Xerox - Environment, Health, and Safety 2004 - Progress Report

2004

Environment, Health, and Safety

PROGRESS REPORT

ABOUT THIS REPORT

Xerox’s 2004 Environment, Health, and Safety Progress Report is the tenth in a series of annualreports documenting our progress toward goals for protecting the environment and safeguardingthe health and safety of Xerox employees, customers, and neighbors.

This report reviews worldwide performance during the 2003 calendar year. It also includes some discussion of 2004 goals and activities. Safety performance data cover Xerox operations and subsidiaries during the 2003 time period. Environmental results show full-year performance of Xerox manufacturing, research and development, and equipment recovery/recycle operations.

This report supports our continued efforts to maintain an open dialogue with audiences interestedin Xerox’s environmental, health, and safety initiatives, including employees, customers, investors,government agencies, non-governmental organizations, and the media. Each year, Xerox strives toenhance the value of this report, incorporating international reporting best practices and feedbackfrom readers. Please send your comments and suggestions to the Xerox contacts listed on theback cover of this report, or visit our web site at www.xerox.com/environment.

XEROX ENVIRONMENTAL, HEALTH, AND SAFETY POLICYXerox Corporation is committed to the protection of the environment and the health and safety of its employees, customers, and neighbors. This commitment is applied worldwide. The followingprinciples shall govern all business practices in thedesign, manufacture, procurement, marketing, distribution, maintenance, reuse/recycling, and disposal of products and related services: • Protection of the environment and the health and safety of Xerox employees,

customers, and neighbors from unacceptable risks takes priority over economic considerations and will not be compromised.

• Xerox operations must be conducted in a manner that safeguards health, protects the environment, conserves valuable materials and resources, and minimizes risk of asset losses.

• Xerox is committed to designing, manufacturing, distributing, and marketing productsand processes to optimize resource utilization and minimize environmental impact.

• All Xerox operations and products are, at a minimum, in full compliance with applicable governmental requirements and Xerox standards.

• Xerox is dedicated to continuous improvement of its performance in environment, health, and safety.

Contents | 1

2 To Our StakeholdersA Message from the Chairman and Chief Executive Officer

3 Executive Summary2003 Highlights

4 Policy, Goals, and StrategyIntegrating Environmental, Health, and Safety Considerations into Xerox Business

10 Waste-Free ProductsSustainable Design

19 Accessible ProductsDesigning for Universal Use

20 Translating Policy Into PracticeWaste-Free Product Showcase

22 Waste-Free FacilitiesAn Ongoing Commitment

29 Environmental RemediationCompliance Penalties

30 Employee Well-BeingHealth and Safety at Xerox

35 Employee and Community InvolvementPartnerships for Progress

37 Company ProfileXerox at a Glance

CONTENTS

A MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

“I believe passionately that corporate social responsibility is good business. It’s good for ourcommunities, good for our customers and employees . . . and ultimately good for Xerox.”

2 | To Our Stakeholders

Over the past few years, Xerox people have survived a crisis, turned the company aroundand put it back on the road to greatness. The key to our success has been a talented groupof people aligned around a common set of objectives determined to save Xerox. One of thethings I am most proud of is that this generation of Xerox people not only saved the company and put it on the path to greatness but that we also strengthened our values. This is in no small part because social responsibility has been ingrained in the Xerox culturesince our earliest days as a company. Xerox founder Joe Wilson and inventor of xerographyChester Carlson were strong advocates of corporate citizenship. Xerox’s rich heritage is livedeach day by our people around the world who strive for sustainable business practicesthrough our environmental, health, and safety initiatives.

Protecting Xerox employees from harm in the workplace is among my highest priorities. Our goal is nothing short of benchmark safety levels — and we will continue to work towardthis goal until we reach it. Over the last several years, we have all learned hard lessons about the risks inherent in today’s world. That is why we have strengthened our emergencyresponse programs throughout our worldwide operations — enhancing the protection of our employees and the surrounding communities.

In our drive to return to greatness, we have rediscovered that the creation of customer valueis at the heart of our growth. We are continually reminded that our customers not only wantus to help them in meeting their basic business needs, but they also expect Xerox to generate value in all areas of their business — including working with them to achieve theirown sustainability goals. We start with responsible product designs that are safe, minimizethe use of hazardous materials, reduce waste, and make efficient and responsible use ofresources. Then Xerox invests in technologies and solutions that give our customers a newway to do their work, creating value, improving productivity, and ultimately making our customers’ business more sustainable. Just a few examples are on-demand publishing, electronic document management solutions, and smart documents that enable the transitionbetween paper and digital documents. These solutions build value and reduce costs forXerox customers . . . and they significantly lessen the environmental impact of our customers’ operations.

I believe passionately that corporate social responsibility is good business. It’s good for ourcommunities, good for our customers and employees . . . and ultimately good for Xerox.This annual report of our environmental, health, and safety progress showcases our successes, evaluates our challenges, and communicates our plans for achieving higher levels of performance in the future. Ultimately, we must all strive toward a sustainable world.The stakes are high for this generation and for those that follow. I pledge that Xerox will continue to work toward this goal — it is part of our heritage and part of our future.

Sincerely,

Anne M. MulcahyChairman and Chief Executive Officer

TO OUR STAKEHOLDERS

Executive Summary | 3

EXECUTIVE SUMMARY2003 HIGHLIGHTS

Goal: Waste-Free Products• Prevented 161 million pounds of material from entering landfills through the reuse

and recycling of Xerox equipment and supplies.

• Enabled energy savings of 51 million therms (nearly 1.5 million megawatt hours)through the reuse of parts and the sale of ENERGY STAR® products.

• Ninety-seven percent of eligible new Xerox products met the requirements of the international ENERGY STAR and Canada’s Environmental Choice EcoLogo.

• One hundred percent of Xerox-designed product models introduced in 2003 havebeen developed with remanufacturing in mind.

• Ninety-seven percent of new products offered two-sided (duplex) capability, promoting efficient use of paper.

• Issued environmental, health, and safety requirements to companies that providepaper to Xerox for resale. To date, we have obtained commitments to meet theserequirements from suppliers who provide more than 90 percent of the paper wesupply to our customers.

Goal: Waste-Free Facilities• Beneficially managed 97 percent of hazardous waste through treatment, recycling,

or energy recovery through fuels blending.

• Recycled 85 percent of non-hazardous solid waste generated in all Xerox facilities.Xerox’s worldwide equipment recovery and recycle operations achieved a 96 percentrecycle rate.

• Ninety-seven percent of waste generated from Toxics Release Inventory-listed chemicalswas beneficially managed, and only 3 percent was released to the environment.

• Maintained ISO 14001 certification for global manufacturing sites.

Goal: Safe Workplace and Healthy Workforce• Maintained injury levels well below industry averages. Further improved our safety

record with a 4 percent reduction in the rate of Total Recordable Incidents. Our Day Away From Work case rate increased by 7 percent; however, we are takingaction to improve our performance.

• Continued deployment of our emergency preparedness standard worldwide, verifying that all operations have documented emergency response plans in place.

Ener

gy S

avin

gs (M

illio

ns o

f The

rms)

50

40

30

20

10

091 99 00 01 02 03

8

4044

49 51

//

Product Energy Savings

1,000

800

600

400

200

0

Avoi

ded

CO2

Emis

sion

s (T

hous

ands

of T

ons)

46

426

544632 698

Energy Saved in Use (ENERGY STAR)

Energy Saved in Manufacture (Parts Reuse)

18

22

27

17 16 14

33 37

Avoided Carbon Dioxide (CO2)Emissions

51

13

38

698

Workplace Injury Rates

Per 1

00 E

mpl

oyee

s 3

2

1

096 99 00 01 02 03 04

Target

Total Recordable IncidentsDay Away From Work Cases

2.40

1.561.05

.69 .57

1.28

.62

1.3 1.19

.56

1.14.60

//

1.03.50

Xerox maintained good performance against key environmental, health, and safety goals in 2003for the benefit of our customers, employees, and neighbors. The following summary of our progresslinks accomplishments to the goals they support.

84%Treated On-Site

8%Treated Off-Site

3%Recycled Off-Site 2% Fuels Blended3%Disposed

2003 Hazardous Waste Management

<1% Recycled On-Site

4 | Policy, Goals, and Strategy

INTEGRATING ENVIRONMENTAL, HEALTH, AND SAFETY CONSIDERATIONS INTO XEROX BUSINESS

Vision and GoalsXerox’s environmental, health, and safety policy, established in 1991, provides a solidfoundation for the development of goals applicable to our global operations. Today,Xerox’s strategic environmental, health, and safety goals are organized into five categories: Safe Workplace and Healthy Workforce, Waste-Free Facilities, SafeProducts, Accessible Products, and Waste-Free Products. While there is still work tobe done, we have made significant advances toward these goals as shown below.

The value of responsible corporate citizenship hasbeen firmly embedded in Xerox culture since thecompany’s inception. We consider protection of theenvironment and the health and safety of our peopleto be fundamental components of our commitmentto good corporate citizenship.

Provide Value to Customers

Safe Products

AccessibleProducts

Waste-FreeProducts

VISION GOALS PERFORMANCE

Provide Value to Employees and Society

Safe Workplace& HealthyWorkforce

Waste-FreeFacilities

Results of the Zero Injury program, initiated in 1997:• 52% reduction in Total Recordable Injury rate.• 43% reduction in Day Away From Work case rate.

95% or more of hazardous waste managed beneficially since 1999 through treatment, recycling, or fuels blending.

Improvement in non-hazardous solid waste recycling rate from 56% to 85% since 1991.

29% reduction in water use since 1999.

92% reduction in air emissions from facilities that manufacture Xerox imaging supplies (our most chemically intensive operations) since 1991.

14% decrease in energy consumption since 1999.

1Energy consumption of the Xerox CopyCentre C55 digital copier compared to the Xerox 5053, introduced in 1992. Customer use patterns affect energy consumption.

Design requirements for materials safety, mechanical and electrical safety, and ergonomics are integratedinto the Xerox product development process. No product is launched until these criteria are satisfied.

Products are designed to be usable by a wide range of customers, including those with disabilities.Starting in 2002, all product designs included requirements consistent with the U.S. Government’sSection 508 accessibility standards. Xerox Copier Assistant software, introduced in 2003, makes it easier for people with disabilities to use the copy function of Xerox office products.

Over 1.5 billion pounds of waste diverted from landfills since 1991 through equipment end-of-life strategies.

Product features such as duplex copying/printing help customers make efficient use of paper. 97% of products introduced in 2003 offered duplex capability.

Up to 50% reduction in product energy consumption since 1992.1

Xerox has achieved its goal of minimizing product emissions of ozone and dust. Today’s emission levels are well below the strictest regulatory limits.

More Than a Decade of Progress

POLICY, GOALS, AND STRATEGY

Policy, Goals, and Strategy | 5

Policy DeploymentThe Environment, Health, and Safety organization is charged with ensuring company-wide adherence to Xerox’s environmental, health, and safety policy. Thegovernance model we employ to accomplish this task is illustrated below. Its centralelements include clearly defined goals, a single set of worldwide standards, and anaudit process that ensures conformance to these requirements.

StandardsEnvironmental, health, and safety standards are our primary tool for ensuring compliance with corporate policies and goals. Applicable to all operations worldwide,these standards establish specific requirements for product safety, materials safety, packaging, environmental management and reporting, workplace safety,emergency response, and asset protection. Xerox employees access these standards via the company’s internal web site.

Operational ProgramsEffective deployment of environmental, health, and safety goals and standards is achieved by full integration into ongoing business practices. Five key programsserve this integration function throughout the company:

• Zero Injury ProgramThe Zero Injury program is designed to ensure the safety of Xerox employeesaround the world. Our ultimate goal is benchmark safety performance. Launchedin 1997, the program trains managers in safety management and holds themaccountable for their organizations’ safety performance. The Environment, Health, and Safety organization develops awareness and training programs, tracks performance worldwide, and provides guidance as needed to correct deficiencies.

• Emergency PreparednessXerox requires each of its operations to have a documented emergency responseplan in place outlining actions to be taken in the event of potential emergencies.Training programs ensure that employees are aware of the plans and understandevacuation procedures and rescue and response methods. Routinely scheduledmanagement reviews, drills, and corporate audits ensure that plans comply withXerox standards and regulations.

1.5billion

Pounds of waste diverted from landfills

since 1991 throughequipment end-of-life

strategies.

CORPORATE REPORTING RELATIONSHIPS

Chairman and Chief Executive Officer

Business Group Operations

Paper, Supplies,and Supply Chain

Operations

Chief Financial Officer

Corporate Controller

Business Ethicsand Compliance

Office

Environment,Health,

and SafetyOrganizationAudit Program

Board of DirectorsAudit Committee

ENVIRONMENTAL, HEALTH, AND SAFETY GOVERNANCE MODEL

Environmental, Health, and Safety Strategic Goals

Xerox Business Divisions and Operations

Zero Injury Program

ISO 14001 EnvironmentalManagement

Product Development

ProcessSupply ChainManagement

Safe Workplace & Healthy Workforce

Waste-FreeFacilities

SafeProducts

AccessibleProducts

Waste-FreeProducts

Environmental, Health, and Safety Corporate Policy

Environmental, Health, and Safety Audit Program

EmergencyPreparedness

Environmental, Health, and Safety Standards

Xerox ManagementAudit Committee


• ISO 14001 Environmental Management SystemAll company manufacturing operations employ an ISO 14001-conforming environmental management system to ensure compliance with regulations andXerox standards, to identify the environmental impact, and to set objective and performance targets. Our major manufacturing operations have been certified to ISO 14001 since 1997. In 2002, we completed the certification of all current manufacturing operations. New plants are scheduled for certification as they are brought on-line.

