FORM 10-Q

		   SECURITIES AND EXCHANGE COMMISSION
			 Washington, D.C. 20549
(Mark One)

[ X ]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended: June 30, 1997

	OR

[   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

	For the transition period from __________ to___________

Commission File Number 1-4471

			XEROX CORPORATION
		   (Exact Name of Registrant as
		     specified in its charter)

	    New York                       16-0468020             _
 (State or other jurisdiction   (IRS Employer Identification No.) 
of incorporation or organization)

			   P.O. Box 1600
		  Stamford, Connecticut   06904-1600
	      (Address of principal executive offices)
				(Zip Code)

			  (203) 968-3000             _  
	  (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months 
(or for such shorter period that the registrant was required to 
file such reports), and (2) has been subject to such filing 
requirements for the past 90 days.
 
Yes     X     No           

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

    Class                         Outstanding at July 31,1997

Common Stock                           325,137,709 shares

	      This document consists of 31 pages.



















This Form 10-Q contains certain forward-looking statements and 
information relating to the Company that are based on the beliefs 
of management as well as assumptions made by and information 
currently available to management.  The words "anticipate", 
"believe", "estimate", "expect", "intends", and similar 
expressions, as they relate to the Company or the Company's 
management, are intended to identify forward-looking statements.  
Such statements reflect the current views of the Company with 
respect to future events and are subject to certain risks, 
uncertainties and assumptions.  Should one or more of these risks 
or uncertainties materialize, or should underlying assumptions 
prove incorrect, actual results may vary materially from those 
described herein as anticipated, believed, estimated or expected.  
The Company does not intend to update these forward-looking 
statements.


			   Xerox Corporation
			       Form 10-Q
			     June 30, 1997

Table of Contents
							     Page
Part I -  Financial Information

   Item 1. Financial Statements

      Consolidated Statements of Income                         5

      Consolidated Balance Sheets                               6

      Consolidated Statements of Cash Flows                     7

      Notes to Consolidated Financial Statements                8

   Item 2. Management's Discussion and Analysis of Results of
     Operations and Financial Condition

      Document Processing                                      13

      Discontinued Operations                                  19

      Capital Resources and Liquidity                          23

      Hedging Instruments                                      25

Part II - Other Information

   Item 1. Legal Proceedings                                   26

   Item 2. Changes in Securities                               26

   Item 4. Submission of Matters to a Vote of Security Holders 26

   Item 6. Exhibits and Reports on Form 8-K                    27

Signatures                                                     29

Exhibit Index

   Computation of Net Income per Common Share                  30

   Computation of Ratio of Earnings to Fixed Charges           31

   Letter Agreement dated June 4, 1997 between Registrant and
   G. Richard Thoman, President and Chief Operating Officer of 
   Registrant                     (filed in electronic form only)

Financial Data Schedule           (filed in electronic form only)


For additional information about The Document Company Xerox, 
please visit our World-wide Web site at www.xerox.com and select 
"Investor Information."


PART I - FINANCIAL INFORMATION

Item I                           Xerox Corporation
			  Consolidated Statements of Income

					Three months ended  Six months ended
					       June 30,           June 30,
(In millions, except per-share data)        1997     1996      1997    1996

Revenues
  Sales                                  $ 2,286  $ 2,192   $ 4,265  $ 4,102
  Service and rentals                      1,817    1,778     3,607    3,540
  Finance income                             253      247       506      503
  Total Revenues                           4,356    4,217     8,378    8,145


Costs and Expenses
  Cost of sales                            1,230    1,191     2,354    2,282
  Cost of service and rentals                913      882     1,811    1,781
  Equipment financing interest               129      125       258      255
  Research and development expenses          281      264       543      518
  Selling, administrative and general 
    expenses                               1,288    1,269     2,468    2,435
  Other, net                                  18       27        19       31
  Total Costs and Expenses                 3,859    3,758     7,453    7,302


Income before Income Taxes, Equity Income
   and Minorities' Interests                 497      459       925      843

  Income taxes                               175      164       325      303
  Equity in net income of unconsolidated
    affiliates                                46       42        68       62
  Minorities' interests in earnings of
    subsidiaries                              31       44        61       72

Income from Continuing Operations            337      293       607      530

Discontinued Operations                        -        -         -        -

Net Income                                $  337  $   293    $  607  $   530

Primary Earnings per Share
  Continuing Operations                   $ 1.00  $  0.85    $ 1.78  $  1.53
  Discontinued Operations                      -        -         -        -
Primary Earnings per Share                $ 1.00  $  0.85    $ 1.78  $  1.53

Fully Diluted Earnings per Share
  Continuing Operations                   $ 0.94  $  0.81    $ 1.69  $  1.46
  Discontinued Operations                      -        -         -        -
Fully Diluted Earnings per Share          $ 0.94  $  0.81    $ 1.69  $  1.46

See accompanying notes.


				 Xerox Corporation
			    Consolidated Balance Sheets

					      June 30,      December 31,
(In millions, except share data in thousands)    1997             1996
Assets

Cash                                         $    118          $   104
Accounts receivable, net                        2,135            2,022
Finance receivables, net                        4,232            4,386
Inventories                                     3,046            2,676
Deferred taxes and other current assets         1,014              964

  Total Current Assets                         10,545           10,152

Finance receivables due after one year, net     6,973            6,986
Land, buildings and equipment, net              2,264            2,256
Investments in affiliates, at equity            1,474            1,282
Goodwill                                        1,368              623
Other assets                                    1,232            1,121
Investment in discontinued operations           3,977            4,398

Total Assets                                 $ 27,833         $ 26,818
									

Liabilities and Equity

Short-term debt and current portion of 
  long-term debt                             $  3,412        $   3,536
Accounts payable                                  525              577
Accrued compensation and benefit costs            605              761
Unearned income                                   210              208
Other current liabilities                       2,202            2,122

  Total Current Liabilities                     6,954            7,204

Long-term debt                                  9,797            8,424
Postretirement medical benefits                 1,074            1,050
Deferred taxes and other liabilities            2,344            2,429
Discontinued operations liabilities -                                 
  policyholders' deposits and other             2,090            2,274
Deferred ESOP benefits                           (494)            (494)
Minorities' interests in equity of subsidiaries   121              843
Company obligated, mandatorily redeemable
  preferred securities of subsidiary trust
  holding solely subordinated debentures
  of the Company                                  637                -
Preferred stock                                   713              721
Common shareholders' equity                     4,597            4,367

Total Liabilities and Equity                 $ 27,833        $  26,818

Shares of common stock issued                      325,902           325,902
Shares of common stock outstanding                 324,777           323,681

See accompanying notes.





				 Xerox Corporation
		       Consolidated Statements of Cash Flows

Six months ended June 30  (in millions)                1997         1996

Cash Flows from Operating Activities 
Income from Continuing Operations                     $ 607       $  530
Adjustments required to reconcile income to cash
 flows from operating activities:
  Depreciation and amortization                         334          357
  Provisions for doubtful accounts                      114           88
  Provision for postretirement medical
    benefits, net of payments                            20           23
  Minorities' interests in earnings of subsidiaries      61           72
  Undistributed equity in income of affiliated companies(65)         (62)
  Increase in inventories                              (568)        (543)
  Increase in finance receivables                      (247)        (187)
  Increase in accounts receivable                      (148)        (282)
  Decrease in accounts payable and accrued 
    compensation and benefit costs                     (204)        (177)
  Net change in current and deferred income taxes        71          124 
  Other, net                                           (184)        (444)
Total                                                  (209)        (501)

Cash Flows from Investing Activities                                    
  Cost of additions to land, buildings and equipment   (193)        (241)
  Proceeds from sales of land, buildings and equipment   19           30
  Purchase of additional interest in Rank Xerox        (812)           -
  Net change in payables to Discontinued Operations     (26)           -
Total                                                (1,012)        (211)

Cash Flows from Financing Activities
  Net change in debt                                    617        1,079
  Dividends on common and preferred stock              (237)        (220)
  Proceeds from sale of common stock                    108           66
  Repurchase of common and preferred stock             (116)        (207)
  Dividends to minority shareholders                     (3)          (1)
  Net proceeds from issuance of mandatorily
    redeemable preferred stock                          637            -
Total                                                 1,006          717
Effect of Exchange Rate Changes on Cash                  (8)          (2)

Cash Provided (Used) by Continuing Operations          (223)           3

Cash Provided (Used) by Discontinued Operations         237         (121)
Increase (Decrease) in Cash                              14         (118)

Cash at Beginning of Period                             104          136

Cash at End of Period                                 $ 118       $   18

See accompanying notes.

