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Exhibit 12 (b)

                                Xerox Corporation
                Computation of Ratio of Earnings to Fixed Charges

<TABLE>
<CAPTION>
                                                      Three months ended
(In millions)                                              March 31,
                                                                    2001
                                                        2002      Restated
                                                  ----------------------------
<S>                                               <C>            <C>
Fixed charges:
   Interest expense                                   $ 173        $ 293
   Portion of rental expense which
     Represents interest factor                          21           27

Total fixed charges before capitalized
   interest and preferred stock dividends of
   subsidiaries                                         194          320
Capitalized interest                                      -            -

Preferred stock dividends of subsidiaries                16           14
                                                      ------------------
   Total fixed charges                                $ 210        $ 334
                                                      ==================

Earnings available for fixed charges:
   Earnings                                           $ (42)       $ 641

   Less undistributed income in minority owned
   companies                                            (24)          (6)
   Add fixed charges before capitalized
   interest and preferred stock dividends of
   subsidiaries                                         194          320
                                                      ------------------
   Total earnings available for fixed charges         $ 128        $ 955
                                                      ==================
Ratio of earnings to fixed charges (1)                   **         2.86
                                                      ==================
</TABLE>

     (1)  For purposes of determining the ratio of earnings to fixed charges and
          deficiency of earnings to cover fixed charges, if applicable, earnings
          are defined as the income (loss)from continuing operations before
          income taxes and adjustment for minority interest or income or loss
          from equity investees, plus fixed charges (net of capitalized interest
          and preferred stock dividend requirements), amortization of
          capitalized interest, and distributed income of equity investees.
          Fixed charges consist of interest costs (both expensed and capitalized
          during the period) amortization of debt expense and discount or
          premium relating to any indebtedness, that portion of rental expense
          that is representative of the interest factor and the amount of
          pre-tax earnings required to cover preferred stock dividends of
          subsidiaries. This definition of fixed charges complies with
          Regulation S-K but is not consistent with the definition contained in
          the indentures.

     *    Sum of Income (Loss) before Income Taxes, Equity Income, Minorities'
          Interest, Extraordinary Gain, Cumulative Effect of Change in
          Accounting Principles, Discontinued Operations and includes Equity in
          net income of unconsolidated affiliates.
     **   Earnings for the three months ended March 31, 2002 were inadequate to
          cover fixed charges. The coverage deficiency was $82 million.