interest income on participant
notes receivable - - - - -
Total 70,153 131,683 68,895 54,698 18,569
Benefit payments (7,917) (21,895) (8,032) (15,032) (4,985)
Transfers among funds (15,596) (3,921) (35,798) 21,568 11,940
Net increase (decrease)
in net assets available
for plan benefits 46,640 105,867 25,065 61,234 25,524
Net assets available for plan
benefits:
Beginning of year 178,144 412,026 192,119 44,713 19,974
End of year $ 224,784 517,893 217,184 105,947 45,498
The accompanying notes are an integral part of the financial statements.
Enhanced Xerox
More Bond Income Stock Marketplace Employee
Stocks Fund Fund Fund Window Loan Fund Total
- - - - - - -
43,098 862 19,292 32,992 2,550 - 158,590
4,008 762 10,086 2,630 1,394 - 27,959
53,514 5,264 23,704 3,672 7,436 - 163,734
100,620 6,888 53,082 39,294 11,380 - 350,283
200,491 149 22,218 (405,691) 27,639 - 49,785
- - - - - 7,751 7,751
301,111 7,037 75,300 (366,397) 39,019 7,751 407,819
(72,973) (2,675) (67,625) (21,215) (8,155) - (230,504)
(145,004) (2,770) (120,560) 189,497 100,285 359 -
83,134 1,592 (112,885) (198,115) 131,149 8,110 177,315
1,114,703 18,980 695,489 600,253 19,043 82,792 3,378,236
1,197,837 20,572 582,604 402,138 150,192 90,902 3,555,551
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
With Fund Information
Year ended December 31, 1998
(In thousands)
Fund Information
Small Balanced Fund
International Company
Stock U.S. Stock Stock Fifty/ More
Fund Fund Fund Fifty Bonds
Contributions:
Employer $ 2,402 7,629 3,095 871 376
Employees' - voluntary 11,839 21,938 15,336 141 67
Rollovers from external plans 1,310 3,985 1,419 183 119
Rollovers from internal plans 5,297 13,781 7,133 2,659 750
Total contributions 20,848 47,333 26,983 3,854 1,312
Net income (loss) from Master
Trust investments, net of
administrative expenses 24,155 82,037 (9,065) 2,841 1,201
Interest income on participant
notes receivable - - - - -
Total 45,003 129,370 17,918 6,695 2,513
Benefit payments (6,940) (14,249) (6,787) (428) (1,232)
Transfers among funds (26,617) 38,371 (25,537) 38,446 18,693
Transfer between plans 234 151 229 - -
Net increase (decrease)
in net assets available
for plan benefits 13,680 153,643 (14,177) 44,713 19,974
Net assets available for plan
benefits:
Beginning of year 164,464 258,383 206,296 - -
End of year $ 178,144 412,026 192,119 44,713 19,974
The accompanying notes are an integral part of the financial statements.
Enhanced Xerox
More Bond Income Stock Marketplace Employee
Stocks Fund Fund Fund Window Loan Fund Total
13,575 193 3,179 10,190 353 - 41,863
40,013 64 20,323 23,493 55 - 133,269
7,473 508 14,785 2,944 119 - 32,845
83,404 551 65,748 5,559 255 - 185,137
144,465 1,316 104,035 42,186 782 - 393,114
161,361 229 43,553 209,986 1,239 - 517,537
- - - - - 6,180 6,180
305,826 1,545 147,588 252,172 2,021 6,180 916,831
(57,189) (527) (68,257) (16,824) (336) - (172,769)
(95,701) 17,962 (28,692) 33,339 17,358 10,378 -
1,906 - 1,964 659 - 52 5,195
154,842 18,980 52,603 269,346 19,043 16,610 749,257
959,861 - 642,886 330,907 - 66,182 2,628,979
1,114,703 18,980 695,489 600,253 19,043 82,792 3,378,236
The accompanying notes are an integral part of the financial statements.
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements,Continued
December 31, 1999 and 1998
(1) Description of Plan and Summary of Significant Accounting Policies
The following description of the Xerox Corporation Profit Sharing and Savings
Plan (Plan) provides only general information. Participants should refer to the
summary plan description and the Plan document for a more complete description
of the Plan's provisions.
(a) General
The Plan is a defined contribution plan covering substantially all full and
part-time U.S. employees of Xerox Corporation (sponsor) and participating
subsidiaries, except those covered by a collective bargaining agreement unless
that agreement calls for participation in the Plan. Employees are automatically
eligible to participate in the 401(k) savings portion of the Plan upon date of
hire.
(b) Plan Amendment
Effective January 1, 1998, the Company modified the profit sharing payout
amounts beginning with the plan year ended December 31, 1998. In 1998, profit
sharing payouts were 50% in cash and 50% in stock options (stock options are not
a component of the Plan). Beginning in 1999, the profit sharing payout
structure changed to 50% in cash, 25% in deferred compensation and 25% in stock
options. For the calendar year ended December 31, 1999, the sponsor's EPS growth
was below 5%. In accordance with the plan document, there was no Xerox Profit
Sharing contribution for 1999. See Xerox profit sharing contribution disclosure
in note 1(e) for further information.