• Product Development ProcessXerox integrates environmental, health, safety, and accessibility criteria into the earliest stages of Xerox product design and development. Products’ adherence tosafety standards, ecolabel criteria, accessibility requirements, and end-of-life strategies is reviewed at each major phase of the development process. Failure tomeet these requirements can delay product launch.

• Supply Chain Environmental, Health, and Safety ManagementXerox extends environmental, health, and safety requirements across its supplychain. Since 1998, Xerox has asked its materials and components suppliers to meetspecific environmental, health, and safety requirements. Starting in 2003, Xeroxextended additional requirements to companies who provide paper to Xerox forresale. Supplier initiatives are described in more detail on the following pages.

Audit ProgramA well-established audit program measures our success in implementing environmental,health, and safety goals and targets. Research, manufacturing, and service operationsare scheduled for audits at least once every three years. Xerox audit teams evaluateoperations against Xerox standards, regulations, and industry guidelines to identifyenvironmental, health, and safety risks and potential areas of non-compliance. Localmanagers, with the assistance of audit teams, develop action plans to correct deficiencies. Situations that pose a high risk of environmental damage, serious injuryto employees, or regulatory non-compliance receive special attention from seniormanagement and are tracked for resolution. The audit program has proven to be animportant mechanism for identifying and correcting performance gaps. At the sametime, it offers a valuable opportunity to share best practices among facilities.

ENVIRONMENTAL PLANK OF XEROX’S ETHICS POLICY

Xerox is committed to protecting the environmentand the health and safety of its employees, customers, and the communities where it doesbusiness. Xerox will operate in a manner that conserves natural resources and will comply withall laws regulating these matters.

ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS ACROSS THE SUPPLY CHAIN

TransportationServices

Recycling and WasteDisposal Services

XeroxCustomers

(Product Use)

Xerox Operations(Research,

Development,Manufacturing,

Remanufacturing, Marketing, Sales,

Distribution, Services)

Company-Wide Commitment to ReduceGreenhouse Gas Emissions

Expanded Environmental, Health, and Safety Supplier Requirements

Material Flow

Xerox EH&S Requirements

Outsourced Operation

Waste-Free Goals

Xerox extends environmental, health, and safety requirements to its own operations and those of its suppliers. Xerox has recently strengthened requirements for paper suppliers and materials and component suppliers, and has expanded company-wide our commitment to reduce energy and greenhouse gas emissions.

Xerox Suppliers(Materials & Components

Suppliers, Paper Suppliers,Contract Manufacturing)

BUSINESS ETHICS AND COMPLIANCE

Xerox’s code of conduct is deployed by the XeroxBusiness Ethics and Compliance Office. Annual training gives employees detailed guidance on maintaining a commitment to business ethics. As part of this effort, the company CEO builds employees’ awareness of their responsibility to our corporate environmental, health, and safety commitment through an annual ethics letter. Eachemployee must confirm his/her understanding of thiscommitment through a formal acknowledgementprocess and completion of refresher training.



Working to Become a Sustainable CompanyFor more than a decade, Xerox has deployed its Waste-Free goal of making Waste-FreeProducts in Waste-Free Factories to help our customers attain Waste-Free Workplaces.This effort has produced dramatic improvements in the environmental performance ofour company, as described throughout this report.

In moving toward a sustainable future, we recognize that we must continue to extendthe reach of our environmental, health, and safety policies across the product life cycle.At the same time, we must further reduce the environmental impact of Xerox’s ownoperations. In 2003 and 2004, we launched new initiatives that will enable progress in both of these areas. We have strengthened environmental, health, and safety requirements for materials and components suppliers to better control the chemicalcontent of Xerox products. We issued new requirements for companies that providepaper to Xerox for resale, further expanding our influence on the supply chain. For ourown operations, we have strengthened our commitment to reduce Xerox’s energy consumption and associated greenhouse gas emissions.

Controlling the Chemical Content of Xerox ProductsXerox has long worked toward minimizing the use of hazardous substances in our products.In support of this, Xerox has had in place for many years a set of requirements that governproduct design and material selection. Xerox toxicologists conduct a comprehensive assessment of all new products and materials to ensure conformance with these criteria.

Concern about the use of hazardous materials in electronics has prompted many countriesaround the world to consider restricting the use of certain substances. Most notably, theEuropean Union will require electronic products sold after July 1, 2006, to be free of lead,mercury, cadmium, hexavalent chromium, and certain brominated flame retardants unlessfeasible alternatives are unavailable. In 2004, Xerox is issuing a new set of environmental,health, and safety requirements for Xerox suppliers to better control the use of chemicals in Xerox products. All new product designs will refer to these requirements,and suppliers will be expected to verify their compliance with these strict requirements.

In 1999, Xerox banned the use of the targeted flame retardants in our products. Wehave also made very good progress in eliminating the use of mercury. Remaining uses — mercury-containing lamps that scan images and back-light user displays —will be phased out as alternatives become available. The elimination of lead — used in virtually all electronic components — is a particularly challenging task for the electronics industry. Questions of reliability and functionality of lead-free componentsare serious concerns for companies such as Xerox who produce high-performanceproduction-level equipment. Despite these challenges, Xerox is committed to eliminating these materials from new products by July 1, 2006.

ENVIRONMENTAL, HEALTH, AND SAFETYREQUIREMENTS FOR XEROX MATERIALSAND COMPONENTS SUPPLIERS(UPDATED IN 2004):

• Comply with applicable government environmental, health, and safety regulations.

• No ozone-depleting substances in manufacturingor processing of parts/materials supplied to Xerox.

• No toxic heavy metals — including cadmium,mercury, hexavalent chromium, or lead — in packaging.

• No use of asbestos, benzene, hexachlorobenzene,ozone-depleting substances, polybrominatedbiphenyls or polybrominated diphenyl ethers,polychlorinated terphenyls, or polychlorinatedbiphenyls in parts/materials supplied to Xerox.

• By July 1, 2006, eliminate cadmium, hexavalentchromium, mercury, and lead from parts/materials supplied to Xerox — except whereexemptions are allowed by the European UnionROHS Directive.1

• Restricted use of 25 additional substances.Approval for use requires a Xerox-conductedsafety assessment.

• Mark plastic parts with recycling codes, as defined by ISO standards.

1 European Union Directive 2002/95/EC on the restrictionsof the use of hazardous substances in electrical andelectronic equipment (ROHS). The Directive allows theuse of targeted materials when there is no alternative orwhere the negative environmental, health, or safetyimpacts caused by substitution outweigh the benefits.


Paper SourcingAs one of the largest brands of cut-sheet paper in the world, Xerox recognizes its obligation to ensure the responsible management of forests that provide raw materialsfor the production of paper. To this end, Xerox adopted in 2000 an environmentalposition on sourcing paper. The position states that our goal is to source paper fromcompanies committed to sound environmental, health, and safety practices and sustainable forest management.

In support of our position, we issued in 2003 a set of stringent requirements for companies who provide paper to Xerox for resale. The requirements, which go into effect over a two-year period, cover all aspects of papermaking, from forest management to production of finished goods. The requirements are now included inour new supplier qualification process, and existing Xerox paper suppliers worldwidemust meet these new requirements to continue doing business with Xerox. Suppliersmust also submit detailed documentation, on an annual basis, verifying conformance.To date, more than 75 percent of our paper suppliers — representing greater than 90 percent of the paper we supply to our customers — have committed to meetingthese requirements. The remaining suppliers are working with Xerox to ensure their commitment by the end of 2004.

Key elements of the requirements include:

• Commitment to compliance with all applicable environmental, health, and safety regulatory requirements, including forestry codes of practice and regulations governing legal harvesting of wood.

• An effective mill environmental management system and objectives for continualimprovement in environmental performance above and beyond regulatory compliance.

• An effective procurement process that:

• Ensures the exclusion of illegally harvested wood raw materials.

• Ensures the exclusion of wood raw materials derived from forest areas of significant ecological or cultural importance unless certified to a Xerox-acceptedsustainable forest management standard.

• Encourages all suppliers of wood raw materials to practice sustainable forest management.

• Strict limits on the use of hazardous materials, including exclusion of elementalchlorine, in the processing and content of Xerox papers.

We recognize that one of the most significant challenges paper companies face inmeeting Xerox’s requirements will be to demonstrate that they are safeguarding forest areas of significant ecological or cultural importance. Xerox fully supports multistakeholder efforts to develop information sources and tools that will help suppliers identify these areas on their own forestlands and in their procurement ofwood raw materials from third-party lands. Xerox expects its suppliers to take fulladvantage of these resources as part of their sustainable forestry efforts.

The Xerox Foundation extends financial supportto NatureServe, a non-profit organization that is developing tools to help forest managers identifyplant and animal species and ecological communities requiring protection.

XEROX POSITION ON PAPER SOURCING

Xerox Corporation sources its paper from companies committed to sound environmental,health, and safety practices and sustainable forestmanagement in their own operations and those oftheir suppliers. Our intent is to protect the healthand integrity of forest ecosystems, conserve biological diversity and soil and water resources,safeguard forest areas of significant ecological orcultural importance, and ensure sustainable yield.Companies must be committed to compliancewith all applicable environmental, health, and safety regulatory requirements in the countrieswhere they operate.



Energy and Greenhouse Gas Emission ReductionsEnergy management is not new for Xerox. We have reduced energy consumptionassociated with the manufacture of Xerox products through our remanufacturing and parts reuse program. By reusing parts, Xerox avoids the energy expenditures associated with the extraction of raw materials and fabrication of parts. In addition,Xerox designs its products to be energy efficient, allowing customers to reduce theirconsumption of energy and associated greenhouse gases. Over the last several years,we have also reduced energy consumption within our operations through the use of high-efficiency lighting, the installation of motion detectors that turn off lights whenrooms are unoccupied, and the implementation of energy management programs.

In 2003, Xerox strengthened its commitment to reducing energy consumption andassociated greenhouse gas emissions across all its operations through 2012. Sincethen, we have established a baseline inventory for the U.S. that is consistent with the guidelines of the U.S. Environmental Protection Agency’s Climate Leaders program.This inventory was developed for a baseline year of 2002 and quantifies the relativecontributions of greenhouse gas emissions from our U.S. facilities and operations.Total emissions, directly or indirectly attributable to Xerox, are estimated to be 350,000tons of carbon dioxide. Xerox does not emit any other greenhouse gas in significantquantities. Seventy percent of Xerox U.S. greenhouse gas emissions are indirect emissions — the result of purchased electricity used in Xerox manufacturing sites andoffice and warehouse facilities. Thirty percent are direct emissions due to the consumptionof natural gas by facilities and consumption of gasoline by Xerox’s vehicle fleet.

Xerox’s greenhouse gas inventory will be expanded to worldwide company operations. A reduction target for the U.S. and the entire corporation worldwide will be developed early in 2005. Xerox is a member of the U.S. Environmental Protection Agency’s Climate Leaders Program and The Business Roundtable’s Climate RESOLVE program.Both programs are voluntary initiatives to help companies develop long-term climate change strategies.

The U.S. Environmental Protection Agency sponsorsClimate Leaders, a voluntary industry-government partnership that encourages companies to develop long-term comprehensive climate change strategies and set greenhouse gas emissions reduction goals.

Climate RESOLVE was created by The BusinessRoundtable, a Washington, D.C.-based association ofchief executive officers of the largest U.S. corporations.The program helps participating companies take voluntary action to reduce, offset, sequester, or avoidgreenhouse gas emissions.

Major Mobile OtherManufacturing Sources Office/Warehouse

Sites Sites

U.S. Greenhouse Gas Emissions

Perc

enta

ge o

f Tot

al E

mis

sion

s

80

70

60

50

40

30

20

10

0

Purchased ElectricityDirect Emissions

60

1510

15

U.S. Environmental Protection Agency Administrator Michael Leavitt (left) recognizes Xerox Corporation for joining the Climate Leaders Program.Accepting is Anne Stocum (right) from Xerox’s Environment, Health, and Safety organization.

10 | Waste-Free Products

SUSTAINABLE DESIGN

Xerox continued to make good progress toward our Waste-Free Product goals in 2003:

• Xerox equipment remanufacture and supplies reuse/recycle programs diverted 161 millionpounds of material from landfills.

• Energy-efficient product features enabled energy savings of 38 million therms (1.1 million megawatt hours). Parts reuse saved an additional 13 million therms (390,000 megawatt hours) of energy.

• All newly introduced products achieved Xerox’s strict standards for minimal use of hazardous materials and emissions of noise, ozone, and dust.

