Anne M. Mulcahy – Chairman of the Board & Chief Executive Officer Ursula M. Burns – President & Director Lawrence A. Zimmerman – Chief Financial Officer & Executive Vice President

Shannon Cross – Cross Research Richard Gardner – Citigroup Mark Moskowitz – JP Morgan Keith Bachman – Bank of Montreal Chris Whitmore – Deutsche Bank

Welcome to the Xerox fourth quarter 2008 earnings release conference call hosted by Anne Mulcahy, Chairman and Chief Executive Officer. She is joined by Ursula Burns, President and Larry Zimmerman, Executive Vice President and Chief Financial Officer. During this call Xerox executives will refer to slides that are available on the web at www.Xerox.com/investor. At the request of Xerox Corporation, today’s conference call is being tape recorded. Other taping and/or rebroadcasting of this call are prohibited without the express permission of Xerox. After the presentation there will be question and answer session. (Operator Instructions) During this conference call Xerox’s executives will make comments that contained forward-looking statements which by their nature address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein. At this time I would like to turn the meeting over to Ms. Mulcahy. Anne M. Mulcahy: We’re going to begin with Slide Four and before I get in to the results of the quarter here’s a look at the dynamics we’re facing, the fundamentals of our business that give us confidence in our models and the actions we’re taking to help offset the challenges in the economy. The continued weakening economy and rapid shift in exchange rates put pressure on our business in the fourth quarter. The impact on earnings was largely due to the strengthening of the Yen and deteriorating developing market economies particularly in Russia and Eastern Europe which started in the later part of the quarter. Within increasingly widespread economic concerns we are finding that more of our customers and partners are scrutinizing investments which is delaying decisions on major contracts. In addition, our distributors are reducing inventory of supplies creating an impact on wholesale revenue this quarter. Despite this challenging market place our business model delivered $265 million in adjusted income for the quarter or $0.30 adjusted EPS. The basic fundamentals of our operations continue to deliver solid results giving us flexibility in these uncertain times and strengthening our competitive position. As you all know, more than 70% of our revenue comes from our post sale. We track the success of this annuity extreme by closely managing the metrics that drive it including MIF or machines in field which is the number of Xerox systems in the marketplace. The better our MIF the more pages printed on Xerox systems, especially color pages and these metrics continue to be positive. Our growing services business also flows through the post sales. With a value proposition that helps customers reduce costs we are getting more and more interest in our outsourcing and other document services. We’re consistently generating solid cash flow while containing our capital investments. We generated $1.7 billion in adjusted cash flow from core operations and $1.36 adjusted free cash flow per share in 2008. These fundamentals will continue to serve us well. While better positioned than most we certainly have not been immune from this environment. We’re taking swift actions to help improve earnings while maintaining investments to drive growth. The fourth quarter restructuring will deliver $200 million in savings this year. In addition, we remain relentless in our focus on reducing costs and on generating cash. And, like others in our industry we’ve made price adjustments to better support our business model in this environment. We are not underestimating the seriousness of today’s challenges but we have a resolve that we know what to do and we will do whatever it takes to navigate Xerox through this period of uncertainty. We have an experienced management team that has been tested in the past and emerged a strong and confident group that knows how to take on challenges. Now, let me take a moment to review our Q4 results. Larry will then share more detail about our financial results. I’ll provide some guidance on the coming year and then Larry, Ursula and I will take your questions. Please turn to Slide Five for a summary of our fourth quarter performance. As I mentioned, adjusted EPS was $0.30. This excludes the previously announced restructuring charge of $0.27 as well as an equipment right off of $0.03. Currency had a significant negative impact on results this quarter on revenue as the dollar strengthened against the Euro and on margins as the strengthening of the Yen increased our product costs. Total revenue of $4.4 billion was down 10% in the quarter which included a five point negative impact from currency. Wholesale revenue was down 8% or 3% in constant currency. Again, this was largely due to distributors holding lower supply inventory levels as they prioritize cash at the end of the year. Equipment sale revenue declined 15% or 11% in constant currency, a reflection of weakened economies all around the world with especially significant decline in key development markets. I’ll talk more about this in a moment. But for some perspective consider that up until November our developing markets business was delivering double digit growth. The rapid appreciation of the Yen impacted gross margin. Excluding an equipment write off caused by the retirement of the product line, the decline is due to the strengthening of the Yen which increased our product costs. Selling, administrative and general expenses were 25.2% of revenue, up about a point from the fourth quarter of 2007 as we maintained our sales coverage investments to continue building on our industry leadership. Our cash flow remains strong, in the fourth quarter we generated $1 billion in cash from core operations excluding the net litigation payments of $615 million. We closed the year with $1.2 billion in cash and cash equivalents. Now, turn to Slide Six for a further review of revenue. The most significant revenue shift in the quarter was in our developing markets. Through the third quarter 2008 revenue from DMO was up 17%. In the fourth quarter revenue from DMO declined 14%. 