Exhibit 12 (b)

Xerox CorporationComputation of Ratio of Earnings to Fixed Charges

The ratio of earnings to fixed charges, the ratio of combined earnings to fixed charges and preferred stock
dividends, as well as any deficiency of earnings are determined using the following applicable factors:

Earnings available for fixed chargesare
calculated first, by determining the sum of: (a) income (loss) from continuing operations before income taxes, adjustment for minorities interests and equity income or loss, (b) fixed charges, as defined below, (c) amortization of capitalized
interest and (d) distributed equity income. From this total, we subtract (a) capitalized interest and (b) preferred security dividend requirements of our consolidated subsidiaries and any accretion in the carrying value of the redeemable preferred
securities of our consolidated subsidiaries.

Fixed chargesare calculated as the sum of (a) interest costs (both expensed and capitalized), (b)
amortization of debt expense and discount or premium relating to any indebtedness, (c) that portion of rental expense that is representative of the interest factor and (d) the amount of pre-tax earnings required to cover preferred security dividends
and any accretion in the carrying value in the redeemable preferred securities of our consolidated subsidiaries. Note, in our calculation, all of the dividends and related carrying value accretion of the preferred securities of our consolidated
subsidiaries are tax deductible, which are those referenced in Note 16 to the Consolidated Financial Statements included in our 2002 Form 10-K, under the caption, Company-Obligated, Mandatorily Redeemable Preferred Securities of Subsidiary
Trusts Holding Solely Subordinated Debentures of the Company. Therefore, the amount of pre-tax earnings required to cover the dividend requirements and accretion, are equal to the amount of such dividends and accretion.

Preferred stock dividendsused in the ratio of earnings to combined fixed charges and preferred stock dividends consist of the dividends paid on our Series B Convertible
Preferred Stock. These dividends are tax deductible.



|                                                                                     |  | Three Months EndedMarch 31, |    
|------------------------------------------------------------------------------------ |  | --------------------------- | ---
|                                                                                     |  |                             |    
|(In millions)                                                                        |  | 2003                        |    
|                                                                                     |  |                             |    
|Fixed charges:                                                                       |  |                             |    
|Interest expense                                                                     |  | $                           | 202
|Portion of rental expense which represents interest factor                           |  |                             | 19 
|                                                                                     |  |                             |    
|Total fixed charges before preferred security dividends of consolidated subsidiaries |  |                             | 221
|Preferred security dividends of consolidated subsidiaries                            |  |                             | 36 
|                                                                                     |  |                             |    
|Total fixed charges                                                                  |  | $                           | 257
|                                                                                     |  |                             |    
|Earnings available for fixed charges:                                                |  |                             |    
|Earnings (1)                                                                         |  | $                           | (96
|Less: Undistributed equity in income of affiliated companies                         |  |                             | (13
|Add: Fixed charges before preferred security dividends of consolidated subsidiaries  |  |                             | 221
|                                                                                     |  |                             |    
|Total earnings available for fixed charges                                           |  | $                           | 112
|                                                                                     |  |                             |    
|Ratio of earnings to fixed charges                                                   |  |                             | ** 
|                                                                                     |  |                             |    

______________



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**

Earnings for the three months ended March 31, 2003
and 2002 were inadequate to cover fixed charges. The coverage deficiency was $145 million and $97 million, respectively.

(1)

Earnings is derived from our condensed consolidated statements of operations, included in our financial statements, as the Sum of: (a) Loss before Income Tax Benefits,
Equity Income, Minorities Interests and Cumulative Effect of Change in Accounting Principle and (b) Equity in net income of unconsolidated affiliates.

Xerox CorporationComputation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends



|                                                                                                                                        |  | Three MonthsEnded March 31, |    
|--------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ---
|                                                                                                                                        |  |                             |    
|(In millions)                                                                                                                           |  | 2003                        |    
|                                                                                                                                        |  |                             |    
|Fixed charges:                                                                                                                          |  |                             |    
|Interest expense                                                                                                                        |  | $                           | 202
|Portion of rental expense which represents interest factor                                                                              |  |                             | 19 
|                                                                                                                                        |  |                             |    
|Total fixed charges before preferred security dividends of consolidated subsidiaries and preferred stock
dividends                      |  |                             | 221
|Preferred security dividends of consolidated subsidiaries                                                                               |  |                             | 36 
|Preferred stock dividends                                                                                                               |  |                             | 10 
|                                                                                                                                        |  |                             |    
|Total combined fixed charges and preferred stock dividends                                                                              |  | $                           | 267
|                                                                                                                                        |  |                             |    
|Earnings available for fixed charges:                                                                                                   |  |                             |    
|Earnings(1)                                                                                                                             |  | $                           | (96
|Less: Undistributed equity in income of affiliated companies                                                                            |  |                             | (13
|Add: Fixed charges before capitalized interest, preferred security dividends of consolidated subsidiaries and preferred stock
dividends |  |                             | 221
|                                                                                                                                        |  |                             |    
|Total earnings available for fixed charges                                                                                              |  | $                           | 112
|                                                                                                                                        |  |                             |    
|Ratio of earnings to combined fixed charges and preferred stock dividends                                                               |  |                             | ** 
|                                                                                                                                        |  |                             |    

______________

**

Earnings for the three months ended March 31, 2003 and 2002 were inadequate to cover combined fixed charges and preferred stock dividends. The
coverage deficiency was $155 million and $97 million, respectively.

(1)

Same as above.



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