The efforts of Xerox engineering teams to incorporate increasingly challenging targets forenergy efficiency, reuse/recycling, and minimized use of hazardous materials into future product designs will ensure continued advances in these areas. The deployment in 2004 of a revised, more stringent environmental, health, and safety standard for the chemical contentof parts and materials used in Xerox products will drive progress in this area as well.

One measure of the success of our Waste-Free focus is the number of Xerox products thatmeet the world’s most widely recognized certifications for product environmental performance— the international ENERGY STAR, Canada’s Environmental Choice EcoLogo, and Germany’sBlue Angel. Ninety-seven percent of Xerox’s eligible product offerings meet ENERGY STARand Environmental Choice EcoLogo criteria. Because of changes in Germany’s Blue Angel criteria in late 2003, Xerox has no products that currently meet these requirements.

WASTE-FREE PRODUCTS

WASTE-FREE PRODUCT GOALS AND INITIATIVES

• Equipment remanufacture and parts reuse/recycle

• Supplies return and recycle programs

• Efficient use of paper

• Energy-efficient design

• Recycled content in equipment,supplies, and packaging

• Design to Xerox worldwide product environmental performance standards

Sustainable ProductDesign Initiatives

Waste-FreeProduct Goals

Efficient use of materials and

energy

Minimal use of hazardous substances

Low emissions and noise

Perc

enta

ge o

f Xer

ox P

rodu

ctM

odel

s In

trodu

ced

100

80

60

40

20

095 99 00 01 02 03

64 60

20

93 96

33

98 100

25

100100

20

100 100

50

ENERGY STAR Canada’s Environmental Choice EcoLogo

Germany’s Blue Angel

//

ECOLABEL-QUALIFIED PRODUCTS

Note: Percentages represent the proportion of product models introduced in a given year that are eligiblefor ecolabel certification (i.e., within the scope of an ecolabel program) and that meet ecolabel criteria.

Xerox’s commitment to becoming a Waste-Free companyspans more than a decade. An ambitious set of Waste-Free goals have helped us put this commitmentinto practice. As a result, each new generation of Xeroxproducts offers increasing functionality while conservingenergy and materials and requiring fewer hazardous substances throughout the product life cycle.

97 97

0

Waste-Free Products | 11

Integrating Waste-Free Goals into Product DesignXerox recognized early in our drive for Waste-Free Products that the best results —both environmental and financial — are achieved when products are designed fromthe outset with Waste-Free goals in mind.

Customer feedback, combined with a forward-looking view of global trends in technology, regulations, and ecolabels such as ENERGY STAR, has shaped the development of a comprehensive set of Xerox product environmental, health, and safety performance standards. The standards incorporate Waste-Free goals as well as product safety requirements encompassing electrical and mechanical safety,ergonomic design, electromagnetic emissions, fire resistance, and materials safety.

Products being developed undergo a careful review by Xerox business teams and theEnvironment, Health, and Safety organization at each stage of Xerox’s Time to Marketproduct development process. These ongoing reviews ensure that environmental,health, and safety requirements are fully satisfied by all Xerox products, whether theyare designed by Xerox or suppliers. Failure to fully meet these requirements can delaythe introduction of a new product.

The following pages describe the sustainable product design practices that have beenmost significant in moving Xerox toward its Waste-Free Product goals.

161million

Pounds of materialdiverted from landfills

through Xerox equipment remanufacture

and supplies reuse/recycle programs.

Xerox conducts a careful review of the chemical composition of all Xerox products and supplies toensure that materials are safe for customer use.

Xerox test facilities ensure that products comply withthe strictest safety regulations. Our anechoic chamberin Webster, New York, measures product emissions of,and immunity to, electromagnetic radiation.

The Xerox Time to Market product development process is the mechanism we use to deploy environmental, health, and safety product performance standards. Xerox engineers consider environmental, health, and safety requirements in the earliest phases of product design. Business teams regularly assess developing products to ensure that these criteria are fully implemented.

StrategicPlanning

TechnologyAssessment

ProductDefinition

and Design

ProductLaunch

ProductDelivery

• Market Research

• CompetitiveTrends

• RegulatoryTrends

• EH&S TechnologyNeeds

• EH&S DesignStandards

• ProductAccessibilityRequirements

• Product Safety• Materials Safety• Environmental

Requirements• Ergonomic Design• Remanufacture/

Recycle• Product

Accessibility

• EnvironmentalMarketing

• CustomerCommunications

• Customer/SalesSupport

• CustomerSatisfaction Surveysand Feedback

XEROX’S TIME TO MARKET PRODUCT DEVELOPMENT PROCESS


Equipment Remanufacture and Parts Reuse The practice of converting end-of-life electronic equipment into new products andparts is one that Xerox pioneered. We developed a comprehensive process for taking back end-of-life products from customers in the early 1990s, establishing aremanufacture and parts reuse program that fully supports our Waste-Free initiatives.All Xerox-designed product models introduced in 2003 have been developed with remanufacturing in mind.

Our approach to managing products at end-of-life translates into significant environmental and financial benefits. Equipment remanufacture and the reuse andrecycling of parts prevents millions of pounds of waste from entering landfills eachyear — 144 million pounds in 2003 alone. The practice of reusing parts reduces theamount of raw material and energy needed to manufacture brand new parts, generating several hundred million dollars in cost savings each year. We estimate that in 2003, energy savings from parts reuse totaled 13 million therms (390,000megawatt hours) — enough energy to light more than 315,000 U.S. homes for a year.

Designing for ReuseXerox has been able to maximize the end-of-life potential of products and componentsby incorporating reuse considerations into the design process. Machines are designedfor easy disassembly and contain fewer parts. Parts are designed for durability overmultiple product life cycles. Parts are also easy to reuse or recycle, and are codedwith disposition instructions. As a result, equipment returned to Xerox at end-of-lifecan be remanufactured — rebuilt — to as-new performance specifications, reusing 70 to 90 percent by weight of machine components, while meeting performancespecifications for equipment with all new parts.

Xerox has further extended its ability to reuse parts by designing product families aroundmodular product architectures and a common set of core components. These advancesoffer Xerox multiple options for giving new life to old equipment. A returned machine canbe rebuilt as the same model through remanufacture, converted to a new model withinthe same product family, or used as a source of parts for next-generation models.

Improved processes for forecasting equipment returns from customers have allowed Xeroxto increasingly rely on previous generations of equipment as a source of components forproducts in development. Xerox products whose designs are based on previous models may have 60 percent of their parts in common with previous equipment. As the pace of technological innovation has shortened product life cycles, our ability toreuse parts across product generations has become increasingly important.

Raw Materials

Fabricate New Parts

Build Product

Process Parts for Reuse(Equipment Remanufacture

or Conversion)

Deliver

Customer Use

Return to Xerox

Dismantle

DisposalGoal: Zero to Landfill

Alternative Uses

Recycle Materials(Third Party)

Recycle Parts

Sort/Inspect

Since its inception in the early 1990s, Xerox’s equipment remanufacture and parts reuse/recycle program has keptover 1.5 billion pounds of waste out of landfills — theequivalent of more than 2.3 million machines. This isenough material to fill New York’s Empire State Buildingnearly four times.

XEROX EQUIPMENT RECOVERY AND PARTS REUSE/RECYCLE PROCESS

WASTE-FREE PRODUCTS


Ensuring Product QualityXerox has developed unique processes and technologies to ensure that all Xeroxproducts, regardless of their reused/recycled part content, meet the same specifications for performance, appearance, quality, and reliability. Signature Analysisis one such technology. It enables Xerox engineers to determine the life expectancy of motors and other electromechanical components. Using this technology, we testnew parts to determine a “signature” — an acceptable range for the noise, heat, or vibration that electromechanical parts produce while in use. We then test the samecharacteristics in parts from returned equipment. Only those parts whose signaturesare consistent with those of newly built parts are approved and processed for reuse.

Xerox has been using Signature Analysis technology in its equipment disassemblyand remanufacture operations since 1994. Prior to its introduction, the reuse potentialof returned parts was predetermined based on average life expectancy data. Someparts were consistently scrapped, while others were consistently approved for reuse.Today, using Signature Analysis, Xerox is able to identify unacceptable parts thatmight otherwise have been approved for reuse, improving equipment reliability andcustomer satisfaction. Xerox also identifies many useful parts that would otherwisehave been scrapped, reducing unnecessary waste and eliminating costs associatedwith the purchase of new parts.

The full integration of equipment remanufacture and parts reuse processes with traditional manufacturing operations is another critical element of Xerox’s strategy forensuring consistent quality for all products. Machines with reused/recycled parts arebuilt on the same manufacturing lines as newly manufacturedequipment, and they undergo the same rigorous quality assurancetests. As a result, products with reused/recycled parts carry thesame Xerox guarantees, warranties, and service agreements asXerox equipment made from all new parts.

Meeting Customer RequirementsCustomer acceptance of reused/recycled parts was a significant challenge for Xerox’sprogram throughout the 1990s. Today, with more than a decade of proof, we find that far fewer customers share the misperception that products with reused/recycledparts are inferior to those built from all new parts. Xerox continues to educate customers about the quality and reliability of reused parts. And, whenever necessary,we promote environmentally responsible purchasing policies and practices that eliminate barriers to reuse by focusing on the quality and performance of productsregardless of recycled content.

Note: Data cover the remanufacture and reuse/recycle ofXerox equipment and parts at Xerox facilities and thoseof our contract office equipment manufacturer,Flextronics.

Note: Percentages are the proportion of Xerox-designedproduct models introduced each year that are designed for remanufacture.

1 Energy savings represent the difference between the energy required to build new parts and the energyrequired to process parts for reuse, assuming an average machine composition of 60 percent plastic and 40 percent steel. Energy savings calculationsencompass “feedstock energy” (the energy content ofthe petroleum and coal raw materials converted to plastic and steel, respectively) and energy required toprocess and transport materials throughout the lifecycle. Life cycle energy data was obtained from FranklinAssociates, Ltd. Energy savings were converted intoavoided emissions of carbon dioxide using a U.S. energy profile and emissions factors calculated by theU.S. Environmental Protection Agency and Departmentof Energy. Feedstock energy was excluded from thisconversion.

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CO2 Emissions AvoidedFeedstock Energy Saved

Process and Transport Energy Saved

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Waste Diverted from Landfillsthrough Parts Reuse/Recycle

99 00 01 02 03

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Products Designed for Remanufacture

100

Reductions in Energy and Carbon Dioxide (CO2)Emissions from Parts Reuse1

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Xerox uses Signature Analysis testing technology to determine the usable life of parts from returned equipment.


Reuse and Recycling of Xerox Supplies: The Green World AllianceThe Xerox Green World Alliance reuse/recycle program for imaging supplies is a central element of our strategy to achieve Waste-Free Product goals for efficient useof materials and energy. Partnerships with Xerox customers have made this program a success. In 2003, the Green World Alliance prevented more than 17 million poundsof waste from entering landfills worldwide.

Xerox has well-established methods for collecting and reprocessing spent print/copycartridges, toner containers, and waste toner from Xerox office and production equipment. Prepaid postage labels and the packaging from new supplies allow customers to return these materials to Xerox for reuse and recycling. For cartridgesand waste toner bottles, Xerox includes return labels in boxes of new supplies. Labels for toner containers are available from Xerox upon request.

Returned products are cleaned, inspected, and then remanufactured or recycled.Remanufactured cartridges, containing an average of 90 percent reused/recycledparts, are built and tested to the same performance specifications as new products.Similarly, waste toners qualified for reuse may account for 25 percent of the weight of new toner, without any compromise in toner functionality. The reuse of waste tonersaves several million dollars each year in avoided raw material costs.

Through the Green World Alliance, customers worldwide returned more than 4.5 million cartridges and toner containers to Xerox in 2003. More than 90 percent by weight of these returned materials were remanufactured or recycled. Xerox alsoprocessed 3.1 million pounds of post-consumer waste toner for reuse. The plasticbottles customers used to return waste toner to Xerox — more than 200,000 in number — were recycled. At the same time, Xerox continued its practice of designingtoner containers to incorporate post-consumer recycled plastic, achieving an averageof 30 percent recycled content for toner bottles sold in 2003.1 For one of our mostpopular product families, Xerox has in place a closed-loop recycling process. Theprocess enables scrap plastic parts from damaged cartridges to be re-ground, re-qualified, and molded into the same parts. These parts — made of 100 percentrecycled plastic — are used in manufacturing new cartridges. More than 150,000pounds of post-consumer plastic scrap is recycled in this manner each year.

Xerox strengthened the Green World Alliance program in several ways in 2003. We upgraded our Green World Alliance web site, making it possible for customers to download return labels directly from the site rather than requesting them by phone or e-mail. In 2004, Xerox has expanded the Green World Alliance suppliesrecycling program in 14 countries in Europe by providing a web page to accommodate the needs of customers. Xerox is continuing to qualify new cartridgesand waste toner including color toners for remanufacture. Xerox engineers are alsoidentifying reuse options for black toners not suitable for remanufacture. One suchoption is using reprocessed waste toner as a colorant in newly built plastic parts.