11 percentage points of this decline is entirely due to major shifts in currency in several developing markets. Typically we can manage changes in currency through pricing yet this quarter the movement was so rapid and meaningful to our results that pricing couldn’t catch up so we’re calling it out separately. Exacerbating the situation was the rapid decline in the Russian and Eastern European economies. So, a very challenging external environment in developing markets clearly put unexpected pressure on our business. In production the weakening economy resulted in a 6% constant currency decline in total production revenue largely due to a slower demand for monochrome systems. Installs of production black and white systems declined 11%. Color installs were up in production. The benefit of a strong demand for the iGen4 and the Xerox 700 digital color press, both of which have only been available worldwide since September. In addition, we’re pleased with the demand for our color continuous feed system which just recently launched in North America. In the office, installs of black and white systems were down 18% which contributed to a decline in total office revenue of 5% in constant currency. Yet, like production, color was the highlight in the office as well. Installs of color multifunction systems were up 9% in the fourth quarter. We continue to lead the industry in the number of color pages printed and while fourth quarter revenue from color was flat in constant currency, color pages were up 23% and now represent 18% of total pages printed on Xerox technology. Color results exclude the benefits from Global Imaging Systems. Our document services helped business work faster and smarter with lower costs often saving our clients up to 30% on their document related needs. According to Gartner we hold the number one market share for managed print services for more of 50% of the total market. In Gartner’s highly respected Magic Quadrant report, we’re in the leaders quadrant for managed print services, and by the way, the same holds true for our multifunction printers. Ours services business benefits our post sales stream and provides multiyear contracts that generated $3.5 billion in annuity revenue in 2008, a 3% increase year-over-year. Services signings were up 6% in the quarter. Through our services and technology, much of what we do is aimed squarely at helping our customers cut costs and operate more efficiently and effectively so we remain confident that the value we bring to our customers can help them through this economy and can help us build on our industry leadership in document management. Now, I’d like to turn it over to Larry for a deeper dive on our financials and then I’ll return to discuss Q1 expectations. Lawrence A. Zimmerman: In my presentation this morning I hope to give you insight in to our fourth quarter results addressing both economic and business model dynamics. Lower demand and significant currency changes represented the economic challenges while the fundamentals of our annuity were stable and we had continued strong cash performance. Let’s start with fourth quarter and full year core cash generation, Slide Eight. In the fourth quarter we generated $1 billion of cash flow excluding $615 of net litigation payments. Full year core cash flow was $1.7 billion again, excluding the $6165 million. This represents $1.36 of adjusted free cash flow per share for the full year. Fourth quarter cash flow was driven by earnings as well as significant performance in working capital. Cash performance is the foundation of our annuity business model and our performance along with our investment grade credit rating positions us well in challenging capital markets. Coupled with our $2 billion revolver we have the ability to run our business and pay down debt with no requirement to access capital markets unless we choice to. Moving to investment, cap ex and internal use software were $91 million in the quarter and $335 million for the year, a relatively small percentage of our cash flow. Full year cash flow from financing is driven by reduction in secured debt by $227 million net proceeds on other debt of $926 million reflecting our accessing capital markets at attractive rates back in April, $812 million of share repurchase and $154 million of dividend. Ending cash was $1.2 billion. Last week we paid down $900 million of notes due reducing our debt by $500 million. So, overall solid cash and balance sheet performance which we expect will continue going forward. Slide Nine, adjusted earnings for fourth quarter were $0.30 and $1.10 for the full year. The adjustments on full year basis after tax, our restructuring charges of $240 million, litigation net of recoveries of $491 million and an equipment write off of $24 million. Adjusted gross margin for fourth quarter was 38.8% and 39.2% for the full year. The adjustment is for the $39 million equipment write off caused by our decision to retire a product line in the office segment. In addition, gross margin was negatively affected by the significant strengthening of the Yen versus the dollar and the Euro. This increased our costs in US dollars and reduced margin. At this point I believe it is prudent to assume currency exchange rates will remain where they are now going forward. [RD&E] declined $26 million and SAG declined $84 million including $68 million beneficial impact of currency. While SAG spending was down, bad debt provisions were up year-over-year. Adjusted operating income as a percent of revenue was 8.7% in fourth quarter and 8.4$ full year. So, although this year’s results were not what we challenged ourselves to, they did deliver about $1.5 billion of adjusted operating profit and drove $1.7 billion of cash in challenging economic times. Slide 10, on this next Slide I want to cover some