(c) Payments of Benefits
Upon termination of service, a participant may elect to receive either a lump
sum amount equal to the value of his or her account, or may purchase an annuity
payable from a life insurance company. There were no benefits allocated from
the Plan for participants at December 31, 1999 and 1998.
(d) Employee Savings Contributions
Subject to limits imposed by the Internal Revenue Code, eligible employees may
contribute up to 18% of pay (as defined in the Plan) through a combination of
before-tax and after-tax payroll deductions. Employees are immediately vested
in their savings contributions.
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
(1) Description of Plan Continued
(e) Xerox Profit Sharing Contribution
Eligible employees may receive a profit sharing contribution from the sponsor.
In 1998 the Plan document specified that any contribution payout would range
from zero to 10% of pay based upon the return on assets (ROA) of the Xerox
Document Processing industry segment as defined in the Plan document. ROA is
determined as of the sponsor's calendar year-end.
During 1998, the sponsor's ROA was 17.5%, which resulted in a maximum profit
sharing contribution for all eligible active employees at December 31, 1998
equal to 5% of pay or $128,734 and 5% in stock options which are not a component
of this plan. Participants elected to invest approximately $41,863 into the
Plan at December 31, 1998 (dollars in thousands).
Beginning in 1999 and forward, a profit sharing payout now has three components.
They are as follows: (i) 50% of the payout will come in the form of cash which
you can defer to the savings plan, (ii) another 25% of the payout is
automatically deferred to the Xerox stock fund, and (iii) the last 25% of the
payment is provided in the form of stock options which is not a component of
this Plan. Employees are immediately vested in profit sharing contributions.
In 1999 and forward, the maximum profit sharing payout will be 15%. In any
given year, the payout bears a one-to-one relationship to earnings per share
(EPS) growth up to 15%. However, if EPS growth is below 5%, there is no
payment.
For the calendar year ended December 31, 1999, the sponsor's EPS growth was
below 5%. In accordance with the plan document, there was no Xerox Profit
Sharing contribution for 1999.
(f) Investment Funds
As further described in note 3, the investment funds are part of the Xerox Trust
Agreement to Fund Retirement Plans (Master Trust). Effective October 1, 1998,
the sponsor added the following four new investment funds to the Plan: Balanced
Fund - Fifty/Fifty, Balanced Fund - More Bond, Enhanced Bond Fund and
Marketplace Window. Additionally, the Balanced Fund name was changed to
Balanced Fund - More Stocks. Employees can direct their plan accounts to one or
more of the following ten investment funds:
International Stock Fund - Invests primarily in stocks of companies outside the
U.S.
U.S. Stock Fund - Invests primarily in stocks of medium to large U.S. companies.
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
Small Company Stock Fund - Invests primarily in stocks of smaller U.S.
companies.
Balanced Fund - Fifty/Fifty - Usually invests approximately 50% in stocks and
50% in bonds; some private placements and cash. The mix may shift with market
outlook.
Balanced Fund - More Bonds - Usually invests 30% in stocks, most of the rest in
bonds, some private placements and cash. The mix may shift with market outlook.
Balanced Fund - More Stocks - Usually invests approximately 70% in stocks, most
of the rest in bonds, some private placements and cash. The mix may shift with
market outlook.
Enhanced Bond Fund - Invests in intermediate duration; approximately 70% high
quality bonds, and 30% high-yield lower quality bonds.
Income Fund - Invests in short to intermediate duration, high quality bonds;
contracts with insurance companies and banks.
Xerox Stock Fund - Invests in Xerox Corporation common stock and some cash for
administrative purposes.
Marketplace Window- Offers access to no-load mutual funds outside of Xerox
funds.
(g) Employee Loan Fund
Participants are permitted to borrow from their profit sharing savings accounts
subject to certain limitations. The loans are payable over terms up to 14.5
years and bear interest at the quarterly Citibank commercial prime rate in
effect at the time of loan issuance plus 1%. Principal and interest payments on
the loans are redeposited into the participants' accounts based on their current
investment allocation elections. Loans are issued at market value. At
December 31, 1999 and 1998, market value on loans approximates fair value.
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
Summary of Significant Accounting Policies
a. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and changes
therein, disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
b. If available, quoted market prices are used to value investments. Non-
readily marketable investments are carried at estimated fair value. Investment
contracts are carried at contract value, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividend income is recorded
on the ex-dividend date. Margin variation represents market fluctuations on
future investments.
c. The income fund was designed primarily to allow both retirees and
participants exiting the Company to transfer their benefits to a low risk
investment option without removing funds from the plan. This includes their TRA
assets. Effective January 1, 1998 this option is no longer available. Upon
retiring, voluntary termination, or involuntary termination, all participants
must transfer their lump sum benefits to the Xerox Corporation Profit Sharing
and Savings Plan or withdraw the benefits from the Plan.
