Office products manufacturer Xerox (NYSE:XRX) needs to change its toner cartridge. Its Q4 earnings release, published yesterday, appears to read: "Our 2003 performance -- capped by a successful fourth quarter -- is proof positive that the Xerox value proposition is clicking with customers and that our strengthened operations are delivering sustainable benefits."

Maybe we should take a closer look -- the numbers are kind of blurry, and I'm not quite sure I read that right.

At first glance, Xerox seems to have had a wonderful fourth quarter for 2003. Earnings came in at $0.22 a share, which was certainly stronger than the $0.01 per share it earned in last year's Q4. Equipment sales grew 11%. Revenue grew 1% (hey, at least it wasn't negative 1%). Operating cash flow was strong and the company has a nice pile of cash -- $2.5 billion in all.

But if you read a little lower down on the press release, and maybe pull back just the tiniest bit to see the full-year 2003 picture, it all becomes much clearer.

For instance, the 11% gain in equipment sales becomes 4% if you take out the gains Xerox made off of currency exchange rate fluctuations. And oops! Remember that 1% in revenue growth that was at least positive? Well, take out the exchange rate benefits on that one, and it actually does become negative -- negative 5%, to be precise. Also, the $2.5 billion in cash on hand is actually down from $2.9 billion in cash one year ago.

Now, I will grant that things are not all bad in Xerox land. The cash levels fell not because the company was burning cash (Xerox was free cash flow positive for both the quarter and the year), but rather because the company was repaying debt. And boy, oh boy, does it ever have debts to repay. Despite making considerable progress on debt repayment in 2003, Xerox still has close to $12 billion in total debt on its books.

But even if the company can continue to pay down debt at the rate it managed in 2003 -- and that is a big "if" given much of the company's "profitability" appears to hinge on exchange rate fluctuations -- Xerox still has at least two to three years before it can consider itself debt-free and begin printing serious money.

Rich Smith has no interest in Xerox -- not so much as a photocopy of a stock certificate framed and hanging on the wall. The Motley Fool, on the other hand, has a disclosure policy .