"Closing the sale of our China operations to Fuji Xerox is thefirst in a series of asset dispositions that are a key element inour plan and designed to restore a sound financial foundation tothe business," said Paul A. Allaire, Xerox chairman and chiefexecutive officer.

Xerox said it has drawn down the remaining balance of its $7billion revolving credit agreement, a portion of which had beenused to repay maturing debt. The company's current cash balance isapproximately $1.4 billion, considerably higher than the $154million available as of Sept. 30. Xerox officials indicate that the$550 million from the sale of its China operations are part of thecompany's current cash balance.

"These activities further strengthen Xerox's liquidity," saidAllaire. "As we said when we announced our agreement to sell theXerox China operations, our asset dispositions are on track andahead of schedule and our cost reduction program is on track. Andwhile we are confident for a turnaround in 2001, our fourth quarterperformance is likely to be softer than the third quarter,especially in light of the current economic environment."