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Xerox Chairman Reports to Shareholders: Stronger, Focused On Profitability

Press release from the issuing company

STAMFORD, Conn.--Sept. 9, 2002--Xerox Corporation has forged itself into a stronger, bolder company with unmatched opportunity for growth in the office, production and services markets -- and with a sharp focus on driving sustainable profitability. This was the message delivered by Xerox Chairman and Chief Executive Officer Anne M. Mulcahy during the company's annual shareholders meeting, held here today. Over the past year, Xerox has overcome operational and liquidity issues -- posting a $1.9 billion cash balance at the end of the second quarter and reducing its annualized cost base by almost $1.3 billion. Now, "we're focused with a single-minded purpose and a relentless passion on sustaining profitability, returning to growth over time, and rebuilding shareholder value," Mulcahy said. "All the cost cutting and asset selling have been done thoughtfully and with a purpose beyond mere survival. We have been investing in -- and preparing for -- a future of growth for Xerox and opportunity for Xerox shareholders, customers and employees." Mulcahy noted that the company -- building on the momentum from its turnaround accomplishments -- has made significant investments designed to fuel growth across Xerox's major office, production and services businesses. In addition to a research and development investment of about $1 billion, Xerox has launched customer-focused advertising and marketing campaigns, strengthened and expanded sales coverage, and introduced a series of new digital systems and services. This year "will be among the very best new product introduction years in our history," she said, with new color and black-and-white multifunction systems, color printers, and a production color controller already in the marketplace -- and the breakthrough DocuColor iGen3 Digital Production Press set to launch next quarter, creating growth opportunities for Xerox that build off the company's leadership position in the black-and-white production printing market. Mulcahy noted that the companies three core markets -- production, the office and services -- give Xerox "room to run and grow." "They are three attractive market segments where we can choose our sweet spots, add value for our customers, grow profitable revenue over time and reward our shareholders for their investments. We estimate that over time these three market segments will yield about 5 percent a year revenue growth -- even more if we are highly successful in areas such as digital production printing, color, high value solutions for the office and services." The chairman also said Xerox is well positioned to achieve full-year profitability in 2002, "a year in which we take another major step forward in our drive to restore shareholder value." Also at the annual meeting, shareholders approved increasing the authorized shares of Xerox common stock by 700 million shares. Although these additional shares will provide future flexibility for Xerox, there are no specific present plans or proposed transactions for their use. In addition, shareholders approved the election of PricewaterhouseCoopers LLP as the company's independent auditors for 2002, and the election of eight members of the Xerox board of directors: Anne M. Mulcahy, Antonia Ax:son Johnson, Vernon E. Jordan Jr., Yotaro Kobayashi, Hilmar Kopper, Ralph S. Larsen, N.J. Nicholas Jr., and John E. Pepper.

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