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, 1994 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, A.C.T.W.U., A.F.L.- C.I.O. 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 1 SIGNATURES THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the persons who administer the plan have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Patricia M. Nazemetz Stamford, Connecticut Dated June 26, 1995 2 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Financial Statements and Schedule December 31, 1994 and 1993 (With Independent Auditors' Report Thereon) 3 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Statement of Net Assets Available for Plan Benefits with Fund Information December 31, 1994
4Fund Information ----------------------------------------------------------------------------------------------------------- Small Company Xerox Segregated Employee International U.S Stock Stock Balanced Income Stock Assets Loan Stock Fund Fund Fund Fund Fund Fund Fund Total Fund (see note 4 ) Assets: Employer contributions receivable $ 33,574 16,700 23,082 1,435,336 1,416,645 125,831 - - 3,051,168 Investment in employees' loans $ - - - - - - - 8,970,184 8,970,184 Investment in Master Trust 3,354,512 1,329,298 1,429,505 30,366,601 91,493,729 5,406,194 1,874,205 - 135,254,044 Total assets 3,388,086 1,345,998 1,452,587 31,801,937 92,910,374 5,532,025 1,874,205 8,970,184 147,275,396 Liabilities: Accrued expenses and other liabilities 3,478 1,500 1,077 32,420 21,684 (938) - - 59,221 Due from (to) other funds (4,322) (4,403) (3,059) (51,790) (162,581) (4,279) - 230,434 - Net assets available for plan benefits $ 3,380,286 1,340,095 1,448,451 31,717,727 92,726,109 5,528,684 1,874,205 9,200,618 147,216,175 The accompanying notes are an integral part of the financial statements. THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Statement of Net Assets Available for Plan Benefits with Fund Information December 31, 1993
5Fund Information ----------------------------------------------------------------------------------------------------------- Small Company Xerox Segregated Employee International U.S Stock Stock Balanced Income Stock Assets Loan Stock Fund Fund Fund Fund Fund Fund Fund Total Fund (see note 4 ) Assets: Employer contributions receivable $ 42,757 23,500 17,657 571,453 1,384,492 63,978 - - 2,103,837 Investment in employees' loans $ - - - - - - - 7,897,396 7,897,396 Investment in Master Trust 1,535,567 1,005,105 514,484 29,553,131 85,285,984 3,586,309 4,439,982 - 125,920,562 Other - - - - 13,118 - - - 13,118 Total assets 1,578,324 1,028,605 532,141 30,124,584 86,683,594 3,650,287 4,439,982 7,897,396 135,934,913 Liabilities: Accrued expenses and other liabilities 819 553 379 40,629 - 206 - - 42,586 Due from (to) other funds 565,857 99,126 61,025 144,090 (830,829) (276,730) - 237,461 - Net assets available for plan benefits $ 2,143,362 1,127,178 592,787 30,228,045 85,852,765 3,373,351 4,439,982 8,134,857 135,892,327 The accompanying notes are an integral part of the financial statements. THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Statement of Changes in Net Assets Available for Plan Benefits with Fund Information Year ended December 31, 1994
6Fund Information ---------------------------------------------------------------------------------------------------------------- Small Company Xerox Segregated Employee International U.S Stock Stock Balanced Income Stock Assets Loan Stock Fund Fund Fund Fund Fund Fund Fund Total Fund (see note 4 ) Contributions: Employer $ 33,305 16,340 22,812 1,421,797 1,496,837 126,084 - - 3,117,175 Employees- voluntary 394,279 204,052 157,440 3,676,059 9,395,921 478,178 - - 14,305,929 427,584 220,392 180,252 5,097,856 10,892,758 604,262 - - 17,423,104 Net income from Master Trust investments, net of administrative expenses (205,008) (25,378) 33,598 (282,640) 5,654,635 429,090 - - 5,604,297 Interest income on employees' loans - - - - - - - 534,057 534,057 Total 222,576 195,014 213,850 4,815,216 16,547,393 1,033,352 - 534,057 23,561,458 Benefit payments (282,639) (86,778) (102,492) (2,481,851) (8,988,424) (295,426) - - (12,237,610) Transfers among funds 1,296,987 104,681 744,306 (843,683) (685,625) 1,417,407 (2,565,777) 531,704 - Net increase (decrease) in net assets available for plan benefits 1,236,924 212,917 855,664 1,489,682 6,873,344 2,155,333 (2,565,777) 1,065,761 11,323,848 Net assets available for plan benefits: Beginning of year 2,143,362 1,127,178 592,787 30,228,045 85,852,765 3,373,351 4,439,982 8,134,857 135,892,327 End of year 3,380,286 1,340,095 1,448,451 31,717,727 92,726,109 5,528,684 1,874,205 9,200,618 147,216,175 The accompanying notes are an integral part of the financial statements. THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Statement of Changes in Net Assets Available for Plan Benefits with Fund Information Year ended December 31, 1993
