ceo anne mulcahy greater energy efficiency giving us their greatest vote of confidence – their...

Volume 3 | Issue 4 | October ’06

CEO Anne Mulcahy

Positive third quarter financial results ensure, among our many other initiatives, that we’ll continue to stay on the cutting edge of technology for our customers. Read more.

Greater Energy Efficiency

Xerox teams up two leading universities to pursue more energy-efficient products as part of a state funding initiative aimed at lowering the energy consumption of machines.Read more.

Security Summit Increases Awareness

How well are you protecting your intellectual assets? If you’re not sure, you may do well to attend a meeting of the Xerox Security Summit, free to Xerox customers.Read more.

Innovations Abound

Our fastest-ever desktop multifunction system. Software for better blogs and wiki pages. A Portal for submitting and buying print jobs online. Even carbonless and lightweight color paper.Read more.

“And the Winner Is…”

In the first half of 2006 alone, Xerox office devices have earned 146 honors and awards worldwide from leading IT testing and research organizations.Read more.

Global Citizenship Initiatives

As outlined in its first global report on citizenship, Xerox will provide The Nature Conservancy a $1 million grant and technical expertise to promote responsible forest management. Read more.

Millions of Americans Say “Thanks” to Our Troops

By visiting Xerox-sponsored www.LetsSayThanks.com, you, your family, friends, customers, suppliers, employees – anybody – can say “thanks” on colorful postcards to our troops overseas. Read more.

Case Study: Santa Fe Public School District

Xerox helps the Santa Fe Public School District maintain its high standards of service to its students and staff by improving the quality and efficiency of its print operations.Read more.

Scanning and MFP, Tune into Our Webcast

Designed for information technology professionals as part of our IT XChange Webcast series, our 27-minute video focuses on the many benefits of multifunction printers (MFPs).Read more.

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Letter from the CEOWe just announced our third quarter financial results, which include adjusted earnings of 23 cents per share. That’s up 28 percent year-over-year and a little ahead of our expectations.

Just about everywhere you look, our performance reflects the positive track Xerox is on to create value for all our stakeholders. Revenue and profit are up. Costs and debt are down. We’re producing healthy amounts of cash. And more and more customers like you are giving us their greatest vote of confidence – their business.

So all up, all in, it was another solid quarter for Xerox. You can find details on our third quarter results at http://www.xerox.com/investor.

Our positive performance means we can continue to make investments that enable us to stay on the cutting edge of technology for our customers. A few examples in the quarter are worthy of note:

•We made several announcements that strengthen our leadership in the production market including advanced finishing capabilities for the iGen3®andDocuTech180Highlight Color System and a dual-engine printer that sets a new speed record for two-sided, black-and-white cut sheet finishing.

•We launched the WorkCentre® 4150 for the office. It’s our fastest ever desktop multifunction device.

•We closed on the $175 million cash acquisition of Amici LLC, an e-discovery company that strengthens and expands our offerings in litigation-related document services.

•We announced the $54 million cash acquisition of XMPie, a leading provider of variable information software.

In a world of constant change, at least one thing is a sure bet. You can be certain that we will continue to invest heavily in creating value for our customers. You’re the reason we exist. We know that you have choices with whom you do business. We’re dedicated to giving you reasons to keep choosing Xerox.

In this issue of exchange, you’ll find articles on how we helped the Santa Fe Public Schools consolidate its printer resources and save money; new product offerings for small and medium businesses; a novel way to thank our troops overseas; our partnership with The Nature Conservancy; and much more.

As the name suggests, exchange is a two-way communications vehicle. We’d love to hear from you. If you have a comment, question, or suggestion, just click on feedback.

Thanks for your business. We all feel honored that you have placed your trust in us – and we’re focused on continuing to earn that trust.

Sincerely,

Anne M. MulcahyChairman and CEO

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Teaming with Academia to Explore Greater Energy Effi ciencyXerox’s pursuit of more energy-effi cient products has won support from New York State in the form of grants that will fund research aimed at lowering the energy consumption of machines and other devices. The research will be conducted with Clarkson University and Rensselaer Polytechnic Institute (RPI) as part of a $16.6 million state funding initiative aimed at developing new technology and supporting collaborative research among universities and industry. Expected to take several years, it will focus on developing a new class of materials that enable more effi cient thermal conduction.

Says Xerox Fellow Santokh Badesha, who will work on the research, “Both on the products a company develops and from an overall environmental stand-point, any effort to lower energy consumption has a positive effect. Making a better thermal conductor will benefi t not only Xerox but the industry at large.”