   Xerox Corporation
   Notes to Consolidated Financial Statements

1.  The consolidated financial statements presented herein have 
been prepared by Xerox Corporation ("the Company") in accordance 
with the accounting policies described in its 1996 Annual Report 
to Shareholders and should be read in conjunction with the notes 
thereto.

Effective 1997, Fuji Xerox changed its reporting period from a 
fiscal year ending October 20 to a fiscal year ending December 
20.  The results of operations during the period between the end 
of the 1996 fiscal year and the beginning of the new fiscal year 
(the stub period) amounted to a gain of $8 million.  The gain was 
credited to retained earnings.

In the opinion of management, all adjustments (consisting only of 
normal recurring adjustments) which are necessary for a fair 
statement of operating results for the interim periods presented 
have been made. Interim financial data presented herein are 
unaudited.

References herein to "we" or "our" refer to Xerox and 
consolidated subsidiaries unless the context specifically 
requires otherwise.


2.  Inventories consist of (in millions):

					 June 30,     December 31,
					     1997             1996

Finished products                       $   1,779         $  1,570
Work in process                               110               80
Raw materials and supplies                    419              322
Equipment on operating leases, net            738              704
    Total                               $   3,046         $  2,676


3.  In June, 1997, we acquired the remaining 20 percent of Rank 
Xerox Limited (Rank Xerox) from The Rank Group Plc (Rank) in a 
transaction valued at 940 million pounds sterling, or 
approximately $1.5 billion.  As a result of this transaction, we 
now own 100 percent of Rank Xerox.  The transaction was funded 
entirely by debt consisting of 500 million pounds sterling of 
third party debt and 440 million pounds sterling of notes payable 
issued to Rank, which will be paid in deferred installments, half 
within one year and the other half at the end of two years.  An 
additional payment of up to 60 million pounds sterling would be 
made in 2000 based upon achievement of certain Rank Xerox 
earnings growth targets by 1999.  The purchase price was 
allocated such that goodwill increased by $737 million, minority 
interest in equity of subsidiaries was reduced by approximately 
$720 million, with the balance of $70 million applied to other 
assets and liabilities, primarily investment in affiliates, at 
equity.


4.  In January 1997, a trust sponsored and wholly owned by the 
Company issued 650,000 shares of 8% Capital Securities (the 
Preferred Securities) with an aggregate liquidation amount of 
$650 million to the public for net proceeds, after discount and 
fees, of $637 million.  The trust also issued 20,103 shares of 
common securities to the Company.  The proceeds from these 
offerings were invested by the trust in $650 million aggregate 
principal amount of the Company's newly-issued 8% Junior 
Subordinated Debentures due 2027 (the Debentures).  The 
Debentures represent all of the assets of the trust.  The 
proceeds from the issuance of the Debentures were used by the 
Company for general corporate purposes.  The Debentures and 
related income statement effects are eliminated in the Company's 
consolidated financial statements.

The Preferred Securities accrue and pay cash distributions semi-
annually at a rate of 8% per annum of the stated liquidation 
amount of $1,000 per Preferred Security.  The Company has 
guaranteed, on a subordinated basis, distributions and other 
payments due on the Preferred Securities (the Guarantee).  The 
Guarantee, when taken together with the Company's obligations 
under the Debentures and in the indenture pursuant to which the 
Debentures were issued and the Company's obligations under the 
Amended and Restated Declaration of Trust governing the trust, 
provides a full and unconditional guarantee of amounts due on the 
Preferred Securities.

The Preferred Securities are mandatorily redeemable upon the 
maturity of the Debentures on February 1, 2027, or earlier to the 
extent of any redemption by the Company of any Debentures.  The 
redemption price on February 1, 2027 will be $1,000 per share 
plus accrued and unpaid distributions to the date fixed for 
redemption.



5.  Common shareholders' equity consists of (in millions):

					  June 30,     December 31,
					     1997             1996

Common stock                             $    327         $    327
Additional paid-in-capital                  1,349            1,353
Retained earnings                           3,459            3,090
Net unrealized gain (loss) on
  investment securities                         5               (1)
Translation adjustments                      (424)            (241)
Treasury stock                               (119)            (161)
    Total                                $  4,597         $  4,367

6.  Interest expense totaled $288 million and $295 million for 
the six months ended June 30, 1997 and 1996, respectively.  


7.  In 1996, the Board of Directors authorized the Company to 
repurchase up to $1 billion of Xerox common stock.  The stock 
would be purchased from time to time on the open market depending 
on market conditions.  Through June 30, 1997, 8.5 million shares 
had been repurchased for $422 million, some of which had been 
reissued to satisfy the exercise of stock options.  In the second 
quarter of 1997, the repurchase program was suspended in 
connection with the acquisition of the remaining interest in Rank 
Xerox, as described above.


8.  Summarized operating results of Insurance follow (in 
millions):

					Three months ended   Six months ended
					      June 30,            June 30,
					   1997     1996       1997     1996

Revenues
Insurance premiums earned                $  381   $  436     $  805   $  854
Investment and other income                 112      107        223      213
     Total Revenues                         493      543      1,028    1,067
Costs and Expenses
Insurance losses and loss expenses          556      362        921      705
Insurance acquisition costs and
  other operating expenses                  129      141        277      283
Interest expense                             49       48         98      102
Administrative and general expenses         (39)       3        (28)       9
     Total Costs and Expenses               695      554      1,268    1,099
Realized Capital Gains                        1        -          7        2
Gain on Sale of Subsidiary                   63        -         63        -
Income (Loss) Before Income Taxes          (138)     (11)      (170)     (30)
Income Tax Benefits                          49        5         65       14
Income (Loss) From Insurance *           $  (89)  $   (6)    $ (105)  $  (16)

*  The total Insurance after-tax losses were charged to reserves established 
   for this purpose and, therefore, did not impact our earnings.


The net assets at June 30, 1997 and December 31, 1996 of the 
Insurance businesses included in our consolidated balance sheets 
as discontinued operations are as follows (in millions):

						    June 30,     December 31,
							1997             1996
Insurance Assets
Investments                                          $ 6,888          $ 7,889
Reinsurance recoverable                                2,111            2,458
Premiums and other receivables                         1,003            1,082
Deferred taxes and other assets                          987            1,201
     Total Insurance Assets                          $10,989          $12,630

Insurance Liabilities
Unpaid losses and loss expenses                      $ 7,538          $ 8,572
Unearned income                                          609              812
Notes payable                                            265              215
Other liabilities                                        979            1,185
     Total Insurance Liabilities                     $ 9,391          $10,784
Investment in Insurance, net                         $ 1,598          $ 1,846


9.  Litigation 
     
Continuing Operations

On March 10, 1994, a lawsuit was filed in the United States 
District Court for the District of Kansas by two independent 
service organizations (ISOs) in Kansas City and St. Louis and 
their parent company. Plaintiffs claim damages predominately 
resulting from the Company's alleged refusal to sell parts for 
high volume copiers and printers to plaintiffs prior to 1994. The 
Company's policies and practices with respect to the sale of 
parts to ISOs were at issue in an antitrust class action in 
Texas, which was settled by the Company during 1994. Claims for 
individual lost profits of ISOs who were not named parties, such 
as the plaintiffs in the Kansas action, were not included in that 
class action. In their complaint plaintiffs allege monetary 
damages in the form of lost profits in excess of $10 million (to 
be trebled) and injunctive relief.  In a report prepared, 
pursuant to Rule 26(a)2)B)of the Federal Rules of Civil 
Procedure, an accountant retained by plaintiffs as an expert has 
indicated that he plans to testify at trial that, allegedly as a 
result of Xerox' conduct, plaintiffs have lost profits of 
approximately $75 million. The Company has asserted counterclaims 
against the plaintiffs alleging patent and copyright 
infringement, misappropriation of Xerox trade secrets and 
conversion. On December 11, 1995, the District Court issued a 
preliminary injunction against the parent company for copyright 
infringement.  On April 8, 1997, the District Court granted 
partial summary judgment in favor of the Company on plaintiffs' 
antitrust claims, ruling that the Company's unilateral refusal to 
sell or license its patented parts cannot give rise to antitrust 
liability.  The Court's ruling did not preclude a finding of 
antitrust liability based upon other allegations of exclusionary 
conduct, including the refusal to sell unpatented parts.  The 
District Court also granted summary judgment in favor of the 
Company on its patent infringement claim, leaving open with 
respect to patent infringement only the issues of willfulness and 
the amount of damages, and granted partial summary judgment in 
favor of the Company with respect to some of its claims of 
copyright infringement. On July 17, 1997 the District Court, 
pursuant to 28 U.S.C. Section 1292(b), certified its April 8, 
1997 Order for interlocutory appeal to the United States Court of 
Appeals for the Federal Circuit and stayed trial of the matter 
pending remand.