(2) Federal Income Taxes
The Plan obtained its latest determination letter from the Internal Revenue
Service (IRS) on September 18, 1995, covering Plan amendments through January
31, 1995, indicating that the Plan, as designed, was in compliance with the
applicable requirements of the Internal Revenue Code. The Plan administrator
and Plan's internal tax counsel believe that the Plan, as currently designed and
operated, is in compliance with the applicable requirements of the Internal
Revenue Code. Accordingly, they believe that the Plan was qualified and the
related trust was tax-exempt as of the financial statement date.
As long as the Plan continues to be qualified under present Federal income tax
laws and regulations, participants will not be taxed on company contributions or
on investment earnings on such contributions at the time such contributions and
investment earnings are received by the trustee under the Plan, but may be
subject to tax thereon at such time as they receive distributions under the
Plan.
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
(3) Master Trust
As discussed in note 1, the Plan participates in the Master Trust. The
following other Xerox employee benefit plans also participate in the Master
Trust as of December 31, 1999:
The Profit Sharing Plan of Xerox Corporation and The Xerographic Division, Union
of Needletrades, Industrial and Textile Employees, A.F.L. - C.I.O. - C.L.C.;
Xerox Corporation Retirement Income Guarantee Plan; and
Retirement Income Guarantee Plan of Xerox Corporation and The Xerographic
Division, Union of Needletrades, Industrial and Textile Employees, A.F.L. -
C.I.O. - C.L.C.
The Master Trust has nine investment pools - the International Stock Pool, U.S.
Stock Pool, Small Company Stock Pool, Other Equity Pool, Income Fund, Other
Fixed Pool, Bond Pool, Xerox Stock Fund, and Marketplace Window.
Participants direct their accounts into investment funds, as described in note
1, which participate in the aforementioned investment pools. Each of the plans
has an ownership interest in one or more of these investment pools in accordance
with that interest as determined by participant fund elections.
The Expense Pool represents net accrued, plan specific administrative expenses
that are attributable to the other equity Pool , Other Fixed Pool and the Bond
Pool,which comprise the Balanced Fund. It is not an investment pool.
In October 1998, there was a pool restructure. Assets of the All Other Pool
were transferred to the Other Equity Pool and the Bond Pool. The pool
restructure was done in conjunction with the addition of the new investment
funds as discussed in note 1.
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The following financial information is presented for the Master Trust and each
of the Master Trust investment pools:
Statement of Net Assets of the Master Trust as of December 31, 1999 is as
follows (in thousands):
Small
International Company Xerox
Stock U.S. Stock Stock Income Stock
Assets Pool Pool Pool Fund Fund
Cash (overdraft) $ (230) 2 2 (68) -
Receivables:
Dividends 1,316 1,645 255 - 3,697
Interest 220 574 338 7,653 38
Due from brokers 2,231 261 4,171 10,115 -
Other 80 - - - -
Total receivables 3,847 2,480 4,764 17,768 3,735
Investments at fair value:
At quoted market value:
Short-term investments 67,026 115,890 146,755 106,070 8,059
Fixed income investments 2,102 - - 774,937 -
Equity securities:
Xerox common stock - - - - 427,828
Other 1,379,984 2,990,177 683,719 3,852 -
At estimated fair value:
Interest in real estate
Trusts - - - - -
Other investments - - - - -
Total investments 1,449,112 3,106,067 830,474 884,859 435,887
Total assets 1,452,729 3,108,549 835,240 902,559 439,622
Liabilities
Due to brokers (11,121) (2,311) (4,159) (128,244) -
Other (1,970) (1,662) (702) (468) (43)
Net assets $ 1,439,638 3,104,576 830,379 773,847 439,579
Other Other
Equity Fixed Marketplace Bond Expense
Pool Pool Window Pool Pool Total
- - - 38,086 - 37,792
- - - - - 6,913
674 216 - 20,876 - 30,589
- - 1,891 52,405 - 71,074
- - - - - 80
674 216 1,891 73,281 - 108,656
166,235 52,809 - 147,207 - 810,051
- - - 1,875,604 - 2,652,643
- - - - - 427,828
145,046 - 161,843 70,755 - 5,435,376
3,505 - - - - 3,505
340,264 - - - - 340,264
655,050 52,809 161,843 2,093,566 - 9,669,667
655,724 53,025 163,734 2,204,933 - 9,816,115
(133) - (1,649) (220,434) - (368,051)
(297) (167) - (1,463) - (6,772)
655,294 52,858 162,085 1,983,036 - 9,441,292
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The allocation of Master Trust net assets by investment pool as of December 31,
1999 is as follows (in thousands):
Small
International Company Balanced Balanced
