Moody's assigns Xerox Corp. SGL-1 rating

Moody's Investors Service said it assigned to Xerox Corp. a first-time SGL-1 rating, indicating very good liquidity.

Moody's said the rating considers its $2.3 billion of cash balances at September 2003, expectations of stable cash flow from operations, and comfortable room under the covenants in its undrawn $700 million secured bank facility in the context of its scheduled public debt maturities, which total $1.1 billion in the fourth quarter of 2003 and about $1 billion over the first nine months of 2004.

Xerox revenues remain pressured (down 1.7% nine months September 2003) due to the continued cautious demand worldwide for office equipment, competitive pricing, the decline related to the older analog post sale streams, and the lagging impact of weak product installations and share loss in the 1999-2001 period.

While most of these issues are expected to persist to varying degrees over the next year, Xerox's improved installations over the last few quarters should set the stage for modest revenue growth in late 2004 or 2005.

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