Discontinued Operations

Farm & Home Savings Association, now known as Roosevelt Bank, 
(Farm & Home) and certain Talegen Holdings, Inc. insurance 
companies (Insurance Companies) entered into an agreement 
(Indemnification Agreement) under which the Insurance Companies 
are required to defend and indemnify Farm & Home from certain 
actual and punitive damage claims being made against Farm & Home 
relating to the Brio superfund site (Brio).  In a number of 
lawsuits pending against Farm & Home in the District Courts of 
Harris County, Texas, several hundred plaintiffs, former 
residents of, or students attending school within, a residential 
subdivision known as Southbend, seek both actual and punitive 
damages allegedly relating to injuries arising out of the 
hazardous substances at Brio.  The Insurance Companies have been 
defending these cases under a reservation of rights because it is 
unclear whether certain of the claims fall under the coverage of 
either the policies or the Indemnification Agreement.  The 
Insurance Companies have been successful in having some claims 
dismissed which were brought by plaintiffs who were unable to 
demonstrate a pertinent nexus to the Southbend subdivision.  
However, there are numerous plaintiffs who do have a nexus to the 
Southbend subdivision.  In February 1997, the Insurance Companies 
reached an agreement in principle to settle all of the claims 
brought by plaintiffs who have or had a pertinent nexus to the 
Southbend subdivision, with the exception of a group of 53 
plaintiffs. In addition, Farm & Home intends to press its pending 
motions for summary judgment which, if granted, would provide a 
legal basis for dismissal of any claims asserted in the future.  
If the settlement is not consummated, and the claims are not 
resolved by summary judgment, one or more of these cases can be 
expected to be tried in 1997.  The Southbend subdivision has 
since been acquired by the Insurance Companies and all of the 
structures have been demolished.


Item II                  Xerox Corporation
	     Management's Discussion and Analysis of
	   Results of Operations and Financial Condition

 Document Processing

Summary

Income from continuing operations increased 15 percent from $293 
million in the 1996 second quarter to $337 million in the 1997 
second quarter, including $13 million as a result of the 
acquisition of the Rank Group's remaining interest in Rank Xerox 
in June.

Revenues of $4.4 billion in the quarter represented 6 percent 
growth on a pre-currency basis.  After the adverse effect of 
currency, revenue growth was 3 percent.  The pre-currency revenue 
growth was driven by strong growth in equipment sales (excluding 
OEM sales) and continued excellent growth in document 
outsourcing.

Fully diluted earnings per share increased 16 percent to $0.94 in 
the second quarter including $0.04 as a result of the Rank Xerox 
transaction.

Underlying Growth

To understand the trends in the business, we believe that it is 
helpful to adjust revenue and expense growth (except for ratios) 
to exclude the impact of changes in the translation of foreign 
currencies into U.S. dollars.  We refer to this adjusted growth 
as "underlying growth."

A substantial portion of our consolidated revenues is derived 
from operations outside of the United States where the U.S. 
dollar is not the functional currency, primarily in Europe.  When 
compared with most of the major European currencies, the U.S. 
dollar was approximately 11 percent stronger in the 1997 second 
quarter than in the 1996 second quarter;  only the pound sterling 
was stronger.  As a result, foreign currency translation had an 
unfavorable impact of approximately 2 percentage points on total 
revenues in the 1997 second quarter.

Revenues denominated in currencies where the local currency is 
the functional currency are not hedged for purposes of 
translation into U.S. dollars.


Revenues

For the major product categories, the underlying revenue growth 
rates are as follows:

				   1996                    1997
			  Q1   Q2   Q3   Q4   FY        Q1   Q2

Total Revenues            4%   6%   5%   8%   6%        5%   6% 

Digital Products         19   21   23   26   23        18   24
Light Lens Copiers        -    -   (4)   -   (1)       (2)  (3)

Digital product revenues were 34 percent of total revenues in the 
1997 second quarter compared with 29 percent in the 1996 second 
quarter.  Growth of 24 percent in the second quarter follows 18 
percent growth in the first quarter. Color copying and printing 
grew 62 percent with continued excellent growth from the 
DocuColor 40, the company's 40 page-per-minute color document 
production system.  Computer printing grew 15 percent and 
production publishing  grew 9 percent despite some slowdown due 
to customer anticipation of the new 180 page-per-minute DocuTech 
Production Publisher, introduced in May and widely available 
beginning in July.

Black-and-white light lens copier revenues were 52 percent of 
total revenues in the 1997 second quarter compared with 57 
percent in the 1996 second quarter.  Revenues declined 3 percent 
in the second quarter reflecting increased competitive pricing 
pressures and the impact of customers transitioning to Xerox 
digital technology, including the new black-and-white digital 
copiers introduced in April and production publishing products.

Geographically, the underlying revenue growth rates are as 
follows:

				  1996                  1997   _
			  Q1   Q2   Q3   Q4   FY      Q1   Q2

Total Revenues             4%   6%   5%   8%   6%     5%   6%

United States              5    6    5    9    6      6    3
Rank Xerox                (2)   2    2    2    1      3    6
Other Areas               11   10    6   14   10      3   11

Memo:  Fuji Xerox         13   15   11   11   12     11    4

Revenues from the U.S. sales and service operations grew 5 
percent in the second quarter.  However, total U.S. revenue 
growth was 3 percent primarily due to lower shipments to Fuji 
Xerox in the 1997 second quarter compared with a year ago.

Rank Xerox Limited and related companies manufacture and market 
Xerox products principally in Europe. Overall, the European 
economies remain soft. However, the U.K., Germany, and Holland 
had good revenue growth in the second quarter. France, Italy, and 
Spain had modest growth.  Consolidation of the South African 
operations in 1997 accounted for one percentage point of the Rank 
Xerox growth in the 1997 second quarter.

Other Areas include operations principally in Latin America, 
Canada and China.  Brazil had strong revenue growth in the 1997 
second quarter reflecting excellent growth in equipment sales and 
document outsourcing. Revenue growth was also excellent in 
Mexico, but the smaller Latin American countries such as Chile, 
Venezuela and Colombia continue to be impacted by difficult 
economic conditions. Revenue growth in Canada and China was good 
in the second quarter.

Fuji Xerox Co., Ltd., an unconsolidated entity, jointly owned by 
Rank Xerox Limited and Fuji Photo Film Company Limited, develops, 
manufactures and distributes document processing products in 
Japan and other areas of the Pacific Rim, Australia and New 
Zealand.  The modest revenue growth in the 1997 second quarter 
following strong revenue growth in the previous quarters is 
primarily the result of calendarization due to the 1997 change in 
the Fuji Xerox fiscal year from October 20 to December 20. The 
1997 second quarter reflects modest growth in Japan and excellent 
growth in the Asia Pacific countries.

The underlying growth rates by type of revenue are as follows:

				     1996                    1997  
			    Q1   Q2   Q3   Q4   FY        Q1   Q2

Total Revenues              4%   6%   5%   8%   6%        5%   6%

Sales                       3    6    7   12    7         5    6

  Equipment (Excluding OEM) 7    9    6   14   10        10   11
  Supplies                  1    8   11   11    8         1    2
  Paper                    (2)  (7) (12)  (7)  (7)       (9)  (1)

Service/Rentals/
 Outsourcing/Other          5    4    4    4    4         4    5
  Service                   1   (2)  (3)  (1)  (1)       (2)   1
  Rentals                   2    2    1   (4)   -       (11)  (8)
  Document Outsourcing *   48   51   51   41   47        41   36

Finance Income              1    -    4    1    1         2    5

Memo: Revenues Excluding
       Equipment Sales      3    4    2    3    3         2    3

*Excludes equipment in outsourcing contracts that are accounted 
for as sales.

Equipment sales in the 1997 second quarter grew 11 percent 
reflecting excellent growth in digital products partially offset 
by declines in black-and-white light lens copiers.

Supplies sales: The decline in growth in the 1997 first and 
second quarters from the 1996 third and fourth quarters is due 
principally to a reduction in sales of OEM printer cartridges 
following the buildup of inventory for new products at OEM 
customers.

Paper sales: Our strategy is to charge a spread over mill 
wholesale prices to cover our costs and value added as a 
distributor.  The modest revenue decline in the 1997 second 
quarter from the 1996 second quarter is the result of lower 
industry-wide price declines which were offset by volume 
increases.

