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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended: March 31, 2007

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: 1-8133

XEROX CREDIT CORPORATION

(Exact name of Registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 06-1024525                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|100 First Stamford Place Stamford, Connecticut                 |  | 06904                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(203)
325-6600

(Registrants telephone number, including area code)

Securities registered pursuant to
Section 12(b) of the Act:



|                     |  |                                          
|-------------------- |  | -----------------------------------------
|Title of Each Class  |  | Name of Each Exchange on Which Registered
|7.20% Notes due 2012 |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the Act: None

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  ̈

Indicate by a check mark whether the Registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ̈              Accelerated filer  ̈             Non-accelerated filer x

Indicate by a check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ̈        No    x

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



|             |  |                                 
|------------ |  | --------------------------------
|Class        |  | Outstanding as of April 30, 2007
|Common Stock |  | 2,000                           

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a) AND (b) OF FORM 10-Q AND
IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.





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##### Table of Contents

Forward-Looking Statements

This Quarterly Report on Form 10-Q and any exhibits to this Report may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words
anticipate, believe, estimate, expect, intend, will, should and similar expressions, as they relate to us, are intended to identify forward-looking statements. These
statements reflect managements current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. The primary factor is the liquidity of our ultimate parent company, Xerox
Corporation. Other factors include, but are not limited to, the risks that are set forth in the Risk Factors section, the Managements Discussion and Analysis of Results of Operations and Financial Condition section and
other sections of this Quarterly Report on Form 10-Q, as well as in our 2006 Form 10-K filed with the Securities and Exchange Commission (SEC). The company assumes no obligation to update any forward-looking statements as a result
of new information or future events or developments, except as required by law.



2



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XEROX CREDIT CORPORATION

Form 10-Q

March 31, 2007

Table of Contents



|                                                                                              |  |     
|--------------------------------------------------------------------------------------------- |  | ----
|                                                                                              |  | Page
|Part IFinancial Information                                                                  |  |     
|Item 1. Financial Statements (Unaudited)                                                      |  | 4   
|Condensed Balance Sheets                                                                      |  | 4   
|Condensed Statements of Income                                                                |  | 5   
|Condensed Statements of Cash Flows                                                            |  | 6   
|Notes to Condensed Financial Statements                                                       |  | 7   
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 8   
|Results of Operations                                                                         |  | 8   
|Capital Resources and Liquidity                                                               |  | 8   
|Item 4. Controls and Procedures                                                               |  | 16  
|Part IIOther Information                                                                     |  |     
|Item 1. Legal Proceedings                                                                     |  | 17  
|Item 1A. Risk Factors                                                                         |  | 17  
|Item 6. Exhibits                                                                              |  | 18  
|Signatures                                                                                    |  | 19  
|Exhibit(s)                                                                                    |  | 20  



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               | 
|Exhibit 3 (a)  |  | Articles of Incorporation of Registrant filed with the Secretary of State of Delaware on September 23, 1980, as amended by Certificates of Amendment thereto filed with the
Secretary of State of Delaware on September 12, 1980 and September 19, 1988, as further amended by Certificate of Change of Registered Agent filed with the Secretary of State of Delaware on October 7, 1986, Certificate of Ownership
and Merger filed with the Secretary of State of Delaware on April 30, 1992 and Certificate of Correction of Certificate of Ownership and Merger filed with the Secretary of State of Delaware on March 3, 1994.
|               | 
|Exhibit 3 (b)  |  | By-Laws of Registrant, as amended through September 1, 1992.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|               | 
|Exhibit 31 (a) |  | Certification of CEO Pursuant to Rule13a-14(a) or Rule15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|               | 
|(b)            |  | Certification of CFO Pursuant to Rule13a-14(a) or Rule15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|               | 
|Exhibit 32     |  | Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



3



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##### Table of Contents

PART IFINANCIAL INFORMATION

Item 1

XEROX CREDIT CORPORATION

CONDENSED BALANCE SHEETS (UNAUDITED)

(in millions)

