Xerox Corporation continues to execute with precision on a business strategy that is driving revenue growth in key markets, increasing earnings, and delivering shareholder value. Xerox Chairman and Chief Executive Officer Anne M. Mulcahy expects this momentum to continue to accelerate during 2005. At the company’s annual Investor Conference, Mulcahy joined other Xerox executives in reviewing the company’s accomplishments, opportunities for future growth, and objectives for 2005 and 2006.
For full-year 2005, Mulcahy expects revenues to grow 3% and expects earnings to be in the range of 90 cents to $1 per share. This progress will continue in the following year, with expectations of 5% revenue growth and a 15% - 20% increase in earnings per share for full-year 2006. Xerox’s revenue growth strategy is designed to create new opportunities to expand its share of the $102 billion document market with new technology and service offerings for office and production environments, including affordable color printing for businesses of any size. The company also hopes to accelerate the transfer of pages now printed on offset presses to digital systems.
With about 5% of the company’s revenues invested in Research & Development each year, Xerox has created a broad portfolio of document management technologies and services. The company launched 40 new systems this year, including color and black & white digital presses, production copier/printers, office multifunctional systems, and printers that have earned more than 125 awards worldwide.
Xerox’s investment in color technology continues to deliver, with color revenue up 20% through the end of the third quarter. Revenue from color is expected to increase at about the same rate in 2005. For Xerox, revenue per color page is more than five times greater than revenue per black & white page. With about 3 trillion total pages printed each year, advancements in digital color printing are driving rapid increases in color page volume, which is expected to demonstrate a CAGR (compound annual growth rate) of more than 20%.
In the production printing market, more color pages are printed on Xerox technology than on any other competitor’s devices. The Xerox iGen3 is driving even greater page volume with commercial printers transferring some jobs that were once produced on offset presses to the iGen3. In addition, the iGen3’s ability to create personalized, short-run, high-quality color applications has created new business opportunities for customers, who on average print more than 400,000 pages per month on their iGen3 systems.
At the same time, Xerox is accelerating the use of color printing in office environments through new color-capable multifunctional systems that combine the convenience and costs of a black & white device with the added benefit of color. Xerox has also increased its share in the color printing market by expanding its line of Phaser solid ink printers, which use fewer materials to produce color prints and result in 90% less waste than comparable color laser printers.
Xerox has generated $900 million in operating cash flow through the third quarter of this year and is on track to deliver $1.5 billion for the year. The company expects to generate about $1 billion to $1.5 billion of operational cash flow in 2005. Through the third quarter of this year, Xerox has reduced debt by $1 billion year over year. With further debt reductions expected next month, the company will have cut its debt in half since year-end 2000. Xerox ended the third quarter with $3.4 billion in cash, a year-over-year increase of $1.1 billion.
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