Fund Information --------------------------------------------------------------------------------------------------------- Small Company Xerox Segregated Employee International U.S Stock Stock Balanced Income Stock Assets Loan Stock Fund Fund Fund Fund Fund Fund Fund Total Fund (see note 4 ) Contributions: Employer $ 42,757 23,500 17,657 566,953 1,383,897 - - - 2,034,764 Employees- voluntary 44,079 44,192 27,581 3,776,664 9,981,970 535,206 - - 14,409,692 86,836 67,692 45,238 4,343,617 11,365,867 535,206 - - 16,444,456 Net income from Master Trust investments, net of administrative expenses 120,598 13,176 18,120 3,680,861 5,980,841 484,171 - - 10,297,767 Interest income on employees' loans - - - - - - - 625,629 625,629 Total 207,434 80,868 63,358 8,024,478 17,346,708 1,019,377 - 625,629 27,367,852 Benefit payments (99) (427) (71) (1,219,878) (5,082,107) (138,662) - - (6,441,244) Transfers among funds 1,936,027 1,046,737 529,500 1,075,935 (4,889,967) (684,029) - 985,797 - Transfer from Xerox Corporation Profit Sharing and Savings Plan - - - (2,026) - 2,766 - - 740 Transfer to Xerox Retirement Income Guarantee Plan and Retirement Income Guarantee Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U, A.F.L.-C.I.O. segregated assets fund - - - - - - (104,810) - (104,810) Net increase (decrease) in net assets available for plan benefits 2,143,362 1,127,178 592,787 7,878,509 7,374,634 199,452 (104,810) 1,611,426 20,822,538 Net assets available for plan benefits: Beginning of year - - - 22,349,536 78,478,131 3,173,899 4,544,792 6,523,431 115,069,789 End of year 2,143,362 1,127,178 592,787 30,228,045 85,852,765 3,373,351 4,439,982 8,134,857 135,892,327 The accompanying notes are an integral part of the financial statements. 7 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements December 31, 1994 and 1993 (1) Description of Plan The following description of the Profit Sharing Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L - C.I.O. (Plan) provides only general information. Participants should refer to the 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 A.C.T.W.U., A.F.L. - C.I.O. employees of Xerox Corporation (sponsor). Employees hired on or before the first working day in July are eligible to participate in the Plan immediately. Otherwise, employees are eligible to participate beginning on the next January 1. 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 an annuity payable from a legal reserve life insurance company. Employee Savings Contributions Subject to limits imposed by the Internal Revenue Code, eligible employees may contribute up to 18% annual of pay (as defined in the Plan) through any combination of before- and after-tax payroll deductions. (The maximum before-tax contribution for the 1994 calendar year is $9,240.) Employees are immediately vested in their savings contributions. Xerox Corporation matches 35% of employee savings contributions, up to a maximum match equaling 1.4% of annual pay. Xerox Optional Profit Sharing Contributions Eligible employees may receive an optional profit sharing contribution from the sponsor. The contribution ranges from zero to 10% of pay and is based upon the return on assets (ROA) of the Xerox Document Processing industry segment as defined in the Plan document. An employee may receive the contribution in cash or Xerox Corporation common stock, or may elect to invest all or part of the contribution on a tax deferred basis, subject to limits imposed by the Internal Revenue Code, through the Plan's investment funds. Employees are immediately vested in optional profit sharing contributions. During 1994, the sponsor's ROA was 16%, which resulted in an optional profit sharing contribution for all eligible active employees at December 31, 1994 equal to 9.1% of pay or $3,051,068. 8 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (1) Description of Plan (continued) During 1993, ROA targets (as defined in the Plan document)requiring the sponsor to make optional profit sharing contributions were not achieved. Accordingly, no optional profit sharing contributions were made in 1993. Investment Funds As further described in note 3, the investment funds are part of the Xerox Trust Agreement to Fund Retirement Plans (Master Trust). Employees can direct their plan accounts to one or more of the following six investment funds: International Stock Fund -- Invests primarily in stocks of companies based outside of the United States. 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 normally those representing the smallest 20% of the broad stock market, based on market capitalization. Balanced Fund -- Invests in a variety of stocks, bonds, convertible securities and money market instruments, emphasizing the common stock of many different companies. Other investments also include real estate and private placements. Income Fund -- Invests in investment contracts with insurance companies and banks, government and corporate bonds, mortgage-backed securities and money market instruments. Xerox Stock Fund -- Invests exclusively in Xerox Corporation common stock and some short-term cash equivalents. 