Paul Allaire Quotations

We have more significant issues than we previously anticipated, ... We're confident about a turnaround, but the timing is clearly later.

We're looking across the board at asset dispositions. We are talking about very significant asset dispositions to (try) to improve the strength of the balance sheet,

This leadership transition is consistent with the Board's plans developed last year when I returned as CEO and Anne was named president and COO. The plan called for a gradual transition of leadership with Anne becoming CEO when the Board was confident of the effective execution of Xerox's turnaround. Clearly, this requirement has been met.

This was a difficult but necessary decision that is consistent with our resolve to execute an effective turnaround by focusing on core office and production growth opportunities, ... While Xerox was engaged in active discussions with potential equity partners, the slowdown in the economy and its impact on the PC and SOHO markets prevented these companies from making what was once considered a compelling investment in Xerox's SOHO business.

Clearly, the fact that our current expectation on the second quarter is less than we anticipated ... our recovery is pushed back in time. We do expect the turnaround to be there and be significant and therefore have an improvement in the second half and have good momentum going into 2001.

Xerox's performance in the first quarter is evidence of significant cash and operational improvements as well as the effectiveness of our turnaround strategy,

Xerox can now continue to focus on effectively executing its turnaround strategy, which remains on track,

After serious deliberation, the Board of Directors chose to eliminate the dividend -- a decision that contributes to the progress Xerox is making in restoring its financial strength and helps to provide the flexibility required to build on the effective execution of its turnaround plan, ... As Xerox returns to profitability, the Board will consider the reinstatement of dividends.

We expect an earnings recovery in 2001 ... by strengthening our operations, improving our strong product offering and through significant cost reductions. We expect to achieve this, even if the economy and competing environment preclude any revenue growth in the year.

This is all about execution. This management team is totally committed to advancing our business strategies. Rick's directions and initiatives were, in fact, right.