The funding includes two grants from the New York State Offi ce of Science, Technology and Academic Research as part of a $1.84 million grant package awarded to RPI and to Clarkson’s Center for Advanced Materials Processing. The two projects will focus on developing materials for energy effi cient color fusers and cold chargers.

Color fusers, used in products like the Xerox iGen3®Digital Production Press, tend to operate at high temperatures. Creating a material to help lower the temperature of fusers would prolong their life and overall make a machine more energy effi cient.

Cold chargers sensitize a photoreceptor prior to image exposure. Since cold chargers tend to consume signifi cant amounts of energy, developing one with new materials would reduce overall energy consumption.

The universities will work on developing the new class of materials while Xerox will assist with making the devices, testing them and integrating them into color products.

“These are industry issues that we’ve been struggling with for some time,” Badesha said. “The class of materials developed will have a wide range of applications and is an excellent example of our ability to capitalize on external R&D.”

Badesha’s commitment to innovation is paying off for him and for Xerox. Besides expecting his 150th U.S. patent award – a milestone few Xerox researchers have reached – Badesha also will receive an honorary Doctor of Science degree from Clarkson next year. The award will refl ect his fi fteen-year relationship with the university and honors his efforts to encourage innovation in academia through partnerships with industry.

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Xerox iGen3® Digital Production Press


So Far in 2006, Xerox Offi ce Devices Take Home 146 Independent Honors and AwardsIn the fi rst half of 2006, Xerox offi ce printers, copiers and multifunction systems earned 146 honors and awards worldwide from leading IT testing and research organizations including Buyers Laboratory Inc., Industry Analysts Inc. and Better Buys for Business.

Xerox received three “Pick of the Year” awards from BLI for the Phaser® 7760 tabloid color laser printer andtheWorkCentre® Pro 232 and 238 multifunction systems that copy, print, scan and fax. BLI conducts intensive competitive testing on document products, comparing overall performance, productivity, reliability and ease of use, among many critical factors.

“With our rigorous testing methods we put products through their paces,” said Anthony Polifrone, managing director, BLI. “Our tests show these Xerox products can be counted on for superior performance – providing remarkable ease of use while achieving high print quality and impressive print productivity.”

In the recent Tester’s Choice report, Industry Analysts Inc., an independent research and testing lab, selected the Xerox DocuColor® 250 color multifunction system as the best product in the Light Production-Color category. The DocuColor 250 was named “Best in Class” for its overall productivity, user interface and continuous tones.

In eight different buyers guides, Better Buys for Business honored 24 Xerox offi ce products with “Editor’s Choice” awards, which are independent endorsements based on the products’ quality, performance and value. The awards are based on the evaluation of hundreds of models from major competitors, feedback from customers, hands-on testing and in-depth user surveys. Xerox offi ce products receiving these awards include:

• WorkCentre PE120/120i multifunction systems •WorkCentre M118/M118i multifunction systems •WorkCentre/WorkCentre Pro 232 and 238

multifunction systems•DocuColor 240/250andWorkCentre C2424

color multifunction systems• FaxCentre® F110 workgroup fax machine.

For more information on Xerox products, visit www.xerox.com/tr/offi ce or call 800-ASK-XEROX.

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Phaser 7760

Docucolor 240/250


Webcast Explains Benefi ts of Scanning and How MFPs Achieve Effi cient ResultsBy eliminating the need to reproduce, fi le and retrieve paper documents, scanning can be indispensable to improving effi ciency and profi tability. Imagine, for example, having all your employee fi les prepared and arranged digitally in order to meet governmental requirements.

That’s why Xerox has produced Fast Track to Effi ciency and Compliance with Scan-Enabled MFPs, a 27-minute video available through Xerox’s IT XChange Webcast series. Designed for information technology professionals, the video focuses on the benefi ts of multifunction printers (MFPs), which are devices that print, copy, scan, fax and e-mail.

The video, free to Xerox customers and partners, features Joel Mazza, Director, InfoTrends/CAPVentures Network Document Solutions Consulting Service and stories from Xerox customers in the U.S. and Europe. Click here to view the video.

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How Well Are You Protecting Your Company’s Intellectual Assets?Earlier this year in Boston, Xerox kicked off its series of SecuritySummitsthatservetoincreasethe awareness of growing internal and external threats facing global, networked environments. A cogent example is the vulnerability to corporate espionage of digital fi les, and paper documents in particular, since almost 80% of attacks on a company’s intellectual assets come from people within.