Stock U.S. Stock Stock Fund - Fund -
Fund Fund Fund Fifty/Fifty More Bonds
International Stock
Pool $ 236,019 - - 19,135 8,183
U.S. Stock Pool - 544,578 - 40,703 17,409
Small Company
Stock Pool - 229,144 9,560 4,088
Income Fund - - - - -
Xerox Stock Fund - - - - -
Other Equity Pool - - - 10,419 4,456
Other Fixed Pool - - - 840 360
Marketplace Window - - - - -
Bond Pool - - - 30,781 13,662
Expense Pool - - - - -
Total $ 236,019 544,578 229,144 111,438 48,158
Balanced Xerox
Fund - Enhanced Income Stock Marketplace
More Stocks Bond Fund Fund Fund Window Total
1,176,301 - - - - 1,439,638
2,501,886 - - - - 3,104,576
587,587 - - - - 830,379
- - 773,847 - - 773,847
- - - 439,579 - 439,579
640,419 - - - - 655,294
51,658 - - - - 52,858
- - - - 162,085 162,085
1,916,922 21,671 - - - 1,983,036
- - - - - -
6,874,773 21,671 773,847 439,579 162,085 9,441,292
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
Investment in the Master Trust for all participating plans as of December 31,
1999 is as follows (in thousands):
Small Balanced Balanced
International Company Fund Fund -
Stock U.S. Stock Stock Fifty/ More
Fund Fund Fund Fifty Bonds
Xerox Corporation Profit
Sharing and Savings Plan $ 225,051 518,508 217,442 106,073 45,552
The Profit Sharing Plan of
Xerox Corporation and
The Xerographic Division,
Union of Needletrades,
Industrial and Textile
Employees, A.F.L. -
C.I.O. - C.L.C. 10,968 26,070 11,702 5,365 2,606
Xerox Corporation Retirement
Income Guarantee Plan - - - - -
Retirement Income Guarantee
Plan of Xerox Corporation
and The Xerographic
Division, Union of
Needletrades, Industrial and
Textile Employees, A.F.L. -
C.I.O. - C.L.C. - - - - -
Total $ 236,019 544,578 229,144 111,438 48,158
Balanced
Fund - Enhanced Xerox
More Bond Income Stock Marketplace
Stocks Fund Fund Fund Window Total
1,199,259 20,596 583,296 402,616 150,370 3,468,763
80,608 1,075 65,096 36,963 11,715 252,168
5,049,587 - 110,335 - - 5,159,922
545,319 - 15,120 - - 560,439
6,874,773 21,671 773,847 439,579 162,085 9,441,292
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The following financial information is presented for the Master Trust and each
of the Master Trust investment pools:
Statement of Net Assets of the Master Trust as of December 31, 1998 is as
follows (in thousands):
Small
International Company
Stock U.S. Stock Stock All Other Income
Assets Pool Pool Pool Pool Fund
Cash (overdraft) $ 16,520 (141) 1,088 - (4,469)
Receivables:
Dividends 1,371 2,687 501 - -
Interest 198 638 215 - 9,664
Due from brokers 3,227 7,697 1,783 - 77,389
Other 30 11 (1) - (225)
Total receivables 4,826 11,033 2,498 - 86,828
Investments at fair value:
At quoted market value:
Short-term investments 29,261 160,154 67,680 - 188,727
Fixed income investments 3,637 - - - 781,381
Equity securities:
Xerox common stock - - - - -
Other 1,033,271 2,842,337 613,346 - 5,973
At estimated fair value:
Interest in real estate
Trusts - - - - -
Other investments - - - - -
Investments at contract value:
Investment contracts with
insurance companies
and banks - - - - 62,861
Total investments 1,066,169 3,002,491 681,026 - 1,038,942
Total assets 1,087,515 3,013,383 684,612 - 1,121,301
Liabilities
Due to brokers (3,983) (6,052) (2,607) - (183,652)
Other (2,053) (1,692) (751) - (500)
Net assets $ 1,081,479 3,005,639 681,254 - 937,149
Xerox Other Other
Stock Equity Fixed Marketplace Bond Expense
Fund Pool Pool Window Pool Pool Total
- - - - 15,757 - 28,755
1,962 22 - - - - 6,543
33 1,403 660 - 16,511 - 29,322
- 6,359 - - 17,986 - 114,441
10 - - - (143) - (318)
2,005 7,784 660 - 34,354 - 149,988
9,401 335,740 159,972 - 78,006 - 1,028,941
- 3,221 - - 1,519,208 - 2,307,447
632,445 - - - - - 632,445
- 114,059 - 19,796 104,887 - 4,733,669
- 31,562 - - - - 31,562
- 208,894 - - - - 208,894
- - - - - - 62,861
641,846 693,476 159,972 19,796 1,702,101 - 9,005,819
643,851 701,260 160,632 19,796 1,752,212 - 9,184,562
- (6,359) - - (115,955) - (318,608)
(92) (311) (162) - (1,374) (72) (7,007)
643,759 694,590 160,470 19,796 1,634,883 (72) 8,858,947
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The allocation of Master Trust net assets by investment pool as of December 31,
1998 is as follows (in thousands):
Small
International Company Balanced Balanced
Stock U.S. Stock Stock Fund - Fund -
Fund Fund Fund Fifty/Fifty More Bonds
International Stock
Pool $ 184,457 - - 6,100 2,870
U.S. Stock Pool - 426,768 - 17,536 8,252
Small Company
Stock Pool - - 199,672 3,275 1,541
All Other Pool - - - - -
Income Fund - - - - -
Xerox Stock Fund - - - - -
Other Equity Pool - - - 4,936 2,010
Other Fixed Pool - - - 2,700 513
Marketplace Window - - - - -
Bond Pool - - - 10,987 5,170
Expense Pool - - - - -
