Xerox Corporation announced better-than-expected fourth-quarter earnings per share of U.S. $0.22, including a $0.3 positive effect from a reduced litigation reserve. According to the manufacturer, the earnings reflect strong sales of its color systems and office digital products, as well as continued operational excellence through disciplined cost management.
"Xerox is operating on full throttle with winning results," said Anne M. Mulcahy, Xerox chairman and CEO. "Our 2003 performance -- capped by a successful fourth quarter -- is proof positive that the Xerox value proposition is clicking with customers and that our strengthened operations are delivering sustainable benefits."
Equipment sales grew 11 percent in the fourth quarter, including a currency benefit of 7 percentage points. About 60 percent of all equipment sales in the quarter were generated from products launched in the past 2 years, reflecting a strong return on investment, the company said. Total revenue for the fourth quarter was U.S. $4.3 billion, an increase of 1 percent from the fourth quarter of 2002 including a currency benefit of 6 percentage points. Revenue growth was adversely affected by declining post-sale revenue from the company's older light lens technology and its exit in 2001 from the small office/home office business, Xerox said.
Total fourth-quarter revenue from the company's targeted growth areas -- office digital, production digital and value-added services -- grew 10 percent year over year and now represent about 73 percent of the company's revenue. Xerox also noted significant progress in its developing markets operations, which delivered total revenue growth of 1 percent in the quarter and 21-percent equipment sales growth.
Revenue from color products grew 20 percent in the fourth quarter and is a key driver of Xerox's growth strategy as the increasing volume of pages printed on Xerox's color systems flows through to post-sale revenue.
For full-year 2003, Xerox reported net income of $360 million or $0.36 per share, including a previously announced $0.17 litigation charge and a $0.5 charge for the remaining unamortized fees associated with the company's terminated 2002 credit facility.
Full-year equipment sale revenues were $4.3 billion, an increase of 7 percent from $4 billion in 2002, including a 6 percentage point currency benefit. Total revenue was $15.7 billion, a decline of 1 percent from $15.8 billion in 2002, including a 5 percentage point currency benefit. In addition, the company announced a debt reduction of $3 billion, operating cash flow of $1.9 billion, and a year-end cash balance of $2.5 billion.
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