WASTE-FREE PRODUCTS

Xerox return programs for supplies provide significant environmental benefits. In 2003, these initiatives diverted 17.4 million pounds of material from landfills worldwide.

Xerox Green World Alliancewww.xerox.com/gwa

99 00 01 02 03

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17.8

Xerox Green World Alliance: Total Waste Diverted from Landfills

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15

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TonerContainersWaste Toner

Cartridges

1.13.3

13.0

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1 This figure is based on North American sales.


PaperAs one of the largest distributors of cut-sheet paper, Xerox recognizes its obligation to reduce the environmental impact of paper. Starting with the source of fiber used to make the paper, through its manufacture and use, Xerox strives to minimize environmental impact while meeting its customers’ exacting business needs. Xeroxbegan deployment of new environmental requirements to its paper suppliers in 2003.1

The requirements encompass sustainable forest management and fiber sourcing,strict limits on the use of hazardous materials in the processing and content of Xeroxpaper, and reusable/recyclable packaging. Meeting these requirements is a conditionof doing business with Xerox. To date, more than 75 percent of our paper suppliers— representing greater than 90 percent of the paper we supply to our customers —have committed to compliance with these requirements. By the end of 2004, we expect all suppliers to make this commitment.

Incorporating recycled content in our products is another important way Xeroxreduces the environmental impact of its papers. Xerox recycled papers use post-consumer waste in place of new pulp to conserve natural resources. For everyton of recycled fiber used, paper manufacturers avoid the use of 3.5 tons of virginfiber.2 This not only saves trees, but reduces pressure on natural forests. Recycledproducts are designed for optimal performance in Xerox equipment and are requiredto meet the same strict performance specifications as virgin products. Xerox offersmultipurpose papers with up to 100 percent post-consumer recycled content.Transparencies, tabs, colored papers, and several premium products designed specially for digital color printing applications contain 20 to 30 percent recycled content. In 2004 and 2005, Xerox will continue to expand its recycled product offerings.

Other advances in incorporating environmental considerations into Xerox productsinclude products such as Planet Light. This product, available in Europe, is a 70 gram per square meter (g/m2) paper that achieves the same characteristics of a heavier-weight 80 g/m2 sheet using less fiber. A new lighter-weight ream wrap Xeroxintroduced in the U.S. in 2003 also conserves resources, being 45 percent lighter thanthe wrap it replaces. Across our product line, Xerox has increased to greater than 95percent the amount of Xerox paper manufactured using elemental chlorine-free (ECF)or totally chlorine-free (TCF) bleaching or de-inking processes.

Xerox equipment and software are also designed with featuresthat allow customers to make efficient use of paper. Reliable two-sided (duplex) printing is featured in Xerox office equipment.Software products such as DocuShare, FlowPort, and DigiPathhelp Xerox customers reduce paper consumption by facilitating electronic data management, scan to e-mail, print-on-demand, and distribute-then-print workflows.

Xerox strives to minimize the environmentalimpact of paper while meeting its customers’exacting business needs.

1 Refer to page 8 of this report for additional detail about these requirements.

2 Paper Task Force Recommendations for Purchasing and Using Environmentally Preferable Paper, Updated LifecycleEnvironmental Charts (2002).

Planet+ (TCF)

Planet Light

100% Recycled

Digital Color Xpressions 98(20% recycled content)

Digital Color Graphics(30% recycled content)

Multipurpose Recycled Paper(30% recycled content)


Energy Efficiency Xerox has followed a comprehensive approach to reducing product energy consumptionover the past decade, achieving significant reductions in several phases of the productlife cycle. First, the company’s remanufacture and parts reuse program, described inthe preceding pages of this report, has reduced the amount of energy required tobuild equipment. This is because it takes much more energy to build a new part fromraw materials than it does to process a part for reuse. Second, product design features such as automatic power-saver modes have substantially lowered the energyconsumed by products during the customer use phase of the life cycle. Together,these initiatives have dramatically reduced the energy needs of Xerox products, generating cost savings for Xerox and its customers and notable benefits for the environment.

Energy Technology InnovationFor more than a decade, Xerox equipment has been designed to enter a power-savermode after a specified period of non-use. Because office equipment is often inactivefor portions of a workday and may be left on overnight, this power-saver feature hasthe potential to substantially reduce energy use.

Xerox formalized its commitment to energy-efficient product design in 1993, joiningthe U.S. Environmental Protection Agency’s ENERGY STAR Office Equipment programas a Charter Partner. Since then, we have introduced more than 260 copier, printer, fax,and multifunction products that have earned the ENERGY STAR. Ninety-seven percentof eligible Xerox products introduced in 2003 met ENERGY STAR criteria.

Advances in fusing technology and new electronics architectures have made today’sXerox office equipment significantly more energy efficient than comparable 1990models, even while offering customers enhanced functionality, including color

capability. For example, the annual energy consumption of theENERGY STAR-qualified Xerox CopyCentre C55 digital copier is 50 percent1 less than that of the Xerox 5053, introduced in 1992.

In 2003 alone, Xerox ENERGY STAR equipment in customer locations around the world — several million machines —enabled energy savings of 38 million therms (1.1 millionmegawatt hours). These energy savings translate into an avoidance of nearly 621,000 tons of carbon dioxide emissions.By remanufacturing equipment with reused parts in 2003, Xerox saved an additional 13 million therms of energy (390,000megawatt hours) and prevented 77,000 tons of carbon dioxideemissions from entering the atmosphere. In total, the energysaved in 2003 through ENERGY STAR product features andequipment remanufacturing is enough to light nearly 1.2 millionU.S. homes for a year.

WASTE-FREE PRODUCTS

The annual energy consumption of the ENERGYSTAR-qualified Xerox CopyCentre C55 digitalcopier is 50 percent1 less than that of the Xerox5053, introduced in 1992.

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ENVIRONMENTAL BENEFITS OF PRODUCT ENERGY EFFICIENCY PROGRAMS

Note: Energy savings from parts reuse represent the difference between the energy required to buildnew parts and the energy required to process parts for reuse (refer to footnote on page 13 for moredetails). Annual energy savings from ENERGY STAR features are calculated by comparing the annualenergy consumption of Xerox ENERGY STAR-qualified product types to non-ENERGY STAR counterparts. Savings are aggregated across the estimated number of Xerox ENERGY STAR-qualifiedmachines in customer locations worldwide. Energy reductions are translated into avoided carbon dioxide emissions using U.S. Environmental Protection Agency, U.S. Department of Energy, andInternational Energy Agency conversion factors.

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Energy Saved in Use (ENERGY STAR)

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Avoided Carbon Dioxide (CO2) Emissions

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1 This calculation assumes that customers do not manually power off equipment at theend of each workday.


Production SystemsXerox’s production systems offer a wide range of features that provide high-capacity and print-on-demand capability for Xerox customers.Energy management in such technologically complex systems is challenging due to the products’ large number of individual subsystems.Xerox’s recently introduced Nuvera 100/120 DigitalCopier/Printer was designed from the ground up to meet ENERGY STAR and Environmental Choice EcoLogo specifications. It provides copying, scanning, and printing capability for mid-production applications of up to 500,000images per month. The product’s unique integrated printer controller optimizes the energyconsumption of each subsystem, reaching power-saving levels previously achieved only by much-lower-speed machines. The product isdesigned to reach power-saving sleep-mode levels of less than 70 watts after a periodof non-use. To accomplish this, the machine’s power consumption must be reducedby 90 percent from its standby mode. The integrated printer controller coordinates the reduction in the power consumption, turning off each subsystem while ensuringthe machine’s ability to “wake up” quickly.

Power consumption in other modes of operation have also been reduced. For example, the Nuvera 100/120 Digital Copier/Printer operates at standby power levelsthat have been reduced by 60 percent when compared to earlier Xerox offerings in thisclass, and operates at run-mode levels that have been reduced by up to 30 percent.

Office Multifunction BenefitsXerox multifunction systems further reduce the amount of energy required to providecustomers with copy, print, fax, and scan capabilities by combining the functions ofmultiple products into one machine. The annual energy consumption of a XeroxWorkCentre or WorkCentre Pro multifunction system is approximately 50 percent lessthan the combined annual energy consumption of the individual ENERGY STAR-qualifiedcopier, fax, and printers it replaces. Energy savings increase to 73 percent if a multifunctionsystem replaces individual products that have not earned the ENERGY STAR.

XEROX MULTIFUNCTION SYSTEMS: INHERENT ENVIRONMENTAL BENEFITS

Annual energy consumptionof an office copier, four laserprinters, and a fax: 1422 kWh

Annual energy consumptionof a multifunction system:706 kWh➡50% reduction

The low-sleep-mode power consumption of the ENERGY STAR-qualified Nuvera DigitalCopier/Printer is achieved by turning off this feature-rich product’s subsystem when not in use.

NUVERA DIGITAL COPIER/PRINTER

User-Interface DisplaySleep Power: 0 Watts

Printer ControllerSleep Power: 68 Watts

Feeder ModuleSleep Power: 0 Watts

Fuser SubsystemSleep Power: 0 Watts

Finisher ModuleSleep Power: 0 Watts


WASTE-FREE PRODUCTSMinimal Use of Hazardous Substances

To reduce the use of chemicals considered harmful to human health or the environment, Xerox has established a set of requirements that govern product designand materials selection. Xerox toxicologists conduct a comprehensive assessment of all new products and materials to ensure conformance with these criteria. As discussed on page 7 of this report, Xerox has issued updated requirements to itsmaterials and components suppliers in 2004. Our goal is to eliminate the use of lead,mercury, cadmium, and hexavalent chromium in new products by July 1, 2006.

Low Emissions and NoiseXerox designs its products to strictly control emissions of chemicals and noise, consistent with the criteria of the world’s strictest ecolabels. As a result, current products have achieved chemical emission levels that are well below global regulatoryrequirements — often at or near the detection limit of our measurement equipment— and are considered to have a negligible impact on customers’ work environments.Since 1991, ozone and dust emissions from office and production copying and printing systems have decreased by more than 50 percent. Future Xerox products will be developed to maintain these low levels.

Sophisticated noise prediction models developed by Xerox noise experts make it possible to identify potential noise sources in the earliest stages of product design, evenbefore prototypes are available for testing. This modeling technology has proven to be a cost-effective way of designing low-noise equipment. State-of-the-art acoustical instrumentation facilitates troubleshooting and enhances advanced product development.

Into the FutureMaintaining leadership in sustainable product design requires an ongoing effort andmust be aligned with the company’s business strategy. Xerox innovation efforts arefocused on three broad areas — Reinventing our machines, Rethinking how we work,and Redefining the document. Efforts in each of these areas are preparing Xerox forthe sustainable product designs and solutions of the future. For example, Xerox is aleader in developing micro-electro-mechanical-systems (MEMS) which integrate electronics and mechanical systems to enable more intelligent systems based onsensing, control, and adaptive processes. Research in MEMS will result in smallermachines that make more efficient use of materials and energy.

In the materials area, Xerox is pioneering the application of nanotechnology, the scienceof building materials, and devices out of elements in the nanometer-or-less-size range.Emulsion aggregation (EA) toner, introduced in 2002, is an example of nanotechnology.It uses a process that grows micron-size particles from smaller nanometer-size constituents. EA toner uses an estimated 25 percent less energy to manufacture than traditional toner. It is additionally environmentally advantaged in that it is water-based and avoids the use of organic solvents commonly required to make particles in this size range.

Xerox is a leader in the development of solid ink technology. Its inherent environmental benefits include the efficient use of materials, typically producing 95 percent less waste than a comparable laser printer. Xerox is investing in researchthat will enhance the energy efficiency attributes of this technology with innovativeinks and print heads.

Xerox is also focused on expanding the boundaries of today’s documents. One area of research looks at how to create alternative document viewing media, such as electronic paper, that preserve desirable attributes of paper, such as portability, thinness, and low cost, while imparting the benefits of digital systems such as reuseand storage. Xerox established its first commercial venture in 2003, marketingSmartPaper technology via wholly owned subsidiary Gyricon LLC.

ENVIRONMENTAL, HEALTH, AND SAFETYREQUIREMENTS FOR MATERIALS USED INXEROX EQUIPMENT AND SUPPLIES

• Compliance with applicable global registration,hazard communication, and waste handling anddisposal regulations for materials of concern.

• No use of materials that:

• Are carcinogenic, mutagenic, or cause adversedevelopmental or reproductive effects.

• Pose a toxicity hazard to humans or aquaticspecies.

• Can cause a permanent adverse impact to theskin, eyes, or respiratory system.

• Are considered hazardous waste.

• No use of asbestos, benzene, ozone-depletingsubstances, polybrominated flame retardants,polychlorinated terphenyls, or polychlorinatedbiphenyls (PCBs).

• As of July 1, 2006, cadmium, mercury, hexavalent chromium, and lead will be eliminatedfrom new Xerox products.

• Restricted use of 25 additional materials.Approval for use requires a Xerox-conductedsafety assessment.

Xerox researchers have developed the Optical MEMS(Micro Electro-Mechanical Systems) switch.Research in MEMS will result in smaller machinesthat make more efficient use of materials and energy.

