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Xerox Building Value Through Innovation, Operational Excellence, Financial Strength, Chairman Reports

Press release from the issuing company

HARTFORD, Conn.--May 19, 2005-- In the past four years, Xerox Corporation has more than doubled its equity and created or restored $6 billion of shareholder value. The company has eliminated nearly $2 billion in cost, cut debt almost in half, consistently increased earnings, and maintained its investment in innovation -- building the industry's broadest portfolio of technology, document management and consulting services. This is the message Anne Mulcahy, Xerox chairman and chief executive officer, delivered here today at the company's annual shareholder meeting. "Xerox is strong and getting stronger," she said. "We have not been this financially healthy for a very long time." Mulcahy noted the company's investment in key growth areas that represent a $100 billion opportunity: digital office, digital production and value-added services. In 2004, Xerox brought 40 new products to market, earned 230 industry awards and received 525 utility patents in the United States. This year alone, the company has launched 16 new products and broadened its offerings in services like digital imaging, archiving, and asset management. Color is playing a critical role in creating new business opportunities for Xerox and its customers. Only 3 percent of the total pages produced in businesses today are produced on color devices. Xerox expects new color technologies and services to drive that number to 10 percent of pages by 2008, fueling a $22 billion market opportunity. The company continues to deliver double-digit revenue increases from the sale of its industry-leading color systems. "Two-thirds of our equipment sales are coming from products and services introduced in the past two years," added Mulcahy. "And, in more and more accounts, large and small, we are becoming strategic partners. The copier and hardware company has morphed into a technology and services enterprise." Mulcahy also showed how Xerox's Smarter Document Management(SM) offerings help customers find better ways to work "through processes that deliver the right information, in the right form and the right time." For example, Xerox implemented an electronic library card and kiosk system for the Brooklyn Public Library that allows users to check out materials, access printers and reserve computer time - saving the library about $1.2 million. "We are all focused on serving our customers with precision and passion, growing revenue and improving profitability," said Mulcahy. "If we do that well, we know we will create value for our shareholders and give you a good return on the trust you placed in us." Also at the annual meeting, shareholders approved the election of 11 members of the Xerox board of directors, including new director Robert McDonald, a 25-year veteran of The Proctor & Gamble Company and current vice chairman of global operations. Re-elected to the board are Glenn A. Britt, Richard J. Harrington, William Curt Hunter, Vernon E. Jordan Jr., Hilmar Kopper, Ralph S. Larsen, Anne M. Mulcahy, N.J. Nicholas Jr., Ann N. Reese, and Stephen Robert. More than 90 percent of the Xerox board is considered independent. Shareholders also ratified the selection of PricewaterhouseCoopers LLP as Xerox's independent auditors for 2005.