Exhibit 12

XEROX CORPORATION

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

Preferred stock dividends used 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. The Series B convertible preferred stock was redeemed and converted to common stock as of May 27, 2004 and, as such, there will be no future dividends beyond such date.

Computation of Ratio of Earnings to Fixed Charges

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
	($ In millions)
Fixed charges:
Interest expense	$	176		$	216		$	530		$	695
Portion of rental expense which represents interest factor		20			18			64			55
Total fixed charges	$	196		$	234		$	594		$	750
Earnings available for fixed charges:
Earnings	$	225		$	155		$	756		$	149
Less: Undistributed equity in income of affiliated companies		(59	)		(13	)		(93	)		(33	)
Add: fixed charges before capitalized interest and preferred stock dividends		196			234			594			750
Total earnings available for fixed charges	$	362		$	376		$	1,257		$	866
Ratio of earnings to fixed charges		1.85			1.61			2.12			1.15

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
	($ In millions)
Fixed charges:
Interest expense	$	176		$	216		$	530		$	695
Portion of rental expense which represents interest factor		20			18			64			55
Total fixed charges	$	196		$	234		$	594		$	750
Preferred stock dividends pre-tax income requirements		24			35			87			56
Total combined fixed charges and preferred stock dividends	$	220		$	269		$	681		$	806
Earnings available for fixed charges:
Earnings	$	225		$	155		$	756		$	149
Less: Undistributed equity in income of affiliated companies		(59	)		(13	)		(93	)		(33	)
Add: fixed charges		196			234			594			750
Total earnings available for fixed charges and preferred stock dividends	$	362		$	376		$	1,257		$	866
Ratio of earnings to combined fixed charges and preferred stock dividends		1.65			1.40			1.85			1.07