Total $ 184,457 426,768 199,672 45,534 20,356
Balanced
Fund - Enhanced Xerox
More Bond Income Stock Marketplace
Stocks Fund Fund Fund Window Total
888,052 - - - - 1,081,479
2,553,083 - - - - 3,005,639
476,766 - - - - 681,254
- - - - - -
- - 937,149 - - 937,149
- - -- 643,759 - 643,759
687,644 - - - - 694,590
157,257 - - - - 160,470
- - - - 19,796 19,796
1,599,517 19,209 - - - 1,634,883
(72) - - - - (72)
6,362,247 19,209 937,149 643,759 19,796 8,858,947
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
Investment in the Master Trust for all participating plans as of December 31,
1998 is as follows (in thousands):
Small Balanced Balanced
International Company Fund - Fund -
Stock U.S. Stock Stock Fifty/ More
Fund Fund Fund Fifty Bonds
Xerox Corporation Profit
Sharing and Savings Plan $ 175,891 404,740 189,184 43,879 19,615
The Profit Sharing Plan of
Xerox Corporation and
The Xerographic Division,
Union of Needletrades,
Industrial and Textile
Employees, A.F.L. -
C.I.O. - C.L.C. 8,566 22,028 10,488 1,655 741
Xerox Corporation Retirement
Income Guarantee Plan - - - - -
Retirement Income Guarantee
Plan of Xerox Corporation
and The Xerographic
Division, Union of
Needletrades, Industrial and
Textile Employees, A.F.L. -
C.I.O. - C.L.C. - - - - -
Total $ 184,457 426,768 199,672 45,534 20,356
Balanced
Fund - Enhanced Xerox
More Bond Income Stock Marketplace
Stocks Fund Fund Fund Window Total
1,102,063 18,803 692,898 590,564 18,706 3,256,343
76,223 406 79,433 53,195 1,090 253,825
4,686,540 - 143,631 - - 4,830,171
497,421 - 21,187 - - 518,608
6,362,247 19,209 937,149 643,759 19,796 8,858,947
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
Statement of Changes in Net Assets of the Master Trust for the year ended
December 31, 1999 is as follows (in thousands):
Small
International Company Xerox
Stock U.S. Stock Stock Income Stock
Pool Pool Pool Fund Fund
Additions:
Transfers in $ 90,431 155,074 46,723 154,653 418,469
Investment earnings:
Interest 1,625 6,862 2,424 51,889 610
Dividends 19,430 27,271 3,499 168 10,769
Net appreciation
(depreciation) 336,067 544,823 203,930 (22,348) (456,299)
Margin variation on
futures contracts (385) (6,508) (2,146) 633 -
Other 1,296 823 376 889 (10)
Total investment
Earnings 358,033 573,271 208,083 31,231 (444,930)
Total additions 448,464 728,345 254,806 185,884 (26,461)
Deductions:
Administrative expenses (8,744) (8,684) (3,333) (2,323) (660)
Transfers out (95,513) (125,724) (71,348) (346,863) (177,059)
Total deductions (104,257) (134,408) (74,681) (349,186) (177,719)
Transfers between funds/pools 13,952 (495,000) (31,000) - -
Net assets:
Beginning of year 1,081,479 3,005,639 681,254 937,149 643,759
End of year $ 1,439,638 3,104,576 830,379 773,847 439,579
Other Other
Equity Fixed Marketplace Bond Expense
Pool Pool Window Pool Pool Total
794 12,398 150,408 36,210 - 1,065,160
7,461 8,786 - 76,242 - 155,899
3,682 - 5,519 2,045 - 72,383
210,313 (20,000) 25,002 (52,983) - 768,505
(15,280) (1,719) - 261 - (25,144)
26,733 3 - 1,699 - 31,809
232,909 (12,930) 30,521 27,264 - 1,003,452
233,703 (532) 180,929 63,474 - 2,068,612
(1,482) (798) (48) (6,442) (1,813) (34,327)
(563,105) (782) (38,592) (33,879) - (1,452,865)
(564,587) (1,580) (38,640) (40,321) (1,813) (1,487,192)
291,588 (105,500) - 325,000 1,885 925
694,590 160,470 19,796 1,634,883 (72) 8,858,947
655,294 52,858 162,085 1,983,036 - 9,441,292
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The allocation of net income (loss) from Master Trust investments, net of
administrative expenses, by investment pool and fund for the year ended December
31, 1999 is as follows (in thousands):
Small
International Company Balanced Balanced
Stock U.S. Stock Stock Fund - Fund -
Fund Fund Fund Fifty/Fifty More Bonds
International Stock
Pool $ 56,809 - - 3,042 848
U.S. Stock Pool - 88,467 - 4,899 1,369
Small Company
Stock Pool - - 54,095 1,567 437
Income Fund - - - - -
Xerox Stock Fund - - - - -
Other Equity Pool - - - 2,406 672
Other Fixed Pool - - - (142) (41)
Marketplace Window - - - - -
Bond Pool - - - 215 61
Expense Pool - - - - -
Total $ 56,809 88,467 54,095 11,987 3,346
Balanced
Fund - Enhanced Xerox
More Bond Income Stock Marketplace
Stocks Fund Fund Fund Window Total
288,590 - - - - 349,289
469,852 - - - - 564,587
148,651 - - - - 204,750
- - 28,908 - - 28,908
- - - (445,590) - (445,590)
228,349 - - - - 231,427
(13,545) - - - - (13,728)
- - - - 30,473 30,473
20,418 128 - - - 20,822
(1,813) - - - - (1,813)
1,140,502 128 28,908 (445,590) 30,473 969,125
Xerox Corporation and XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
Net Income (loss) from Master Trust Investments, net of administrative expenses,
for all participating plans for the year ended December 31, 1999 is as follows