9 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (1) Description of Plan (continued) Segregated Assets Fund This fund was established on April 1, 1991 and represents participant investments in certain guaranteed investment contracts which are segregated and frozen. See note 4 to the financial statements for further discussion. 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 the loan is made 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, 1994, market value on loans approximates fair value. (2) Federal Income Taxes The Plan obtained its latest determination letter from the Internal Revenue Service (IRS) on July 28, 1986, covering Plan amendments through October 11, 1985, indicating that the Plan, as designed, was in compliance with the applicable requirements of the Internal Revenue Code. Since receiving the determination letter, the Plan has been fully amended to conform with qualificiation requirements enacted by the Tax Reform Act of 1986 and Omnibus Budget Reconciliation Act of 1993. The Plan, as amended, has recently been submitted to the IRS for a new determination letter. The Plan Administrator and the 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 actual distributions under the Plan. 10 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust As discussed in note 1, the Plan participates in the Master Trust. The following other Xerox Corporation employee benefit plans also participate in the Master Trust as of December 31, 1994: Xerox Corporation Profit Sharing and Savings Plan; Xerox Corporation Retirement Income Guarantee Plan; Retirement Income Guarantee Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O.; and XDS Investment Plan. Effective September 30, 1993, the Master Trust (and the Plan) was amended to permit the General Fund to be split into four investment pools: International Stock Pool, U.S. Stock Pool, Small Company Stock Pool and All Other Pool. The Balanced Fund (formerly the General Fund) participates in each of the four investment pools. The Master Trust has six investment options -- the International Stock Pool, U.S. Stock Pool, Small Company Stock Pool, All Other Pool, Income Fund, and the Xerox Stock Fund. Participants direct their accounts into investment funds, as described in note 1, which participate in the aforementioned investment accounts. Each of the plans has an ownership interest in one or more of these investment accounts and shares in the investment results of the account(s) in accordance with that interest as determined by participant fund elections. In addition, there is a Segregated Assets Fund which is discussed in note 4. The following financial information is presented for the Master Trust and each of the Master Trust investment accounts: 11 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Statement of Net Assets of the Master Trust as of December 31, 1994:
12Small Company Xerox Segregated International U.S Stock Stock All Other Income Stock Assets Stock Pool Pool Pool Fund Fund Fund Total Assets Pool (see note 4) Cash $ 3,148 9,097 45 18 - - - 12,308 Receivables: Accrued dividends 446,621 683,726 337,463 871,380 - 647,774 - 2,986,834 Accrued interest 33,924 532,682 267,210 13,031,739 6,729,148 11,142 - 20,605,845 Due from brokers 2,235,831 1,426,530 10,684,287 13,483,796 - - - 27,830,444 Total receivables 2,716,376 2,642,938 11,288,960 27,386,915 6,729,148 658,916 - 51,423,253 Investments at fair value: At market value: Short-term investments 9,009,966 41,792,714 68,793,635 332,087,600 52,220,697 2,713,608 - 506,618,220 Fixed income investments 673,386 18,912,572 - 484,053,271 226,745,618 - - 720,384,847 Equity securities: Xerox common stock - - - - - 89,619,651 - 89,619,651 Other 653,939,252 863,617,173 512,963,406 749,417,078 - - - 2,779,936,909 Investment contracts with insurance companies and banks - - - - 769,803,524 - 27,686,390 797,489,914 Real estate - - - 163,723,180 - - - 163,723,180 Other investments - - - 93,340,341 - - - 93,340,341 Total investments 663,622,604 924,322,459 581,757,041 1,822,621,470 1,048,769,839 92,333,259 27,686,390 5,161,113,062 Total assets 666,342,128 926,974,494 593,046,046 1,850,008,403 1,055,498,987 92,992,175 27,686,390 5,212,548,623 Due to brokers 3,048,676 7,664,546 1,942,416 27,119,404 - 1,357,626 - 41,132,668 Net assets $ 663,293,452 919,309,948 591,103,630 1,822,888,999 1,055,498,987 91,634,549 27,686,390 5,171,415,955 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) The allocation of Master Trust investments by investment pool and fund as of December 31, 1994 is as follows:
13Small Company Xerox Segregated International U.S Stock Stock Balanced Income Stock Assets Stock Fund Fund Fund Fund Fund Fund Total Fund (see note 4) International Stock Pool $ 68,022,397 - - 595,271,055 - - - 663,293,452 U.S. Stock Pool - 39,275,076 - 880,034,872 - - - 919,309,948 Small Company Stock Pool - - 42,258,270 548,845,360 - - - 591,103,630 All Other Pool - - - 1,822,888,999 - - - 1,822,888,999 Income Fund - - - - 1,055,498,987 - - 1,055,498,987 Xerox Stock Fund - - - - - 91,634,549 - 91,634,549 Segregated Assets Fund - - - - - - 27,686,390 27,686,390 Total $ 68,022,397 39,275,076 42,258,270 3,847,040,286 1,055,498,987 91,634,549 27,686,390 5,171,415,955 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Investments in the Master Trust for all participating plans as of December 31, 1994 are as follows:
14Small Company Xerox Segregated International U.S Stock Stock Balanced Income Stock Assets Stock Fund Fund Fund Fund Fund Fund Total Fund (see note 4) Xerox Corporation Profit Sharing and Savings Plan $ 64,667,885 37,945,778 40,828,765 479,095,378 723,861,153 86,228,355 18,971,989 1,451,599,303 The Profit Sharing Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O. 3,354,512 1,329,298 1,429,505 30,366,601 91,493,729 5,406,194 1,874,205 135,254,044 Xerox Corporation Retirement Income Guarantee Plan - - - 2,966,903,954 208,810,260 - 5,989,417 3,181,703,631 Retirement Income Guarantee Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O. - - - 370,313,301 31,333,845 - 850,779 402,497,925 XDS Investment Plan - - - 361,052 - - - 361,052 Total $ 68,022,397 39,275,076 42,258,370 3,847,040,286 1,055,498,987 91,634,549 27,686,390 5,171,415,955 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Statement of Net Assets of the Master Trust as of December 31, 1993:
Small Company Xerox Segregated International U.S Stock Stock All Other Income Stock Assets Stock Pool Pool Pool Fund Fund Fund Total Assets Pool (see note 4) Cash $ 1,942,826 - - - - - - 1,942,826 Receivables: Accrued dividends 251,855 697,518 395,186 936,670 - 554,763 - 2,835,992 Accrued interest 29,889 235,163 4,228 9,938,366 6,313,465 353 - 16,521,464 Due from brokers 11,614,323 17,205,341 5,601,972 16,672,715 - 948,786 - 52,043,137 Total receivables 11,896,067 18,138,022 6,001,386 27,547,751 6,313,465 1,503,902 - 71,400,593 Investments at fair value: At market value: Short-term investments 61,657,136 94,327 3,127,738 156,203,122 4,457,300 282,755 9,849,886 235,672,264 Fixed income investments 441,256 11,622,890 - 688,564,203 - - - 700,628,349 Equity securities: Xerox common stock - - - - - 62,974,876 - 62,974,876 Other 638,472,369 953,182,594 572,126,612 833,097,670 - - - 2,996,879,245 Investment contracts with insurance companies and banks - - - - 1,011,077,102 - 55,739,277 1,066,816,379 At estimated fair value: Real estate - - - 176,749,209 - - - 176,749,209 Other investments - - - 86,263,104 - - - 86,263,104 Total investments 700,570,761 964,899,811 575,254,350 1,940,877,308 1,015,534,402 63,257,631 65,589,163 5,325,983,426 Total assets 714,409,654 983,037,833 581,255,736 1,968,425,059 1,021,847,867 64,761,533 65,589,163 5,399,326,845 Due to brokers 34,758,828 14,430,563 4,108,155 37,797,906 - - - 91,095,452 Net assets $ 679,650,826 968,607,270 577,147,581 1,930,627,153 1,021,847,867 64,761,533 65,589,163 5,308,231,393 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Investments in the Master Trust for all participating plans as of December 31, 1993 are as follows:
16Small Company Xerox Segregated International U.S Stock Stock Balanced Income Stock Assets Stock Fund Fund Fund Fund Fund Fund Total Fund (see note 4) International Stock Pool $ 35,007,301 - - 644,643,525 - - - 679,650,826 U.S. Stock Pool - 27,113,584 - 941,493,686 - - - 968,607,270 Small Company Stock Pool - - 22,474,838 554,672,743 - - - 577,147,581 All Other Pool - - - 1,930,627,153 - - - 1,930,627,153 Income Fund - - - - 1,021,847,867 - - 1,021,847,867 Xerox Stock Fund - - - - - 64,761,533 - 64,761,533 Segregated Assets Fund - - - - - - 65,589,163 65,589,163 Total $ 35,007,301 27,113,584 22,474,838 4,071,437,107 1,021,847,867 64,761,533 65,589,163 5,308,231,393 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Investments in the Master Trust for all participating plans as of December 31, 1993 are as follows:
17Small Company Xerox Segregated International U.S Stock Stock Balanced Income Stock Assets Stock Fund Fund Fund Fund Fund Fund Total Fund (see note 4) Xerox Corporation Profit Sharing and Savings Plan $ 33,471,734 26,108,479 21,960,354 495,330,317 713,563,009 61,175,224 44,944,784 1,396,553,901 The Profit Sharing Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O. 1,535,567 1,005,105 514,484 29,553,131 85,285,984 3,586,309 4,439,982 125,920,562 Xerox Corporation Retirement Income Guarantee Plan - - - 3,142,405,312 191,354,048 - 14,188,905 3,347,948,265 Retirement Income Guarantee Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O. - - - 403,734,978 31,644,826 - 2,015,492 437,395,296 XDS Investment Plan - - - 413,369 - - - 413,369 Total $ 35,007,301 27,113,584 22,474,838 4,071,437,107 1,021,847,867 64,761,533 65,589,163 5,308,231,393 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Statement of Changes in Net Assets of the Master Trust for the year ended December 31, 1994:
18Small Company Xerox Segregated International U.S Stock Stock All Other Income Stock Assets Stock Pool Pool Pool Fund Fund Fund Total Pool (see note 4) Additions: Transfers in $ 11,553,765 8,122,564 6,987,403 127,619,433 72,701,254 9,380,959 - 236,365,378 Investment earnings: Interest 12,145 1,949,452 1,131,681 67,938,487 72,446,366 57,426 - 143,535,557 Dividends 9,106,518 31,651,521 18,577,981 25,163,430 - 2,269,628 - 86,769,078 Netappreciation(39,257,213)(41,485,157) 6,093,049 (93,044,732) (3,223,805) 5,978,104 - (164,939,754) Other (480,965) 33,815 56,565 118,626 276,363 - - 4,404 Total (30,619,515) (7,850,369) 25,859,276 175,811 69,498,924 8,305,158 - 65,369,285 Total additions(19,065,750) 272,195 32,846,679 127,795,244 142,200,178 17,686,117 - 301,734,663 Deductions: Administrative expenses 4,074,596 3,744,502 3,776,084 14,169,577 1,883,726 63,378 - 27,711,863 Transfers out 5,022,659 2,280,352 2,291,424 255,504,460 138,968,228 7,209,639 - 411,276,762 Total deductions 9,097,255 6,024,854 6,067,508 269,674,037 140,851,954 7,273,017 - 438,988,625 Transfers between funds/pools 11,805,631 (43,544,663)(12,823,122) 33,702,115 32,302,896 16,459,916 (37,902,773) - Transfers from other plans - XES, Inc. Employee Retirement Plan - - - 438,524 - - - 438,524 Net assets: Beginning of year $679,650,826 968,607,270 577,147,581 1,930,627,153 1,021,847,867 64,761,533 65,589,163 5,308,231,393 End of year $663,293,452 919,309,948 591,103,630 1,822,888,999 1,055,498,987 91,634,549 27,686,390 5,171,415,955 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) The allocation of net income from Master Trust investments, net of administrative expenses, by investment pool and fund for the year ended December 31, 1994:
19Small Company Xerox International U.S Stock Stock Balanced Income Stock Stock Fund Fund Fund Fund Fund Total Fund International Stock Pool $(3,808,376) - - (30,885,735) - - (34,694,111) U.S. Stock Pool - (515,834) - (11,079,037) - - (11,594,871) Small Company Stock Pool - - 1,343,142 20,740,050 - - 22,083,192 All Other Pool - - - (13,993,766) - - (13,993,766) Income Fund - - - - 67,615,198 - 67,615,198 Xerox Stock Fund - - - - - 8,241,780 8,241,780 Total $(3,808,376) (515,834) 1,343,142 (35,218,488) 67,615,198 8,241,780 37,657,422 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Net income from Master Trust investments, net of administrative expenses, for all participating plans for the year ended December 31, 1994:
20Small Company Xerox International U.S Stock Stock Balanced Income Stock Stock Fund Fund Fund Fund Fund Total Fund Xerox Corporation Profit Sharing and Savings Plan $(3,606,028) (491,403) 1,308,846 (4,303,058) 46,619,642 7,813,835 47,341,834 The Profit Sharing Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O. * (202,348) (24,431) 34,296 (290,849) 5,689,437 427,945 5,634,050 Xerox Corporation Retirement Income Guarantee Plan - - - (27,190,008) 13,183,761 - (14,006,247) Retirement Income Guarantee Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O. - - - (3,423,714) 2,122,358 - (1,301,356) XDS Investment Plan - - - (10,859) - - (10,859) Master Trust investment income, net of administrative expenses $(3,808,376) (515,834) 1,343,142 (35,218,488) 67,615,198 8,241,780 37,657,422 *The above allocation of investment results, net of administrative expenses, is at the Master Trust level. This allocation differs from the amounts reported in the statement of changes in net assets available for plan benefits due to the impact of investment manager expenses accrued at the Plan level. THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Statement of Changes in Net Assets of the Master Trust for the year ended December 31, 1993:
21Small Company Xerox Segregated International U.S Stock Stock All Other General Income Stock Assets Stock Pool Pool Pool Fund Fund Fund Fund Total Pool (see note 4) Additions: Transfers in $ 1,380,797 1,384,937 1,009,310 17,677,033 114,418,557 93,292,693 11,050,570 - 240,213,897 Investment earnings: Interest 76,819 280,179 28,140 14,892,033 36,340,417 75,931,530 24,691 - 127,573,809 Dividends 1,388,456 14,421,509 1,949,837 7,894,517 51,606,508 - 2,274,605 - 79,535,432 Net appreciation77,951,301 1,192,606 22,034,883 19,575,448 314,139,075 - 6,944,246 - 441,837,559 Other (139,815) 51,563 1,326 (650,360) 13,952,675 95 652 - 13,216,136 Total 79,276,761 15,945,857 24,014,186 41,711,638 416,038,675 75,931,625 9,244,194 - 662,162,936 Total additions 80,657,558 17,330,794 25,023,496 59,388,671 530,457,232 169,224,318 20,294,764 - 902,376,833 Deductions: Administrative expenses 23,909 2,958 2,311 7,776,116 9,204,309 1,148,214 71,308 - 18,229,125 Transfers out 52,161 57,276 49,192 26,358,810 86,982,599 85,029,190 5,189,019 - 203,718,247 Total deductions 76,070 60,234 51,503 34,134,926 96,186,908 86,177,404 5,260,327 - 221,947,372 Transfers between funds/pools 599,069,338 951,336,710 552,175,588 1,905,373,408 (3,958,073,603) (42,164,303) (7,717,138) - - Transfer from other plans - XES, Inc. Employee Retirement Plan - - - - 18,835 - - - 18,835 Net assets: Beginning of year - - - - 3,523,784,444 980,965,256 57,444,234 65,589,163 4,627,783,097 End of year $679,650,826 968,607,270 577,147,581 1,930,627,153 - 1,021,847,867 64,761,533 65,589,163 5,308,231,393 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) The allocation of net income from Master Trust investments, net of administrative expenses, by investment pool and fund for the year ended December 31, 1993:
22Small Company Xerox International U.S Stock Stock Balanced Income Stock Stock Fund Fund Fund Fund Fund Total Fund International Stock Pool $2,326,781 - - 76,926,071 - - 79,252,852 U.S. Stock Pool - 305,098 - 15,637,801 - - 15,942,899 Small Company Stock Pool - - 768,657 23,243,218 - - 24,011,875 All Other Pool - - - 33,935,522 - - 33,935,522 General Fund - - - 406,834,366 - - 406,834,366 Income Fund - - - - 74,783,411 - 74,783,411 Xerox Stock Fund - - - - - 9,172,886 9,172,886 Total $2,326,781 305,098 768,657 556,576,978 74,783,411 9,172,886 643,933,811 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) Net income from Master Trust investments, net of administrative expenses, for all participating plans for the year ended December 31, 1993:
23Small Company Xerox International U.S Stock Stock Balanced Income Stock Stock Fund Fund Fund Fund Fund Total Fund Xerox Corporation Profit Sharing and Savings Plan $2,206,183 291,922 750,537 67,686,667 52,720,351 8,688,715 132,344,375 The Profit Sharing Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O. 120,598 13,176 18,120 3,680,861 5,980,841 484,171 10,297,767 Xerox Corporation Retirement Income Guarantee Plan - - - 429,991,828 13,844,932 - 443,836,760 Retirement Income Guarantee Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L.-C.I.O. - - - 55,159,534 2,237,287 - 57,396,821 XDS Investment Plan - - - 58,088 - - 58,088 Master Trust investment income, net of administrative expenses $2,326,781 305,098 768,657 556,576,978 74,783,411 9,172,886 643,933,811 XEROX CORPORATION PROFIT SHARING AND SAVINGS PLAN Notes to Financial Statements (3) Master Trust (continued) With respect to the Plan, the Joint Administrative Board (JAB) is responsible for establishing investment guidelines, reviewing the investment decisions and reviewing investment results. The JAB consists at present of five 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. Securities and trust funds that are not readily marketable are valued based on comparisons to yields of issues of similar quality and maturities. The value of the investment contracts with insurance companies and banks is at contract value. In connection with the investment contracts, all of which are fully benefit-responsive, the following information is presented: (i) The average investment yields for the years ended December 31, 1994 and 1993 were 6.7% and 7.6%, respectively. (ii) The crediting interest rates at December 31, 1994 and 1993 ranged from 4.2% to 10.2% and from 5.2% and 9.7%, respectively. (iii) The fair value, as determined by discounting future cash flows and the market value of underlying investments, at December 31, 1994 and 1993 was approximately $813,486,486 and $1,049,000,000, respectively. 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 group 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. Derivative financial instruments are used by the Master Trust's 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. 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. Including the foreign exchange forward contracts, less than 5% of the Master Trust's assets are invested in non-exchange traded derivatives at December 31, 1994. The use of derivative instruments is not believed to materially increase the credit or market risk of the Master Trust's investments. 24 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (3) Master Trust (continued) The net appreciation (depreciation) of investments for the year ended December 31, 1994 is as follows:
