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Xerox CEO Comments: 600 iGen3's in 2004, Exclusive deal with CGX

Tuesday, November 25, 2003

Press release from the issuing company

NEW YORK--Nov. 24, 2003-- With more market share gains, more systems and services, more productivity and profitability, and more satisfied customers, Xerox Corporation is amplifying its leadership in document technology and services. That momentum will accelerate in 2004, said Xerox Chairman and Chief Executive Anne M. Mulcahy, since the company has successfully forged its advanced portfolio of document technology and services, expanded market reach, and operational and financial improvements into a strong, competitively advantaged company. "We are proud of our accomplishments over the past few years, and more important, we are confident about what we can continue to deliver over the next few years," Mulcahy told analysts at the company's 2003 Investor Conference here. By investing in "the right offerings," focusing on "the right markets" and competing with "the right model," Xerox has proven "we are really good at what we do," she added. "There's a ton of opportunity in front of us, and now it all comes down to execution." Reviewing the company's results through the third quarter, Mulcahy noted that through precise execution of a sound strategy, Xerox consistently meets its commitments. Through Sept. 30, the company has reported equipment sales growth of 5 percent, modest total revenue declines of 2 percent, gross margins at 41.8 percent, and $2.3 billion cash on hand. As important, Mulcahy said a steady stream of more than two dozen new Xerox multifunction printers, digital copiers and digital color presses this year is being well received by customers worldwide, measured by both install and share gains. According to the latest data available, Xerox has grown or maintained market share in nearly all of its key office and production segments. Furthermore, Xerox remains No. 1 in production publishing, production printing, production color publishing and printing, and office color copiers and multifunction systems. "We've been listening to our customers, responding to their needs, and they like what they see," she said. "Our technology portfolio has never been stronger, and our commitment to research and development will ensure that continues." Mulcahy added that Xerox is "driving color everywhere." With unmatched expertise in the science of color imaging, Xerox has engineered its systems to bring customers all the benefits of digital color printing at the lowest possible costs per page. Looking ahead to 2004, Xerox will continue to mine opportunities for operational improvements and operating margin expansion - largely driven through the discipline of Lean Six Sigma tools and processes. Mulcahy noted that 2004's other key imperatives are all centered on business opportunity in the production, office and services markets. New Business of Printing In addition to "driving color everywhere," in the production market, Xerox will continue to lead "the new business of printing" and help commercial printers make the transition from offset to the more dynamic world of digital - enabled by systems such as the DocuColor iGen3 Digital Production Press. Xerox recently installed its 100th iGen3 and anticipates that 400-500 more DocuColor iGen3 systems will be installed in 2004. More than 100 million pages have been printed to date from iGen3 presses. Also: Color pages are growing at a rapid rate. Impressions produced on digital color production printers are expected to grow from 11 billion in 2001 to 54 billion in 2006, according to CAP Ventures. For Xerox, revenue per color page is more than five times greater than revenue per black-and-white page. Digital production printing enables faster turnaround of large print jobs and the advantages of customized, one-to-one printing. According to independent third-party research, by 2005, 33 percent of all commercial print jobs will be produced in 24 hours. And, the market for customized print applications will grow from $2.5 billion in 2001 to $6 billion in 2004. Xerox continues to defend with a vengeance its leadership position in the monochrome production business, with plans to launch new platforms next year for high-end publishing and light-production systems. Consolidated Graphics, which owns 65 printing companies, has selected Xerox as its only provider of high-volume (60+ pages per minute) digital color equipment. The nation's largest commercial sheet-fed printing company, Consolidated Graphics has initially purchased three DocuColor iGen3's and four DocuColor 6060 digital color presses. Digitize the Office Xerox also will leverage its legacy and leadership to further "digitize the office" - bringing the productivity and technology benefits of its new and enhanced printers, multifunction devices, and copiers to offices large and small. In the $57 billion office market, Xerox has nearly doubled its portfolio of office systems in the last year and now has the industry's most complete product line of cost-competitive offerings in all segments. Customers benefit from added productivity when these systems are integrated with innovative software and solutions from Xerox and its partners. In the office market, color pages are growing 20 percent per year, excluding inkjet. In 2002, about 64 billion pages were printed in color. Xerox expects that, by 2007, office environments will print about 159 billion pages in color. Like the production business, color pages can deliver five times the revenue of black-and-white. In the third quarter, installations of Xerox's office color multifunction systems increased 49 percent due to the success of Xerox's DocuColor 3535, WorkCentre Pro 32 and WorkCentre Pro 40 color systems. Xerox's expanded distribution strategy brings the Xerox brand to businesses small to large. In addition to the industry's strongest direct sales force and thousands of global concessionaires, resellers and Xerox sales agents, the company's 500 global TeleWeb representatives expand Xerox's reach, reduce selling costs, and touch one-third of all office-related purchasing decisions. Services and Large Enterprises Xerox is accelerating its focus on value-added services that help large enterprises integrate Xerox technology with document, content and knowledge management expertise to simplify the way work gets done. In the $16 billion document services market, Xerox holds the No. 1 worldwide market position with large enterprises. Xerox's Office Document Assessments identify, on average, savings of more than 30 percent for clients. Office Document Assessments -- a Six Sigma-based consulting tool -- evaluate a company's entire document environment to identify areas where operating costs can be reduced, processes simplified and productivity improved. Through Xerox's rich set of business innovation services, the company helps document-intensive businesses streamline workflow, speed up work processes and reduce costs. In the past year Xerox has brought its document services and solutions to customers such as Honeywell International, Siemens, WellChoice Inc., Bank of America, Prudential Financial and more. Xerox expects to return to total revenue growth in the second half of 2004. For the full year 2004, Xerox expects that revenue will be flat and that operating margin expansion will enable earnings to grow about 35 percent, to 67-72 cents. Xerox also reiterated its guidance for full-year 2003 results, stating that the company expects to deliver fourth-quarter earnings consistent with its previously announced 13-16 cent range.




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