Combined service, rental and document outsourcing and other 
revenue growth improved to 5 percent in the 1997 second quarter. 
The 36 percent growth in document outsourcing (excluding 
equipment in outsourcing contracts accounted for as sales) 
continued to divert revenues from service, rentals, finance 
income and supplies. Service revenues grew 1 percent as the 
impact of higher machine populations resulting from recent higher 
equipment sales was partially offset by competitive price 
pressures. Rental revenues continued to decline due to continuing 
customer preference for purchase, primarily in Latin America, or 
document outsourcing rather than rental.

Document Outsourcing revenues are included in Equipment Sales as 
well as in Service/Rental/Document Outsourcing/Other. Where 
document outsourcing contracts include revenue accounted for as 
equipment sales, this revenue is included as Equipment Sales on 
the Income Statement.   All other document outsourcing revenue 
which includes service, equipment not treated as sales, supplies, 
paper, and labor, are included in the 
Service/Rentals/Outsourcing/Other line item. When equipment in 
document outsourcing contracts recognized as equipment sales is 
included, total document outsourcing business revenue growth 
accelerated in the 1997 first and second quarters from earlier 
quarters.

Finance income: Our strategy for financing equipment sales in the 
industrialized economies is to charge a spread over our cost of 
borrowing and to lock in that spread by match funding the finance 
receivables with borrowings of similar maturities. Continuing 
strong growth in the financing of equipment sales in Latin 
America has been partially offset by lower average interest rates 
in North America and Europe.



Gross Profit and Expenses

The gross margins by revenue stream were as follows:

				 1996                       1997
		       Q1    Q2    Q3    Q4    FY       Q1    Q2

Total Gross Margin   46.0% 47.9% 46.2% 47.1% 46.9%    46.5% 47.8%

Sales                42.9  45.7  43.9  45.4  44.6     43.2  46.2
Service/Rent/DocOut  49.0  50.4  48.8  49.3  49.4     49.9  49.7
Financing            49.0  49.5  48.3  51.0  49.5     48.9  49.2

The total gross margin declined by 0.1 percentage point in the 
1997 second quarter from the 1996 second quarter.

The sales gross margin improved by 0.5 percentage points from the 
1996 second quarter principally due to productivity, partially 
offset by competitive pricing pressures. The service, rentals and 
document outsourcing gross margin declined by 0.7 percentage 
points from an unusually high 1996 second quarter but was in line 
with the last several quarters.

Research and development (R&D) expense increased 6 percent in the 
1997 second quarter as we continue to invest in technological 
development to maintain our premier position in the rapidly 
changing document processing market. Xerox R&D is strategically 
coordinated with that of Fuji Xerox which invested $537 million 
in R&D in the 1996 full year, for a combined total of $1.6 
billion.

Selling, administrative and general expenses (SAG) increased 3 
percent in the 1997 second quarter, or only half the revenue 
increase.  SAG was 29.6 percent of revenue in the second quarter, 
a decrease of 0.5 percentage points from the 1996 second quarter.  
The decline was due to productivity initiatives and expense 
controls.

Worldwide employment increased by 900 in the 1997 second quarter 
to 89,100, largely as a result of the net hiring of 500 employees 
in the company's fast-growing document outsourcing business.

The $9 million decrease in other expenses, net, from the 1996 
second quarter was due to the non-recurrence of several one-time 
charges in 1996 partially offset by increased currency losses 
from balance sheet translation due to currency devaluations in 
our Latin American operations.  In January 1997, we issued $650 
million of mandatorily redeemable preferred stock through a trust 
and paid down debt, which resulted in reduced interest expense.  
The after tax impact of the dividend on these securities is 
included in the income statement in the line item:  minorities' 
interests in the earnings of subsidiaries.

Income Taxes, Equity in Net Income of Unconsolidated Affiliates 
and Minorities' Interests in the Earnings of Subsidiaries

Income before income taxes increased 8 percent to $497 million in 
the 1997 second quarter from $459 million in the 1996 second 
quarter.

The effective tax rate was 35.1 percent in the 1997 second 
quarter compared with 35.7 percent in the 1996 second quarter.  
We expect the second quarter rate to be maintained during the 
balance of 1997.

Equity in the net income of unconsolidated affiliates is 
principally the Rank Xerox share of Fuji Xerox income. Although 
there was a lower 1997 second quarter profit contribution from 
Fuji Xerox, largely because of unfavorable currency translation 
and calendarization relating to the 1997 fiscal year change, 
total equity in net income increased modestly, as a result of 
increases from a number of smaller investments.

Minorities' interests reduction in the second quarter was 
primarily due to our acquisition of the remaining interest in 
Rank Xerox, effective in June, and lower Rank Xerox profits, 
partially offset by the after tax impact of the dividend on the 
mandatorily redeemable preferred stock discussed above.

In June 1997, the company completed the acquisition of The Rank 
Group's remaining 20 percent financial interest in Rank Xerox 
Limited and related companies (Rank Xerox Companies) for 940 
million pounds sterling, or approximately $1.5 billion. 
The transaction was funded entirely by debt consisting of 
500 million pounds sterling of third party debt and 
440 million pounds sterling of notes payable issued to The Rank Group. 
The purchase price was allocated such that goodwill increased by 
$737 million, minority interest in equity of subsidiaries was 
reduced by approximately $720 million, with the balance of $70 
million applied to other assets and liabilities, primarily 
investments in affiliates at equity.  

This acquisition increased second quarter net income by $13 
million and fully diluted earnings per share by $0.04 and we 
estimate that it will have a positive impact on earnings per 
share and cash flow going forward. 

In February 1996, the board of directors authorized the 
repurchase of up to $1 billion of Xerox common stock. Through the 
1997 second quarter, the company had repurchased 8.5 million 
shares for $422 million, including $16 million in April.  As a 
result of the Rank Xerox transaction, the repurchase program was 
suspended during the second quarter as use of the company's 
financial resources to fund the $1.5 billion acquisition of The 
Rank Group's remaining interest in Rank Xerox produces greater 
value for Xerox shareholders.

Effective 1997, Fuji Xerox changed its reporting period from a 
fiscal year ending October 20 to a fiscal year ending December 
20.  The results of operations during the period between the end 
of the 1996 fiscal year and the beginning of the new fiscal year 
(the stub period) amounted to a gain of $8 million.  The gain was 
credited directly to retained earnings.

In February 1997, the Financial Accounting Standards Board (FASB) 
issued Statement of Financial Accounting Standards (SFAS) No. 128 
"Earnings Per Share."  Commencing with our fourth quarter 
reporting, SFAS No. 128 will require us to present basic and 
diluted earnings per share (EPS) on the face of the income 
statement.  The computation of basic EPS replaces primary EPS.  
If we had implemented SFAS No. 128 during the second quarter, we 
would have reported basic EPS of $1.01 and $1.80 for the quarter 
and year to date, respectively, and diluted EPS of $0.94 and 
$1.69 for the quarter and year to date, respectively.

In June 1997, the FASB issued SFAS No. 130, "Reporting 
Comprehensive Income" and No. 131, "Disclosures about Segments of 
an Enterprise and Related Information."  Commencing in 1998, SFAS 
No. 130 will require companies to report comprehensive income and 
SFAS No. 131 will require companies to report segment performance 
as it is used internally to evaluate segment performance.  These 
statements merely add additional disclosure requirements.


		      Discontinued Operations

The net investment in the discontinued financial services 
businesses which includes Insurance, Other Financial Services and 
Third-Party Financing and Real Estate totaled $1,887 million at 
June 30, 1997 compared with $2,124 million at December 31, 1996.  
The decrease primarily reflects the sale of Coregis Group, Inc. 
(Coregis) somewhat offset by scheduled funding of reinsurance 
coverage to the Talegen Holdings, Inc. (Talegen) companies and 
The Resolution Group, Inc. (TRG) by Ridge Reinsurance Limited 
(Ridge Re) and interest for the period on the assigned debt.  A 
discussion of the discontinued businesses follows.

Insurance

In 1995, we recorded a $1,546 million after-tax charge in 
connection with agreements to sell all of our "Remaining" 
insurance companies, which included Coregis, Crum & Forster 
Holdings, Inc., Industrial Indemnity Holdings, Inc. (II), 
Westchester Specialty Group, Inc. (WSG), TRG and three insurance-
related service companies.

On September 11, 1996, those transactions were terminated.  No 
additional charges are considered necessary as a result of the 
termination.  In September 1996, the Board of Directors of Xerox 
formally approved a plan of disposal under which we have retained 
investment bankers to assist us in the simultaneous disposition 
of each of the Remaining insurance and service companies.