Accessible Products | 19

ACCESSIBLE PRODUCTS

From the earliest stages of product development,engineering teams incorporate features that make Xerox products easy to operate.

Designing products that are user-friendly for a broad array of customers has been astandard practice at Xerox for more than three decades. Our engineers consider thevariation in customers’ physical characteristics and cognitive function from the earlieststages of product development. We create products that require minimal force to pushbuttons, lift document covers, and open doors, and we place controls within reach fora wide range of people. User interfaces are designed for reading clarity under a varietyof environmental conditions, and buttons are easy to identify and activate. Over theyears, we have also developed dozens of accessories such as angled consoles, brailleconsole labels, and “start print” footswitches to help customers with disabilities be moreproductive in the workplace. We are proud of these efforts. However, we recognizethat there is still a segment of our potential customer base — people with certain disabilities and age-related disorders — that may have trouble using our products.

Closing the GapsIn 2001, Xerox completed a thorough assessment of our products, including hardwareand software, using the U.S. Government’s Section 508 accessibility standards1 as ourguide. We found that our products met or exceeded many of the requirements of thisstandard. However, the assessment revealed some gaps in our products. Our softwareand web interfaces, for example, were not completely compatible with assistive technology such as screen readers. In the last two years, we have made most of thenecessary changes to make our products fully compatible with assistive technology.For future product designs, we have incorporated product accessibility design requirements into our Time to Market product development process.

One of the most difficult accessibility problems we encountered during the assessmentprocess centered on the touchscreen technology that allows users to program copy,scan, and fax jobs on Xerox multifunction systems. While providing valuable navigational capability on our feature-rich digital systems, the touchscreen is difficult to use by customers with certain disabilities including visual, tactile, and mobility impairments. Xerox solved this problem for the copy function with the development of the Xerox Copier Assistant. Designed with input from the Association for the Blindand Visually Impaired, the Xerox Copier Assistant helps users, regardless of theirimpairments, to easily program copy jobs. The Xerox Copier Assistant has earnedawards from several organizations, including the Information Technology Associationof America and the Regional Center for Independent Living. The Xerox Copier Assistantis available today for nearly all currently marketed Xerox office multifunction systems.

The Xerox Copier Assistant gives customers with disabilities an alternative to the touchscreen for programming copy jobs. Xerox Copier Assistant software is loaded on a personal computer that connects to a Xerox product through an existing external port. The software displays an enlarged user interface on the computer monitor. Embedded text-to-speech software gives a user voice directions for programming a job and reports the job’s status as it proceeds to completion.

THE XEROX COPIER ASSISTANT

1 In 2001, amendments to the U.S. Rehabilitation Act of 1973 became effective, requiring that electronic and informationtechnology developed, procured, maintained, or used by the U.S. federal government be accessible to all personsincluding those with disabilities. The U.S. Government Access Board developed Section 508 accessibility standardsin support of this amendment.

DESIGNING FOR UNIVERSAL USE

Digital Production TechnologyInnovative design features coupled with digital technology make Xerox-designed production printing offerings the environmentally preferable choice for the commercial printing industry.

• The dry inks are non-toxic and have a transfer efficiency rateof nearly 100 percent, reducing the potential for waste.

• Emissions of chemicals, such as ozone, and dust are strictlycontrolled to the same levels achieved by Xerox officemachines and are well below regulatory requirements.

• Digital print-on-demand technology reduces paper use andexcess inventory by making it economical to print books andbrochures as they are ordered.

• Every part that is lifted, pushed, or pulled during machineassembly, operation, or service has been engineered andevaluated to minimize risk of injury to Xerox employees and customers.

Nuvera Digital Print-on-Demand and Publishing SolutionsIntroduced in 2004, the Nuvera 100/120 Digital Production System and DigitalCopier/Printer features a modular architecture and new technologies that extend thelife of machine components and make efficient use of materials and energy. Duringthe imaging process, a cloud of toner is suspended over the photoreceptor belt where the fine particles adhere only to the properly charged areas. The ability to develop animage without contact extends the life of the photoreceptor and the developer.Innovative cleaning technologies also minimize wear to the photoreceptor and extendthe belt’s life by 200 percent. The system’s full-width array scanner captures light so efficiently that the Nuvera product can use a lower-power xenon lamp in its 120-pages-per-minute scanner, replacing the mercury-containing lamp typically used in such applications.

Xerox iGen3 Digital Production Press Compared to traditional offset printing presses, the Xerox iGen3 creates little waste,emits 80 percent less noise, and neither generates hazardous waste1 nor uses hazardousmaterials. Up to 97 percent of the parts in this three-ton machine and 80 percent byweight of the waste it generates can be reused or recycled. This 80 percent figureincludes the machine itself, empty toner bottles, waste developer, and packaging.

20 | Translating Policy Into Practice

Xerox iGen3 Digital Production Press

WASTE-FREE PRODUCT SHOWCASETRANSLATING POLICY INTO PRACTICE

Xerox has introduced a number of products and supplies in 2003 and 2004 whose environmental features demonstrate our latest advances toward Waste-Free Product goals.

1 According to applicable national waste regulations worldwide.

NUVERA 100/120 DIGITAL PRODUCTION SYSTEM

Emulsion Aggregation Toner Emulsion aggregation (EA) technology, a breakthrough process for producing color and black toner, was developed over 8 years and is protected by more than 100 patents. Traditional toner manufacturing involves mechanical grinding of largeparticles of solid-colored plastic into smaller ones, followed by a classification processwhich sorts out toner particles of the desired size. By contrast, the EA method chemically builds toner particles to any desired shape or size. Compared to this conventional method, the more precise EA technology requires an estimated 25 percent less energy to manufacture per pound of toner and nearly eliminates out-of-specification toner waste.

EA toner also reduces the amount of energy and waste associated with printing. Theextremely small size and round shape of EA toners make it possible to more uniformlycharge these toners and transfer them efficiently to receiving paper. The result issharper color images and fine lines, about 50 percent less toner per printed page, and a significant reduction in toner waste. EA toner also exhibits image fixing capability at low temperatures, reducing per-page product energy consumption. By eliminating fuser oil, EA technology conserves resources while eliminating potential service calls for oil streaks.

The Xerox CopyCentre C2128/C2636/C3545 copiers and WorkCentre ProC2128/C2636/C3545 multifunction systems are the latest Xerox color products to offer customers the environmental advantages of EA toner.

Solid Ink Color PrintersSolid ink printers use ColorStix ink — solid blocks of ink at room temperature. Duringthe printing process, these sticks are melted and jetted through piezoelectric printheads. Images are printed onto a rotating drum and offset onto paper in a single passof the print engine, achieving nearly 100 percent ink transfer efficiency.

By eliminating print cartridges and minimizing the number of other consumable itemsthat must be replaced throughout the life of the machine, solid ink printing conservesvaluable material resources. Solid ink printing also generates 95 percent less wasteduring use than a typical color laser product. Fewer consumables translate into loweroperating costs, increased reliability, and ease of use. The Phaser 8400 is the newestXerox product featuring solid ink.

SmartPaper: Reusable Electronic PaperSmartPaper, a recent Xerox invention, has significant resource-conserving potential.Like traditional paper, it is thin, lightweight, and flexible. Unlike conventional paper,however, it is electronically writable and erasable and can be reused thousands oftimes.

Gyricon LLC, a wholly owned subsidiary of Xerox, is charged with bringingSmartPaper to market. Gyricon’s first application of this technology is SmartPapereSignage Systems. These wireless systems give customers the ability to instantlychange the content of pricing or informational displays from one central location,reducing the waste and labor associated with daily management of traditional cardboard signage. In 2004, Gyricon placed its first product in the hospitality industry.Pilot tests of its eSignage solutions are continuing with several major retailers and the education industry.

Translating Policy Into Practice | 21

SmartPaper contains millions of small two-color beadssealed in a thin layer of transparent plastic. When voltage is applied to the surface, the beads rotate toshow one color or the other, producing an image.

Phaser 8400 and ColorStix

95percent

Less waste generated bysolid ink printing ascompared to typicalcolor laser printer.

The Xerox WorkCentre Pro C3545 advanced color multifunction system is among the latest products to feature EA toner.

22 | Waste-Free Facilities

AN ONGOING COMMITMENT

ISO 14001 Environmental Management SystemAll company manufacturing operations employ an ISO 14001-conforming environmental management system to ensure compliance with regulations andXerox standards, to identify potential environmental impacts, and to set reductiontargets. The ISO 14001 system requires the integration of environmental planningand program management with day-to-day business activities. This process integrates environmental considerations with overall operational activities andencourages the application of innovative engineering solutions, creative partnerships, and employee involvement.

The ISO 14001 approach has led to the development of programs that proactivelyreduce or prevent environmental impact. For example, in 2003, Xerox deployed anaggressive spill-prevention program at its manufacturing site in Webster, New York.Going well beyond regulatory requirements, the program started with a site-widereview of plant designs and operational procedures. Corrective measures implemented as a result of previous spills were also evaluated. From this review, a set of recommendations were applied across the site that resulted in reduced risk of spills through greater employee awareness, improved operational procedures, and better plant designs. This proactive approach has resulted in a 35 percent reduction in reportable spills in 2003. Furthermore, the spills that have occurred are less severe than those in the past and cleanup has been rapidand effective. This method has been shared with other Xerox sites and interestedparties outside of Xerox.

Environmental Performance ResultsEnvironmental performance data in this section represent total quantities for Xerox’s manufacturing, research and development, and equipment recovery/recycle operations located in 11 countries around the world. Starting in 2002, these data — with the exception of solid waste figures — do not include Xerox office equipment manufacturing operations outsourced in late 2001 to Flextronics, a globalelectronics manufacturing services company. Unless otherwise noted, all numbersrepresent worldwide totals.

Reportable Spills, Webster, NY, Facility

WASTE-FREE FACILITIESSince the early 1990s, Xerox has managed environmentalperformance in its manufacturing operations to an internal benchmark known as Waste-Free Factory. Ourcommitment to the goals of this initiative, along with globalimplementation of an ISO 14001-compliant environmentalmanagement system, has driven environmental performance improvements for over a decade.

Num

ber o

f Rep

orta

ble

Spill

s

18

16

14

12

10

8

6

4

2

03-yr. 2003 2004

baseline YTD

17

6

11

XEROX RESEARCH AND MANUFACTURING SITE OPERATIONSType of Operation

Research, Technology,and Development

Manufacturing,Engineering, andAssembly

Locations

Canada, France, UnitedKingdom, United States

Brazil, Canada, Egypt, India,Ireland, Mexico, Netherlands,Spain, United Kingdom, United States

A spill-prevention program implemented at Xerox’sWebster, New York, manufacturing facility resulted in a 35 percent reduction in reportable spills in 2003.

Waste-Free Facilities | 23

Hazardous WasteXerox strives to minimize hazardous waste generation and to find disposal solutionsthat are environmentally benign. Ninety-seven percent of hazardous waste generated in 2003 was beneficially managed through treatment, recycling, or energy recoverythrough fuels blending. The remaining 3 percent was incinerated or disposed in landfills permitted to accept hazardous waste.

Worldwide hazardous waste volumes increased by 24 percent between 2002 and2003. This change was driven by increases in the production of advanced-technologyprint heads for solid ink printers and associated process wastewater. This wastewateris treated by adjusting the pH level through a neutralization process. After treatment,the non-hazardous wastewater is discharged into local sanitary sewers.

A large proportion of Xerox’s hazardous waste — over 80 percent — was the processwastewater mentioned above. The remaining hazardous waste generated in 2003 wasprimarily organic solvent waste. Captured using sophisticated reclamation systems,organic waste is sent off-site for recycling or energy recovery. Off-site recycling converts waste into reusable products.

Reducing the generation of hazardous waste remains a priority and requires innovativeengineering solutions. Our Webster, New York, photoreceptor plant has recentlyimproved its solvent reclamation system. Originally installed in 1995, the systemreclaims over 98 percent of the solvent used in the photoreceptor coating operation.Reclaimed solvent is either reused in the same process or recycled off-site. Until 2002,only 50 percent of the reclaimed solvent was pure enough for in-process reuse. Aninnovative enhancement to the reclamation process increased the reusable portion to 70 percent, reducing the hazardous waste generated by 45 percent and the chemicalspurchased by over 40 percent.

99 00 01 02 03

Worldwide Hazardous Waste Generated

Thou

sand

s of

Ton

s

18

16

14

12

10

8

6

4

2

0

6.05.2

10.8

13.5

97percent

Beneficially managedhazardous waste throughtreatment, recycling, orenergy recovery through

fuels blending.

16.8

A Xerox technician cleans a returned copier in preparation for remanufacturing. The process involvessquirting a stream of frozen carbon dioxide (dry icepellets) at entire machine hulks as well as at delicatecomponents. Toner, oils, and grime freeze to the surface of the parts and then fall off into a catch panwhere they can be vacuumed or swept away. In placefor over ten years, this is one example of innovationthat reduces the generation of hazardous waste inXerox manufacturing facilities.

Note: Increases in hazardous waste generated in 2001-2003 reflect production increases in Xerox’s solidink facility, acquired in 2000. Greater than 99 percent ofthe hazardous waste generated by this plant is treated on-site and then discharged as non-hazardous wastewater.

