May 24 STAMFORD, Conn.-- At its annual shareholder meeting held here today, Anne M. Mulcahy, chairman and CEO of Xerox Corporation, pointed to the relentless execution of its growth strategy coupled with strategic acquisitions made over the past year as key reasons why Xerox is successfully positioned to attack a $117 billion market opportunity. "By just about any standard, we are making very good progress," Mulcahy said. "The strategic bets we placed several years ago are paying off." During her message to shareholders, Mulcahy noted that Xerox met its 2006 full-year expectations on earnings growth and cash generation, increased post-sale revenue - which represents more than 70 percent of Xerox's total revenue - and strengthened its industry-leading portfolio of products and services. Xerox earned $1.2 billion or $1.22 per share in 2006. With $15.9 billion in revenue, the company generated $1.6 billion in operating cash flow and ended the year with cash and short term investments of $1.5 billion. The company bought back $1.1 billion of Xerox stock and saw its debt rating return to investment grade. "It was a good year and we have every reason to believe we are on our way to a better one," Mulcahy said. Mulcahy updated shareholders on the progress Xerox is making on its four-pronged growth strategy centered on color leadership, document management services, digital production printing and the small and mid-size business (SMB) market. Some examples of Xerox's success in these areas include: * Xerox color presses produce the highest volume of pages in the industry and last year more than 30 billion color pages were printed on Xerox technology. * Since the beginning of this year, Xerox has introduced 19 new products, half of which are color products, surpassing the 14 total product launches in 2006. The company plans to more than double its number of product launches this year. More than two-thirds of Xerox's equipment sales come from products launched in the past two years. * Through multiyear, multimillion dollar contracts, Xerox's document management services generated nearly $800 million in annuity revenue in the first quarter of this year. Mulcahy also pointed to these key acquisitions Xerox made in the last year as critical enablers that help fuel Xerox's growth. * XMPie, the developer of software for personalized multimedia campaigns, provides direct marketers with the ability to customize e-mail, Web sites, catalogs, brochures and other materials that target a customer's personal buying needs. The market for variable data printing is expected to grow from 49 billion pages in 2004 to 138 billion by 2009. * Amici LLC, the market leader in e-discovery technology now offered as part of Xerox Litigation Services, helps companies identify, filter, produce and store data found in paper or electronic documents. The market for e-discovery services is expected to grow 40 percent per year and be valued at $2.5 billion by 2009 in the United States alone. * The recent acquisition of Global Imaging Systems, Inc., an office technology dealer that is a market leader in the U.S. SMB market, increases Xerox's distribution to this market by 50 percent and adds 1,400 sales people serving about 200,000 new customers. Including its partner Fuji Xerox, Xerox invested about $1.4 billion in innovation in 2006. This investment plus the launch of 100 new products in the last three years and 560 new patents granted last year alone, positions Xerox to capitalize on a major market opportunity in the years ahead, said Mulcahy. "We have four planks to our growth strategy," said Mulcahy. "Each builds on our core competencies. Each responds to customer need with customer value. Each is designed to fuel our annuity stream. And each is yielding good results. We can compete for every dollar of it - and we are." Also at the annual meeting, shareholders elected by significant majority vote all 11 members of the Xerox board of directors. Re-elected to the board are Glenn A. Britt, Ursula M. Burns, Richard J. Harrington, William Curt Hunter, Vernon E. Jordan, Jr., Ralph S. Larsen, Robert A. McDonald, Anne M. Mulcahy, N.J. Nicholas, Jr., Ann N. Reese, and Mary Agnes Wilderotter. Shareholders also approved the selection of PricewaterhouseCoopers LLP as the company's independent auditors for 2007. In addition, shareholders voted for an amendment to the 2004 performance incentive plan and against a shareholder proposal related to the adoption of a vendor code of conduct. In related news, the Xerox board of directors today appointed two officers of the corporation. Russell Peacock, 48, who was recently named president, Xerox Office Group was named Xerox corporate vice president. Eric Armour, 48, who joined Xerox earlier this month as the company's chief strategist was also named a corporate vice president.