During the disposal process, we will continue to be subject to 
all business risks and rewards of these insurance businesses.  
Although we believe that the disposal of the Remaining insurance 
companies should be substantially completed by the end of 1997, 
and that the value received from such disposals will be 
consistent with our net carrying value of these businesses, until 
such Remaining insurance companies are actually sold, no 
assurances can be given as to the ultimate impact the Remaining 
insurance companies will have on our total results from 
operations.

Our objective is to continue to maximize value from our Insurance 
investments.  The ultimate value will depend on the success of 
operational improvements, timing, level of interest rates, and 
relative value of insurance properties.

On May 30, 1997, Coregis was sold to a subsidiary of GE Capital 
Corporation for $375 million in cash and the assumption of $75 
million of debt.  The selling price  was in excess of book value 
and was consistent with the estimated value for the unit when we 
discontinued the insurance operations in 1995.  As per the sales 
agreement, the 1997 results of Coregis accrued to the buyer.

In an unrelated transaction, Andersen Consulting LLP agreed to 
acquire certain assets of Apprise Corp. (Apprise), one of 
Talegen's insurance-related service companies.  The financial 
terms of this transaction, which closed in the first quarter, 
were not material.

In May, 1997 we announced an agreement to sell II to Fremont 
Indemnity Company, a unit of Fremont General Corporation for $365 
million in cash and the assumption of $79 million of debt.  The 
selling price is in excess of book value and is consistent with 
the estimated value of the unit when we discontinued the 
insurance operations in 1995.  As per the sales agreement, the 
1997 earnings of II will accrue to the buyer.  This transaction 
was completed on August 1, 1997.


Insurance Operating Results

Operating results for the discontinued Insurance segment (the 
Remaining insurance companies, Ridge Re and Xerox Financial 
Services, Inc. holding company expenses, primarily assigned 
interest) for the second quarter follow:

			    Second Quarter        Six Months  
(In millions)               1997     1996       1997      1996

Total Insurance Revenue   $  340   $  359     $  686    $  707


Insurance Pre-Tax Income
     (Loss):
Underwriting              $ (268)  $  (54)    $ (332)   $ (108)
Investment income             84       74        164       148
Net realized capital gains     1        -          1         2
Interest expense             (49)     (49)       (98)     (103)
Other                         40       (1)        44        (6)
   Insurance Pre-Tax
     Income (Loss)        $ (192)  $  (30)    $ (221)   $  (67)

After-Tax Income
     (Loss):
Insurance                 $ (151)  $  (18)    $ (160)   $  (40)
Disposed companies            62       12         55        24
   Total After-Tax
     Income (Loss)*       $  (89)  $   (6)    $ (105)   $  (16)


* The total Insurance after-tax loss was charged to reserves 
  established for this purpose and, therefore, does not impact 
  our earnings.

The preceding table's revenue and pre-tax loss excludes the 
results of Coregis, II and Apprise.  The 1997 results of Apprise 
and the 1996 results of Coregis, II and Apprise are shown on an 
after-tax basis under the caption "Disposed companies."

Revenues from Insurance totaled $340 million in the second 
quarter of 1997 compared with $359 million in the second quarter 
of 1996, reflecting a slight reduction of earned premiums 
somewhat offset by an improvement in investment income.

The increase in the 1997 second quarter Insurance pre-tax loss, 
compared with 1996, primarily reflects reserve strengthening at 
WSG offset partially by an improvement in investment income.

The investment in Insurance at June 30, 1997 totaled $1,598 
million compared with a balance of $1,846 million at December 31, 
1996.  The decrease primarily reflects the sale of Coregis, 
somewhat offset by contractual payments to Ridge Re for annual 
premium installments and associated finance charges and interest 
on the assigned insurance debt that will continue until the 
closing of the sales of the Remaining insurance companies.

Property and Casualty Operating Trends

The industry's profitability can be significantly affected by 
cyclical competitive conditions, judicial decisions affecting 
insurers' liabilities, and by volatile and unpredictable 
developments, including changes in the propensity of courts to 
grant large awards, fluctuations in interest rates and other 
changes in the investment environment (which affect market prices 
of insurance companies' investments, the income from those 
investments and inflationary pressures that may tend to affect 
the size of losses).  The Remaining insurance companies' 
operating results have historically been influenced by these 
industry trends, as well as by their exposure to uncollectible 
reinsurance, which had been greater than most other insurers.

Other Financial Services

The net investment in Other Financial Services (OFS) at June 30, 
1997 was $122 million compared with $101 million at December 31, 
1996.  The increase in the investment primarily reflects the 
effect of a transfer from Insurance which had no effect on the 
total net investment in the discontinued financial services 
businesses.

On June 1, 1995, Xerox Financial Services, Inc. (XFSI) completed 
the sale of Xerox Financial Services Life Insurance Company and 
related companies (Xerox Life).  In connection with the 
transaction, OakRe Life Insurance Company (OakRe), a wholly-owned 
XFSI subsidiary, has assumed responsibility, via Coinsurance 
Agreements, for existing Single Premium Deferred Annuity (SPDA) 
policies issued by Xerox Life.  The Coinsurance Agreements 
include a provision for the assumption (at their election) by the 
purchaser's companies, of all of the SPDA policies at the end of 
their current rate reset periods.  A Novation Agreement with an 
affiliate of the new owner provides for the assumption of the 
liability under the Coinsurance Agreements for any SPDA policies 
not so assumed.  Other policies (of Immediate, Whole Life, and 
Variable annuities as well as a minor amount of SPDAs) were sold 
and are now the responsibility of the purchaser's companies. 

As a result of the Coinsurance Agreements, at June 30, 1997, 
OakRe retained approximately $1.9 billion of investment portfolio 
assets (transferred from Xerox Life) and liabilities related to 
the reinsured SPDA policies.  Interest rates on these policies 
are fixed and were established upon issuance of the respective 
policies.  Substantially all of these policies will reach their 
rate reset periods through the year 2000 and will be assumed 
under the Agreements as described above.  Xerox Life's portfolio 
was designed to recognize that policy renewals extended liability 
"maturities", thereby permitting investments with average 
duration somewhat beyond the rate reset periods.  OakRe's 
practice is to selectively improve this match over time as market 
conditions allow.

In connection with the aforementioned sale, XFSI established a 
$500 million letter of credit and line of credit with a group of 
banks to support OakRe's coinsurance obligations.  The term of 
this letter of credit is five years and it is unused and 
available at June 30, 1997.  Upon a drawing under the letter of 
credit, XFSI has the option to cover the drawing in cash or to 
draw upon the credit line.

Third-Party Financing and Real Estate

Third-Party Financing and Real Estate assets at June 30, 1997 
totaled $395 million, a $55 million reduction from the December 
31, 1996 level due primarily to the continued run-off of third-
party assets.  The run-off proceeds were used to reduce assigned 
debt to $178 million at June 30, 1997, a $45 million decrease 
from the year-end 1996 level.


Capital Resources and Liquidity

Total debt, including ESOP and discontinued operations debt not 
shown separately in our consolidated balance sheets, was $13,702 
million at June 30, 1997 or $1,254 million more than at December 
31, 1996.  The changes in consolidated indebtedness since year-
end and versus the first six months of 1996 are summarized as 
follows:

(In millions)                                1997       1996
Total Debt as of January 1                $12,448    $11,794
Non-Financing Businesses
Document Processing operations                419        648
Discontinued Businesses                      (151)       109
Total Non-Financing                           268        757
Financing Businesses                         (201)       (14)
Total Operations                               67        743
Shareholder dividends                         237        220
Acquisition of Additional Interest in RX    1,530          -
Mandatorily redeemable preferred stock       (637)         -
Equity redemption and other changes            57          5
Total Debt as of June 30                  $13,702    $12,762


The following table summarizes the changes in total equity during 
the first six months of 1997 and 1996:

(In millions)                                1997         1996
Total equity as of January 1               $5,931       $5,396
Income from Continuing Operations             607          530
Shareholder dividends paid                   (237)        (220)
Proceeds from Sale of Common Stock            108           66
Repurchase of common and preferred stock     (116)        (207)
Purchase of Minority Interest                (723)           -
Net proceeds from issuance of mandatorily
 redeemable preferred stock                   637            -
All other, net                               (139)         (56)
Balance as of June 30                      $6,068       $5,509


Non-Financing Operations

Operational cash flows are highly seasonal. Due primarily to 
profit sharing payments and inventory build up, historically our 
operations have used cash in the first half and generated cash 
later in the year.

