September 23, 2002, 8:23 PM PT

Xerox said Tuesday that the U.S. attorney's office in Bridgeport, Conn., is investigating its past accounting practices.

The announcement of the investigation comes more than five months after the copier maker paid a record $10 million to the Securities and Exchange Commission to settle charges it manipulated its financial results to defraud investors and inflate earnings.

"Our understanding is that the probe is into the same matters," said Xerox spokeswoman Christa Carone. "We still need to learn of the full context of the investigation."

The SEC charged Xerox with fraud, alleging that the company "used a variety of what it called 'accounting actions' and 'accounting opportunities' to meet or exceed Wall Street expectations and disguise its true operating performance from investors."

By 1998, the agency said, nearly $3 of every $10 of Stamford, Conn.-based Xerox's annual reported pretax earnings resulted from undisclosed accounting actions.

Under the terms of the SEC settlement earlier this year, Xerox restated its financial results for 1997 through 2000 and adjusted its 2001 results. The company paid a civil fine, but was not required to admit or deny the allegations of the complaint.

Xerox said in a statement it would cooperate fully with the U.S. attorney's investigation.

C/NET

-- Anonymous, September 24, 2002

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