ASSETS



|                                                                            |  |               |       |                  |   |      
|--------------------------------------------------------------------------- |  | ------------- | ----- | ---------------- | - | -----
|                                                                            |  | March 31,2007 |       | December 31,2006
|Assets:                                                                     |  |               |       |                  |   |      
|Note receivableXerox Corporation                                           |  | $             | 1,408 |                  | $ | 1,422
|Other assets                                                                |  |               | 4     |                  |   | 4    
|                                                                            |  |               |       |                  |   |      
|Total Assets                                                                |  | $             | 1,412 |                  | $ | 1,426
|                                                                            |  |               |       |                  |   |      
|                                                                           
|LIABILITIES AND SHAREHOLDERS EQUITY                                       
|Liabilities:                                                                |  |               |       |                  |   |      
|Current portion of notes payable                                            |  | $             | 279   |                  | $ | 277  
|Notes payable after one year                                                |  |               | 160   |                  |   | 185  
|Due to Xerox Corporation, net                                               |  |               | 5     |                  |   | 6    
|Other liabilities                                                           |  |               | 4     |                  |   | 4    
|                                                                            |  |               |       |                  |   |      
|Total Liabilities                                                           |  |               | 448   |                  |   | 472  
|                                                                            |  |               |       |                  |   |      
|Shareholders Equity:                                                       |  |               |       |                  |   |      
|Common stock, no par value, 2,000 shares authorized, issued and outstanding |  |               | 23    |                  |   | 23   
|Additional paid-in-capital                                                  |  |               | 219   |                  |   | 219  
|Retained Earnings                                                           |  |               | 722   |                  |   | 712  
|                                                                            |  |               |       |                  |   |      
|Total Shareholders Equity                                                  |  |               | 964   |                  |   | 954  
|                                                                            |  |               |       |                  |   |      
|Total Liabilities and Shareholders Equity                                  |  | $             | 1,412 |                  | $ | 1,426
|                                                                            |  |               |       |                  |   |      

The accompanying notes are an integral part of these Condensed Financial Statements.



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XEROX CREDIT CORPORATION

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

(in millions)



|                                         |  |                              |    |      |   |   
|---------------------------------------- |  | ---------------------------- | -- | ---- | - | --
|                                         |  | Three Months Ended March 31,
|                                         |  | 2007                         |    | 2006
|Earned Income from Xerox note receivable |  | $                            | 25 |      | $ | 24
|                                         |  |                              |    |      |   |   
|Expenses:                                |  |                              |    |      |   |   
|Interest                                 |  |                              | 8  |      |   | 8 
|Loss on derivative instruments, net      |  |                              | 1  |      |   |  
|General and administrative               |  |                              |   |      |   |  
|                                         |  |                              |    |      |   |   
|Total Expenses                           |  |                              | 9  |      |   | 8 
|                                         |  |                              |    |      |   |   
|Income before income taxes               |  |                              | 16 |      |   | 16
|Provision for income taxes               |  |                              | 6  |      |   | 6 
|                                         |  |                              |    |      |   |   
|Net Income                               |  | $                            | 10 |      | $ | 10
|                                         |  |                              |    |      |   |   

The accompanying notes are an integral part of these Condensed Financial Statements.



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XEROX CREDIT CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)



|                                                                                            |  |                              |     |   |      |   |     |  
|------------------------------------------------------------------------------------------- |  | ---------------------------- | --- | - | ---- | - | --- | -
|                                                                                            |  | Three Months Ended March 31, |    
|                                                                                            |  | 2007                         |     |   | 2006 |  
|Cash Flows from Operating Activities                                                        |  |                              |     |   |      |   |     |  
|Net income                                                                                  |  | $                            | 10  |   |      | $ | 10  |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                              |     |   |      |   |     |  
|Loss on derivative instruments, net                                                         |  |                              | 1   |   |      |   |    |  
|Net change in other assets and other liabilities                                            |  |                              | (1  | ) |      |   | (25 | )
|                                                                                            |  |                              |     |   |      |   |     |  
|Net cash provided by (used in) operating activities                                         |  |                              | 10  |   |      |   | (15 | )
|                                                                                            |  |                              |     |   |      |   |     |  
|Cash Flows from Investing Activities                                                        |  |                              |     |   |      |   |     |  
|Net repayments from Xerox Corporation                                                       |  |                              | 15  |   |      |   | 15  |  
|                                                                                            |  |                              |     |   |      |   |     |  
|Net cash provided by investing activities                                                   |  |                              | 15  |   |      |   | 15  |  
|                                                                                            |  |                              |     |   |      |   |     |  
|Cash Flows from Financing Activities                                                        |  |                              |     |   |      |   |     |  
|Cash payments on debt                                                                       |  |                              | (25 | ) |      |   |    |  
|                                                                                            |  |                              |     |   |      |   |     |  
|Net cash used in financing activities                                                       |  |                              | (25 | ) |      |   |    |  
|                                                                                            |  |                              |     |   |      |   |     |  
|Cash and cash equivalents, beginning of period                                              |  |                              |    |   |      |   |    |  
|                                                                                            |  |                              |     |   |      |   |     |  
|Cash and cash equivalents, end of period                                                    |  | $                            |    |   |      | $ |    |  
|                                                                                            |  |                              |     |   |      |   |     |  

The accompanying notes are an integral part of these Condensed Financial Statements.



