Xerox 2004 Annual Report Download - page 3

Fellow Shareholders:
A
s I write this letter, I am enormously proud
of what Xerox people have accomplished
over the past few years; galvanized by the
opportunities we see immediately ahead of us;
sobered by the demands of the marketplace and
the strength of our competitors; and humbled
by the trust you have placed in us. Our goal is to
give you a good return on that trust – and that’s
precisely what we are all hard at work doing.
Proud of Our Accomplishments
Over the past four years, we believe we have put
together a rather remarkable track record. We
havejust about cut our debt in half, more than
doubled our equity, taken $2 billion out of our
cost base, strengthened our offerings, expanded
our distribution channels, articulated a clear
vision for the future, made the right strategic
investments, and consistently increased
earnings – building value for our shareholders.
Our progress in 2004 provided more
evidence that we are on the right track and
building strong momentum:
•Webrought 40 newproducts to market –
products that set new industry standards
for the creation of customer value and which
garnered some 230 industry awards.
•We were granted 525 utility patents in the
United States alone – a sign that our best
daysare ahead of us.
•Sales, administrative and general (SAG) costs
declined to 26.7 percent of revenue – the
lowest in years.
•Cash flow from operations was $1.8 billion.
•We reduced debt by another $1 billion.
•And we ended the year with a cash balance
of $3.2 billion.
The charts that accompany this letter tell
the story of a company that has returned to
good financial health. We deliver consistent
predictable results. We do what we say we will
do. We also realize that as good as we are today,
we must be even better tomorrow. So rather
than simply rehash the past, I want to take this
opportunity to share our plans for the future.
Poised for Growth
Asthe story of the Xeroxturnaround gets
written, I’m confident that it will say that while
we were focused on reducing costs, boosting
productivity and slashing debt, we were equally
focused on implementing a strategy for growth,
investing in our future and creating value for
our shareholders.
That strategy starts with spending a lot of
time with our customers. Manycompanies
preach that;we practice it. Someone just figured
out how much of my own time I spend with our
clients. The not-so-surprising answer is about
25 percent. All of my senior team maintains an
equally aggressiveschedule of customer
engagement. We estimate that some 80 percent
of our people have regular contact with our
customers. And one in five of our people work
on site in our customers’ places of business.
Why? Because we’re keenly aware that it
takes fivetimes as much effort and moneyto
attract a new customer as it does to keep an old
one. Even more importantly, we know that if
welisten to our customers – really listen – they
will tell us what we need to do to be successful.
What we learn permeates all our decisions.
And what we’ve learned is that our
customers don’t simply want our products – at
least that’s not how they express their needs.
1
Fellow Shareholders:
Anne M. Mulcahy,
Chairman and
Chief Executive
Officer