MRRS - relief granted to provide an extensionto filing deadlines for annual financial statements and interimfinancial statements. Extension for Xerox granted to the laterof June 30, 2002 and the date on which Xerox files its FinancialStatements with the SEC. Extension for XCI granted to the laterof July 30, 2002 and the date that is thirty days after Xeroxfiles its Financial Statements with the SEC.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.s. 77, 78, ss. 80(b)(iii).
Applicable Ontario Rules Cited
OSC Rule 51-501 - AIF and MD&A, (2000) 23OSCB 8365, as am., s. 1.2(2), 2.1(1), 3.1, 4.1(1), 4.3 and 5.1.
OSC Rule 52-501 - Financial Statements, (2000) 23 OSCB 8372,s. 2.2(2) and 4.1.
IN THE MATTER OF
THE CANADIAN SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO,QUEBEC,
PRINCE EDWARD ISLAND, NOVA SCOTIA, NEWFOUNDLAND, NUNAVUT AND
THE YUKON TERRITORIES
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
XEROX CORPORATION, XEROX CANADA INC.
AND XEROX CANADA FINANCE INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, Prince Edward Island, Nova Scotia, Newfoundland, Nunavutand the Yukon Territories (the "Jurisdictions") hasreceived an application from Xerox Corporation ("Xerox"),Xerox Canada Inc. ("XCI") (together with Xerox, the"Filers") and Xerox Canada Finance Inc. ("XCFI")(collectively, the "Applicants") for a decision pursuantto the securities legislation of the Jurisdictions (the "Legislation")to:
(i) extend the deadlines prescribed by the Legislation(the "Deadline Requirements") by which time each Fileris required to file with the applicable Decision Makers itsaudited annual financial statements for its financial year endedDecember 31, 2001 (the "2001 Statements") and its2002 first quarter unaudited financial statements (the "2002Q1 Statements") (collectively, the "Financial Statements")and Annual Report, where applicable; and
(ii) extend the deadlines in the Legislationof Ontario, Quebec and Saskatchewan (the "AIF and MD&ADeadline Requirements") by which time each Filer must filewith the applicable Decision Makers its annual information form("AIF") and management's discussion and analysis ("MD&A").
AND WHEREAS pursuant to the Mutual ReviewSystem for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS the Applicants have representedto the Decision Makers that:
1. Xerox is a State of New York incorporated,U.S.-based company which is a reporting issuer or the equivalentunder the Legislation in each Jurisdiction. Xerox's securitiesare registered with the SEC under the 1934 Act and it is notexempt from the reporting requirements of the 1934 Act underRule 12g3-2.
2. The authorized and issued capital of Xeroxincludes shares of common stock (the "Xerox Common Shares")of which approximately 725,294,902 were issued and outstandingon March 31, 2002.
3. Xerox's financial year-end is December 31.
4. Xerox Common Shares are listed and postedfor trading on the New York Stock Exchange (the "NYSE")under the symbol "XRX" and several other stock exchangesoutside of, but not in, Canada.
5. The transfer agent for Xerox Common Sharesadvises that the registered shareholders with addresses outsideof the United States hold less than 1% of the issued and outstandingXerox Common Shares.
6. XCI is a corporation amalgamated under thelaws of Ontario on November 30, 1989 and is a reporting issuer,or the equivalent, under the Legislation of each Jurisdictionand its head office is in Ontario.
7. The authorized and issued capital of XCIconsists of an unlimited number of voting class A shares (the"XCI Class A Shares"), non-voting exchangeable classB shares (the "XCI Exchangeable Shares"), of which750,542 are issued and outstanding as of April 17, 2002, and$8.00 non-cumulative, non-voting, redeemable preferred shares(the "XCI Preference Shares"). Xerox owns all of theXCI Class A Shares and the XCI Preference Shares that are issuedand outstanding. The XCI Exchangeable Shares represent approximately2% of the outstanding shares of XCI.
8. In 1989 the public common shareholders ofXCI exchanged their common shares for XCI Exchangeable Sharesthat allow them to exchange such Exchangeable Shares for XeroxCommon Shares at any time. Xerox became a reporting issuer orthe equivalent in the Jurisdictions at that time. The XCI ExchangeableShares are not listed or posted for trading on any stock exchangebut are traded on the Canadian Unlisted Board of CDNX.
9. XCFI was continued under the laws of Ontarioon June 3, 1998. XCFI is a reporting issuer or the equivalent,under the Legislation of each Jurisdiction and its head officeis in Ontario.
10. The only outstanding shares of XCFI areits common shares, all of which are directly held by XCI.
11. XCFI has two series of unsecured debenturesoutstanding as at March 31, 2002: Cdn $21,500,000 principalamount of 10.7% sinking fund debentures due 2006 and Cdn $53,800,000principal amount of 12.15% sinking fund debentures due 2007(collectively, the "Debentures"). As a result, thetotal outstanding amount is Cdn $75,300,000.
12. Each of Xerox and XCI has unconditionallyguaranteed the Debentures as to principal and interest. TheLegislation and the trust indentures, as amended, pursuant towhich the Debentures were issued (the "Trust Indentures")do not require that XCFI mail financial statements to the Debentureholders.
13. Xerox has publicly announced, in Canadaand the United States, and has filed with the Decision Makersinformation regarding, the fact that, as part of a settlementreached with the SEC, the filing deadline for its 2001 Statementsand its 2002 Q1 Statements has been extended to June 30, 2002.This extension is to permit Xerox the time necessary to restateand adjust certain historical financial statements and to adjustits previously announced 2001 results.
