U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 18389 / October 3, 2003
, Civil Action No. 03 CV 0671 (DLC) (S.D.N.Y.) (January 29, 2003)

SEC FILES AN AMENDED COMPLAINT CHARGING AN ADDITIONAL KPMG PARTNER WITH
FRAUD IN CONNECTION WITH AUDITS OF XEROX

SEC SEEKS INJUNCTION, DISGORGEMENT AND PENALTIES

   On October 3, 2003, the Securities and Exchange Commission filed an
   amended complaint in the civil fraud injunctive action pending in the
   United States District Court for the Southern District of New York
   against KPMG LLP and four KPMG partners to include charges of fraud
   against an additional KPMG partner, Thomas J. Yoho, in connection with
   KPMG's audits of Xerox Corporation from 1997 through 2000. The SEC
   seeks injunctions, disgorgement of all fees and civil money penalties
   against KPMG and the five KPMG partners named as defendants.

   The action was originally filed against KPMG and four of its partners
   on January 29, 2003. As in the original complaint, the amended
   complaint alleges that KPMG and its partners permitted Xerox to
   manipulate its accounting practices to close a $3 billion "gap"
   between actual operating results and results reported to the investing
   public. Year after year, the KPMG partners falsely represented to the
   public that their audits were conducted in accordance with generally
   accepted auditing standards (GAAS) and that Xerox's financial reports
   fairly represented the company's financial condition and were prepared
   in accordance with generally accepted accounting principles (GAAP).

   The Commission's amended complaint also repeats allegations that
   beginning at least as early as 1997, Xerox initiated or increased
   reliance on various accounting devices to manipulate its equipment
   revenues and earnings. Most of these "topside accounting devices"
   violated GAAP and most improperly increased the amount of equipment
   revenue from leased office equipment products which Xerox recognized
   in its quarterly and annual financial statements filed with the
   Commission and distributed to investors and the public. This improper
   revenue recognition had the effect of inflating equipment revenues and
   earnings beyond what actual operating results warranted. In addition,
   the amended complaint alleges that the defendant KPMG partners
   fraudulently permitted Xerox to manipulate reserves to boost the
   company's earnings.

   Thomas J. Yoho, a resident of Greenwich, Connecticut and a certified
   public accountant, was the Concurring Review partner for KPMG on the
   Xerox audit from 1994 until after the 2000 audit was completed and