(in thousands):
Small Balanced Balanced
International Company Fund - Fund -
Stock U.S. Stock Stock Fifty/ More
Fund Fund Fund Fifty Bonds
Xerox Corporation Profit
Sharing and Savings Plan $ 54,334 84,438 51,596 11,449 3,162
The Profit Sharing Plan of
Xerox Corporation and
The Xerographic Division,
Union of Needletrades,
Industrial and Textile
Employees, A.F.L. -
C.I.O. - C.L.C. 2,475 4,029 2,499 538 184
Xerox Corporation Retirement
Income Guarantee Plan - - - - -
Retirement Income Guarantee
Plan of Xerox Corporation
and The Xerographic
Division, Union of
Needletrades, Industrial and
Textile Employees, A.F.L. -
C.I.O. - C.L.C. - - - - -
Total $ 56,809 88,467 54,095 11,987 3,346
Balanced
Fund - Enhanced Xerox
More Bond Income Stock Marketplace
Stocks Fund Fund Fund Window Total
200,491 149 22,218 (405,691) 27,639 49,785
12,858 (21) 1,942 (39,899) 2,834 (12,561)
836,717 - 4,160 - - 840,877
90,436 - 588 - - 91,024
1,140,502 128 28,908 (445,590) 30,473 969,125
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
Statement of Changes in Net Assets of the Master Trust for the year ended
December 31, 1998 is as follows (in thousands):
Small
International Company
Stock U.S. Stock Stock All Other Income
Pool Pool Pool Pool Fund
Additions:
Transfers in $ 43,514 139,522 51,756 418,842 126,050
Investment earnings:
Interest 2,206 8,198 6,948 59,043 57,481
Dividends 19,994 26,128 2,502 12,123 435
Net appreciation
(depreciation) 140,075 663,920 (6,208) 25,060 5,737
Margin variation on
futures contracts 1,217 7,864 350 13,831 (287)
Other (775) 1,911 639 22,210 (104)
Total investment
Earnings 162,717 708,021 4,231 132,267 63,262
Total additions 206,231 847,543 55,987 551,109 189,312
Deductions:
Administrative expenses (8,531) (7,852) (4,300) (7,872) (2,341)
Transfers out (53,101) (58,284) (52,728) (442,927) (176,723)
Total deduction (61,632) (66,136) (57,028) (450,799) (179,064)
Transfers between funds/pools(90,097) (274,164) (290,563) 313,106 -
Pool restructure - - - (2,448,260) -
Net assets:
Beginning of year 1,026,977 2,498,396 972,858 2,034,844 926,901
End of year $ 1,081,479 3,005,639 681,254 - 937,149
Xerox Other Other
Stock Equity Fixed Marketplace Bond Expense
Fund Pool Pool Window Pool Pool Total
102,002 125,652 118,979 18,839 18,136 - 1,163,292
445 4,308 3,270 - 17,068 - 158,967
7,453 3,749 - 569 1,195 - 74,148
221,414 60,417 14,876 735 16,842 - 1,142,868
- 7,862 1,321 - (7,125) - 25,033
- 3,156 (2) - (439) - 26,596
229,312 79,492 19,465 1,304 27,541 - 1,427,612
331,314 205,144 138,444 20,143 45,677 - 2,590,904
(668) (301) (346) (1) (1,443) (391) (34,046)
(32,892) (600,735) (85,628) (346) (528) - (1,503,892)
(33,560) (601,036) (85,974) (347) (1,971) (391) (1,537,938)
- 230,399 108,000 - 3,000 319 -
- 860,083 - - 1,588,177 - -
346,005 - - - - - 7,805,981
643,759 694,590 160,470 19,796 1,634,883 (72) 8,858,947
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The allocation of net income (loss) from Master Trust investments, net of
administrative expenses, by investment pool and fund for the year ended December
31, 1999 is as follows (in thousands):
Small
International Company Balanced Balanced
Stock U.S. Stock Stock Fund - Fund -
Fund Fund Fund Fifty/Fifty More Bonds
International Stock
Pool $ 25,486 - - 875 412
U.S. Stock Pool - 86,279 - 1,167 397
Small Company
Stock Pool - - (9,729) 66 31
All Other Pool - - - - -
Income Fund - - - - -
Xerox Stock Fund - - - - -
Other Equity Pool - - - 538 253
Other Fixed Pool - - - 130 61
Marketplace Window - - - - -
Bond Pool - - - 176 83
Expense Pool - - - - -
Total $ 25,486 86,279 (9,729) 2,952 1,237
Balanced
Fund - Enhanced Xerox
More Bond Income Stock Marketplace
Stocks Fund Fund Fund Window Total
127,413 - - - - 154,186
612,326 - - - - 700,169
9,563 - - - - (69)
124,395 - - - - 124,395
- - 60,921 - - 60,921
- - - 228,644 - 228,644
78,400 - - - - 79,191
18,928 - - - - 19,119
- - - - 1,303 1,303
25,595 244 - - - 26,098
(391) - - - - (391)
996,229 244 60,921 228,644 1,303 1,393,566
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
Net Income (loss) from Master Trust Investments, net of administrative expenses,
for all participating plans for the year ended December 31, 1998 is as follows
(in thousands):
Small Balanced Balanced
International Company Fund - Fund -
Stock U.S. Stock Stock Fifty/ More
Fund Fund Fund Fifty Bonds
Xerox Corporation Profit
Sharing and Savings Plan $ 24,155 82,037 (9,065) 2,841 1,201
The Profit Sharing Plan of
Xerox Corporation and
The Xerographic Division,
Union of Needletrades,
Industrial and Textile
Employees, A.F.L. -
C.I.O. - C.L.C. 1,331 4,242 (664) 111 36
Xerox Corporation Retirement