key points as we look forward to 2009. First and foremost is cash generation on the top left and our debt ladder on the top right. Looking at full year 2009 cash flow, we start the year with $1.2 billion in cash on hand and expect to generate $1.7 billion core cash flow with uses of $300 million of cap ex and internal use software, $200 million for dividend. We expect to pay down $1.6 billion debt, our entire debt due in 2009 and we’ll have at the end of the year a cash balance of $800 million. $900 million of debt has already been paid on January 15th so in 2009 there is no requirement to access capital markets unless we see an opportunity that we want to take advantage of. Our $2 billion revolver and significant cash flow provides this flexibility. One last point, on the top right our debt ladder is designed to be significantly below our cash flow and is roughly $1 billion a year going forward. If we look at receivables we can see that the metric of write offs and provisions as a percentage of revenue is approximately 1%. The provision ticked up full year by $54 million or three tenths of a point. This was caused by some customer bankruptcies in the fourth quarter in the US, Germany and UK. So, although we did see a move consistent with the environment, we believe that our tight credit and collection processes are functioning well. Aging has not increased significantly, days sales outstanding has actually declined and we had very good collections in fourth quarter. However, from a conservative viewpoint, we are assuming this higher trend going forward. Currency, there are two kinds. Translation, a non-US country’s P&L converted to US dollars. For example Euros to US dollars. The dollar strengthening 15% since July ’08, a huge change. If it stays there we will have about a 5% to 6% negative impact on revenue for first half of the year. Second, transaction currency is the conversion of costs from a shipping country’s currency to the local country currency where the product is sold. For example, Yen converted to dollars and Euros. As you can see from the Slide we have had a significant strengthening of the Yen in the last few months, 23% against the Euro and 195 against the dollar. This raises our cost and reduces our gross margin. Our actions include price management, hedging, sourcing and currency cost sharing with Fuji Xerox. If the rates remain where they are it will continue to have a negative impact on 2009. Slide 11, now I want to spend a few moments on our post sale annuity since it is stabilizing factor in our model. It represents 73% of our revenue and although it declined 3% on a constant currency basis, the impact is relatively small and did not result from a significant change in our fundamentals, machines installed and pages. $65 million, two points or about two thirds of the decline was driven by lower supplies sold to our distributors as they managed inventory and cash in fourth quarter. Other areas of post sales, outsourcing and service and rental which totaled $2 billion and represent two thirds of the revenue declined very modestly. Color usage grew year-over-year while black and white declined slightly. We did see the normal seasonal growth in these revenue streams from third quarter to fourth quarter. Finally, we did not adjust for developing markets currency but it was significant in fourth quarter and cost us one percentage point on total post sale revenue. So, we are focused on the fundamentals of installing machines which generate pages and selling services. Let’s look at those results, Slide 12. In spite of economic challenges, our annuities score card is favorable. Digital machines in the field MIF and pages continue to grow 6% and 1% respectively driven by color machines in the field up 33% and color pages up 24%. The pressure on digital pages has been in black and white and we did see a decline in fourth quarter. The pressure on digital pages has been in black and white as I said and in addition the decline in DMO supplies had a negative effect on how we calculate their pages and this should improve in the future. Color now represents 37% of the total revenue, 22% of MIF and 18% of pages. The positive influence of color on price per page will continue to be an opportunity. Services annuity continues to grow at 3% as customers look to Xerox to help them reduce their cost by optimizing and simplifying their document infrastructure. As economic conditions and currency changes impacts our business, I believe that focusing on these fundamentals of our model will play out well going forward. Now, I’ll hand it back to Anne. Anne M. Mulcahy: So, as we head in to the first quarter we do expect that weak worldwide economic conditions as well as unfavorably exchange rates will continue to put pressure on the business. We will have the benefit of initial savings from our fourth quarter restructuring actions and continued cost containment as well as flow through from products launched in the second half of last year and the strength of our services business. With that, we’re setting first quarter guidance at $0.16 to $0.20 per share. The broader range reflects the implication of continuing currency pressures and a continuing weak economy. We believe that this is prudent approach in these uncertain times. We also believe it’s premature to go in to detail on full year guidance at this time. At the investor conference in November we provided a broad range of guidance for 2009 reflecting the uncertainty from the impact of currency. Considering the fourth quarter trends, our expectations are now based on assumptions of continued economic weakness and unfavorable exchange rates. With that, we expect to be at about $1 per share for the year at the low end of the range that we provided to you in November. Now, if you turn to Slide 15, we’ll do a quick summary then, we’ll take your questions. As I mentioned at the start of the call, the focus is on the fundamentals and ensuring we’re executing with precision not only to ride out the storm but to come through it stronger. To that