The following table summarizes Document Processing non-financing 
operations cash generation and borrowing for the six months ended 
June 30, 1997 and 1996:

				     Cash Generated/(Borrowed)
				      Six Months Ended June 30
(In millions)                       1997                  1996
Document Processing
Non-Financing:
Income                            $  505               $  429
Depreciation and amortization        334                  357
Capital expenditures, net           (174)                (211)
Working capital/other             (1,084)              (1,223)
Total                             $ (419)              $ (648)

Six-month cash usage of $419 million was $229 million less than 
in the first six months of 1996 due primarily to higher net 
income, lower capital spending due to an unusually high level of 
facilities infrastructure investments in the first half of 1996, 
and reduced working capital growth resulting from improved 
billing and collection performance.

Financing Businesses

Financing businesses debt was reduced by $201 million and $14 
million during the first six months of 1997 and 1996, 
respectively.  This larger decline in 1997 reflects currency 
translation effects related to the strength of the U.S. dollar 
compared with the major European currencies which were only 
partially offset by volume growth.


		      Hedging Instruments

We have entered into certain financial instruments to manage 
interest rate and foreign currency exposures.  These instruments 
are held solely for hedging purposes and include interest rate 
swap agreements, forward exchange contracts and foreign currency 
swap agreements.  We do not enter into derivative instrument 
transactions for trading purposes and we employ long-standing 
policies prescribing that derivative instruments only be used to 
achieve a set of very limited objectives.

Currency derivatives are primarily arranged in conjunction with 
underlying transactions that give rise to foreign currency-
denominated payables and receivables; for example, an option to 
buy foreign currency to settle the importation of goods from 
suppliers, or a forward exchange contract to fix the U.S. dollar 
value of a foreign currency-denominated loan.  In addition, when 
cost-effective, currency derivatives may be used to hedge balance 
sheet exposures.

Revenues denominated in currencies where the local currency is 
the functional currency are not hedged.

With regard to interest rate hedging, virtually all customer 
financing assets earn fixed rates of interest.  We "lock in" an 
interest rate spread by arranging fixed-rate liabilities with 
similar maturities as the underlying assets.  Additionally, 
customer financing assets in one currency are consistently funded 
with liabilities in the same currency.  We refer to the effect of 
these conservative practices as "match funding" customer 
financing assets. This practice effectively eliminates both the 
risk of a major compression in interest margins if interest rates 
increase and the opportunity for margin expansion if interest 
rates decline.

More specifically, pay fixed-rate and receive variable-rate swaps 
are typically used in place of more expensive fixed-rate debt.  
Pay variable-rate and receive variable-rate swaps are used to 
transform variable-rate medium-term debt into commercial paper or 
LIBOR obligations.  Additionally, pay variable-rate and receive 
fixed-rate swaps are used from time to time to transform longer-
term fixed-rate debt into commercial paper or LIBOR-rate 
obligations. The transactions performed within each of these 
three categories enable cost-effective management of interest 
rate exposures.  The potential risk attendant to this strategy is 
non-performance of a swap counterparty.  We address this risk by 
arranging swaps exclusively with a diverse group of strong-credit 
counterparties, regularly monitoring their credit ratings, 
determining the replacement cost, if any, of existing 
transactions, and internally capping related exposures.

Our currency and interest rate hedging is typically unaffected by 
changes in market conditions as forward contracts, options and 
swaps are normally held to maturity consistent with our objective 
to lock in currency rates and interest rate spreads on the 
underlying transactions.


PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

The information set forth under Note 9 contained in the "Notes to 
Consolidated Financial Statements" on pages 11-12 of this 
Quarterly Report, on Form 10-Q, is incorporated by reference in 
answer to this item.


Item 2.  Changes in Securities

During the quarter ended June 30, 1997, Registrant issued the 
following securities in transactions which were not registered 
under the Securities Act of 1933, as amended (the Act):

(a)  Securities Sold:  on April 1, 1997, Registrant issued 1,798
     shares of Common stock, par value $1 per share.

(b)  No underwriters participated.  The shares were issued to
     each of the non-employee Directors of Registrant:  A.A.
     Johnson, B.R. Inman, V.E. Jordan, Jr., Y. Kobayashi,
     H. Kopper, R.S. Larsen, J.D. Macomber, G.J. Mitchell,
     N.J. Nicholas, Jr., J.E. Pepper, M.R. Seger and T.C.
     Theobald.

(c)  The shares were issued at a deemed purchase price of $56.875
     per share (aggregate price $102,261.26), based upon the
     market value on the date of issuance, in payment of the
	quarterly Directors' fees pursuant to Registrant's
     Restricted Stock Plan for Directors.

(d)  Exemption from registration under the Act was claimed based
     upon Section 4(2) as a sale by an issuer not involving a
     public offering.


Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Shareholders of Xerox Corporation was duly 
called and held on May 15, 1997 at the Sutton Place Hotel, 955 
Bay Street, Toronto, Ontario, Canada.

Proxies for the meeting were solicited on behalf of the Board of 
Directors of the Registrant pursuant to Regulation 14A of the 
General Rules and Regulations of the Commission.  There was no 
solicitation in opposition to the Board of Directors' nominees 
for election as directors as listed in the Proxy Statement, and 
all nominees were elected.

At the meeting, votes were cast upon the Proposals described in 
the Proxy Statement for the meeting (filed with the Commission 
pursuant to Regulation 14A and incorporated herein by reference) 
as follows:

Proposal 1 - Election of directors for the ensuing year.

Name                           For              Withheld Vote

Paul A. Allaire                288,098,645       1,594,838
B. R. Inman                    288,192,852       1,500,631
Antonia Ax:son Johnson         288,238,146       1,455,337
Vernon E. Jordan, Jr.          288,093,982       1,599,501
Yotaro Kobayashi               288,441,237       1,252,246
Hilmar Kopper                  254,937,711      34,755,772
Ralph S. Larsen                288,455,665       1,237,818
John D. Macomber               288,389,761       1,303,721
George J. Mitchell             288,245,098       1,448,385
N. J. Nicholas, Jr.            288,439,212       1,254,271
John E. Pepper                 288,408,014       1,285,469
Martha R. Seger                288,327,631       1,365,852
Thomas C. Theobald             288,358,443       1,335,040

Proposal 2 - To elect KPMG Peat Marwick LLP as independent 
auditors for the year 1997.

For -                          288,390,447
Against -                          547,723
Abstain -                          755,313

Proposal 3 - To approve the amendments to the 1991 Long-Term 
Incentive Plan
For -                          275,981,729
Against -                        8,556,033
Abstain -                        2,149,186
Broker Non-vote                  3,006,535

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibit 3(a)(1) Restated Certificate of Incorporation of
     Registrant filed by the Department of State of the State of
     New York on October 29, 1996.  Incorporated by reference to
     Exhibit 3(a)(1) to Registrant's Quarterly Report on Form
     10-Q for the Quarter Ended September 30, 1996.

     Exhibit 3(b) By-Laws of Registrant, as amended through
     May 29, 1991.  Incorporated by reference to Exhibit 3(b)(2)
     to Registrant's Quarterly Report for the Quarter Ended
     June 30, 1991.

     Exhibit 10(b)  Registrant's 1991 Long-Term Incentive Plan,
     as amended through May 15, 1997.  Incorporated by reference
     to Registrant's Notice of the 1997 Annual Meeting of
     Shareholders and Proxy Statement pursuant to Regulation 14A.

Exhibit 10(n)  Letter Agreement dated June 4, 1997 between 
Registrant and G. Richard Thoman, President and Chief 
Operating Officer of Registrant.

     Exhibit 11  Computation of Net Income per Common Share.

     Exhibit 12  Computation of Ratio of Earnings to Fixed
     Charges.

     Exhibit 27  Financial Data Schedule (in electronic form
     only).


(b)  Current reports on Form 8-K dated April 7, 1997, May 19, 
1997, June 6, 1997 and June 30, 1997 reporting Item 5 "Other 
Events" were filed during the quarter for which this Quarterly 
Report is filed.



			   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 
1934, the registrant has duly caused this report to be signed on 
its behalf by the undersigned thereunto duly authorized.