Income Guarantee Plan - - - - -
Retirement Income Guarantee
Plan of Xerox Corporation
and The Xerographic
Division, Union of
Needletrades, Industrial and
Textile Employees, A.F.L. -
C.I.O. - C.L.C. - - - - -
Total $ 25,486 86,279 (9,729) 2,952 1,237
Balanced
Fund - Enhanced Xerox
More Bond Income Stock Marketplace
Stocks Fund Fund Fund Window Total
161,361 229 43,553 209,986 1,239 517,537
10,912 15 4,866 18,658 64 39,571
746,740 - 10,952 - - 757,692
77,216 - 1,550 - - 78,766
996,229 244 60,921 228,644 1,303 1,393,566
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
Master Trust investments are managed by selected investment managers under the
direction of the Treasurer of Xerox Corporation. The Finance Committee of the
Xerox Corporation Board of Directors is responsible for establishing investment
objectives and policies, reviewing the investment decisions of the Treasurer and
reviewing the investment results of the Master Trust. The Finance Committee of
the Xerox Corporation Board of Directors consists, at present, of six members
of the Xerox Corporation Board of Directors, none of whom are officers of Xerox
Corporation.
Marketable securities are valued at the last reported sales price on the last
business day of the year. Quotations are obtained from national securities
exchanges or, in instances where securities are not listed on any of the
exchanges, quotations are obtained from brokerage firms.
Non-readily marketable investments, which include private placements, are
carried at fair value, based upon the cost of the investments, developments
concerning the portfolio investments of the private placements, and other
factors as the managing general partners of these investments may deem relevant.
The valuations do not necessarily represent amounts which might ultimately be
realized from the investments.
At December 31, 1999 the Master Trust held no investment contracts with
insurance companies or banks. For the plan year ended December 31, 1998
investment contracts with insurance companies and banks were valued at contract
value, which approximated fair value. In connection with the investment
contracts, all of which are fully benefit-responsive, the following information
is presented (dollars in thousands):
(i) The average investment yield for the year ended December 31, 1998 was
7.1%.
(ii) The crediting interest rate at December 31, 1998 was 4.4%.
(iii) The fair value, as determined by discounting estimated future cash flows
for traditional GIC's and the market value of the underlying investments and the
associated wrapper for synthetic GIC's at December 31, 1998 was $63,780.
Contract value was $62,861 at December 31, 1998.
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The Master Trust invests in real estate group trusts. These trusts provide
pension and profit sharing plans with a medium for pooling their funds for
investment in income producing real estate. The investment trusts value real
estate holdings at estimated market value based upon independent appraisals,
consideration of significant changes in economic circumstances, and capital
additions made to properties after the appraisal date. Such market value
estimates necessarily involve subjective judgments. Accordingly, the actual
market price of the real estate can only be determined by negotiation between
independent third parties in a sales transaction.
Purchases and sales of securities are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date. Interest income is recorded as
earned. Margin variation represents market fluctuations on futures investments.
Derivative financial instruments are used by the Master Trust's equity and
balanced portfolio investment managers primarily to rebalance the fixed
income/equity allocation of the Master Trust's portfolio and to hedge the
currency risk component of the Master Trust's foreign investments. Certain of
the Master Trust's fixed income investment managers are permitted to use certain
specified types of derivative instruments as part of their respective
strategies. These strategies include the use of exchange traded futures and
options as substitutes for certain types of fixed income securities. Leveraging
of the Master Trust's assets and speculation are prohibited. Currency hedge
positions are not permitted to exceed the level of exposure in the related
Master Trust's assets.
The derivatives most commonly used by the investment managers are highly liquid
exchange traded equity and fixed income futures and over-the-counter foreign
exchange forward contracts. The use of derivative instruments is not believed
to materially increase the credit or market risk of the Master Trust's
investment.
