Xerox 2002 Annual Report Download - page 4

We said we would drive selling, administrative and general
(SAG) costs down and we have. We reduced SAG costs by
six percent last year and implemented actions under the
Turnaround Program which will reduce our total cost base
by $1.7 billion.
We said we would return Xerox to full-year profitability and
we did. After absorbing $670 million of pre-tax restructuring
charges, we were able to report a return to profitability in
2002. All of our major operations were profitable for the
full year.
Over the past two years, we have reduced costs, improved
liquidity, stabilized our business, strengthened our business
model, invested in our future and laid out a plan to return to
growth and to provide value for our shareholders. But all of
us at Xerox are keenly aware that last year’s accomplishments
are yesterday’s news. The task before us now is to harness
our momentum and take Xerox to the next level of greatness.
We are well on our way.
Opportunities For Growth
Xerox has three strong opportunities for growth over the next
several years.
There is, of course, the production market which we lead and
which is growing at about two percent a year. It is expected to
reach $39 billion by 2006. Within that market, digital produc-
tion color – where Xerox has a commanding lead – is growing
much more rapidly at more than 30 percent per year.
A strong array of systems and solutions – led by the Xerox
DocuColor®iGen3™digital production press – promises to
dramatically expand the market opportunity for Xerox. There
is every reason to expect that we can grow faster than the
market as a whole by driving the “new business of printing”
in areas such as one-to-one marketing and print-on-demand.
Early customer response to our new generation of color
production technology has been very encouraging.
Our second opportunity is in the office – a market that is
relatively flat, but very large at $52 billion a year. Xerox is
entrenched in the office and we are competitively advantaged
in segments of the market that are growing the fastest. Three
examples: color in the office, digital multi-function devices
and value-added office solutions and services.
2
We said we would drive selling, administrative and general
(SAG) costs down and we have. We reduced SAG costs by
six percent last year and implemented actions under the
Turnaround Program which will reduce our total cost base
by $1.7 billion.
We said we would return Xerox to full-year profitability and
we did. After absorbing $670 million of pre-tax restructuring
charges, we were able to report a return to profitability in
2002. All of our major operations were profitable for the
full year.
Over the past two years, we have reduced costs, improved
liquidity, stabilized our business, strengthened our business
model, invested in our future and laid out a plan to return to
growth and to provide value for our shareholders. But all of
us at Xerox are keenly aware that last year’s accomplishments
are yesterday’s news. The task before us now is to harness
our momentum and take Xerox to the next level of greatness.
We are well on our way.
Opportunities For Growth
Xerox has three strong opportunities for growth over the next
several years.
There is, of course, the production market which we lead and
which is growing at about two percent a year. It is expected to
reach $39 billion by 2006. Within that market, digital produc-
tion color – where Xerox has a commanding lead – is growing
much more rapidly at more than 30 percent per year.
A strong array of systems and solutions – led by the Xerox
DocuColor®iGen3™Digital Production Press – promises to
dramatically expand the market opportunity for Xerox. There
is every reason to expect that we can grow faster than the
market as a whole by driving the “new business of printing”
in areas such as one-to-one marketing and print-on-demand.
Early customer response to our new generation of color
production technology has been very encouraging.
Our second opportunity is in the office – a market that is
relatively flat, but very large at $52 billion a year. Xerox is
entrenched in the office and we are competitively advantaged
in segments of the market that are growing the fastest. Three
examples: color in the office, digital multi-function devices
and value-added office solutions and services.
Declining Debt
as of December 31st
($ billions)
2000 2001 2002
14.2
0
2002
18.6
16.7
Cash on Hand
as of December 31st
($ billions)
2000 2001 2002
2.9
0
2002
1.8
4.0