14. XCI has publicly announced in Canada, andhas filed with the Decision Makers, information concerning itsdetermination that it is necessary to restate and adjust itsfinancial statements for its financial year ended December 31,2000. Since the XCI 2001 Statements and 2002 Q1 Statements areconsolidated with those of Xerox, the preparation of the twosets of statements, including the footnote disclosures, areinter-dependent. The restatements to Xerox's financial statements,including any restatement of footnote disclosures, has a materialbearing on XCI's financial statements and requires that XCIrestate and adjust its financial statements for the year endedDecember 31, 2000 to conform with the Xerox restatements. Followingdetermination of the amount of any such restatements and completionof any such restatements it will be necessary for XCI's externalauditors to audit the restatements and to re-audit the yearsin question.
15. Differences in filing deadlines under U.S.and Canadian laws result in a normal deadline of April 1 andMay 15 for Xerox filings of annual and first quarter financials,respectively, in the U.S. versus May 21 and May 30, respectively,in Canada. As a result, XCI generally has over a month afterthe finalization of the Xerox financial information to reviewsuch information (particularly the note disclosure containedtherein) to ensure consistency of presentation in the XCI financialstatements, AIF and MD&A filed by May 21.
16. Xerox proposes to make its complete 2001Statements, its 2002 Q1 Statements, its AIF on Form 10-K, itsquarterly report on Form 10-Q and its Annual Report, where applicable,available to the public via SEDAR by filing them in each ofthe Jurisdictions contemporaneously with their filing with theSEC. Substantially concurrently with such filing by Xerox, XCIwill, on behalf of Xerox, disseminate a press release summarizinghighlights of such Financial Statements, advising readers thatsuch Financial Statements, and the Forms 10-K and 10Q have beenfiled with regulatory authorities in each of the Jurisdictionsand are available for viewing on SEDAR. In addition at suchtime, Xerox anticipates posting such Financial Statements onits website.
17. As a result of XCI's determination thatit is necessary to restate and adjust its financial statements,and of Xerox's delay in filing its Financial Statements, thepreparation and filing of XCI's 2001 Statements, 2002 Q1 Statements,AIF and MD&A is also expected to be delayed.
18. XCI proposes to make its 2001 Statements,2002 Q1 Statements, AIF, MD&A and Annual Report, where applicable,available to the public via SEDAR by filing them in each ofthe Jurisdictions within 30 days of Xerox filing its informationwith the SEC. Substantially concurrently with such filing, XCIanticipates disseminating a press release summarizing highlightsof such Financial Statements, advising readers that such FinancialStatements have been filed with regulatory authorities in eachof the Jurisdictions and are available for viewing on SEDAR.
19. Xerox and XCI will each issue a press release(the "Press Release") immediately following the issuanceof this Decision Document which will announce the filing extensiongranted and such other relief as is granted pursuant to thisDecision Document.
20. If, prior to the issuance of the Press Release,any material change occurs in the circumstances or affairs ofXerox or XCI, Xerox or XCI, as applicable, will disclose suchmaterial change forthwith.
AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision, has been met;
THE DECISION of the Decision Makers underthe Legislation is that the Filers shall not be subject to theDeadline Requirement for their respective 2002 Q1 Statements,2001 Statements, and Annual Reports, where applicable, providedthat:
1. In the case of Xerox, Xerox files with theapplicable Decision Makers and delivers to its security holdersits Financial Statements and Annual Report, where applicable,by the later of June 30, 2002 and the date on which Xerox filesits Financial Statements with the SEC.
2. In the case of XCI, XCI files with the applicableDecision Makers and delivers to its security holders its FinancialStatements and Annual Report, where applicable, by the laterof July 30, 2002 and the date that is thirty days after Xeroxfiles its Financial Statements with the SEC.
3. XCI will, on its own behalf and on behalfof Xerox, announce by way of a press release, upon the grantingof this Decision Document, the filing extension granted.
4. Each Filer will issue a press release summarizingor setting out its Financial Statements upon the approval ofsuch statements by the respective boards of directors of theFilers.
5. Until the Filers have filed their respective2002 Q1 Statements, audited 2001 Statements, AIF, MD&A andAnnual Report, where applicable, with the Decision Makers, XCIwill, on its own behalf and on behalf of Xerox, (i) file withthe Decision Makers any documents filed by Xerox with the SECand (ii) distribute, to the registered holders of XCI ExchangeableShares, any material distributed by Xerox to holders of itscommon stock, if such filing or distribution was made for thepurpose of providing updated information regarding the filingof Xerox's Financial Statements.
6. XCI provides an undertaking that its "Managementand Other Insiders" will cease trading in securities ofXCI until its Financial Statements, AIF, MD&A and AnnualReport, where applicable, have been filed with the DecisionMakers, where, for this purpose, "Management and OtherInsiders" means one or more persons or companies who aredirectors, officers or insiders of XCI during the period priorto such date.
May 21, 2002.
"Paul M. Moore" "Harold P. Hands"
THE FURTHER DECISION of the DecisionMakers in each of Ontario, Saskatchewan and Quebec is that theAIF and MD&A Deadline Requirements shall not apply to theFilers provided that, in the case of Xerox, its AIF and MD&Aare filed with the applicable Decision Makers and deliveredto its security holders by the later of June 30, 2002 and thedate on which Xerox files its Financial Statements with theSEC and, in the case of XCI, its AIF and MD&A are filedwith the applicable Decision Makers and delivered to its securityholders by the later of July 30, 2002 and the date that is thirtydays after Xerox files its Financial Statements with the SEC.
May 21, 2002.