					 XEROX CORPORATION
					   (Registrant)




				   _____________________________
Date: August 7, 1997                  By  Philip D. Fishbach      
				   Vice President and Controller
				  (Principal Accounting Officer)



 









Exhibit 11
Xerox Corporation

		  Computation of Net Income Per Common Share
      (Dollars in millions, except per-share data; shares in thousands)

					    Three months        Six months
					   ended June 30,     ended June 30,
					    1997     1996      1997     1996

I. Primary Net Income Per Common Share

   Income from continuing operations    $   337 $    293  $    607 $    530
   Accrued dividends on ESOP preferred 
    stock, net                              (11)     (10)      (22)     (21)
   Accrued dividends on redeemable
     preferred stock                          -        -         -       (1)
   Adjusted income from 
     continuing operations                  326      283       585      508
   Discontinued operations                    -        -         -        - 
   Adjusted net income                  $   326 $    283  $    585 $    508

   Average common shares outstanding 
     during the period                  324,090  323,795   324,018  323,492
   Common shares issuable with respect 
     to common stock equivalents for
     stock options, incentive and 
     exchangeable shares                  5,775    8,961     5,775    8,961
   Adjusted average shares outstanding 
     for the period                     329,865  332,756   329,793  332,453

   Primary earnings per share:
     Continuing operations              $  1.00 $   0.85  $   1.78 $   1.53
     Discontinued operations                  -        -         -        -
   Primary earnings per share           $  1.00 $   0.85  $   1.78 $   1.53

II. Fully Diluted Net Income Per Common Share

   Income from continuing operations    $   337 $    293  $    607 $    530
   Accrued dividends on redeemable 
     preferred stock                          -        -         -       (1)
   ESOP expense adjustment, net of tax        1        -         -       (1)
   Interest on convertible debt, 
     net of tax                               -        -         1        1
   Adjusted income from 
     continuing operations                  338      293       608      529
   Discontinued operations                    -        -         -        -
   Adjusted net income                 $    338 $    293  $    608 $    529

   Average common shares outstanding  
     during the period                  324,090  323,795   324,018  323,492
   Stock options, incentive and 
     exchangeable shares                  6,597    9,483     6,597    9,483
   Convertible debt                       2,644    2,644     2,644    2,644
   ESOP preferred stock                  27,498   28,137    27,498   28,137
   Adjusted average shares outstanding 
     for the period                     360,829  364,059   360,757  363,756

   Fully diluted earnings per share:
     Continuing operations             $   0.94 $   0.81  $   1.69 $   1.46
     Discontinued operations                  -        -         -        -
   Fully diluted earnings per share    $   0.94 $   0.81  $   1.69 $   1.46




Exhibit 12
			       Xerox Corporation

		  Computation of Ratio of Earnings to Fixed Charges

		       Six months ended            Year ended
			   June 30,                December 31,
(In millions)            1997    1996    1996    1995    1994    1993*  1992
Fixed charges:
  Interest expense    $   288  $  295  $  592  $  603  $  520  $  540 $  627
  Rental expense           60      74     140     142     170     180    187
  Preferred stock divi-
   dend of subsidiary      23       -       -       -       -       -      -
 Total fixed charges
  before capitalized
  interest                371     369     732     745     690     720    814
Capitalized interest        -       -       -       -       2       5     17
Total fixed charges   $   371  $  369  $  732  $  745  $  692  $  725 $  831

Earnings available for
  fixed charges:
  Earnings**          $  993  $  905  $2,067  $1,980  $1,602  $ (193) $1,183
  Less undistributed
   income in minority
   owned companies       (65)    (62)    (84)    (90)    (54)    (51)    (52)
  Add fixed charges 
    before capitalized
    interest and 
    preferred stock
    dividend of 
    subsidiary           348     369     732     745     690     720     814
  Total earnings 
    available for
    fixed charges     $1,276  $1,212  $2,715  $2,635  $2,238  $  476  $1,945

Ratio of earnings to
 fixed charges (1)(2)   3.44    3.28    3.71    3.54    3.23    0.66    2.34

(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,
    one-third of rent expense as representative of the interest portion of 
    rentals, and preferred stock dividend requirements of subsidiaries.
    Debt has been assigned to discontinued operations based on historical
    levels assigned to the businesses when they were continuing operations,
    adjusted for subsequent paydowns.  Discontinued operations consist of
    the Company's Insurance and Other Financial Services businesses and its
    real-estate development and third-party financing businesses.

(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.

*   1993 earnings were inadequate to cover fixed charges.  The coverage 
    deficiency was $249 million.

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



Exhibit 10(n)

THE DOCUMENT COMPANY

XEROX

Paul A. Allaire
Chairman and Chief Executive Officer
Xerox Corporation
800 Long Ridge Road
Stamford, CT  06904
(203) 968-4515

June 4, 1997

Mr. G. Richard Thoman
28 Fox Run Lane
Greenwich, CT  06831

Dear Rick,

On behalf of Xerox Corporation, I am pleased to provide you with 
this revised offer for the position of President and Chief 
Operating Officer reporting to me at our Corporate Headquarters 
in Stamford, Connecticut.  As we discussed, initially you will 
have primary oversight responsibility for Xerox' business 
operations and I would oversee the staff positions.

Corporate Officer
Upon your acceptance of this offer of employment, I will 
recommend to the Board of Directors that you be elected to this 
position and that you become a member of our board.  Eligibility 
for the executive compensation, benefits and perquisites 
described below are contingent upon approval by the Executive 
Compensation and Benefits Committee of the Board of Directors 
(Committee) and your election by the Board.

Base Salary
The initial base salary for this position is at the annualized 
rate of $700,000.  Salary payments are made monthly at the end of 
each calendar month.  Compensation, including base salary level, 
is reviewed annually and increases are dependent on your personal 
as well as the Company's performance.

Fuji Xerox Co., Ltd.
I will recommend that you be elected to the Board of Directors of 
Fuji Xerox Co., Ltd..  This position provides an estimated annual 
retainer of $50,000 and eligibility for participation in the Fuji 
Xerox directors' pension plan.

Awards Upon Commencement of Employment
Upon commencement of employment, and subject to approval by the 
Committee, you will be awarded:
(1) 650,000 Non Qualified Stock Options under the terms of the 
1991 Long-Term Incentive Plan (LTIP).  This award will vest in 
equal installments over the next five years beginning on January 
1, 1998 and will have an exercise price which is based upon the 
Fair Market Value (as defined in LTIP) on the effective date of 
the award. 

(2) 100,000 Incentive Stock Rights (ISRs) which will also vest 
over this same 5 year period.

The other terms and provisions of these awards will be governed 
by the terms of LTIP and the customary form of agreement with 
participants currently in use under LTIP.

Executive Performance Incentive Plan (EPIP)
You are eligible to participate in the Company's annual incentive 
plan - the Executive Performance Incentive Plan.  Your target 
bonus is 80% of base salary and payments can range from 0% to 
320% of base salary (maximum 400% of the target award).  We will 
meet and agree upon your personal 1997 bonus objectives and 
discuss details of the plan shortly after you join the Company.  
We will guarantee that for 1997 that you will be paid at least 
the target 80% bonus or $560,000.

In addition, I will recommend to the Committee that for each of 
the next three years, beginning with the performance year 1998, 
that you be awarded additional bonuses under EPIP in the amount 
of $3,750,000 annually.  Since these bonuses are based on 
forfeiture of vested stock options at your current employer, 
should your current employer not cancel your already vested stock 
options, as you have indicated is their privilege, then Xerox 
will reduce the above amounts to $2,000,000 for 1998 and 1999 and 
$1,500,000 for the year 2000.  These payments will not be 
included for purposes of determining benefits under any of the 
special provisions of this offer or under any of the Company's 
pension, profit sharing or similar retirement plans.

While annual bonuses are normally payable during February of the 
year following the bonus performance year, you have agreed that 
you will elect to defer all of these three incremental bonuses in 
the amounts stated above.  We have agreed that you may elect to 
defer these amounts into deferred compensation accounts under the 
Company's Deferred Compensation Plan For Executives.  Therefore, 
in advance of each bonusable year, you will be allowed to elect 
in writing to hypothetically invest your account balances in any 
of the investment choices offered under the Company's Profit 
Sharing and Savings Plan and to elect payment options which meet 
your investment needs and preferences.

Leveraged Executive Equity Plan (LEEP)
You will be recommended for participation in the Leveraged 
Executive Equity Plan under LTIP (LEEP) for 1997 which is subject 
to approval by the Committee.  The current 3-year cycle of LEEP 
commenced in 1995 and your participation will be structured in 
order for you to participate for this, the last year of the Plan. 
LEEP is comprised of three elements, each briefly described 
below:

Investment Shares
Under the terms of LEEP, participation in the 1997 segment of the 
1995 award cycle, requires you to own shares of Xerox common 
stock in an amount equivalent to 100% of your annual base salary 
rate (the Investment Shares). You will have until the end of the 
insider trading window following the reporting of first quarter 
1998 financial results to acquire the requisite number of shares.  
We have agreed that the vesting of restricted shares and related 
dividends and non-qualified stock options (described below) for 
this initial 1997 LEEP award are not contingent on meeting the 
Investment Share requirement until after the above date in 1998.  
The total number of shares required will be determined using the 
fair market value of our stock (as defined in LTIP) on the 
effective date of this LEEP award.