end, we remain confident in the long term value of our business model. It delivers recurring revenue from multiyear contracts and generates strong operating cash flow. This is a team that knows how to manage the balance sheet with a close eye on the bottom line. We’re already implementing restructuring actions that will deliver more than $200 million in savings this year. As important our industry leading services, software and systems consistently deliver customer value and savings. Real dollars that mean even more in this economic climate. Our distribution reach through an extensive set of channels from retailers to Global Imaging to a network of sales agents, dealers and worldwide direct sales force that sell the broadest portfolio of products in the industry and continues to be a competitive advantage. We’re realistic about the challenges we face in this marketplace and we’re recalibrating our investments, priorities and expectations to focus even more on profitability and cash while delivering the innovation, service and value our customers expect from Xerox. In doing so we fully intend to be in an excellent position to capture market growth as the economies improve. I’d like to thank you for your time and now Larry, Ursula and I would be happy to take your questions.

(Operator Instructions) Your first question comes from Shannon Cross – Cross Research. Shannon Cross – Cross Research: I guess the first question Anne is can you talk a little bit about what you’re seeing in terms of usage by the end customer? So, there was inventory contraction in the channel on the supply side but, from a page volume standpoint just from the health of the end customer can you give us some ideas of some of the trends you’re seeing both in terms of color and black and white and just general page printing? Anne M. Mulcahy: Well, I think as you could see from some of the data that Larry presented, we have seen some deterioration in terms of percentage rates on black and white pages. I do think it’s important Shannon to mention that pages were up from Q3 to Q4 in total so this isn’t kind of an off the chart deterioration. We saw a seasonal uptick not as much as we would normally see particularly in black in white. In color, growth has stayed very strong and we’re very pleased with double digit growth in pages. That growth rate has declined a modest amount, not significantly, a few points but color pages stayed quite strong. I think the difficulty for us is that as we kind of try to deliver to you the page growth rate, the methodology makes assumptions in terms of supply purchase translating to pages. I think that methodology is a little broken right now because we saw the deterioration of inventories in channels that are not necessarily aligned with the actual pages being printed. When you see supply inventories going from six weeks to in many cases three weeks it’s hard to translate that accurately in to what exactly happened with page growth so we have a little bit of a question mark there. We know the pressure would have been quite serious at the end of the year particularly to optimize cash so we are hopeful that we’ll see a bounce back to more normal levels of pages as we enter 2009. I think it would be fair to say that what we see is some modest deterioration but nothing that is alarming in terms of the pages and I think we’ll have better intelligence as we come through first quarter where hopefully we see a little bit of bounce back that will be necessary in inventories. Shannon Cross – Cross Research: From a pricing standpoint can you talk a bit about pricing for equipment as well as pricing for pages? Obviously you talk about not being able to shift pricing in DMO but I’m just curious as to what you are seeing in Europe and the US in terms of both equipment and page pricing. Anne M. Mulcahy: In terms of equipment pricing, in the range 5% to 10%. I think it was probably right in the middle of that range, pretty square in the middle of the 5% to 10% range in terms of equipment discounting which actually moderated a bit from the first half of the year. So, no significant drop off in terms of equipment pricing. Pages, you know, very steady as you go. Color page pricing at constant currencies remained very stable. Obviously the mix helps us in terms of increasing the average price per page because of the more color pages you get in the mix. So, that would have been a helper not a hurter. Perhaps not to the extent it had been in past quarters but it’s positive. So, nothing on pricing that is really significant. I think the biggest issue for us is what we saw happen to the Yen in the last six weeks of the year clearly created a problem in terms of being about to use pricing to offset that impact. Hopefully, over the course of the year we’ll be able to get a little bit more pricing help than we were in the fourth quarter. Shannon Cross – Cross Research: Larry, one question for you on working capital improvements in 2009 and your comfort level in obtaining the $1.7 billion in cash. Obviously, you did it this year in a little bit better of an economy so how should we sort of think about cash generation in 2009 in what is apparently – it’s getting bad if you listen to GE or anybody right now. So, how do we think about your comfort with your cash flow generation for this year? Lawrence A. Zimmerman: A little bit of what I said at the investor conference, I think we start off and just because of what you said which was a tough economy that working capital has to be something that we spend a lot more time on, not that we haven’t in the past but we just have to make sure that collections and inventory growth don’t happen. So, normally what you see is an increase in working capital from fourth quarter to first quarter and we’re going to make every effort we possibly can to flatten out that whole curve as we go through this kind of a downturn. To answer it, I’m confident that we can make the $1.7. We’re going to make it may be slightly differently than we had planned for originally but, nonetheless we’ll get there.

