Exhibit 12 (b)





XEROX CORPORATION

COMPUTATION 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 charges are 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 charges are 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 our 2002 consolidated financial statements included in
an updated current report on Form 8-K dated July 23, 2003, 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 dividends used 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 and our Series C Mandatory Convertible Preferred Stock. The Series B dividends are tax deductible.



|                                                                                     |  | Three MonthsEndedJune 30, |      |   | Six MonthsEndedJune 30, |  
|------------------------------------------------------------------------------------ |  | ------------------------- | ---- | - | ----------------------- | -
|(In millions)                                                                        |  | 2003                      |      |   | 2002                    |  
|Fixed charges:                                                                       |  |                           |      |   |                         |  
|Interest expense                                                                     |  | $                         | 205  |   |                         | $
|Portion of rental expense which represents interest factor                           |  |                           | 18   |   |                         |  
|                                                                                     |  |                           |      |   |                         |  
|Total fixed charges before preferred security dividends of consolidated subsidiaries |  |                           | 223  |   |                         |  
|Preferred security dividends of consolidated subsidiaries                            |  |                           | 36   |   |                         |  
|                                                                                     |  |                           |      |   |                         |  
|Total fixed charges                                                                  |  | $                         | 259  |   |                         | $
|                                                                                     |  |                           |      |   |                         |  
|Earnings available for fixed charges:                                                |  |                           |      |   |                         |  
|Earnings (1)                                                                         |  | $                         | 162  |   |                         | $
|Less: Undistributed equity in income of affiliated companies                         |  |                           | (7   | ) |                         |  
|Add: Fixed charges before preferred security dividends of consolidated subsidiaries  |  | $                         | 223  |   |                         | $
|                                                                                     |  |                           |      |   |                         |  
|Total earnings available for fixed charges                                           |  | $                         | 378  |   |                         | $
|                                                                                     |  |                           |      |   |                         |  
|Ratio of earnings to fixed charges                                                   |  |                           | 1.46 |   |                         |  
|                                                                                     |  |                           |      |   |                         |  

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|** |  | Earnings for the six months ended June 30, 2003 was inadequate to cover fixed charges. The coverage deficiency was 26 million.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------

|(1) |  | Earnings is derived from our condensed consolidated statements of operations, included in our financial statements, as the Sum of: (a) Income 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.
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XEROX CORPORATION

COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND

PREFERRED STOCK DIVIDENDS



|                                                                                                                                        |  | Three MonthsEnded June 30, |      |   | Six MonthsEnded June 30, |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---- | - | ------------------------ | -
|(In millions)                                                                                                                           |  | 2003                       |      |   | 2002                     |  
|Fixed charges:                                                                                                                          |  |                            |      |   |                          |  
|Interest expense                                                                                                                        |  | $                          | 205  |   |                          | $
|Portion of rental expense which represents interest factor                                                                              |  |                            | 18   |   |                          |  
|                                                                                                                                        |  |                            |      |   |                          |  
|Total fixed charges before preferred security dividends of consolidated subsidiaries and preferred stock dividends                      |  |                            | 223  |   |                          |  
|Preferred security dividends of consolidated subsidiaries                                                                               |  |                            | 36   |   |                          |  
|Preferred stock dividends                                                                                                               |  |                            | 11   |   |                          |  
|                                                                                                                                        |  |                            |      |   |                          |  
|Total combined fixed charges and preferred stock dividends                                                                              |  | $                          | 270  |   |                          | $
|                                                                                                                                        |  |                            |      |   |                          |  
|Earnings available for fixed charges:                                                                                                   |  |                            |      |   |                          |  
|Earnings (1)                                                                                                                            |  | $                          | 162  |   |                          | $
|Less: Undistributed equity in income of affiliated companies                                                                            |  |                            | (7   | ) |                          |  
|Add: Fixed charges before capitalized interest, preferred security dividends of consolidated subsidiaries and preferred stock
dividends |  |                            | 223  |   |                          |  
|                                                                                                                                        |  |                            |      |   |                          |  
|Total earnings available for fixed charges                                                                                              |  | $                          | 378  |   |                          | $
|                                                                                                                                        |  |                            |      |   |                          |  
|Ratio of earnings to combined fixed charges and preferred stock dividends                                                               |  |                            | 1.40 |   |                          |  
|                                                                                                                                        |  |                            |      |   |                          |  

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|** |  | Earnings for the six months ended June 30, 2003 was inadequate to cover combined fixed charges and preferred stock dividends. The coverage deficiency was $47 million.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) |  | Same as above.
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