During the conference, third-party security experts discussed organized cyber crime, the impact of negligence, the importance of policy enforcement, trade secret valuation and more. In addition, Xerox IT and product-security professionals explained the steps Xerox is taking to tighten security on its networked peripherals, to achieve rigorous security certifi cations, and to help companies attain greater levels of security through a wide range of consulting services. To learn more, click here.

Earlier this month, Xerox also announced a new software platform that expands the productivity and security of its offi ce multifunction printers. The Xerox Extensible Interface Platform™ is tailored to meet document-management needs in areas such as legal, fi nance and healthcare, providing an added level of security to protect personal identifi cation information.

This offering adds to Xerox’s rich portfolio of security-related technology, which also includes proprietary innovations like GlossMarks, DataGlyphs and Micro-Fonts. To learn more, click here.

The Xerox Security Summit will also be held in the following cities:

Chicago November 7, 2006 Phoenix November 9, 2006 Seattle February 13, 2007

For information on how to register for this free seminar, contact your sales representative or call 585-423-4588.

At the conference, IDC, a global provider of market intelligence and advisory services, provided views on the growing need for tightened IT security across corporate networks. To learn more about Xerox technology that can help you secure your assets and to read the IDC Opinion Paper, click here.

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Information is the currency of the Internet age.


Xerox’s Fastest Desktop Multifunction Printer, Starting at $2,199For small businesses and large looking to print, copy, scan and fax, Xerox has introduced the WorkCentre® 4150 multifunction system, its fastestever.

Starting at $2,199 and with speeds up to 45 pages per minute, the WorkCentre 4150 is the fi rst Xerox multifunction product in its class to be sold through reseller partners and other channels, thereby serving a broad base of customers.

Capabilities include ID Card Copy, which can copy both sides of an identifi cation or insurance card onto one page in fewer steps than any competitive product. And for an added level of security, the WorkCentre 4150 offers network authentication by requiring user names and passwords for scan, e-mail and fax.

Step-by-step network installation and a simple touch-screen interface make it easy for offi ces to set up and maintain the printer, with or without dedicated IT support.

Flexible, Affordable Cost-per-page Pricing Program for ResellersXerox has also announced two additions to its portfolio of channel offerings. PagePack™, a cost-per-page pricing program, allows resellers to offer fl exible, affordable monthly service and supplies contracts based on how many pages their customers print. The program lets businesses predict their monthly printing and copying costs more accurately while eliminating the cost of stocking supplies.

In addition, the WorkCentre™ 7132 color multifunction system is now available through the reseller channel.

The WorkCentre 4150 is available worldwide through Xerox resellers, distributors, authorized sales agents, dealers, direct sales representatives and concessionaires. It is also available at www.xerox.com/direct and at 800-ASK-XEROX. PagePack is available immediately to authorized resellers on select Xerox Phaser®printersandWorkCentre multifunction systems.

For more information about Xerox offi ce products and services, visit www.xerox.com/tr/offi ce or call 800-ASK-XEROX.

Latest Innovations Cover a Range of Capabilities

WorkCentre 4150

WorkCentre 7132

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New Tools to Help Developers Customize DocuShare Software for Blogs, Wikis and MoreXerox recently launched new tools that make it easier and faster for software developers to customize Xerox’s DocuShare® Enterprise Content Managersoftware for tasks such as personalizing blogs and wikis and using Extensible Markup Language (XML) technology to update and process business forms automatically for repeated use.

Developers, solution providers and IT managers can now customize the look and functions of DocuShare 5.0andDocuShare CPXenterprisecontent-management software and create advanced workfl ow applications. For example, developers can manage, update and personalize a company’s DocuShare blog and wiki pages by using a series of templates, which include photos, company logos or other graphics and content. These templates ensure consistency by providing a layout and guide for departments and individuals who want to create their own blog or wiki pages.

In addition, developer’s can save people time by creating customized XML-based templates so that content within existing Word or Excel documents can be repurposed and automatically reused in routine offi ce forms.

DocuShare 5.0 is available through Xerox direct sales representatives, agents, resellers, dealers, Xerox DocuShare Business Partners and TeleWeb sales. DocuShare CPX is available through Xerox direct sales representatives; select global systems integrators, Xerox DocuShare Business Partners and TeleWeb sales.

