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X Marks the Settlement
Xerox only recently regained enough strength to resume paying dividends.
Now it has agreed to ship even more cash to its shareholders, to settle lawsuits accusing the company of having inflated its earnings by $1.5 billion over four years.
The company said it has received court permission to pay $670 million to investors who bought its stock or bonds from 1998 through mid-2002.
The company didn't admit or deny any wrongdoing in agreeing to the settlement. It said it proffered the agreement "to avoid the time, expense and uncertainty of litigation."
Xerox said it would take an after-tax charge of $491 million in the first quarter to cover the settlement and to "adequately reserve for other pending securities-related cases." The rest of the settlement money will come from the company's insurers, Xerox said.
Xerox added that its auditor at the time, KPMG, has agreed to pay $80 million to Xerox shareholders to settle the suits against it. In 2005, the accounting firm agreed to pay $22 million to settle Securities and Exchange Commission allegations that it signed off on the suspect Xerox accounts.
KPMG, which is currently embroiled in a controversy over its audits of failed mortgage lender New Century Corp., did not comment on the case.
by Mark Stein
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