Xerox Targeting Opportunities in Business Services

ROCHESTER, NY—May 10, 2011—At its annual investor conference to be held here today, Xerox Corp. is sharing its strategy to capture key growth opportunities in business services and document management and deliver long-term value for shareholders.

“This is the new Xerox. Today, we provide the most diverse set of services in the industry, offer the broadest portfolio of document technology, have a growing global customer base, and continue to invest in world-class innovation that brings differentiated value to customers,” said Ursula Burns, chairman and CEO. “The disciplined execution of our strategy is creating shareholder value through the strength of our solid annuity-based business, expanding earnings and strong cash generation.”

Delivering Shareholder Value
During the conference, Xerox will outline its financial profile, highlighting key growth drivers that include:

• Shifting its revenue mix to a higher percentage of services, a business that is targeted to grow between 6-8 percent by 2012. More than 90 percent of revenue from services is annuity-based, providing a long-term revenue stream.

• Expanding distribution in its document technology business to capture more opportunity in developing markets and increase its business with small and mid-sized companies. Revenue in the company’s technology business is expected to grow 1-3 percent in 2012 with growth driven both from increased distribution and an increase in color pages. Color pages currently account for 25 percent of the total number of pages printed on Xerox systems yet color pages are growing 9 percent per year.

• Investing in acquisitions that give Xerox more scale in services and more “feet on the street” selling the company’s products in global markets. The company expects to invest about $300 million in acquisitions this year; the added capabilities and channel expansion are expected to deliver 1-2 points of revenue growth.

The company is reiterating its expectations for full-year 2011 to deliver revenue growth of 6-8 percent or 3-5 percent on a pro-forma basis and GAAP earnings per share of 89-94 cents or $1.05-$1.10 on an adjusted basis. In 2012, Xerox expects revenue will grow in the range of 4-6 percent and adjusted EPS will increase to $1.18 – $1.28.

Xerox will also outline details on the cash-generating strength of its business model, reiterating expectations to deliver $2.5 billion in operating cash flow this year. In 2012, Xerox expects to generate $2.6-$2.9 billion in cash from operations.

“Over the next five years, we expect to generate more than $10 billion in free cash flow, reflecting the benefit of our annuity-driven earnings growth and continued operational improvements,” said Luca Maestri, chief financial officer, Xerox. “We remain committed to creating value for our shareholders by growing our business organically and through acquisitions, delivering dividends and buying back stock. In 2011 and 2012, we’re targeting to use about 70 percent of our available cash for share repurchase.”

Services Led; Technology Driven Strategy
“Throughout enterprises of any size and in any industry, we are providing the back office support that results in reduced costs, more productivity, and efficient, simplified ways of getting work done,” said Burns.

She noted that the ultimate outcome for clients is freeing up time and resources better spent on their core business. It is a powerful value proposition that is reflected in how Xerox serves the marketplace and how the company is expanding its business through these areas:

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