-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NT1qQiNSqWr4UxO7d2qdWWk/3eUjAPUZOS1LjvGpSozVBE1MiYFvTUsWQwY5+lH0 WBOh3Xg/lpVaICpmA6fPTg== /in/edgar/work/20000630/0000108772-00-000021/0000108772-00-000021.txt : 20000920 0000108772-00-000021.hdr.sgml : 20000920 ACCESSION NUMBER: 0000108772-00-000021 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: XEROX CORP CENTRAL INDEX KEY: 0000108772 STANDARD INDUSTRIAL CLASSIFICATION: [3577 ] IRS NUMBER: 160468020 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-04471 FILM NUMBER: 665447 BUSINESS ADDRESS: STREET 1: P O BOX 1600 STREET 2: 800 LONG RIDGE ROAD CITY: STAMFORD STATE: CT ZIP: 06904-1600 BUSINESS PHONE: 2039683000 MAIL ADDRESS: STREET 1: 800 LONG RIDGE ROAD STREET 2: PO BOX 1600 CITY: STAMFORD STATE: CT ZIP: 06904 FORMER COMPANY: FORMER CONFORMED NAME: HALOID XEROX INC DATE OF NAME CHANGE: 19730813 11-K 1 0001.txt 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: 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. 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. 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. Sally Conkright Plan Administrator Stamford, Connecticut Dated June 29, 2000 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. Financial Statements and Schedule December 31, 1999 and 1998 (With Independent Auditors' Report Thereon) 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. Statement of Net Assets Available for Plan Benefits With Fund Information December 31, 1999 (In thousands) Fund Information Small International Company Balanced Fund Stock U.S. Stock Stock More More Fund Fund Fund Fifty/Fifty Bonds Stocks Assets: Participant notes $ Receivable - - - - - - Investment in Master Trust 10,968 26,070 11,702 5,365 2,606 80,608 Total assets 10,968 26,070 11,702 5,365 2,606 80,608 Due from (to) other funds (38) (91) (41) (19) (9) (280) Net assets available for plan benefits $ 10,930 25,979 11,661 5,346 2,597 80,328 The accompanying notes are an integral part of the financial statements. Enhanced Xerox Bond Income Stock Marketplace Employee Fund Fund Fund Window Loan Fund Total - - - - 17,337 17,337 1,075 65,096 36,963 11,715 - 252,168 1,075 65,096 36,963 11,715 17,337 269,505 (4) (226) (129) (40) 877 - 1,071 64,870 36,834 11,675 18,214 269,505 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. Statement of Net Assets Available for Plan Benefits With Fund Information December 31, 1999 (In thousands) Fund Information Small International Company Balanced Fund Stock U.S. Stock Stock More More Fund Fund Fund Fifty/Fifty Bonds Stocks Assets: Employer contributions Receivable $ 63 221 94 41 27 1,079 Participant notes Receivable - - - - - - Investment in Master Trust 8,566 22,028 10,488 1,655 741 76,223 Total assets 8,629 22,028 10,582 1,696 768 77,302 Due from (to) other funds (13) (34) (16) (2) (1) (117) Net assets available for plan benefits $ 8,616 22,215 10,566 1,694 767 77,185 The accompanying notes are an integral part of the financial statements. Enhanced Xerox Bond Income Stock Marketplace Employee Fund Fund Fund Window Loan Fund Total 13 154 649 14 - 2,355 - - - - 17,299 17,229 406 79,433 53,195 1,090 - 253,825 419 79,587 53,844 1,104 17,299 273,479 (1) (122) (81) (2) 389 - 418 79,465 53,763 1,102 17,688 273,479 PROFIT SHARING AND SAVINGS PLAN XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILES EMPLOYEES A.F.L.- C.I.O - C.L.C. 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 More Fund Fund Fund Fifty Bonds Stocks Contributions: Employer $ 97 210 136 11 8 728 Employees'-voluntary 669 1,529 887 135 72 4,078 Rollovers from external plans 22 22 22 11 - 144 Rollovers from internal plans 60 556 16 2,162 1,347 4,455 Total contributions 848 2,317 1,061 2,319 1,427 9,405 Net income (loss) from Master Trust investments, net of administrative expenses 2,475 4,029 2,499 538 184 12,858 Interest income on participant notes receivable - - - - - - Total 3,323 6,346 3,560 2,857 1,611 22,263 Benefit payments (481) (1,373) (290) (1,194) (171) (5,260) Transfers among funds (528) (1,209) (2,175) 1,989 390 (13,860) Net increase (decrease) in net assets available for plan benefits 2,314 3,764 1,095 3,652 1,830 3,143 Net assets available for plan benefits: Beginning of year 8,616 22,215 10,566 1,694 767 77,185 End of year $ 10,930 25,979 11,661 5,346 2,597 80,328 The accompanying notes are an integral part of the financial statements. Enhanced Xerox Bond Income Stock Marketplace Employee Fund Fund Fund Window Loan Fund Total 4 703 442 9 - 2,348 36 3,929 2,834 173 - 14,342 - 267 20 232 - 740 333 1,137 154 439 - 10,659 373 6,036 3,450 853 - 28,089 (21) 1,942 (39,899) 2,834 - (12,561) - - - - 1,180 1,180 352 7,978 (36,449) 3,687 1,180 16,708 (16) (9,989) (1,663) (245) - (20,682) 317 (12,584) 21,183 7,131 (654) - 653 (14,595) (16,929) 10,573 526 (3,974) 418 79,465 53,763 1,102 17,688 273,479 1,071 64,870 36,834 11,675 18,214 269,505 PROFIT SHARING AND SAVINGS PLAN XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILES EMPLOYEES A.F.L.- C.I.O - C.L.C. 