Xerox 10-Q 2007 Q2 Quarterly report

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 chargesare 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 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 C mandatory convertible preferred stock. Series C mandatory convertible preferred stock was redeemed and converted to common stock as of July 3, 2006 and as such, there were no dividends beyond such date.

Computation of Ratio of Earnings to Fixed Charges

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2007			2006		2007			2006
Fixed charges:
Interest expense	$	149		$	136	$	285		$	266
Portion of rental expense which represents interest factor		23			23		45			45
Total fixed charges	$	172		$	159	$	330		$	311
Earnings available for fixed charges:
Earnings	$	342		$	282	$	677		$	529
(Undistributed) distributed equity in income of affiliated companies		(13	)		3		(18	)		(34	)
Fixed charges		172			159		330			311
Total earnings available for fixed charges	$	501		$	444	$	989		$	806
Ratio of earnings to fixed charges		2.91			2.79		3.00			2.59

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)	2007			2006		2007			2006
Fixed charges:
Interest expense	$	149		$	136	$	285		$	266
Portion of rental expense which represents interest factor		23			23		45			45
Total fixed charges		172			159		330			311
Preferred stock dividends pre-tax income requirements		—			24		—			48
Total combined fixed charges and preferred stock dividends	$	172		$	183	$	330		$	359
Earnings available for fixed charges:
Earnings	$	342		$	282	$	677		$	529
(Undistributed) distributed equity in income of affiliated companies		(13	)		3		(18	)		(34	)
Fixed charges before preferred stock dividends		172			159		330			311
Total earnings available for fixed charges and preferred stock dividends	$	501		$	444	$	989		$	806
Ratio of earnings to combined fixed charges and preferred stock dividends		2.91			2.43		3.00			2.25