NEWTONVILLE, MA (January 31, 2001)--Today, in a candid executive briefing, Mr. James Firestone, Senior Vice President of Corporate Strategy and Marketing, Xerox Corporation (NYSE: XRX), highlighted the core elements of the firm's multipronged business strategy at The 2001 Lyra Imaging Symposium: Hard Copy and Beyond: Mapping the Future of Output and Imaging, held at Marriott's Las Palmas Resort in Rancho Mirage, CA, January 29-31, 2001. In his presentation, "Redefining Xerox: Challenges, Changes, and New Directions," Mr. Firestone explained how major imaging industry trends have presented Xerox with both new competitive challenges and strong growth opportunities. These trends include: * an overall slowdown in hard copy output growth fueled by a transition from paper to electronic documents; * a customer shift from copiers to printers for producing hard copy; * a technology and business-model transformation in the copier industry from analog/light-lens machines to network-capable, digitally based units; and * a migration from black-and-white to color hard copy use in virtually every market segment. During 1999 and 2000, Firestone noted that a convergence of external market forces, combined with internal operations issues, caused the firm to "hit the wall." Acknowledging increased market pressure, Mr. Firestone discussed the progress of Operation Turnaround, a three-phase plan to ensure ongoing liquidity of the firm, reestablish profitability, and architect "a new Xerox." The plan will begin with a resizing of the company to ensure a profitable business model. Firestone's presentation noted that the plan is designed to fuel "a historic business comeback." In discussing the shape of the "new Xerox," Firestone explained that the firm will focus on high-end growth in production printing, solutions, and services, building on the strength of its leading market position and technology. The company will also target key office segments with new lower-cost multifunction offerings, develop partnerships to share investments and expand its SOHO business, and aggressively pursue non-paper-based business opportunities related to professional services and knowledge-sharing. Noting that Xerox is still the market leader in digital printing, Firestone explained, "Color is the future of Xerox ... across the board," and outlined how the company will make the largest strategic investment in its history in new FutureColor production technology to leverage its current estimated high-end color market share of more than 60 percent.