"Closing the sale of our China operations to Fuji Xerox is the first in a series of asset dispositions that are a key element in our plan and designed to restore a sound financial foundation to the business," said Paul A. Allaire, Xerox chairman and chief executive officer.

Xerox said it has drawn down the remaining balance of its $7 billion revolving credit agreement, a portion of which had been used to repay maturing debt. The company's current cash balance is approximately $1.4 billion, considerably higher than the $154 million available as of Sept. 30. Xerox officials indicate that the $550 million from the sale of its China operations are part of the company's current cash balance.

"These activities further strengthen Xerox's liquidity," said Allaire. "As we said when we announced our agreement to sell the Xerox China operations, our asset dispositions are on track and ahead of schedule and our cost reduction program is on track. And while we are confident for a turnaround in 2001, our fourth quarter performance is likely to be softer than the third quarter, especially in light of the current economic environment."