Xerox CEO to Investors: Annuity Business, Industry Leadership, Solid

NEW YORK—Nov. 24, 2008—At its annual investor conference being held here today, Xerox Corp. (NYSE: XRX) is addressing how its annuity-based business model, strong operating cash flow and industry-leading document management services and technology are assets in tough economic times.

“Our value proposition is supported by the strength of our financial position and the resiliency of our recurring revenue stream,” said Anne Mulcahy, Xerox chairman and chief executive officer. “We’re managing our operations with a close eye on the bottom line. The restructuring actions we’re taking this quarter are expected to deliver $200 million in savings next year, giving us greater flexibility to operate even more efficiently and effectively in an uncertain economic environment.

“About 85 percent of our cash flow is generated from our annuity business model. This annuity is driven by install activity of our technology and multi-year contracts for document services,” she added. “Despite the current economy, the backlog of orders for our products and a 14 percent increase this year in signings for document services along with our disciplined approach to cost management give us confidence in the overall health of our business and our ability to navigate through these challenging times.”

During the conference, Xerox will outline 2009 expectations with operating profit between $1.4 billion to $1.7 billion and cash from operations of $1.7 billion to $1.9 billion. As a result, 2009 earnings per share are expected to range between $1.00 and $1.25 and free cash flow per share of $1.60 to $1.85. The company noted that the range reflects the extraordinary volatility from the impact of currency. Given the strength of Xerox’s cash flow and its credit facility of $2 billion, the company has no requirement to access the capital markets in the foreseeable future.

Xerox’s investment in innovation has brought to market more than 100 products in the last three years, building the broadest portfolio in the industry and in Xerox’s history. Maintaining this focus on innovation, the company said it expects 2009 investments in research, development and engineering will be 4 percent to 5 percent of total revenue.