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The net appreciation (depreciation) of investments for the year ending December
31, 1999 is as follows (in thousands):
Small
International Company Xerox
Stock U.S. Stock Stock Income Stock
Pool Pool Pool Fund Fund
Investments at quoted
market value:
Short-term and fixed
income investments $ 309 - - (22,348) -
Xerox common stock - - - - (456,299)
Other equity investments 335,758 544,823 203,930 - -
Investments at estimated
fair value:
Interest in real estate
Trusts - - - - -
Other investments - - - - -
Total $ 336,067 544,823 203,930 (22,348) (456,299)
Other Other
Equity Fixed Marketplace Bond
Pool Pool Window Pool Total
- (20,000) - (54,921) (96,960)
- - - - (456,299)
24,014 - 25,002 1,938 1,135,465
(8,926) - - - (8,926)
195,225 - - - 195,225
210,313 (20,000) 25,002 (52,983) 768,505
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
The net appreciation (depreciation) of investments for the year ending December
31, 1998 is as follows (in thousands):
Small
International Company All
Stock U.S. Stock Stock Other Income
Pool Pool Pool Pool Fund
Investments at quoted
market value:
Short-term and fixed
income investments $ 310 - - 10,107 5,737
Xerox common stock - - - - -
Other equity investments 139,765 663,920 (6,208) 2,884 -
Investments at estimated
fair value:
Interest in real estate
Trusts - - - (20,107) -
Other investments - - - 32,176 -
Total $ 140,075 663,920 (6,208) 25,060 5,737
Xerox Other Other
Stock Equity Fixed Marketplace Bond Expense
Fund Pool Pool Window Pool Pool Total
- - 14,876 - 8,444 - 39,474
221,414 - - - - - 221,414
- 57,463 - 735 8,398 - 866,957
- (4,026) - - - - (24,133)
- 6,980 - - - - 39,156
221,414 60,417 14,876 735 16,842 - 1,142,868
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Notes to Financial Statements, Continued
December 31, 1999 and 1998
(4) Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for plan benefits and
benefits paid to participants as reported in the financial statements to the
Form 5500 at December 31, 1999 and 1998:
December 31,
1999 1998
Net assets available for plan benefits as
reported in the Plan financial statements $ 3,555,551 3,378,236
Benefit claims payable reported on line 31g
of Form 5500 - -
Net assets available for plan benefits as
reported in the Plan Form 5500 $ 3,555,551 3,378,236
December 31,
1999 1998
(in thousands)
Benefits paid to participants as reported in
the Plan financial statements $ 230,504 172,769
Add: Amounts allocated to withdrawing
participants at December 31, 1999 and 1998 - -
Less: Amounts allocated to withdrawing
participants at December 31, 1998
and 1997, respectively - -
Benefits paid to participants as reported in
the Form 5500 $ 230,504 172,769
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date. There were no benefits allocated
from the Plan for participants at December 31, 1999 or 1998.
(5) Stock Split
In February 1999, the shareholders of the plan sponsor approved a two-for-one
stock split of the Company's common stock. The stock split did not impact the
value of participants' interest in the Xerox Stock Fund.
Schedule 1
XEROX CORPORATION
PROFIT SHARING AND SAVINGS PLAN
Line 27a - Schedule of Assets Held for Investment Purposes at End of Year
(In thousands)
December 31, 1999
Description of investment
including
Identity of issue, maturity date, rate of
borrower, interest, collateral, Current
lessor,or similar party par or maturity value Cost value
Investment in Master (1) $ 2,814,991 $ 3,468,763
Trust
*Investment in Participant Loans to Plan participants,
Notes Receivable maturity dates through
5/31/12, interest rates
from 8.0% to 11.5% - 86,788
per annum
* Party-in-interest
(1)See note 1
Independent Auditors' Report
The Plan Administrator and Participants
Xerox Corporation Profit Sharing and Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Xerox Corporation Profit Sharing and Savings Plan (Plan) as of
December 31, 1999 and 1998, and the related statements of changes in net assets
available for plan benefits for the years ended December 31, 1999 and 1998.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1999 and 1998, and the changes in net assets available for plan
benefits for the years ended December 31, 1999 and 1998 in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at December 31, 1999 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The fund information in the statements
of net assets available for plan benefits and the statements of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in the assets available for plan benefits of each fund. The
supplemental schedule and fund information have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
May 26, 2000
EXHIBIT INDEX
Electronic
Submission
Document
Exhibit 2
(b)(1) Accountants' Consent
Accountants' Consent The Board of Directors Xerox Corporation: We consent to incorporation by reference in the Registration Statements (No. 2- 86274 and No. 333-22059) on Form S-8 of Xerox Corporation of our report dated May 26, 2000, relating to the statements of net assets available for plan benefits of the Xerox Corporation Profit Sharing and Savings Plan as of December 31, 1999 and 1998, and the related statements of changes in net assets available for plan benefits for the years then ended and related schedule, which report appears in the December 31, 1999 Annual Report on Form 11-K of the Xerox Corporation Profit Sharing and Savings Plan. Rochester, New York June 29, 2000