For more information on DocuShare, which was honored as “Best Document Manager” in InfoWorld magazine’s “2006 Technology of the Year Awards,” visit www.xerox.com/docushareorcall 800-735-7749.

Workfl ow Software Helps Print Providers Profi t from Jobs Submitted via the WebA “Web-to-print” Web portal that allows print providers to submit and buy print jobs online is among the key upgrades to Xerox’s FreeFlow® Digital Workfl ow Collection, a set of six integrated software tools that streamline how print jobs are handled.

With FreeFlow Web Services 5.0, print providers can:

• Host personalized Web landing pages, from which key customers can upload and select print jobs.

•Simplify the print process by automatically processing job specifi cations and transforming them into a ready-to-print job ticket.

•Strengthen customer interactions with instant quotes and e-mail notifi cation of job status, 24/7.

•Streamline production processes. Combined with other FreeFlow products and JDF-enabled systems, Web Services creates “no touch” printing, through which a job can move from submission to print to fi nishing without operator assistance.

•Permit buyers to select and view cataloged print jobs and templates to produce personalized documents.

•Quickly upload fi les, view a PDF proof before printing, and pay online with a credit card or purchase order through a familiar “shopping cart” process.

The Xerox FreeFlow Digital Workfl ow Collection is available worldwide. For more information, visit www.xerox.com/freefl ow or call 800-ASK-XEROX.

Latest Innovations Cover a Range of Capabilities (cont’d)


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Improved Carbonless Paper and the Industry’s Lightest Digital Coated PaperSpecifically for compatibility with the Xerox iGen3®Digital Production Press at up to 100 pages per minute, Xerox Premium Digital Carbonlesspaperis for commercial and quick printers and in-plant operations to produce colorful multi-part bank statements, invoices and claims forms.

Xerox has also introduced the industry’s lightest-weight digitally optimized paper for high-volume color printing. Now available in 60-pound text, Xerox Digital Select Gloss is a super smooth paper featuring an exclusive coating.

For magazine pages, marketing brochures, catalogs and children’s books, print providers can now experience a 20% increase in pages per inch while reducing bulk and saving on postage.

For more information on these and other Xerox supplies, visit www.xerox.com/supplies.

Latest Innovations Cover a Range of Capabilities (cont’d)


In a major initiative to improve the responsible management of forests that provide the raw materials used to produce paper, Xerox will provide The Nature Conservancy a $1 million grant from the Xerox Foundation as well as the technical expertise of its people. This and other news about the company’s citizenship activities are featured in Xerox’s fi rst global report on citizenship, recently released.

The report is a summary of Xerox’s priorities and current initiatives for citizenship including:

• Recent membership in the Electronic Industry Code of Conduct, which identifi es appropriate standards of conduct for companies that do business in the electronics industry.

• Customers’ Privacy Rights and Xerox’s compliance and governing activities with global regulations including the European Directive on Data Protection, the Personal Information Protection and Electronic Documents Act of Canada, and the U.S. Information Protection Act.

Nature Conservancy Partnership but One of Many Global Citizenship Initiatives

• Actions Xerox continues to take to minimize its impact on the environment, such as:

– Product remanufacturing and recycling, which diverted over 100 million pounds of material from landfi lls in 2005

– Engineering all eligible Xerox products in 2005 to meet ENERGY STAR® effi ciency criteria

– Working to reduce Xerox’s global greenhouse gas emissions by 10% by 2012 from a 2002 baseline.

• Xerox’s U.S. employee diversity representation and the steps taken to nurture a global culture of diversity, inclusion and equal opportunity.

• Contributions to the communities where our people work and live through philanthropic giving, educational programs and employee volunteer activities.

As noted in the report, one of Xerox’s stated goals is to lead in all aspects of social responsibility, including:

•Environmental•Diversity programs•Community outreach• Corporate governance

“In a world of necessarily complex and varied metrics, one stands taller than the rest,” wrote Xerox Chairman and CEO Anne Mulcahy in the report’s letter to stakeholders. “Each generation of Xerox people strives to leave the company, the communities in which we do business and the world at large better than we found it. We all feel that we are part of an ongoing experiment to demonstrate that good business and good values are not only compatible but synergistic. You will fi nd that theme running throughout this report.”

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Xerox’s partnership with The Nature Conservancy represents just one of the many ways that Xerox is translating its citizenship priorities into action. The $1 million grant to The Nature Conservancy will be used to establish a Forest Data Center for Canada’s boreal forest. It will strengthen third-party forest certifi cation standards, identify best forest biodiversity management practices and communicate them broadly with forest managers, paper suppliers and others around the world. The intent is that the work not only will benefi t the boreal forest, but will also have far-reaching benefi ts for forests in Indonesia, Brazil and other parts of the world.