Your next question comes from Richard Gardner – Citigroup. Richard Gardner – Citigroup: I have a couple of questions, first of all Larry and Anne I was hoping you could help us understand how quickly margins can rebound as some of the things you mentioned that help you manage currency kick in? In other words, how quickly to you think things like currency sharing kick in with Fuji Xerox and how quickly can you adjust prices under your current long term contracts? Anne M. Mulcahy: As we look at our agreements with Fuji Xerox on currency sharing and we’ve discussed this in the past, they do happen in arrears and they are a sharing agreement, they don’t offset the entire impact of negative currencies but we should see some help certainly beginning in this quarter based upon the impact that we saw in Q4 which literally had no shade at all and cost us much more than we had anticipated at the investor conference. So, we’ll see some help there. Obviously, half of the restructuring we announced was focused on gross margin improvement but the dynamics of that will be more second half versus first half loaded because of the cadence of the actions. So, that will be more of a second half approach. I think on the pricing side we have certainly some ability under contracts to influence pricing but its I think more important as we think about the equipment transactions going forward that are impacted by the cost of the Yen that we try to recover as much as possible there. Obviously, most of our competitors are Japan based competitors so there’s somewhat of a level playing field here as we think about the impact of the Yen piece. So, we clearly as we’ve given you guidance for 2009 have mitigated the full impact of the Yen with what we think is a reasonable approach of actions we can see flow through. Richard Gardner – Citigroup: Anne, it sounds like what you’re saying is that we really shouldn’t expect pricing to change a lot under current contracts but you’re going to be changing the pricing as contracts come up for renewal. Is that the right way to think about things? Anne M. Mulcahy: Yes. And, I think on new transactions, there’s certainly some ability in current contracts but where we’re really getting hit is clearly on the new transactions which are being impacted by the current cost economics of the Yen. So, this is equipment in transit from Japan now that’s having a huge impact. You could see it in our equipment gross margins for the fourth quarter which declined I think almost three points, it was a significant decline that was due to the cost implications. So, that’s really what we’re focused on to try to get the most relief on. Richard Gardner – Citigroup: Just as a follow up, I know that you mentioned that color page growth was still double digits in the quarter but it did look like it decelerated pretty dramatically based on the full year number of 24% that you talked about and the 29% that you had in the first three quarters it looked like it could have been low double digits maybe 10% to 12% in the fourth quarter. Can you talk about how much of that deceleration from Q3 to Q4 was related to the inventory correction in distribution and how much was related to reductions in usage by your end customers. Anne M. Mulcahy: I think as we looked at it we saw the total color pages, did as I said, moderate some in terms of growth rate. I mean if you looked at Q3 you’d see 23% growth of pages, in Q4 18% growth in pages but, interestingly enough when we use to report pages we did not include DMO primarily and printers as well and if you looked at our fourth quarter pages, just for Europe and North America that was a 23% growth. So, the implications of that say DMO was the major factor in terms of that dip which clearly is driven by a two tiered distribution system where inventorying of supplies is a critical factor. So, I would say that truly would be the primary cause for the deceleration of growth on color pages. Lawrence A. Zimmerman: But, it was still 18%.

