Exhibit 12 (b)



Xerox Corporation

Computation of Ratio of Earnings to Fixed Charges



The ratio of
earnings to fixed charges, the ratio of earnings to combined 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, (b) distributed equity income, (c) fixed charges, as defined below and (d) amortization of capitalized interest, if any. From this total, we subtract capitalized interest, if any.



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 and (c) that portion of rental expense that is representative of the interest factor.



Preferred stock dividendsused in the ratio of earnings to combined fixed charges and
preferred stock dividends consist of the amount of pre-tax earnings required to cover dividends paid on our Series B convertible preferred stock and our Series C mandatory convertible preferred stock. The Series B dividends are tax deductible and,
as such, are equivalent to the pre-tax earnings required to cover such dividends.



Computation of Ratio of Earnings to Fixed Charges



|                                                                             |  |                             |      |   |      |   |      |  
|---------------------------------------------------------------------------- |  | --------------------------- | ---- | - | ---- | - | ---- | -
|                                                                             |  | Three MonthsEnded March 31, |     
|(In millions)                                                                |  | 2004                        |      |   | 2003 |  
|Fixed charges:                                                               |  |                             |      |   |      |   |      |  
|Interest expense                                                             |  | $                           | 184  |   |      | $ | 238  |  
|Portion of rental expense which represents interest factor                   |  |                             | 20   |   |      |   | 19   |  
|                                                                             |  |                             |      |   |      |   |      |  
|Total fixed charges                                                          |  | $                           | 204  |   |      | $ | 257  |  
|                                                                             |  |                             |      |   |      |   |      |  
|Earnings available for fixed charges:                                        |  |                             |      |   |      |   |      |  
|Earnings                                                                     |  | $                           | 232  |   |      | $ | (132 | )
|Less: Undistributed equity in income of affiliated companies                 |  |                             | (23  | ) |      |   | (13  | )
|Add: fixed charges before capitalized interest and preferred stock dividends |  |                             | 204  |   |      |   | 257  |  
|                                                                             |  |                             |      |   |      |   |      |  
|Total earnings available for fixed charges                                   |  | $                           | 413  |   |      | $ | 112  |  
|                                                                             |  |                             |      |   |      |   |      |  
|Ratio of earnings to fixed charges                                           |  |                             | 2.02 |   |      |   | **   |  
|                                                                             |  |                             |      |   |      |   |      |  



|** | Earnings for the three months ended March 31, 2003 were inadequate to cover fixed charges by $145 million.
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Xerox Corporation

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends



|                                                                          |  |                             |      |   |      |   |      |  
|------------------------------------------------------------------------- |  | --------------------------- | ---- | - | ---- | - | ---- | -
|(In millions)                                                             |  | Three MonthsEnded March 31, |     
|                                                                          |  | 2004                        |      |   | 2003 |  
|Fixed charges:                                                            |  |                             |      |   |      |   |      |  
|Interest expense                                                          |  | $                           | 184  |   |      | $ | 238  |  
|Portion of rental expense which represents interest factor                |  |                             | 20   |   |      |   | 19   |  
|                                                                          |  |                             |      |   |      |   |      |  
|Total fixed charges                                                       |  |                             | 204  |   |      |   | 257  |  
|Preferred stock dividends pre-tax income requirement                      |  |                             | 33   |   |      |   | 10   |  
|                                                                          |  |                             |      |   |      |   |      |  
|Total combined fixed charges and preferred stock dividends                |  | $                           | 237  |   |      | $ | 267  |  
|                                                                          |  |                             |      |   |      |   |      |  
|Earnings available for fixed charges:                                     |  |                             |      |   |      |   |      |  
|Earnings                                                                  |  | $                           | 232  |   |      | $ | (132 | )
|Less: Undistributed equity in income of affiliated companies              |  |                             | (23  | ) |      |   | (13  | )
|Add: fixed charges                                                        |  |                             | 204  |   |      |   | 257  |  
|                                                                          |  |                             |      |   |      |   |      |  
|Total earnings available for fixed charges and preferred stock dividends  |  | $                           | 413  |   |      | $ | 112  |  
|                                                                          |  |                             |      |   |      |   |      |  
|Ratio of earnings to combined fixed charges and preferred stock dividends |  |                             | 1.74 |   |      |   | **   |  
|                                                                          |  |                             |      |   |      |   |      |  



|** | Earnings for the three months ended March 31, 2003 were inadequate to cover combined fixed charges and preferred stock dividends by $155 million.
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