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Xerox Corp. (BB63)


Monday 03 April, 2000

Xerox Corp.

Restructuring Program

Xerox Corp
31 March 2000

For additional information contact
Leslie F Varon                       Charles K Wessendorf
Director, Investor Relations         Manager, Investor Relations
203-968-3110                         203-968-3489
[email protected]           [email protected]


$625 Million Pre-Tax First Quarter Charge; Elimination of 5,200 Positions
Worldwide 'Xerox can no longer operate business as usual and expect to win'

STAMFORD, Conn., March 31, 2000 - Xerox Corporation (NYSE: XRX) today announced
details of a worldwide restructuring program designed to enhance shareholder
value and strengthen the company's competitive position in the digital
marketplace.  The program, first announced by Xerox President and CEO Rick
Thoman in December, touches virtually every area of the business.

The actions enable the company to align its cost structure with the unique
requirements of its two core business models, General Markets and Industry
Solutions. Through General Markets Operations (GMO) Xerox sells printers,
copiers, and multifunction devices through indirect channels to home, small and
medium-sized offices.  The Industry Solutions Operations (ISO) business focuses
on delivering high-value document solutions to larger customers through the
Xerox worldwide direct sales force.

Under the program, Xerox will take a pre-tax charge of approximately $625
million in the first quarter. This charge includes severance costs related to
the elimination of 5,200 positions through a combination of voluntary programs
and layoffs. None of the reductions will reduce sales coverage or affect direct
research and development. The charge also includes $175 million related to
facility closings and other asset write-offs such as scrapping certain

The restructuring savings, net of implementation costs, are expected to be
approximately $95 million in 2000 and an incremental $300 million in 2001. These
savings will not be reinvested; however, they provide some opportunity for
accelerating the pace of growth in the inkjet business.

'We must focus on the challenges and opportunities in creating shareholder value
in today's digital economy. While these are difficult actions for our people,
Xerox can no longer operate business as usual and expect to win,' said Thoman.
'We're intensifying our drive to become a faster, leaner and more flexible
enterprise - able to respond swiftly and efficiently to customers' needs with
breakthrough technology and exceptional service.  This program is aimed at
eliminating activities not associated with core business functions and
strengthening the areas that fuel Xerox' growth.'

The employment cuts are wide-ranging, impacting all levels, business groups and
geographic regions of the corporation. Actual implementation will vary depending
on the individual needs of the business groups, union agreements, government
policies and local leadership.

'Over the past two years, we have made progress in improving productivity and
reducing general and administrative expenses,' Thoman added. 'But we need to go
further. With the initiatives announced today, we will. Although we expect
recent currency movement will offset most of the savings this year, this
positions us for mid to high teens earnings growth in 2001.'

The productivity initiatives that will be implemented over the next 12 months

- Sharpening the company's focus on cost, quality and delivery in               
manufacturing by reducing the production infrastructure and moving certain     
product lines to regions where they are in the greatest customer demand.

- Driving greater efficiency in logistics and supply chain operations through   
 the consolidation of distribution centers and warehouses, reducing costs and   
improving inventory turns.

- Enhancing customer service delivery by deploying technology and executing     
 process changes to reduce costs.

- Implementing an average 10 percent reduction in the number of middle and      
 upper managers across the various Xerox businesses in the United States, with  
similar reductions in other geographic areas.

- Eliminating redundancies in support functions by moving to a shared service   
 model for marketing, human resources and finance.

- Outsourcing work in areas not related to the company's core business          
 operations and where there is economic advantage.

- Accelerating the integration of business functions in General Markets         
 Operations to achieve benchmark expenses and processes for indirect sales      

- Implementing a wide-ranging series of initiatives across Developing Markets   
 Operations (DMO) geographies to improve productivity and cost levels.

- Leveraging Web-based technology to simplify and streamline processes across   
 internal business operations, and extending to vendor and customer             

'By making strategic investments, leveraging Xerox technology, simplifying
business processes and attacking the cost base, we are dedicated to building our
business faster and enhancing our competitive position,' said Thoman. 'We will
continue to lead the digital office transition and push aggressively in three
strategic fast-growth areas -- production publishing solutions, document
outsourcing, and the exploding small office/home office market.'

In the past six months, Xerox has made major moves in these areas including the
acquisition of Tektronix' color printing division, the launch of a $2 billion
alliance with Sharp and Fuji Xerox to develop and manufacture inkjet products
for small and home offices, and the introduction of next-generation DocuTech and
DocuColor production publishing systems.

For additional information about The Document Company Xerox, please visit our
Worldwide Web site at


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