By Richard Mullins
Democrat and Chronicle

(Tuesday, January 29, 2002) -- Good news on Xerox Corp.'s fourth-quarter earnings resulted in unexpected gifts for both shareholders and employees.

For shareholders, it was the 13.5 percent surge in Xerox's price on news that the company posted a $108 million or 15-cent-per-share profit for the fourth quarter, not including one-time charges for restructuring and currency conversions.

For employees, it was an extra day off, courtesy of Xerox Chairman and CEO Anne M. Mulcahy, who made the gesture to show her appreciation for their loyalty and hard work during the restructuring.

"Everybody at Xerox deserves to take their birthday off this year," Mulcahy told employees yesterday. "Reward yourselves."

More than 20 million Xerox shares changed hands, nearly five times the daily average. The stock closed at $11.24 a share, up $1.34, almost double where it was a year ago.

Including the charges, Xerox posted a one cent per share loss, up from a four cent per share last loss.

Sales for the quarter fell 13 percent from the previous year, to $4.26 billion. For all of 2001, Xerox posted sales of $16.5 billion, down 12 percent from $18.7 billion in 2000.

Mulcahy said she is not counting on a growing economy. "We expect the economy will be only slightly better in the second half of the year," she said.