2003 HAZARDOUS WASTE MANAGEMENT

84%Treated On-Site

8%Treated Off-Site

3%Recycled Off-Site 2% Fuels Blended3%Disposed <1% Recycled On-Site


Non-Hazardous Solid WasteXerox’s Waste-Free Factory initiative has focused our efforts on reducing the amount ofnon-hazardous solid waste generated in Xerox operations, and responsibly managingwaste that can not be eliminated. In 2003, Xerox operations worldwide collectivelyrecycled 85 percent of their non-hazardous solid waste as compared with 92 percentin 2002. A disposition of waste accumulated over several years in our Resende, Brazil,facility caused this decline in 2003. Excluding this event, the worldwide recycling ratein 2003 was 91 percent, consistent with recent years’ performance.

In addition to the typical solid waste generated from manufacturing processes andconstruction and maintenance projects, Xerox manages thousands of end-of-lifemachines that Xerox customers return each year to our equipment recovery/recyclefacilities. The portion of this returned equipment that can not be reused throughremanufacturing represents over 50 percent of the waste Xerox operations manage.We classify this material as “equipment waste.” Because of the unique challenges ofmanaging electronic waste, the following sections present separate solid waste management results for Xerox equipment recovery/recycle operations that handleequipment waste and manufacturing operations that manage process waste.

Equipment WasteEquipment that has reached the end of its useful life with a customer is returned toXerox equipment recovery/recycle facilities. To maximize environmental and financialbenefits, Xerox first evaluates returned equipment for its reuse potential. Productssuitable for reuse undergo the rigorous equipment remanufacture processesdescribed on pages 12 and 13 of this report. For more than a decade, Xerox’s equipment remanufacture program has given new life to the equivalent of more than2.3 million copiers, printers, and multifunction systems while diverting hundreds ofmillions of pounds of potential waste from landfills.

Returned products that can not be remanufactured are designated as equipmentwaste. Xerox equipment recovery/recycle operations disassemble these machines,removing parts that can be processed for reuse according to stringent standards forquality and performance. The remaining components are recycled or disposed. In2003, Xerox operations managing equipment waste were able to reuse or recycle 96 percent of the 56,000 tons collected.

Xerox also carefully manages suppliers that provide recycling and waste disposalservices. Xerox uses an audit process to ensure that these vendors’ practices aresafe, environmentally sound, and compliant with all regulations. Xerox requires thesecompanies to document the final disposition of material, including electronic scrap,sent to their facilities.

WASTE-FREE FACILITIES

2003 Non-Hazardous Solid Waste Management

30% ProcessWaste Reused orRecycled

2% EquipmentWaste Disposed

55% EquipmentWaste Reused or Recycled

95 99 00 01 02 03

Non-Hazardous Solid Waste Recycle Rate:All Facilities

Perc

enta

ge R

ecyc

led

//

100

80

60

40

20

0

7887

8090 92

Thou

sand

s of

Ton

s

60

40

20

095 99 00 01 02 03

Reused or Recycled Disposed

21

5 4 2 3

5055

3745

2//

EQUIPMENT WASTE:EQUIPMENT RECOVERY/RECYCLE OPERATIONS

13% Process Waste Disposed

85

54

2

Xerox manages thousands of end-of-life machines that customers return each year to our equipment recovery/recycle facilities.


Manufacturing Process WasteXerox manufacturing operations generated 42,000 tons of non-hazardous solid wastein 2003. This waste stream consists primarily of paper; packaging waste includingcorrugated cardboard, wood pallets, and plastics; and other manufacturing-relatedwastes such as scrap metal, waste toner, waste batteries/lamps, and trash. Sixty-ninepercent of this waste was reused or recycled in 2003. Excluding a disposition of wasteaccumulated over several years at our Resende, Brazil, facility, the 2003 recycling ratefor process waste was 81 percent.

• Toner WasteToner represents a significant portion of our solid waste stream. During conventionaltoner manufacture, large toner particles are mechanically ground and classified intothe desired particle size. Toner particle size must be strictly controlled to ensure quality and performance. A by-product of the manufacturing process is toner “fines”that must be excluded from the final product. Several years ago, Xerox achieved amajor reduction in solid waste generation by developing a method to recycle thesefines back into the manufacturing process. In 2003, the reuse of toner fines coupledwith reuse of post-consumer waste toner returned to Xerox from customer sites prevented the disposal of over 6,400 tons of solid waste. In 2003, a new technologyto manufacture toner started production. Xerox’s emulsion aggregation technologyuses a water-based process to chemically build toner particles of the desired size,nearly eliminating the generation of out-of-specification toner waste.

Despite these advances, not all toner can be reused, and to date, only limited recycling outlets have been identified. Meanwhile, several of our North Americanplants are sending this waste toner to be burned to produce energy or to be recycledfor use as a colorant in the manufacture of other products. Through these efforts, thequantity of waste toner sent to landfill in 2003 was reduced almost 40 percent from2002. Our goal is to reduce to zero the amount of waste toner sent to landfills.

Water Consumption and TreatmentWorldwide water consumption declined 14 percent between 2002 and 2003. Thisreduction was primarily due to declines in production and building occupants, including closure of some operations.

Wastewater from manufacturing processes is treated before discharge into local sanitary sewers. Xerox adjusts the pH of the wastewater and removes suspendedsolids as necessary. Xerox facilities have also put in place best management practicesto prevent unwanted pollutants from entering waterways via surface contaminationand run-off. Extensive sampling of wastewater discharges to both sanitary and stormsewers ensures that discharged water meets Xerox’s strict requirements. The Webster site was awarded the New York Water Environment Association’s SilverCompliance Award for the third consecutive year in 2003. Xerox earned the award by demonstrating greater than 99 percent compliance with all permitted wastewater discharge requirements, based on more than 1,700 samples annually.

Worldwide Water ConsumptionM

illio

ns o

f Gal

lons

99 00 01 02 03

898831 850

735

1,000

800

600

400

200

0

Thou

sand

s of

Ton

s 60

40

20

0

Reused or Recycled Disposed

44

14 1222

8

48

37

5759

6//

Process Waste: Manufacturing, Research, and Development Operations

636

29

13

95 99 00 01 02 03

Xerox recently implemented a water conservation project forour emulsion aggregation color toner manufacturing process.This process decreased the toner particle wash steps from 5 cycles to 3 cycles, reducing water consumption by 25 percent (1.3 million gallons) annually, as well as reducingthe volumes of wastewater to be treated prior to discharge.

Xerox’s Webster site has earned a third consecutive NewYork Water Environment Association’s Silver ComplianceAward. Accepting the award is Xerox employee Wen Li.


Air EmissionsXerox facilities released 68 tons of chemicals and particulates to the air in 2003, a 20percent decrease from 2002. The reduction is primarily due to declines in production.

The majority of Xerox’s air emissions are from operations that manufacture Xeroximaging supplies — toners, inks, and photoreceptors. With a firm commitment to our Waste-Free Factory goals, these facilities have made tremendous progress in reducingair emissions over the last decade. Reduction, reuse, and recycling strategies were put in place in the early 1990s and are responsible for reducing air emissions by 87 percent between 1991 and 1996. Since that time, production level declines andcontinuous improvements in our processes have resulted in an additional 5 percentreduction from 1991 levels.

The single largest component of Xerox’s air emissions is dichloromethane (methylene chloride), a necessary solvent for the manufacture of organic photoreceptors. Improvements to the efficiency of manufacturing processes, alongwith state-of-the-art emission control technologies, have resulted in a 96 percentreduction of dichloromethane emissions to air since 1991. Whereas a third of thedichloromethane waste generated was released to the air in 1991, only 3 percent is released today. The remainder is captured and collected for on-site reuse or off-site recycling. To date, we have not been able to identify another chemical as a suitable replacement, but the reduction of dichloromethane emissions to the airremains a priority.


Dichloromethane Management: U.S. Facilities

Released to Air

Reused orRecycled

33

67

Perc

enta

ge o

f Was

teGe

nera

ted

100

80

60

40

20

03

97

AIR EMISSIONS

91 99 00 01 02 03

701

114

260

Tons

76

198

800

600

400

200

0

78185

//58 85

Supplies Operations Worldwide

2003 Air Emissions: Distribution by Type

2% Other Regulated Pollutants

56%Other VolatileOrganic Compounds

26%Dichloromethane

16%Particulates

Note: In late 2001, Xerox outsourced most of its office product manufacturing operations to Flextronics. Air emissions from these transferred operations are excluded from Xerox totals starting in 2002.This change in reporting accounts for nearly all of the reduction in airemissions between 2001 and 2002.

1991 2003

60 68


U.S. Toxics Release InventoryAs part of Xerox’s commitment to environmental responsibility and Waste-Free goals,we work to continually reduce our releases to the environment. One measure of ourprogress is the quantity of releases reportable under the U.S. EnvironmentalProtection Agency’s Toxics Release Inventory (TRI).

Xerox TRI reports, submitted annually to the Environmental Protection Agency andrelevant U.S. state agencies, summarize releases of certain toxic chemicals to air,water, and land. Off-site shipments of these chemicals are also reported. TheEnvironmental Protection Agency makes this information publicly available so localcommunities know the types and quantities of toxic chemicals that are released byneighboring companies. Companies are required to report only certain listed chemicals used above a threshold quantity. Three Xerox U.S. facilities met this reporting requirement for at least one chemical in 2003.

Total releases of TRI-reportable chemicals declined 18 percent between 2002 and2003. Ninety-seven percent of waste generated from TRI-listed chemicals was beneficially managed in 2003 and only 3 percent was released to the environment.

Nearly all of Xerox’s TRI-reportable releases in 2003 — more than 99 percent — were to air. Since 1991, TRI releases to air have been reduced by 95 percent. Recentreductions are due primarily to production decreases and decommissioning of processes. However, most of the overall decrease is due to the installation of state-of-the-art abatement technologies in the early 1990s and continuous improvement in our processes.

51,930

6,721

58,651

0

0

3

0

0

106

51,930

6,721

58,760(3%)

1,754,017

39,370

1,793,436(97%)

1 “Beneficially managed” waste is treated, recycled, or used for energy recovery on- or off-site.

Webster, NY

Oklahoma City,OK

Total

To AirTo Sanitary

SewerTo

Landfill Total

BeneficiallyManaged1

Wilsonville,OR 0 3 106 109 49

2003 MANAGEMENT OF TRI CHEMICALS: U.S. FACILITIES (POUNDS)

Released to EnvironmentXeroxFacility

2003 TRI Air Emissions: Distribution by Chemical

11% Methyl Ethyl Ketone

11% Methanol

2% Methyl IsobutylKetone

2% Toluene

73%Dichloromethane

91 99 00 01 02 03

TRI Air Emissions

Thou

sand

s of

Pou

nds

//

1,400

1,200

1,000

800

600

400

200

0

1,268

142 98 82 72 59

Pollution control devices strictly limit air emissions from Xerox facilities.

1% Butanol


Energy ConsumptionWorldwide energy consumption remained unchanged between 2002 and 2003.Electricity consumption decreased by 4 percent or 22 million kilowatt hours while natural gas consumption increased by 6 percent. A cold winter in North America in 2003 was the key driver for the natural gas increase. The decrease in electricity consumption was the result of production decreases, including discontinued operations and company-wide energy savings initiatives. Because the generation anduse of energy produces emissions of carbon dioxide — a gas that contributes toglobal climate change — Xerox also tracks energy consumption in terms of equivalent carbon dioxide emissions. Our carbon dioxide emissions remainedunchanged in 2003.

The implementation of an ISO 14001-conforming environmental management system in our worldwide manufacturing operations and the 2003 company-wide commitmentto reduce greenhouse gas emissions have helped maintain a focus on energy conservation. Xerox facilities save energy through “free” cooling. In winter months, the facilities cool process water by running it through outdoor pipes instead of using energy-consuming chillers (industrial air conditioners). In 2003, our Webster, New York, manufacturing complex saved over 3 million kilowatt hoursthrough a “no production-no energy” model. This concept synchronized the lighting,heating, and air conditioning systems to the operations schedule.

Energy-efficient features of Xerox offices include high-efficiency lighting, motiondetectors that turn lights off when rooms are unoccupied, extra insulation, and solarfilm on windows.

As described on page 9 of this report, Xerox committed in 2003 to a company-wideeffort to reduce energy consumption and associated greenhouse gas emissions.Specific reduction targets will be established in early 2005.


2003 Energy Consumption in Equivalent Carbon Dioxide (CO2) Emissions

In Webster, New York, Xerox conserves energy through“free cooling.” During winter months, manufacturing operations cool process water in outdoor pipes insteadof using energy-consuming chillers.

