EXHIBIT 12

Computation of Ratio of Earnings to Fixed Charges

Year ended December 31  (in millions)    2000    1999    1998    1997    1996
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Fixed Charges:
  Interest expense                     $1,031  $  803  $  749  $  617  $  592
  Rental expense                          115     132     145     140     140
                                       --------------------------------------
    Total fixed charges before
     capitalized interest and
     preferred stock dividend
     of subsidiary                      1,146     935     894     757     732
  Capitalized interest                      3       8       -       -       -
  Preferred stock dividend of
   subsidiary                              55      55      55      50       -
                                       --------------------------------------
    Total fixed charges                $1,204  $  998  $  949  $  807  $  732
                                       ======================================

Earnings available for fixed charges:

  Earnings**                           $ (323) $1,976  $  653  $2,132  $2,045
  Less undistributed income in
   minority owned companies               (20)    (68)    (27)    (84)    (84)
  Add fixed charges before capitalized
   interest and preferred stock
   dividend of subsidiary               1,146     935     894     757     732
                                       --------------------------------------
    Total earnings available for
     fixed charges                     $  803  $2,843  $1,520  $2,805  $2,693
                                       ======================================

Ratio of earnings to fixed
 charges (1)(2)                           *      2.85    1.60    3.48    3.68


(1) The ratio of earnings to fixed charges has been computed based on the
    Company's continuing operations by dividing total earnings available for
    fixed charges, excluding capitalized interest, by total fixed charges. Fixed
    charges consist of interest, including capitalized interest and preferred
    stock dividend requirements of subsidiaries, and one-third of rent expense
    as representative of the interest portion of rentals.

(2) The Company's ratio of earnings to fixed charges includes the effect of the
    Company's finance subsidiaries, which primarily finance Xerox equipment.
    Financing businesses are more highly leveraged and, therefore, tend to
    operate at lower earnings to fixed charges ratio levels than do
    non-financial businesses.

 *  Earnings for the year ended December 31, 2000 were inadequate to cover fixed
    charges. The coverage deficiency was $401.

**  Sum of "Income before Income Taxes, Equity Income and Minorities' Interests"
    and "Equity in Net Income of Unconsolidated Affiliates."



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