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 More Fund Fund Fund Fifty Bonds Stocks Contributions: Employer $ 174 390 251 41 27 1,707 Employees'-voluntary 805 1,350 1,163 6 2 4,289 Rollovers from external plans 8 57 30 - - 38 Rollovers from internal plans 28 28 4 - - 962 Total contributions 1,015 1,825 1,448 47 29 6,996 Net income (loss) from Master Trust investments, net of administrative expenses 1,331 4,242 (664) 111 36 10,912 Interest income on participant notes receivable - - - - - - Total 2,346 6,067 784 158 65 17,908 Benefit payments (204) (608) (249) (7) (1) (2,923) Transfers among funds (2,739) 3,720 (1,538) 1,543 703 (3,946) Transfers between plans (234) (151) (229) - - (1,906) Net increase (decrease) in net assets available for plan benefits (831) 9,028 (1,232) 1,694 767 9,133 Net assets available for plan benefits: Beginning of year 9,447 13,187 11,798 - - 68,052 End of year $ 8,616 22,215 10,566 1,694 767 77,185 The accompanying notes are an integral part of the financial statements. Enhanced Xerox Bond Income Stock Marketplace Employee Fund Fund Fund Window Loan Fund Total 13 890 975 14 - 4,482 3 4,535 2,502 2 - 14,657 - 661 70 - - 864 - 1,264 198 - - 2,484 16 7,350 3,745 16 - 22,487 15 4,866 18,658 64 - 39,571 - - - - 1,228 1,228 31 12,216 22,403 80 1,228 63,286 (1) (5,593) (1,019) (2) - (10,607) 388 (6,655) 3,772 1,024 3,728 - - (1,964) (659) - (52) (5,195) 418 (1,996) 24,497 1,102 4,904 47,484 - 81,461 29,266 - 12,784 225,995 418 79,465 53,763 1,102 17,688 273,479 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 (1) Description of Plan and Significant Accounting Policies The following description of the Profit Sharing and Savings Plan of Xerox Corporation and The Xerographic Division, Union of Needletrades, Industrial and Textile Employees, A.F.L. - C.I.O. - C.L.C. (Plan) provides only general information. Participants should refer to the summary plan description or plan document for a more complete description of the Plan's provisions. General The Plan is a defined contribution plan covering substantially all domestic full and part-time Union of Needletrades, Industrial and Textile Employees, A.F.L. - C.I.O. - C.L.C. employees of Xerox Corporation (sponsor). Employees are eligible to participate in the Plan immediately upon hire. Plan Amendments 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 distributions were 50% in cash and 50% in stock options (stock options are not a component of the Plan). Beginning in 1999, the profit sharing structure changed to 50% in cash, 25% in deferred compensation and 25% in stock options. For the calendar year ended December 31, 1999, the sponsors EPS growth was below 5%. In accordance with the plan document, there was no Xerox Profit Sharing contribution for 1999. See Xerox Profit Sharing Contributions disclosure in note 1 for further information. 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 or 1998. 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. 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 Xerox Corporation matches 35% of employee savings contributions, up to a maximum match equaling 4% of annual pay. These contributions are made annually to eligible participants of record on the last day of February following the Plan year end. The 1999 contribution recorded on March 13, 1999 was $1,973,497. 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 could 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 $11,443 and 5% in stock options which are not a component of the Plan. Participants elected to invest $2,355 into the Plan at December 31, 1998 (dollars in thousands). Beginning 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 can be deferred into the savings plan, (ii) 25% of the payout is automatically deferred to the Xerox Stock Fund and (iii) 25% of the payout is provided in the form of stock options, which are not a component of the Plan. Employees are immediately vested in profit sharing contributions. In 1998 and forward, the maximum profit sharing payout will be 15%. In any given year, the payout bears a 1:1 relationship to earnings per share (EPS) growth up to 15%. However, if EPS growth is below 5%, there is no payout. For the calendar year ended December 31, 1999, the sponsors EPS growth was below 5%. In accordance with the plan document, there was no Xerox Profit Sharing contribution for 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 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. 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. 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 Income Fund - Invests 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-lead mutual funds outside of Xerox. 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. 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. c. 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. 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 (2) Federal Income Taxes The Plan obtained its latest determination letter from the Internal Revenue Service (IRS) on September 8, 1995, covering Plan amendments through December 31, 1994, 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, but may be subject to tax thereon at such time as they receive distributions under the Plan. (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: Xerox Corporation Profit Sharing and Savings Plan; 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 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 The Master Trust currently has nine investment pools - the International Stock Pool, U.S. Stock Pool, Small Company Stock Pool, Other Equity Pool, Other Fixed Pool, Bond Pool, Income Fund, 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 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 new investment funds as discussed in note 1. PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAHIC DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES A.F.L. - C.I.O - C.L.C 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 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. 