Exhibit 12

XEROX CORPORATION

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

Earnings available for fixed charges are calculated first, by determining the sum of: (a) income 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 June 30,					Six Months Ended June 30,
(in millions)	2005		2004			2005			2004
Fixed charges:
Interest expense	$	145	$	170		$	292		$	354
Portion of rental expense which represents interest factor		18		24			37			44
Total Fixed charges	$	163	$	194		$	329		$	398
Earnings available for fixed charges:
Earnings	$	137	$	299		$	463		$	531
Adjusted for: Distributed (undistributed) equity income of unconsolidated affiliates		2		(11	)		(33	)		(34	)
Add: Fixed charges before preferred stock dividends		163		194			329			398
Total Earnings available for fixed charges	$	302	$	482		$	759		$	895
Ratio of earnings to fixed charges		1.85		2.48			2.31			2.25

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

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2005		2004			2005			2004
Fixed charges:
Interest expense	$	145	$	170		$	292		$	354
Portion of rental expense which represents interest factor		18		24			37			44
Total Fixed charges before preferred stock dividends pre-tax income requirement		163		194			329			398
Preferred stock dividends pre-tax income requirements		24		30			47			63
Total Combined fixed charges and preferred stock dividends	$	187	$	224		$	376		$	461
Earnings available for fixed charges:
Earnings	$	137	$	299		$	463		$	531
Adjusted for: Distributed (undistributed) equity income of unconsolidated affiliates		2		(11	)		(33	)		(34	)
Add: Fixed charges before preferred stock dividends		163		194			329			398
Total Earnings available for fixed charges	$	302	$	482		$	759		$	895
Ratio of earnings to combined fixed charges and preferred stock dividends		1.61		2.15			2.02			1.94