Xerox Announces Proposed Settlement for Pension Lawsuit

    Xerox Corporation
Cynthia B. Johnston, 203-968-3489
Fax: [phone]
[e-mail]
    or
Darlene Caldarelli, 203-968-3807
Fax: [phone]
[e-mail]

The Xerox Corporation (NYSE:XRX) Retirement Income Guarantee Plan has
reached an agreement in principle to settle the pension-related Berger
v. RIGP litigation. The terms of the proposed agreement require RIGP
to settle the case for $239 million. The final settlement is subject
to the negotiation of a definitive agreement and court approval.

In April, Xerox reported a first-quarter pre-tax charge of $300
million to cover any potential pension-funding shortfall should RIGP
be required to pay damages in this case.

If the court approves the final agreement, RIGP will pay the
settlement amount from its assets. Should the company need to make a
cash contribution to compensate for a potential shortfall in the plan
related to this litigation, it would not be required to begin doing so
until 2005.

RIGP is the primary pension plan for Xerox's salaried employees in the
United States. On July 25, 2000, a lawsuit was filed against RIGP in
the United States District Court for the Southern District of
Illinois. The plaintiffs claim that the plan improperly calculated
lump-sum distributions from cash balance retirement accounts,
resulting in lower benefits for certain employees who left the company
between Jan. 1, 1990, and Dec. 31, 1999.

Former Xerox employees who are eligible to receive damages will
receive notification when the settlement is approved.

For additional information about The Document Company Xerox, please
visit our Worldwide Web site at www.xerox.com/investor.

This release contains forward-looking statements and information
relating to Xerox that are based on our beliefs as well as assumptions
made by and information currently available to us. The words
"anticipate," "believe," "estimate," "expect," "intend," "will" and
similar expressions, as they relate to us, are intended to identify
forward-looking statements. Actual results could differ materially
from those projected in such forward-looking statements. Information
concerning certain factors that could cause actual results to differ
materially is included in the company's Form 10-Q for the quarter
ended September 30, 2003, as filed with the SEC.

XEROX(R), The Document Company(R) and the digital X(R) are trademarks
of XEROX CORPORATION.