Nature Conservancy Partnership but One of Many Global Citizenship Initiatives (cont’d)

Founded in 1951, The Nature Conservancyisone of the world’s most respected conservation organizations. It works in all 50 states and more than 30 countries and is credited with protecting more than 117 million acres of land and 5,000 miles of river.

The partnership between The Nature Conservancy and Xerox will put into practice the common belief that sustainable development is not only possible, but essential.

For more information about Xerox’s environmental and citizenship activities, visitwww.xerox.com/citizenship.

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Americans Send Personalized Messages through www.LetsSayThanks.comIt’s not every day that America comes together for a single cause. Yet within three short months of its launch, more than 4 million Americans have sent free personalized messages of support and encouragement to our troops overseas by visiting Xerox-sponsored www.LetsSayThanks.com.

What started as onsite local card drives has become a national phenomenon. Messages from mothers, fathers, children, grandparents, friends and veterans range from brief words of encouragement to shared family stories of their loved ones currently serving.

Printed on Xerox iGen3® Digital Production Presses, the colorful postcards are mailed in care packages by the military support organization Give2theTroops®.

Xerox Website Lets Millions Say “Thanks” to Our Troops Overseas

Saying Thanks Can Enhance RelationshipsLet’s Say Thanks provides a unique opportunity for you and your employees to interact with us on a more personal level. Many of our customers are teaming up with us to distribute these postcards, which feature a range of children’s artwork, to their clients, friends and colleagues. What better way to boost morale and build relationships with partners, customers and vendors than to provide them with a way to support our troops? Before an event or meeting, ask your Xerox representative to provide you with plenty of blank postcards,

Encourage your family, friends, customers, and civic groups to visit www.LetsSayThanks.comandsendacard, for free.

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Soldiers holding items from a Give2TheTroops® care package, including a Let’s Say Thanks card.

Members of the 149th BCT, U.S. Army from Louisville, KY hold postcards from the Let’s Say Thanks program.


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WorkCentre Pro

The Customer

With more 12,000 students, grades K-12, the

Santa Fe Public School District covers 28

schools in greater Santa Fe, New Mexico. Its

mission is to provide every student with a

high-quality education in a system devoted to

equality, diversity and social justice in a safe,

caring, respectful environment. Its expectation

is for every student to graduate.

The Challenge The District was facing rising print costs on a variety of the schools’ existing ink jet printers, for which it had multiple contracts and accompanying invoices. There was also increased demand on its help desk from users needing direction on everything from clearing printer jams to replacing ink jet cartridges as well as escalating costs of replacing ink jet print cartridges.

The SolutionAt the District’s request, Xerox conducted a thorough assessment to understand the existing printer population and how teachers and other employees were using the printers. Since most of the printers were not networked, Xerox recommended a solution for the entire District that included networked WorkCentre Pro® multifunction devices that print, copy, fax and scan, and a number of Phaser®8500solid ink color printers. The comprehensive solution included a full-time DocuCare assistant with the responsibility to monitor the printers, keep supplies refreshed and help users with applications.

Case Study: Signifi cant, Budget-friendly Upgrade to School District’s Printing Capability

The Benefi tsThe District cut the old printer population in half while it provided other print solutions that were previously not available, including fax and scanning. The District is now able to manage the printer resources to keep up with the changing demands and has added color printing that is affordable. Bringing all of the services and devices under one contract also has meant the District receives only one monthly invoice.

“Xerox was able to provide a robust, affordable solution to our printing dilemma,” observed John Phaklides, Director, Information Technology for the District. “We have improved our print quality, lowered print costs and drastically reduced our maintenance and support costs. With the continuing trend of smaller budgets for school districts,” Phaklides continued, “this was truly a solution that reduced our budgetary needs without compromising services to our staff and students.”

WorkCentre Pro


We want your feedback. To make your job as easy as possible, we’re committed to providing you with the most timely and useful information about Xerox. Please take a moment to let us know what you think of exchange by sending us an e-mail. Your comments, which will be held in the strictest of confidence, will help improve content and style and spur ideas for future articles.

Feedback

You may contact us through our Web site or call 800 ASK XEROX ext. 26397

© 2006 Xerox Corporation. All rights reserved.

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