Slide 1: Xerox First Quarter 2004 Earnings Presentation
Exhibit Xerox First Earnings April Anne Chairman Larry Senior 1 Quarter 23, Mulcahy Zimmerman Corporation Vice BPresentation 2004 &President CEO 2004 & CFO
Slide 2: Disclosures
“During Disclosures You The 2 Company can find this meeting, information does notXerox intend concerning executives to update certain will any forward-looking make factorsforward-looking that couldstatements causestatements. actual made results during Actual to differ this results meeting.” material
Slide 3: Anne Mulcahy, Chairman & CEO
Anne Mulcahy Chairman Xerox 3 Corporation & CEO,
Slide 4: First-Quarter Highlights
.-First-Quarter 4 Strong Improving Effective Operating Excellent Cash Year-over-year Equipment Continued ‘Color Significant balance earnings Everywhere’ execution operating margin revenue improvement sales technology Highlights remains improvement ofgrew improvement $0.25 trends of cash success stro
Slide 5: Improving Revenue Trends
2003 ($M) Equipment Post Total Revenue .Growth 5Total Continued Improving Sale 2004 Revenue Q1 Revenue 3% (4%) (3%) Trends $Q2 &3,757 898 2,859 Sales 8% Equipment trends Financing Q3 (4%) (1%) $5% grew Q4 Continue 1,023 $ in 2,897 3,920 (4%) (2%) 11% Q1 Post 2%$Sales (3%) 1% 9% 948 $to Sale 2,784 3,
Slide 6: Increasing Revenue in Growth Areas
Increasing Revenue 2004 ($M) Digital Value Subtotal Growth Developing Light Other Total Memo: Color 6 2003 Revenue Q1 Lens Added 384 asProduction Office Color Areas areas 2,731 a% Q1 6% Proportion 2004 /Growth Markets SOHO Q2 Services as Revenue $(9%) 67% $ % 7%1,683 aQ3 3,827 of1,004 10% (1%) 292 6
Slide 7: Production Segment Highlights
Total $1,056 $135 $921 Q1 Install May First-Quarter B&W Production -.Light 7 Strong Xerox DocuColor DocuTech 10,000th Over 2003 2004 6: $90 $1,004 Revenue Production Publishing Growth 10% $1,094 drupa 2101 initial Q1 Light entry Segment Monochrome Color Printing of 100/120 5252 iGen3 2004 Digital Hi
Slide 8: Office Segment Highlights
Total $1,820 $279 $1,541 8 Q1 $(M)’s Install2003 $175 Segments 21-90 Office MFD’s Color Revenue Segment $1,857 $1,682 1Q1 .First-Quarter April: Strong DocuColor M15 Services-led Xerox 2004 Light Printers ppm Launched and Growth B&W Color (11-40 office demand2004 PE16 (12%) &andTotal Digital Highligh
Slide 9: DMO Segment Highlights
DMO $395 $89 $306 Q1 % 2003 Revenue Equipment Post Total .First-Quarter 9Accelerated Equipment Post-sale Growth 2003 $118 Sale $420 $302 2004 Revenue Segment Q1 Trend & Equipment revenue Total Post Sale Financing Sales 2004 demand Highlights $(M)’s (19%) Highlights Q1 Sale 17% Revenue growth trend Q
Slide 10: Larry Zimmerman, Senior Vice President & CFO
Larry Zimmerman Senior Xerox 10 Corporation Vice President & CFO,
Slide 11: Solid Delivery Demonstrates Performance
.Solid --$ …demonstrates * 11Delivery Revenue Operating Strengthened YOY Total Earnings 5Consistent, Improving Growth Color Significantly 39.8% SAG Non-financing Operating 243 2.3 10.6 quarters First billion million 27.1% revenue earnings billion revenue gross inon transitioning better Quarter margi
Slide 12: Strong First Quarter Operating Results
Strong, First ($ Equipment Post Total Gross R&D SAG Other, Provision Operating Effective Gain Net Diluted * 12Operating Income Sale Quarter on Revenue Margin Net Predictable, EPS Sale millions Tax /% for % Profit $Financing Sale /profit of 87 $of 2004 of (Loss) Litigation Rate 39.8 0.25 $Revenue Rev
Slide 13: Increasing Revenue in Growth Areas with Currency Effect
Increasing Revenue 2004 ($M) Overall Digital Value Subtotal Growth Developing Light Other Total Memo: Color 13 2003 Revenue Q1 Lens Added 384 asProduction Office Color Areas areas 2,731 a% Q1 6% Proportion 2004 /Growth Markets SOHO Q2 Services as Revenue $(9%) 67% $ % 7%1,683 aQ3 Effect 3,827 of1,00
Slide 14: Operating Margin Improvement
Operating Gross Mix Productivity Interest ($M) Non-financing B/(W) Improvement SAG Infrastructure Bad Currency $M’s R&D iGen3 Platform Q1 YOY * 14Operating 2003 2004 debt (1.2)pts Interest % Operating Margin sustaining $51 Expense Rev 41.9% 39.8% $146 95 $ strategy (14) 47 Margins 1,020 1,036 236 19
Slide 15: Cash Flow Performance
$M’s Depreciation Gain Decrease Increase Debt All Net (Decrease) Cash 15 other Income cash on payments Performance Flows proceeds and Q1sale in provided payments used 2004 (181) 4 in cash in inventories finance accounts $from of and cash 248 in equivalents from on ContentGuard, for financing Amortiz
Slide 16: Continued Strengthening of Balance Sheet
Continued Equity, Finance 18.4 17.7 17.4 *Non-financing Q1 2003 Total Non-financing* Debt Aligning Leveraging 16 Q44.1 6.5 6.8 to significantly 2003 Capitalization Xerox Q1 preferred Capital receivables 8.8 8.4 debt Strengthening 2004 finance 14.3 11.2 10.6 78% with debt 69% 12/31/2003 3/31/2003 3/3
Slide 17: Anne Mulcahy, Chairman & CEO
Anne Mulcahy Chairman Xerox 17 Corporation & CEO,
Slide 18: Summary
-.Summary 18 Technology Effective More Second Services-led Business Launch Services Color Office, Market Equipment Revenue Earnings to everywhere Production, quarter expansion of come momentum growth improvement model execution new sales investments offerings … on technology yielding in growth track
Slide 19: The Document Company Xerox
THE DOCUMENT COMPANY XEROX.
Slide 20: Supplemental Non-GAAP Information
Supplemental Non-GAAP and non-GAAP Reporting” Our Operations In pro-forma also GAAP Company’s accounting 2004 Profit $M’s Continuing Restructuring Provision Equity Operating Memo: 20 an14 calculating pro-forma a2003 effort Margin Profit non-GAAP Income in financial of Total net the for Profit operat