Your next question comes from Mark Moskowitz – JP Morgan. Mark Moskowitz – JP Morgan: Anne, can you talk maybe a little bit about the DMO and just the brick regions in general? It’s kind of a long winded question but here we go, I’m trying to get a sense in terms of the dramatic slowdown you’re seeing, how much of that is based on domestic customers in terms of corporations that are based or domiciled in those regions versus foreign investment in terms of US or European companies that have been investing in those regions over the past few years. Anne M. Mulcahy: I should say probably as we look at the brick companies, the biggest impact to Xerox would be Brazil and Russia where we have sizeable high growth businesses. India is a relatively small business for us so although conditions there certainly are not great, I wouldn’t say it’s had a dramatic impact overall. As you know China, we only see either the risk or the benefit through our equity relationship with Fuji Xerox. So, as we look at domestic and foreign investment I think you have to look and say first of all in Brazil it was less activity driven, it was more currency driven. So, the Real was really the primary issue in Brazil. Although there was some economic decline it was not as radical as it was in Russia. In Russia it was clearly economic driven major deterioration. Literally, we didn’t see it until the second half of November so a dramatic shift in Russia. I don’t think I would point to either domestic or foreign investment as being disproportionately responsible. We do a very, very large small and medium size business in Russia which would be more I would say domestic oriented business yet, a big player with multinationals as well. So, I would not point and say there was any significant difference there. I would say though to very different situations Brazil’s being more currency driven and Russia’s being more economy driven. Mark Moskowitz – JP Morgan: As far as just the revenue run rate profile, how should we kind of contemplate the next couple of quarters in terms of do we see a continuation of the double digit year-over-year decline? I think based on Larry’s commentary in terms of the currency hit continuing and hurting ’09 it sounds like we should be more or less still factoring in the 10% to 12%, maybe 13% year-over-year decline in the first quarter or two. As what point will you have to cut more costs? Where are you in terms of accessing the working capital and where you are? Anne M. Mulcahy: Well, we almost need to separate it in to actual and constant currency discussion because actual currency based on our assumptions, that will have a big impact. For example, as we look at equipment sale revenue primarily impacted by the Euro we would say for the first half of the year if you looked at just the spot rates from December 31st we would see a five to six point impact on the revenue picture just based upon currency. So, that will see the pressure but clearly it will be more currency driven. I mean if you looked at that and said where are we, we’ve been seeing kind of what I would call a mid single digit decline in equipment sale revenue due to pricing investment. We think that will continue but combined with the currency impact you can see double digit decline in equipment sale revenue and still be quite frankly on trend with regard to our activity which is obviously where we are most concerned in terms of the impact on post sale revenue. Post sale revenue we actually feel we’ll see some resiliency, particularly if we are correct and there does have to be some normalization if you will on the inventories that we saw really go in to radical decline in December. So, as we look at things like our population, our machines in field, those were up 4% in December, really important. We talked about 18% color page growth. Our services business continues to be strong and quite frankly our signings indicative of kind of low through in to the following year are up very nicely as well. So, when you look at services, you look at color, you look at population all of those play well for our post services. We think there will be some business impact because certainly things like GDP and unemployment have some impact on business volumes but quite frankly that should be moderate based upon the percentage of under contract revenues that we have in post sales. So, we would expect some improvement in post sales. So, all in all I think we’re being realistic in terms of saying, yes revenues are going to be under pressure assuming nothing gets better in terms of economies but some moderation particularly in the post sales side. Mark Moskowitz – JP Morgan: I have one more question here for Larry and then I’ll jump back in to the queue. Larry, can you talk a little about the tax rate? I think heading in to 2008 more or less you were guiding to around I think 30% tax rate and you had different one-time items and benefits to help ’08. Now, you’re guiding back up for 2009 to 28% so a pretty big jump up there. Can you talk about how confident you are for that 28% holding or do you see some legislation or other [inaudible] types of shifts in terms of your revenue profile that maybe can bring that tax rate down over time. Lawrence A. Zimmerman: I think the tax rate, what you’re forecasting here is the profitability of every country and the tax rate associated to it. So, the complexity plus tax credits and all of that so the preciseness of the number is difficult to say in the least. This year it was below what we called mainly because of less revenue and profit in the United States and more in lower tax countries in the DMO area. The expectation is that given the results of DMO that we see and the change in business and currency there is that you swing back more towards the United States and the United States has the highest tax rate so you end up, our estimate is 28%. Again, that could swing and hopefully we can beat that tax rate, we certainly try. But, that’s what I use for planning purposes so that’s what I give to you for planning purposes.