2003 Energy Use: Distribution by Type

54%NaturalGas45%

Electricity

1%Fuel Oil

67%CO2 fromElectricity

32%CO2 fromNatural Gas

1%CO2 from Fuel Oil

<1%CO2 from Cleaning WORLDWIDE ENERGY CONSUMPTION AND EQUIVALENT

CARBON DIOXIDE (CO2) EMISSIONS

Ener

gy C

onsu

mpt

ion

(Mill

ions

of T

herm

s)

99 00 01 02 03

44 4642

38

60

50

40

30

20

10

0

38

450

375

300

225

150

75

0

Energy Consumption Worldwide

C02 Emissions Worldwide

403

468429

391 390

CO2

Emis

sion

s(T

hous

ands

of T

ons)

Environmental Remediation • Compliance Penalties | 29

Xerox’s innovative remediation technology called 2-Phase Extraction, developed in theearly 1990s, has helped us meet an aggressive schedule for completing remediationprojects. Today, we are expanding our implementation of bioremediation technology— the use of microorganisms to break down soil and groundwater contaminants into benign compounds — to further strengthen our ability to return contaminated properties to a useful and beneficial state. At our site in Henrietta, New York, Xeroxhas been involved with several leading universities in developing microbial monitoringdevices and piloting bioremediation activities.

Xerox, along with many other companies, has also been identified as a potentiallyresponsible party for non-Xerox sites where we may have once sent waste for disposal.Some of these locations are part of the U.S. Superfund program and/or analogous stateprograms which are government efforts to clean up hazardous waste sites. Through year-end 2003, Xerox had been notified of potential liability at 43 state or federal Superfundsites. Xerox has fully satisfied its clean-up obligations at 26 of these sites, and we continue to evaluate whether we have responsibility at 12 more. Xerox does not expect to take further action at 5 sites where we believe we have no responsibility.

To reduce the risk of future contamination, Xerox has implemented environmentalmanagement systems in all manufacturing facilities worldwide. As a result, only onenew contaminated Xerox site has been identified since 1992. We also have a well-established audit process to ensure that companies providing waste disposalservices to Xerox operate in an environmentally sound manner.

Two Xerox U.S. subsidiaries were assessed compliance penalties in 2003. TheMichigan Occupational Safety and Health Administration assessed Xerox subsidiaryGyricon LLC, in Ann Arbor, Michigan, a $1,200 penalty for failure to meet machineguarding, operator control, and lockout/tagout requirements. These areas of non-compliance were noted during an inspection following a July 2003 industrial accident that resulted in a worker fatality.

The City of Palo Alto, California, assessed Xerox subsidiary Palo Alto Research Center,Inc., a penalty of $8,000 for failure to fully comply with recordkeeping and monitoringrequirements for its wastewater treatment facility.

In both cases, corrective actions were immediately implemented to address problemareas. Coupled with regular reviews of proper operating procedures and routine auditing of operations, these actions minimize the possibility of future incidents.

ENVIRONMENTAL REMEDIATIONXerox’s proactive approach to the clean-up of contaminated sites spans nearly two decades. An initial survey of Xerox facilities conducted in the mid-1980s identified 68 sites with soil and/orgroundwater contamination. Since then, Xerox hascompleted remediation activities at 53 sites.

93 99 00 01 02 03 07Goal

12

44 46

Cum

ulat

ive

Num

ber o

fSi

tes

Rem

edia

ted 48 49

70

60

50

40

30

20

10

0

5361

//

Contaminated Sites Remediated

COMPLIANCE PENALTIES

Our goal is to complete 90 percent of remediation activities by 2007.

30 | Employee Well-Being

EMPLOYEE WELL-BEING

Protecting employee safety, health, and well-being is afundamental element of responsible corporate citizenship.It is also critical to building the kind of world-class workenvironment that motivates employees to do their best.A comprehensive array of programs integrate this commitment into all facets of Xerox’s global operations.

HEALTH AND SAFETY AT XEROX

Reducing Employee InjuriesXerox has established high expectations for safety performance with its Zero Injuryprogram. Introduced in 1997, the program’s goal is to reduce injuries to the lowest possible levels among Xerox’s varied employee populations — manufacturing personnel,office workers, and technicians who operate and service equipment at customer sites.Since the program’s inception, our Total Recordable Incident (TRI) rate has fallen by 52 percent and our Day Away From Work (DAFW) case rate has decreased by 43 percent. Despite this success, we continue to set aggressive targets for improvement as we strive to achieve benchmark safety levels.

In 2003, we fell short of our 10 percent year-over-year reduction targets. We achieveda 4 percent reduction in our TRI rate. Our DAFW case rate, however, increased by 7 percent between 2002 and 2003. While disappointed in these results, we are confident the actions we are taking will ensure progress toward our goals.

We continue to expand and improve the Zero Injury program. One important element is the creation of a corporate culture that reinforces the value of safe workpractices. Managers within Xerox are accountable for the safety performance of their organizations and supervisors have been trained to understand their leadership role in promoting safety. Events such as Xerox Safety Week and our Safety Awards program remind all employees of the importance of safety. Some Xerox organizationshave chosen to formalize their safety management through certification to OHSAS18001. This is an occupational health and safety management system designed tocontrol safety risks and improve performance.

On an on-going basis, Xerox operations are expected to execute procedures for identifying and eliminating hazards that can be addressed through engineering controls and process changes. In 2003, the Environment, Health, and Safety organization initiated a reassessment of potentially hazardous electrical and mechanical equipment in all operations worldwide to ensure that appropriate safetymeasures are in place. Also, in 2003, our U.S. environmental, health, and safety services were consolidated to focus on areas of critical need.

Xerox faces a unique challenge in implementing safety programs for our technicianswho operate and service equipment at customer sites throughout the world. In 2004, we initiated a pilot program in the U.S. to enhance medical support and casemanagement among these widely distributed employees. The goal of this program isto provide appropriate medical care to all employees regardless of work location.

Industry Computer Xerox IndustryAverage and Office (U.S.) Benchmark2002 Equipment 2003 2003

2002

5.3

1.9 1.6

0.52

Workplace Safety Comparisons:U.S. Total Recordable Incidents

Per 1

00 E

mpl

oyee

s

6

5

4

3

2

1

0

Note: All figures represent U.S. rates of injuries and illnesses reportable under the Occupational Safetyand Health Act (OSHA). Data are the most currentavailable at time of publication.

Xerox Workplace Injury Rates

Per 1

00 E

mpl

oyee

s 3

2

1

096 99 00 01 02 03 04

Target

Total Recordable IncidentsDay Away From Work Cases

2.40

1.561.05

.69 .57

1.28

.62

1.3 1.19

.56

1.14.60

//

1.03.50

The Xerox facility in Mitcheldean, U.K., under the direction of Dave Bufton, Environment, Health, andSafety Manager, has been certified to OHSAS 18001,an occupational health and safety management system.

Employee Well-Being | 31

A wide array of supporting programs — described below and in the following pages — include motor vehicle safety, ergonomics, and employee wellness. Theseprograms, in combination with the management systems described on the previouspage, will support and enable our ongoing efforts to prevent injuries and illnessamong all Xerox employees.

Motor Vehicle SafetyWith a large population of Xerox service technicians who spend a significant part oftheir time driving to and from customer locations, motor vehicle safety is a key component of Xerox’s efforts to reduce employee injuries. Safety programs in placeworldwide are tailored to local priorities and circumstances. The importance of theseprograms has been heightened as a result of several motor vehicle-related fatalities.Our North American sales and service operations, which employ more than 5,000service technicians, conduct comprehensive driver training and annual reviews ofemployee driving records. Additionally, company vehicles incorporate safety features,such as daytime running lights and protective caging between car drivers and partsstorage areas.

ErgonomicsMusculoskeletal disorders represent nearly 50 percent of our work-related injuries and illnesses. As a result, the application of ergonomic principles is an importantcomponent of our injury reduction program.

Workers’ compensation claims attributable to musculoskeletal disorders peaked in1992. Although Xerox has taken significant steps to reduce these injuries and therehas been a steady decline in the ergonomic case rate, we experienced an increase of 12 percent between 2002 and 2003. This increase reflects the ongoing safety performance challenges in our U.S. operations.

We continue to focus on ergonomic assessments which span the full range of Xeroxoperations.

• Office: Online ergonomic tools and assistance, including an office self-evaluationprogram, are available to employees worldwide. Office furniture standards includeergonomic design requirements, such as adjustable chairs and keyboard trays.

• Product Design: Xerox is integrating ergonomic considerations into the design ofnew products and related manufacturing processes. The aim is to identify and eliminate potential safety hazards to Xerox employees who will assemble and serviceour equipment. The recently launched Xerox iGen3 Digital Production Press andNuvera 100/120 Digital Production Systems are showcases for ergonomic design.Every part handled by Xerox assembly and service personnel or customers has beenengineered and evaluated to minimize risk of injury.

• Manufacturing: Nearly every workstation in Xerox facilities worldwide has been evaluated for ergonomic hazards. Ergonomically designed tools and assist devices,such as tilt tables, lifts, and hoists, make it easier for employees to maneuver partsand equipment during assembly.

• Service: Periodic reviews of service technicians’ tools ensure they are designed withergonomics in mind. Tools posing an unacceptable safety risk are replaced.

52percent

Reduction in ourTotal Recordable

Incident rate since 1996.

WORKPLACE FATALITIESYear Fatalities Cause

2003 2 Industrial equipment accident, Michigan, U.S.1

Motor vehicle accident,Texas, U.S.

2002 1 Motor vehicle accident, Jodhpur, India

2001 2 World Trade Center attack,New York, U.S.

2000 2 Motor vehicle accidents, Texas and Michigan, U.S.

1999 7 Workplace violence incident, Hawaii, U.S.

1 This accident occurred at Gyricon LLC, a whollyowned subsidiary.

92 99 00 01 02 03

2.12

1.67 1.8

Musculoskeletal Injury Rate: U.S. Operations

Per 1

00 E

mpl

oyee

s

1.44 1.27

3

2

1

0 //

Xerox employees use adjustable fixtures that rotate and reposition parts for easy accessibility during machine assembly.

1.42


Emergency Preparedness Xerox has established a comprehensive emergency preparedness and response program to protect the safety of Xerox employees, surrounding communities, and theenvironment. A Xerox corporate standard on emergency preparedness requires allXerox operations worldwide to have documented plans for responding to fires, chemical releases, natural disasters, and other potential incidents.

The terrorist attacks of September 11, 2001, followed by cases of anthrax in the U.S.postal system, profoundly underscored the importance of these plans for all Xeroxoperations. These events also prompted us to expand the traditional scope of emergency planning beyond fires and chemical spills to events not previously considered potential risks. Among the additions are shelter-in-place procedures whichare designed to protect employees from conditions where it is safer to take shelterinside a building than to evacuate, such as chemical or radiological incidents.

Located within 10 miles of a nuclear power plant, our Webster, New York, manufacturing complex is one of the first sites to have defined detailed shelter-in-place actions for radiological events. A team of safety, environmental, medical, security, and facilities personnel completed this activity in June 2003. A site-wide drill conducted in July of that year confirmed that all key elements of theradiological emergency response plan were in place. Non-radiological incidents thathave occurred since then have further tested Webster’s shelter-in-place procedures. While identifying areas for improvement, these events have also proven the value of this unique planning.

All Xerox operations are integrating emergency preparedness and response planninginto existing business review processes. Routinely scheduled management reviews,coupled with drills and corporate audits, verify that plans provide adequate protectionto Xerox and its people.

EMPLOYEE WELL-BEING

EMERGENCY PREPAREDNESS REQUIREMENTS FOR XEROX FACILITIES

• Perform a risk assessment of potential hazards, such as fire, explosion, chemicals, biological agents, radiation,natural disasters, and security/violence issues.

• Develop and document a facility-specific emergency response plan to address all identified risks, including provisions for:

• Emergency response coordination and support personnel.

• Facility shelter-in-place, evacuation, and reentry.

• Emergency alerts and employee communications (e.g., alarms).

• Auxiliary power for emergency lighting and alert systems.

• Communicate the plan to employees. Conduct training in safe evacuation, shelter-in-place procedures, and rescue and response methods.

• Conduct annual drills to ensure plan readiness.

• Review risk assessment and emergency response plan at least annually, revising as necessary.

PLANNING FOR EMERGENCIES

BC

CM

ER

Emergency Response (ER)Crisis Management (CM)Business Continuity (BC)

Leve

l of A

ctiv

ity

Time

Emergency response is the initial set of actions taken in an emergency situation to protect Xerox people and property, surrounding communities,and the environment. Crisis management and business continuity planning ensure that Xerox has defined longer-term activities to resolveissues and protect our ability to maintain business operations. Thisschematic demonstrates the relationship between these response phases.

Employee Well-Being | 33

Medical ServicesXerox offers a broad spectrum of employee health and medical services. Medical evaluations targeted to specific populations of Xerox employees are designed toensure fitness for work, promote good health, and provide early diagnosis and promptmedical intervention for potential health issues.

Xerox medical professionals monitor public health issues with the potential to affectXerox people and business operations and define appropriate protective measures. In 2003, Xerox closely followed the worldwide outbreak of Severe Acute RespiratorySyndrome (SARS), issuing periodic travel advisories.

Xerox is participating in a pilot program in 2004, partnering with a national health-care organization that provides comprehensive occupational health services inorder to enhance medical support and case management to our widely distributedU.S. employees. Pending results from the pilot, this model will be expanded to ourU.S. field locations. The goal of this program is to provide appropriate medical care toall employees regardless of work location.