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 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. 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 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 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 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. 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 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHICAL DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES A.F.L - C.I.O - C.L.C. 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 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. 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 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHICAL DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES A.F.L. - C.I.O - C.L.C. 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 PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHICAL DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES A.F.L - C.I.O - C.L.C. 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 PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHICAL DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES A.F.L. - C.I.O - C.L.C. 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 PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHICAL DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES A.F.L. - C.I.O - C.L.C. 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, 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 $ 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 PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHICAL DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES A.F.L. -C.I.O. - C.L.C. 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 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 With respect to the Plan, the Joint Administrative Board (JAB) is responsible for establishing investment objectives and policies, reviewing the investment decisions and reviewing investment results. The JAB consists of four Xerox Corporation representatives and five union representatives. 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 on the cost of the investments, developments concerning the portfolio of investments of the private placements, and such other factors as the managing general partners of the investments consider 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 at December 31, 1998 was $63,780. Contract value was $62,861 at December 31, 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. 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 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. PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHICAL DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES A.F.L. - C.I.O - C.L.C. 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 PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, UNION OF NEEDELTRADES, INDUSTRIAL AND TEXTILES EMPLOYEES A.F.L. - C.I.O. - C.L.C. 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 Other Investments consist primarily of private placement Ltd. partnerships 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 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 (5) 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 (in thousands) Net assets available for plan benefits as Reported in the Plan financial statements $ 269,505 273,479 Benefit claims payable reported on line 31g Of Form 5500 - - Net assets available for plan benefits as reported in the Plan Form 5500 269,505 273,479 December 31, 1999 1998 (in thousands) Benefits paid to participants as reported in the Plan financial statements $ 20,682 10,607 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 $ 20,682 10,607 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. Notes to Financial Statements, Continued December 31, 1999 and 1998 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 and 1998. (6) 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 PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHICAL DIVISION, UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILES EMPLOYEES A.F.L. - C.I.O. - C.L.C. Line 27a - Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999 (In thousands) 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) $ 204,650 $ 252,168 Trust *Investment in Participant Loans to Plan participants, Notes Receivable maturity dates through 5/31/12, interest rates from 8.0% to 11.5% - 17,337 per annum * Party-in-interest (1)See note 1 Independent Auditors' Report The Plan Administrator and Participants 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.: We have audited the accompanying statements of net assets available for plan benefits of 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. (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. 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 then ended 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 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 net 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 EX-23 2 0002.txt EXHIBIT (B)(1) Accountants' Consent The Board of Directors Xerox Corporation: We consent to incorporation by reference in the Registration Statements (No. 2- 86275 and No. 333-22037) 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 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. 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 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. Rochester, New York June 29, 2000 -----END PRIVACY-ENHANCED MESSAGE-----