Your next question comes from Keith Bachman – Bank of Montreal. Keith Bachman – Bank of Montreal: Larry, I wanted to go back to cash flow for a second if I could. In the Slide that you lay out on page 10 certainly I think the objective that you’re laying out is one that investors applaud as deleveraging. Yet, if I look at the cash flows in FY ’08 taking out cap ex you did about $1.22 billion in free cash flow. So, if I look at FY ’09 you talk about cash flow $1.7 even as earnings just rough estimate will be down 10% compared to ’08. So, how is it that cash flow goes up in ’09 given those set of circumstances? Lawrence A. Zimmerman: Well, the way I look at it – I mean, you took one number out of one number and you didn’t take a number out of the other number. Keith Bachman – Bank of Montreal: So maybe it’s a definitional issue but, Larry are you suggesting that you’re not going to have cap ex in ’09? Lawrence A. Zimmerman: No, I’m not suggesting anything. I think I put it on the chart actually. Anne M. Mulcahy: But, we’re not having litigation in ’09. Keith Bachman – Bank of Montreal: I put the $615 back in. I see the cap ex is $300 million there and the dividend stays put but what I’m suggesting is if I talk out the operating leases and finance receivables, I think is the difference but let’s just start with the premise that it’s flat Larry, how do you think you get to flat free cash flow when net income is going to be down even by your own guidance? Lawrence A. Zimmerman: I reduce working capital. Keith Bachman – Bank of Montreal: Any confidence associated with that? Lawrence A. Zimmerman: High confidence. Keith Bachman – Bank of Montreal: Just two related questions then, I think at your analyst day you talked about ceasing or slowing down the buyback. It certainly showed up here, I assume that’s still the case given the environment has gotten a little more challenging? Lawrence A. Zimmerman: Yes, right now we have no plans to buy back shares unless the capital markets change.

Your next question comes from Chris Whitmore – Deutsche Bank. Chris Whitmore – Deutsche Bank: First for Larry, I wanted to follow up on the last line of questioning around expected cash contributions to the pension this year and can you give us an update as to where the overall pension finished and expectation for pension expense this year? Lawrence A. Zimmerman: At the investor conference we said that pension expense would be up 50 and we said cash contribution would be up 50. In both cases it will be less based on the current assumptions. Congress passed the smoothing of the stock market affect, discount rate is about where it was there which was year-to-year is an improvement in both expense and cash contributions. So, I think we actually could get a little help on the cash side from pensions. On the expense side I think it will still grow but not as much as we said. Chris Whitmore – Deutsche Bank: Larry, how much cash do you need to run the business? Lawrence A. Zimmerman: Well, it depends what day, what month. We like to end quarters above $600 million. We’ve consistently ended quarters at around $800 million. We feel that we could run the business with a quarter ending $600 million. There’s not a huge variation within a quarter, it’s not wild swings so we feel that’s adequate to run the business. Chris Whitmore – Deutsche Bank: Larry, just looking at the math for Q1, you typically use a little cash in Q1 plus you’ve paid down the debt already in January. My math suggests that you’ll get below that level and tap the revolver here in the first half of the year. First, is that accurate? Secondly, are there any covenants related to that, that we should be aware of that are approaching relevance? Lawrence A. Zimmerman: Well, you should be aware of them, that’s public information so you can get what the covenants are [inaudible] exactly. We have cushions in those so they are not relevant to the discussion right now. First quarter I expect us to grow cash flow, that’s my expectation. We will use the revolver. Anne M. Mulcahy: We will use the revolver. Lawrence A. Zimmerman: We use the revolver now. Look back at last year when we bought Global Imaging we used the revolver at that same time. We use it to go through quarters and by the end of the year it’s mostly paid down. I think the important point here is that if we look at the cash flow that we project which I have a high confidence in, we look at cap ex and we look at our debt payments and our revolver. We have no requirement to go to capital markets unless we want to and we can pay down if we choose to the whole $1.6 billion of debt due this year. Chris Whitmore – Deutsche Bank: One question on gross margins, Larry in the past you’ve talked about 39% to 40% kind of gross margin expectations. Are you still comfortable with that number for fiscal ’09? And secondly, can you break out or quantify the impact of the Yen year-on-year on that gross margin? So, how much of that three points of equipment deterioration in the gross margin was related to the Yen versus other factors? Lawrence A. Zimmerman: We’re saying most of it was caused by the Yen number one. You can do estimates of what it’s effect was. We said it was going to be $0.02 to $0.03, it was above that by at least a couple of cents and it will have an effect on gross profit margin to take it down in the 38% range because you just can’t react to it that much [inaudible] quarter a year. So, we expect the range to be in the 38% to 39% going forward for the year at least. Anne M. Mulcahy: And that’s comprehended obviously within our guidance for sure. But, just to reiterate I think the vast majority of the margin deterioration once you kind of take out that write off that we highlighted was related to the Yen issue, the cost issue and that’s not going to go away although we’ll moderate it over the course of the year.