U.S. Small International Stock Company All Other Income Xerox Stock Pool Pool Stock Pool Pool Fund Stock Fund Total Investments at fair value: Short-term and fixed income investments $ (46,924) (903,095) - (71,758,503) (3,223,805) - (75,932,327) Xerox common stock - - - - - 5,978,104 5,978,104 Other equity investments (39,210,289) (40,582,062) 6,093,049 (8,446,013) - - (82,145,315) Investments at estimated fair value: Real estate - - - (2,077,711) - - (2,077,711) Other investments - - - (10,762,505) - - (10,762,505) Total $(39,257,213) (41,485,157) 6,093,049 (93,044,732) (3,223,805) 5,978,104 (164,939,754) The net appreciation (depreciation) of investments for the year ended December 31, 1993 is as follows:
25U.S. Small International Stock Company All Other Balanced Xerox Stock Pool Pool Stock Pool Pool Fund Stock Fund Total Investments at fair value: Short-term and fixed income investments $ 575,715 24,845 28,865 5,627,388 45,594,808 - 51,851,621 Xerox common stock - - - - - 6,944,246 6,944,246 Other equity investments 77,375,586 1,167,761 22,006,018 14,049,775 269,349,181 - 383,948,321 Investments at estimated fair value: Real estate - - - (459,910) (3,639,476) - (4,099,386) Other investments - - - 358,195 2,834,562 - 3,192,757 Total $ 77,951,301 1,192,606 22,034,883 19,575,448 314,139,075 6,944,246 441,837,559 There are no investments in the Plan that represent 5% or more of Master Trust net assets. THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (4) Segregated Assets Fund - Investment Contracts With Executive Life Insurance Company On April 11, 1991, the California Department of Insurance (CDI) took over Executive Life Insurance Company (ELIC) citing a "serious danger of insolvency" and temporarily suspended all payments on Guaranteed Investment Contracts (GICs) issued by ELIC. Effective April 1, 1991, in order to treat all participants fairly, the affected assets were transferred into a Segregated Assets Fund which will not be available for loans, transfers, withdrawals or distributions until the situation has been resolved. Based on documents filed in the court by the California Commissioner of Insurance, Xerox estimates that a substantial amount of the ELIC investment in the Segregated Assets Fund balance should be recovered. The Xerox retirement and savings plans have received $37.9 million in payments relating to the ELIC investments through December 31, 1994. Additional payments are payable through 1998. (5) Unit Values The interests of Plan participants in each of the funds is expressed in terms of units, representing undivided interests in the net assets of the fund. Unit value is calculated monthly by dividing the total value of net assets of each fund (reduced by employer contributions receivable not yet received by the Master Trust and by unaccrued benefit payments) by units outstanding at the valuation date. 26 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (5) Unit Values (continued) The total number of units and net asset value per unit outstanding during the year ended December 31, 1994 was as follows:
27International Fund U.S Stock Fund Small Co. Fund Balanced Fund Income Fund Xerox Stock Fund Units Unit Units Unit Units Unit Units Unit Units Unit Units Unit Outstanding Value Outstanding Value Outstanding Value Outstanding Value Outstanding Value Outstanding Value January 31: 1,882,767 $1.200894 1,096,317 $1.056652 558,769 $1.093340 3,197,136 $9.592572 15,901,851 $5.314789 920,211 $3.969112 February 28: 2,107,201 1.154608 1,113,299 1.028188 613,488 1.090478 3,242,491 9.404461 15,666,537 5.343498 916,156 3.955156 March 31: 2,744,702 1.097568 1,299,804 0.982281 810,343 1.039180 3,417,570 9.023587 15,854,715 5.377876 943,386 3.896747 April 30: 2,800,004 1.110907 1,291,307 0.993102 942,041 1.048419 3,511,615 9.063770 15,941,182 5.410052 975,011 4.029895 May 31: 2,849,471 1.127810 1,344,330 1.009099 1,085,064 1.041191 3,531,999 9.115321 16,358,152 5.445251 971,341 4.127161 June 30: 2,969,745 1.088512 1,384,781 0.975550 1,252,971 1.010557 3,536,665 8.912855 16,326,184 5.473619 1,036,525 4.017794 July 31: 2,970,762 1.131318 1,330,087 1.002377 1,152,342 1.032664 3,545,985 9.126801 16,327,289 5.506708 1,096,176 4.199496 August 31: 3,050,493 1.166434 1,298,434 1.041777 1,119,629 1.092222 3,542,581 9.407529 16,374,660 5.538935 1,096,996 4.427932 September 30: 3,140,377 1.129260 1,375,471 1.020149 1,170,077 1.091694 3,466,653 9.282228 16,475,920 5.564242 1,160,394 4.414350 October 31: 3,185,603 1.146509 1,325,810 1.037980 1,187,931 1.104301 3,477,835 9.368682 16,488,958 5.594922 1,205,467 4.235975 November 30: 3,236,921 1.102678 1,344,644 0.995463 1,256,736 1.073036 3,405,183 9.129961 16,283,629 5.611793 1,275,363 4.089238 December 31: 3,127,109 1.075880 1,356,979 1.004770 1,289,877 1.089892 3,366,467 9.166254 16,161,994 5.640873 1,328,103 4.116633 The Segregated Assets Fund had 5,623,390.699 units outstanding and a net asset value of $1,874,205 at December 31, 1994. THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (5) Unit Values (continued) The total number of units and net asset value per unit outstanding during the year ended December 31, 1993 was as follows:
28International Fund U.S Stock Fund Small Co. Fund Balanced Fund Income Fund Xerox Stock Fund Units Unit Units Unit Units Unit Units Unit Units Unit Units Unit Outstanding Value Outstanding Value Outstanding Value Outstanding Value Outstanding Value Outstanding Value January 31: N/A N/A N/A N/A N/A N/A 2,647,510 $8.121051 15,577,863 $4.949684 1,015,218 $3.345594 February 28: N/A N/A N/A N/A N/A N/A 2,662,800 8.117247 15,582,423 4.978838 1,034,233 3.236214 March 31: N/A N/A N/A N/A N/A N/A 2,799,965 8.342306 16,052,554 5.008552 1,078,654 3.284909 April 30: N/A N/A N/A N/A N/A N/A 2,797,681 8.275210 16,258,558 5.037796 1,086,860 3.039774 May 31: N/A N/A N/A N/A N/A N/A 2,835,508 8.480925 16,302,136 5.068951 1,089,199 3.013354 June 30: N/A N/A N/A N/A N/A N/A 2,877,914 8.554521 16,290,211 5.100320 1,071,453 3.175834 July 31: N/A N/A N/A N/A N/A N/A 2,925,185 8.602049 16,326,632 5.132290 1,069,629 2.901765 August 31: N/A N/A N/A N/A N/A N/A 2,931,426 8.899313 16,324,024 5.164402 1,079,625 2.950596 September 30: 9,972 $1.000000 12,393 $1.000000 7,104 $1.000000 3,018,394 8.909595 16,465,904 5.192094 1,017,259 2.935176 October 31: 457,710 1.068141 527,221 1.014581 244,869 1.016533 3,074,161 9.095676 16,315,629 5.222896 971,257 3.180710 November 30: 1,347,186 1.023952 971,123 0.997867 481,895 1.002976 3,143,203 8.954103 16,002,395 5.252422 979,233 3.339268 December 31: 1,867,435 1.128096 1,082,873 1.020475 550,243 1.047424 3,197,136 9.254004 15,937,397 5.280936 911,027 3.622159 The Segregated Assets Fund had 13,330,206 units outstanding and a net asset value of $4,439,982 at December 31, 1993. THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Notes to Financial Statements (6) Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of net assets available for plan benefits per the financial statements to the Form 5500: December 31 1994 1993 Net assets available for plan benefits as reported in the Plan financial statements $147,216,175 $135,892,327 Benefit claims payable reported on line 31g of Form 5500 (884,395) (363,557) Net assets available for plan benefits as reported in the Plan Form 5500 146,331,780 135,528,770 The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500: Year Ended December 31, 1994 Benefits paid to participants as reported in the Plan financial statements $12,237,610 Add: Amounts allocated to withdrawing participants at December 31, 1994 884,395 Less: Amounts allocated to withdrawing participants at December 31, 1993 (363,557) Benefits paid to participants as reported in the Form 5500 12,758,448 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. Schedule 1 THE PROFIT SHARING PLAN OF XEROX CORPORATION AND THE XEROGRAPHIC DIVISION, A.C.T.W.U., A.F.L.- C.I.O. Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1994
29Description of investment including Identity of issuer, borrower, maturity date, rate of interest, Historical Cost Current Value lessor, or similar party collateral, par or maturity value Investment in Master Trust (1) $ 133,510,322 135,254,044 Investment in Employees' Loans Loans to Plan participants, maturity dates through 5/31/08, interest rates from 7.5% to 11.5% per annum. - 8,970,184 (1) See note 3. INDEPENDENT AUDITORS' REPORT The Plan Administrator and Participants The Profit Sharing Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.u., A.F.L.-C.I.O.: 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, A.C.T.W.U., A.F.L - C.I.O. (Plan) as of December 31, 1994 and 1993, 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, 1994 and 1993, and the changes in those 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 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. The fund information in the statements of net assets available for plan benefits and the statement of changes in the 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. KPMG PEAT MARWICK LLP Rochester, New York May 15, 1995 30 EXHIBIT INDEX Electronic Submission Exhibit Document (b)(1) Accountants' Consent 2
ACCOUNTANTS' CONSENT The Board of Directors Xerox Corporation: We consent to incorporation by reference in the Registration Statement (No. 2-86275) on Form S-8 of Xerox Corporation of our report dated May 15, 1995, relating to the statements of net assets available for plan benefits of the Profit Sharing Plan of Xerox Corporation and The Xerographic Division, A.C.T.W.U., A.F.L - C.I.O. (Plan) as of December 31, 1994 and 1993, and the related statements of changes in net assets available for plan benefits for the years then ended, which report appears in the December 31, 1994 Annual Report on Form 11-K of the Xerox Corporation Profit Sharing and Savings Plan. KPMG PEAT MARWICK Rochester, New York June 28, 1995