Several of our manufacturing complexes, such as Mitcheldean, U.K., and Webster,New York, maintain an on-site occupational health department and an emergencymedical services unit.

Monitoring Workplace ExposuresXerox’s exposure assessment program is another key element of Xerox’s workplacesafety initiative. Designed to protect employees from unsafe exposures to chemicalsand physical agents such as noise and radiation in the workplace, the program definesstrict exposure limits for worldwide manufacturing, research, and service operations.Limits reflect the most stringent regulatory requirements or industry standards. For some materials — including toner, solvents, and certain metals — Xerox has established limits that go beyond even the strictest regulations and standards to provide additional employee protection.

A centrally managed program ensures that all Xerox locations follow well-designedplans for monitoring employee exposures and maintain exposure levels within Xeroxlimits. Xerox facilities conduct routine monitoring of employees’ exposures to workplace chemicals. More than 95 percent of employee chemical exposures in 2003were within Xerox limits. Where exposures were above Xerox action limits, steps weretaken immediately to reduce unsafe overexposure through the use of personal protective equipment, engineering controls, or adherence to safe job procedures.

A Xerox employee avoids unsafe exposure through the use of personal protective equipment.

Xerox Limit

Dutch Limit

U.S. Limit

0 5 10 15Milligrams per Cubic Meter

Respirable Dust Total Dust

Workplace Exposure Limits

0.42.5

510

515

Occupational health professionals at Xerox’sMitcheldean, U.K., facility complete checks on emergency medical equipment.


Health Studies: Establishing the Safety of TonerAs one of the world’s largest manufacturers and distributors of toner, Xerox has longrecognized its responsibility to establish the safety of this material for employees and customers. Toner — fine powders composed of plastics, colorants, and smallquantities of functional additives — has been the focus of health studies Xerox initiated over 20 years ago to examine toner’s potential long-term health effects.

The first of these studies, completed in 1989, was a comprehensive laboratory analysis. Results indicated some health effects at very high levels of dust exposure,levels unlikely to be experienced by workers in Xerox plants. Nonetheless, Xerox lowered toner dust levels in our factories at that time and instituted strict controls on dust emissions from Xerox products.

The other health studies focus on Xerox employees who manufacture toner and service our equipment. One study involves an evaluation of more than 32,000employees who worked at Xerox between 1960 and 1982. This study uses standardized techniques to compare the causes of death for these Xerox populationsto causes of death for the overall U.S. population in order to determine if there are anywork-related mortality patterns. Another study evaluates the potential health effects oftoner on current Xerox manufacturing and service employees exposed to toner, with afocus on the respiratory and cardiovascular systems. To date, neither of these studieshas shown evidence of chronic health effects due to toner exposure.

Xerox health studies have expanded to include the assessment of employees exposedto color toners. Evaluation of our employees at Xerox’s Oakville Color Toner Plant inCanada began in 2003 and will be initiated at our Dundalk, Ireland, facility in 2004.

Xerox will continue to evaluate the health effects of conventional toner, as well as newtoner and ink technologies, through its ongoing studies.

Promoting Employee WellnessXerox encourages healthy behaviors and a proper balance between work and personallife in a number of ways. Tips on nutrition, fitness, self-care, and other aspects ofhealthy living are shared with employees through the Xerox intranet, newsletters, bulletin board displays, and e-mail communications. Our larger U.S. facilities provideon-site fitness centers. Each Xerox site tailors additional offerings such as healthscreenings, fitness classes, lunchtime seminars, instructional programs, and recreation leagues to meet local employees’ needs and preferences.

Work-Life BalanceXerox is committed to helping employees balance the demands of their professionaland personal lives. Xerox offers alternative work arrangements, including flexiblehours, job sharing, and telecommuting. The company also provides a wide range ofbenefits, including help for first-time home buyers, child-care subsidies, and adoptionassistance. Professional counseling and referral services are available to help employees address parenting and elder-care issues and other personal concerns.

EMPLOYEE WELL-BEING

Children of Xerox employees around the world participatedin Xerox’s 2004 Safety Week poster exhibition.

Xerox employees make use of the on-site fitnesscenter at our Webster, New York, campus.

Employee and Community Involvement | 35

Recognizing Employee ContributionsEarth Awards Established in 1990, the Xerox Earth Awards program recognizes employee efforts to practice the “three Rs” — reduce, reuse, and recycle. Each year, teams and individuals from around the world are nominated in categories such as energy andresource conservation, environmental leadership, and community involvement.

Showcasing environmental innovations throughout the global Xerox community, the Earth Awards program is an important communications vehicle. The program has increased employee awareness of Xerox’s environmental goals and initiatives and inspired new efforts throughout the company.

Xerox presented Earth Awards to 14 employee teams in 2004. Selected from 46 nominations, these teams are responsible for substantial environmental benefits for local communities and cost savings of over $5 million for Xerox.

Safety AwardsModeled after the Earth Awards, Xerox’s Safety Awards program was instituted in 2003to raise awareness of the importance of workplace safety. The program seeks out bestpractices in all areas of workplace safety, including fire protection, industrial hygiene,and ergonomics. In 2004, the program generated 25 nominations from employeesaround the world. From these nominations, 6 individuals along with 8 teams werehonored with awards.

To further support the Safety Awards program, Xerox has established two additionalrecognition programs in 2004. The Zero Injury Awards acknowledge organizationsworldwide that excel in safety performance by reducing injuries to the lowest possible level. The Safety Achievement Awards recognize organizations worldwidethat have achieved a 20 percent or greater year-over-year injury reduction. In its first year, 12 organizations from around the world received Zero Injury Awards, while14 organizations were presented Safety Achievement Awards.

EMPLOYEE AND COMMUNITY INVOLVEMENTXerox employees form the backbone of our day-to-day efforts to achieve corporate safety goalsand commitments to environmental and socialresponsibility. Working in Xerox facilities and surrounding communities, our people invest theirexperience, creativity, and energy in makingprogress toward sustainable growth.

PARTNERSHIPS FOR PROGRESS

The Xerox Earth Awards program recognizes employees’ contributions to environmental protection.

The Xerox Safety Awards recognize employees for leadership efforts in promoting workplace safety. Dave Nappi (right) presents a Safety Award to Bill Allocco (left) for his outstanding contribution to safety.

The Zero Injury Awards program recognizesorganizations’ excellence in safety performance.

Representing the Xerox Supplies Business Group Asset Recovery Team in Webster, New York, VictorBerko-boateng (right) accepts an Earth Award from John Laing (left).

36 | Employee and Community Involvement

Community Outreach As a global business leader, Xerox recognizes the importance of extending our commitment to sustainable growth beyond our corporate boundaries. This page features a few of the many outreach activities that Xerox and its people support.

Earth DayXerox people around the world celebrate Earth Day each year, organizing local events to promote environmental awareness among employees and surroundingcommunities. In 2003, staff volunteers from the Xerox Research Centre of Canada hosted a community Environment Day for the Region of Peel to provide an opportunity for local residents to recycle boxes and dispose of household hazardouswaste. Our Rampur, India, manufacturing plant holds an annual Earth Day fair, featuring painting and poster competitions and poetry recitations.

Xerox FoundationFrom its beginnings, Xerox has helped shape the idea of corporate social responsibility.Our education and social service efforts reflect our belief that a successful corporationmust be an active participant in society. The Xerox Foundation donated approximately$11 million dollars in 2003 and remains committed to providing grants to collegesand universities and furthering the advancement of knowledge in science and technology. The Xerox Foundation extends financial support to environmental organizations such as NatureServe and the Nature Conservancy and environmental,health, and safety programs at institutions including the University of Toronto inCanada and Syracuse University in the U.S.

Each year, thousands of Xerox people throughout the U.S. volunteer through theXerox Community Involvement Project, which marks its 30th anniversary in 2004. The program started with 1,000 employees across the U.S. working on 96 projects in its inaugural year. Since that time, nearly 405,000 employees have participated inmore than 15,000 projects and donated millions of volunteer hours. Each year, morethan 13,000 people, or one-third of the Xerox U.S. work force, volunteer in their communities with the company’s sponsorship.

Educational SupportEducational support is central to Xerox’s community involvement programs. XeroxBrazil has partnered with SENAI-SP, Brazil’s top technical school, to start the largestprofessional educational center for digital printing in Latin America. More than 3,000students have attended the Xerox Digital Print Education Center since its opening inApril 2003. The facility houses leading-edge Xerox equipment and features classroomsand workshops for training and developing applications for digital printing technology.The Xerox Science Consultant Program is a partnership with Rochester, New York,elementary schools that sends Xerox engineers and scientists into classrooms twice a month to engage young learners in biology, chemistry, and earth sciences.

In 2003, Xerox Environment, Health, and Safety partnered with Syracuse University todevelop a collaborative research project on indoor air quality. In conjunction with theresearch, Xerox Environment, Health, and Safety senior technical staff members serve as advisors to graduate students at Syracuse. This joint venture provides valuable academic opportunities to Syracuse engineering graduate students whiledeveloping technology that may be useful to Xerox and to commercial establishmentsin New York State.

EMPLOYEE AND COMMUNITY INVOLVEMENT

The Xerox Community Involvement Project funding helped 30 employees and the Boston Elderly Commission plan a dinner dance for 400 senior citizens.

Hundreds of school children participate in XeroxEarth Day activities in Rampur, India.

Students from the Program for Rochester to InterestStudents in Science and Math visit Xerox’s ColorStudio in Webster, New York.

Company Profile | 37

Employees

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COMPANY PROFILEXEROX AT A GLANCE

Product PortfolioXerox provides offices and production-printing environments with a wide array of offerings.Our product portfolio includes dozens of digital imaging devices: printing and publishing systems, presses, multifunction systems, copiers, printers, and fax machines. Our line of supplies includes toners, solid and liquid inks, print/copy cartridges, and printing materials. Xerox software, solutions, and services — including operation of in-house production centers — help customers create, manage, and share documents and information.

Scope of Business OperationsXerox sales and service operations support commercial and government customers in theUnited States, Canada, Europe, and more than 120 countries in Africa, Central and SouthAmerica, Eurasia, and the Middle East. Our products are sold via direct sales, telebusiness,and the Internet, as well as independent resellers, agents, and concessionaires.

Xerox has research and manufacturing sites in 11 countries around the world. Manufacturingoperations build office printers, production-printing systems, and imaging supplies (toners,inks, photoreceptors, print/copy cartridges). They also remanufacture and recycle machinesand supplies that customers return to Xerox.

Xerox’s research and technology centers, located in the United States, Canada, and Europe,develop technologies and engineering concepts for next-generation Xerox products and solutions. Working with Xerox business groups, researchers focus on the following keyareas: marking systems, materials, digital imaging, document solutions, and services.

FOUNDED1906, as The Haloid Company1961, renamed Xerox Corporation

CORPORATE HEADQUARTERS800 Long Ridge RoadP.O. Box 1600Stamford, Connecticut 06904 U.S.A.

CHAIRMAN AND CHIEF EXECUTIVE OFFICERAnne M. Mulcahy

VICE PRESIDENT, ENVIRONMENT, HEALTH, AND SAFETYJack C. Azar

STOCK INFORMATIONXerox is publicly traded on the New York Stock Exchange; symbol XRX.

61.1

35.6

2.3

4.9

8.5

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360

For more information about Xerox’s environmental, health, and safety programs, please contact:

In North AmericaXerox Corporation 800 Phillips Road, Bldg. 205-99FWebster, New York 14580 U.S.A.Telephone: (800) 828-6571TTY: (866) 375-4134E-mail: [email protected]

In EuropeBessemer RoadWelwyn Garden CityHertfordshire AL7 1HEEnglandTelephone: 44 1707 353434E-mail: [email protected]

PublicationsThis report and the following environmental, health, and safety materials are available from the Xerox contacts listed above or theInternet: www.xerox.com/environment.

Xerox Environment, Health, and Safety Progress Reports, 2001-2004

Material Safety Data Sheets

Product Safety Data Sheets

Business Guide to Waste Reduction and Recycling

Brochures:

• Because We Can’t Remanufacture the Earth

• Environment, Health, and Safety: A Record of Progress

• Facts About Ozone

• Facts About the Safety of Xerox Products

• Protecting our Planet is a Group Project: Join In

For information about the Xerox Green World Alliance reuse/recycle program for imaging supplies, please visit www.xerox.com/gwa. The 2003 Xerox annual report and information about corporate commitments to social responsibility and diversity are available fromwww.xerox.com/csr.

©2004 XEROX CORPORATION. XEROX®, 2-Phase Extraction®, 5053®, C55®, ColorStix®, Color Xpressions®, CopyCentre®, DigiPath®, DocuShare®, FlowPort®, Green World Alliance®, iGen3®, Phaser®, and WorkCentre® are registered trademarks and Copier Assistant™, Nuvera™, Planet Light™, and Planet+™ are trademarks of Xerox Corporation in the United States and/or other countries. SmartPaper® is a registered trademark of Gyricon LLC. ENERGY STAR® and the ENERGY STAR mark are registered U.S. marks. All rights reserved. 10/04 610P629200

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