.: Shannon Cross – Cross Research: Just a couple of questions for you, the first one is we’ve talked a lot about Xerox and obviously all the issues you guys are facing in the industry. I’m kind of curious as to what you are seeing in terms of the competitive landscape because obviously I have a feeling things are hurting others. Have you seen market share shift? How should we sort of view what’s going on, on the competitive side of things? Anne M. Mulcahy: Let me begin and then Ursula you may want to jump in. I think if we look at market share the last information we have is kind of the Q3 update Shannon and we were pretty pleased. We held or gained share in almost all categories. A little bit of pressure on entry production color due to the Canon device, and by the way that was pre the 700 so we feel we’ve got a lot of ammunition to come back on that one but I think we will see that we’ve held or gained share in most of the segments. This is not a question of losing to the competition. We feel we’re certainly winning more than our share. We’ve not seen anything unusual in the pricing environment, nothing really crazy there. I don’t know, at the high end production or office Ursula anything unique? Ursula M. Burns: I think the area to point out are in high end color, our iGen4 full quarter of availability. We got it to the market in September and it has done extremely well, it’s done very well, iGen3, iGen4, a really good mix towards the high end of the speed range so we’re pleased with the production color space. Anne talked about the 700 also to the market full in September and we are seeing extremely good activity there as well. Continuous feed color and black and white, still a small part of our business but we are definitely taking share in those two segments as well. Black and white we remain a share leader in the production space and gained space in the office space. I think from an activity standpoint you can see this is MIF and in pages, activity standpoint we’re doing good against the competition. Anne M. Mulcahy: We actually walked out of the year with nice backlogs in the 700s and iGen4 which is terrific. Shannon Cross – Cross Research: Maybe that’s a good segaway to just sort of talking about the backlog, how you feel about business. I know you said things are slowing in terms of the decision but anything you can give us in to sort of what plays in to the decision making of your customers right now? Anne M. Mulcahy: Well, I think what we’ve said was that certainly color remains quite good and certainly the hot products 700 and iGen, we’re seeing very healthy backlogs on. We also talk about services signings up in the fourth quarter and fourth quarter last year was really strong so we were very, very pleased with that. So, overall I think although there’s no question time to decision is a major headwind in terms of the hurdle rates for decisions these days. We think we’re winning more than our fair share and clearly feel good about where Xerox is positioned in that the strength of the services business in this economy is a very big deal. Our enterprise print services offerings are absolutely driving a lot of our services contracts right now. I think we have segments, color particularly that are strong and services which are strong which are offsetting a little bit of the weakness in the black and white world. Ursula M. Burns: One additional add here Shannon is that our product introduction cadence for 2009 will continue to be strong, as strong as it was in 2008 so we believe that positions us well, as well.

Your next question comes from Richard Gardner – Citigroup. Richard Gardner – Citigroup: Anne, I was just hoping, and maybe Ursula that you could give us some sense of what the pattern is for renewals on the business that is coming up for renewals this year? Are the renewal rates pretty much in line with your historical experience, or better, or worse? Anne M. Mulcahy: I think there’s no disproportionate by the way amount of business that is up for renewal, it’s a very, very even cadence in terms of the way the business renewals occur. We’re quite pleased with regard to our ratio of renewals. They’re very, very high and continue to be high. We have no indicators that that business is at all at risk. I would add we’ve even added I think on the incentive side for our field organization on what we call same account revenue growth because we really think it’s hugely important to kind of get a larger sale of wallet so we have some help from the incentive compensation side both ensuring we protect our base as well as grow it particularly in the services area. Ursula M. Burns: I would add is I talked about new product introductions, we put these out primarily because they add additional value to our customers and that will help move decision along for them to trade from the current base that they have to a better product, lower cost, more functionality, etc. In our renewals in color in particular is something that we’re very, very pleased with. When we get a customer who buys a color system, their ability to rebuy from us, especially when we give them new functionality or better price is very good. Richard Gardner – Citigroup: Then maybe as one quick follow up could you talk at all about where your customers are on current average toner usages versus the minimums that they’re contractually required to take? In other words should we be worried that customers a quarter or two ago had been using well above the contractual minimum and are turning back down towards the contractual minimum and that’s having a big impact on post sale as a result of that over the next quarter or two? Anne M. Mulcahy: We’ve talked about this before that a large majority of our contracts have minimums established. The best way for us to really get a sense of where we are is really pages. From that standpoint I would say although page growth decelerated a little bit, it was up from third quarter to fourth quarter so we saw a seasonal uptick in pages so as you think about it that would suggest that certainly minimums are not being breached and not even getting close in terms of the way the contracts are written. Thanks everybody for participating today. We appreciate your involvement this morning. Take care.

This concludes today’s presentation. You may now disconnect. Good day.