For the purposes of your personal financial planning, you need to 
be aware that in order to participate in the 1998 LEEP three-year 
cycle, you will be required to maintain your Investment Share 
requirement, but at an increased amount of 300% of your then base 
salary.

Restricted Shares & Dividends
For each Investment Share, you will be awarded two (2) restricted 
shares of Xerox common stock. The restricted stock is earned 
through the achievement of a 1997 Corporate Earnings Per Share 
goal which was  previously established by the Committee. If 
earned, the restricted shares will be released and you will 
receive the stock along with the accrued dividends associated 
with the shares, both net of any required withholding taxes, on 
or after March 1, 1998.

Non-Qualified Stock Options
For each share invested, you will be awarded five (5) stock 
options at the Fair Market Value on the effective date of the 
award. These options which result from the 1997 award will become 
exercisable on January 1, 1998.  The option to purchase the 
shares will expire on December 31, 2004.

Each of the foregoing incentive stock awards provide for 
immediate vesting in the event of a change in control of the 
Company, as defined.  Details concerning these provisions will be 
made available to you in the Award Summary and form of LEEP 
Agreement as grants are made to you.

The foregoing is merely a brief summary.  Your award will be 
subject to the terms and conditions of the LEEP Agreement to be 
executed following award by the Committee.

In order to gain an appreciation of the potential value of this 
compensation package, I have previously provided you with a 
summary of actual (1995 and 1996 performance years) and 
anticipated (1997) returns for an individual in your pay range.  
Of course, these results are contingent upon a continuance of 
meeting Corporate and individual performance objectives and do 
not constitute a guarantee of future compensation.

Executive Retirement Benefits
You will be recommended for participation in the Mid Career 
Executive Hire program effective with your commencement of 
employment.  This program provides for special retirement income 
and retiree medical insurance benefits which are designed to 
address your joining Xerox as an experienced executive.  Under 
the Supplemental Executive Retirement Plan (SERP), following five 
(5) continuous years of employment and upon retirement from the 
Company at age 60 or beyond, a calculation will be made to 
determine the percent of your five highest years of eligible 
compensation (5HAP) that will be paid to you in monthly SERP 
benefits based on 2.5% of 5HAP per completed years of service 
with the Company.   The maximum SERP calculable under this plan 
is 50% of eligible compensation.  Eligible compensation includes 
base salary and annual incentive bonus payments.  This benefit is 
reduced by benefits payable from other Xerox retirement plans, 
including the Xerox Retirement Income Guarantee Plan, the 
Unfunded Retirement Income Guarantee Plan and a portion of 
estimated social security benefits.

We will recommend to the Committee that a special Mid Career SERP 
program will be provided to you.  Specifically:

You be credited with a "previous employment factor", not 
ordinarily part of SERP, so that you will have a vested benefit 
beginning at age 55 
That the years of service used for the calculation of Mid Career 
SERP result in a crediting factor of  37.5% at age 55 and 
progress to 50.0% at age 60 in increments of 2.5% per year.
Should you not have completed five years of employment with 
Xerox, the compensation used for your 5HAP calculation will be 
your actual earned eligible compensation divided by your actual 
completed years of Xerox employment at the time the calculation 
is made.  
That a minimum annual benefit of $600,000 be provided by Xerox at 
age 55.  
At retirement, you may elect a reduced SERP annuity to provide 
your surviving spouse with 100% of your SERP benefit.  Based on 
your age and that of your spouse at retirement, we currently 
estimate that the 100% Joint and Survivor (J&S) annuity payments 
will be no more than 10% lower than the normal 50% J&S SERP 
benefit. 
Should you die while an active employee of Xerox, but before you 
begin retirement, your surviving spouse will also receive this 
100% joint and survivor SERP benefit irrespective of your age at 
the time of your death.
Participation in a special post retirement medical program will 
also be provided when you retire or this benefit can be triggered 
under the termination provisions of this offer as outlined in the 
second paragraph under Termination below. 

Except as modified by the foregoing, your benefits under the Mid 
Career SERP and special retiree medical program will be 
determined by the other provisions of such plan and program.  
Details of both will be made available to you in a brochure some 
time after you would commence employment.

Executive Benefits and Perquisites
Life Insurance: You will be eligible to join our Contributory 
Life Insurance Plan.  In accordance with plan provisions, your 
participation level provides a death benefit of $3,000,000.  This 
coverage would be effective July 1, 1997.  Should you begin 
employment with Xerox before then, you will be provided with an 
equivalent amount of Term Life Insurance to serve as a bridge 
until July 1, 1997. Please refer to the terms of the life 
insurance plan for full details of its provisions.

Perquisites:  Upon joining us, you will be eligible for an annual 
Executive Expense Allowance of $26,000 subject to Committee 
approval.  Additionally, the Company provides you with allowances 
for income tax preparation and financial counseling services.  
Upon request and availability, limousine service and corporate 
aircraft will be provided for Company travel in accordance with 
the applicable policies.  The details of these programs will be 
provided to you shortly after your start date.


Indirect Pay Elements
In addition to the components of total pay described above, Xerox 
offers a number of indirect pay elements that are outlined in the 
You and Xerox documents previously provided to you.  Please read 
this information carefully.  If you have any questions, I can 
direct you to our Director of Corporate Compensation who can 
address your issues or concerns.  I would like to highlight 
several indirect pay components that may be of particular 
interest to you:

Vacation -  You are eligible for four (4) weeks annual vacation 
commencing with 2 weeks for the balance of 1997.
Profit Sharing - After one year's employment, you become eligible 
to participate in this program.  At target levels of performance, 
the plan provides a payment of up to 10% of annual earnings (base 
and bonus).

The details of these and other plans are both summarized and 
described more fully in the attachments to our earlier offer.

Termination
If you are not elected Chief Executive Officer of the Company 
within thirty-six (36) months of the commencement of your 
employment or should another individual be elected to this post 
within this same period, then you may voluntarily elect to resign 
from your employment with Xerox in which event: 

1) The Incentive Stock Rights, stock options and three 
incremental bonus payments that were awarded as part of Awards 
Upon Commencement of Employment with the Company, 

2) the greater of the  minimum annual retirement benefit of 
$600,000 or the calculated special Mid Career SERP benefit 
described above,

3) the Executive Performance Incentive Plan awards and 

4) the earned portions of any LEEP awards, 

all to the extent not already vested or paid,  will become 
immediately vested and payable to you.

Further, should a change of control, as defined in SERP, occur 
within your first 36 months of employment, the vesting and 
payment provisions described above in paragraphs (1) through (4) 
will be triggered.

Finally, (1) should Xerox ask you to leave for any reason other 
than cause, or (2) if you are demoted from the position of 
President and Chief Operating Officer and you elect to resign 
your employment, the payments, retirement benefits described 
above in paragraphs (1) through (4) will also apply and your 
retiree medical and dental insurance coverages will be triggered.

Other Employment Conditions
Proprietary Information and Conflict of Interest Agreement and 
Other Requirements: This offer is contingent upon verification of 
certain information specified in the enclosed Addendum to Offer 
Letter.  As included in the addendum, you will be expected to 
sign a standard Proprietary Information and Conflict of Interest 
Agreement form.  Previously you received a copy of the form for 
your execution. You will also be expected to give your consent to 
and successfully complete a pre-employment drug test as required 
by Company policy.

We also require that you submit to a pre-employment physical 
examination arranged by the Company or provide us with a current 
medical report from a credible and recognized medical 
organization as a condition of employment with Xerox.

Rick, I look forward to your acceptance of this offer and of your 
joining Xerox.  The President and Chief Operation Officer is, 
without question, a position critical to the future success of 
Xerox and one that I feel you will find both challenging and 
rewarding.  I have every confidence that you will excel not only 
in this position, but can look forward to a rewarding career with 
Xerox.

Please indicate your acceptance of this offer by signing below 
and returning the original of this letter to my attention.

Sincerely,

/s/ Paul A. Allaire
  Paul A. Allaire  
  
  
  Accepted:  /s/ G. Richard Thoman
 G. Richard Thoman   
 
 Date:  June 4,1997
 Attachments:
 PAA/ms
 Copies: W. F. Buehler, 
	 L. G.Robinson
	 
 
  

5 This schedule contains summary financial information extracted from Xerox Corporation's June 30, 1997 financial statements and is qualified in its entirety by reference to such financial statements. 1,000,000 6-MOS DEC-31-1997 JUN-30-1997 118 0 13,760 420 3,046 10,545 5,052 2,788 27,833 6,954 13,437 637 713 327 4,270 27,833 4,265 8,378 2,354 4,423 3,030 114 288 925 325 607 0 0 0 607 1.78 1.69