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XEROX CREDIT CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Dollars in millions, unless other indicated)

(1) Basis of Presentation:

References
herein to we, us, our and the Company refer to Xerox Credit Corporation unless the context specifically requires otherwise.

We have prepared the accompanying unaudited condensed interim financial statements in accordance with the accounting policies described in our 2006 Annual Report on Form 10-K (2006 Annual
Report), and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United
States of America have been condensed or omitted. You should read these Condensed Financial Statements in conjunction with the financial statements included in our 2006 Annual Report.

In our opinion, all adjustments which are necessary for a fair statement of financial position, operating results and cash flows for the interim
periods presented have been made. Interim results of operations are not necessarily indicative of the results of the full year.

We
engage in extensive intercompany transactions with Xerox Corporation (XC and together with its subsidiaries, Xerox) and receive all of our operational and administrative support from XC. By their nature, transactions
involving related parties cannot be presumed to be carried out on the same basis as transactions among wholly-unrelated parties.

(2) Income
Taxes:

We adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an
Interpretation of FASB Statement No. 109 (FIN 48), on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position taken or expected to
be taken in a tax return that is required to be met before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure
and transition. There was no cumulative effect of adopting FIN 48. The total amount of unrecognized tax benefits as of the date of adoption was $2.

We recognize interest and penalties accrued on unrecognized tax benefits as well as interest received from favorable settlements within income tax expense. As of the date of adoption, interest and penalties accrued associated
with unrecognized tax benefits were less than $1.

We are included within the consolidated XC US federal income tax return. XC is no
longer subject to U.S. federal income tax examinations by tax authorities for years before 2005.

(3) Due to/from Xerox:

At March 31, 2007, demand loans to XC totaled $1,408 and the effective rate for the first quarter 2007 was 6.96%.

From time to time we receive non-interest bearing advances from XC to primarily cover the unpaid portion of income taxes as determined in accordance
with our Tax Allocation Agreement with XC. Amounts payable to XC were $5 and $6 as of March 31, 2007 and December 31, 2006, respectively, and are reported in our Condensed Balance Sheets as Due to Xerox Corporation, net.

Intercompany cross-currency interest rate swaps with XC have net liability fair values of $21 and $22 as of March 31, 2007 and
December 31, 2006, respectively and were netted against the demand loan balance.

(4) Subsequent Events:

On May 4, 2007, the Company provided notice of redemption for $25 of the Medium Term Notes due 2012. The notes are expected to be redeemed on
June 5, 2007. A related charge of less than $1, primarily representing remaining deferred swap termination costs, will be recorded in interest expense in our second quarter 2007 operating results upon redemption. These notes have been
reclassified to the current portion of notes payable consistent with our intent to redeem.



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

Because our liquidity is dependent upon the liquidity of XC, Item 2 includes both our Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and portions of XCs MD&A
from its Quarterly Report on Form 10-Q for the quarter ended March 31, 2007. Each MD&A, or portion thereof, is separately presented. Certain matters discussed in XCs MD&A will relate to events and transactions that do not affect
us directly.

RESULTS OF OPERATIONSXEROX CREDIT CORPORATION

Earned income from the Master Demand Note, which
represents a demand loan for accumulated cash transfers to XC, was $25 million and $24 million for the first quarters of 2007 and 2006, respectively, as interest rates and the average note balance were essentially flat between the two periods.

Interest expense was $8 million for the first quarters of 2007 and 2006, respectively as interest rates and average debt balances
were essentially flat between the two periods.

The effective income tax rate was 37.5% and 39.1% for the first quarters of 2007 and
2006, respectively. The primary change in effective tax rates was due to changes in the applicable state tax rates and other items.

CAPITAL RESOURCES AND LIQUIDITYXEROX CREDIT CORPORATION

Net cash provided by operating activities
was $10 million for the first quarter of 2007 compared to $15 million used in the first quarter of 2006. The relative increase in cash flow of $25 million was primarily due to the absence of prior year first quarter income tax payments of $25
million associated with realized taxable gains from significant debt repayments in 2005.

Net cash provided by investing activities
was $15 million for the three months ended March 31, 2007 and 2006, respectively. Cash provided by investing activities in 2007 consisted of an increase resulting from our collections on the demand note of $25 million used to repay debt,
partially offset by a reduction of $10 million of net advances to Xerox (the net advances consisted of additional loans to Xerox of $25 million from interest on the demand loan, net of $15 million used for the payment of taxes and interest). Cash
provided by investing activities in 2006 consisted of net repayments from Xerox of $15 million consisting of collections on the demand note of $39 million for the payment of taxes and interest, partially offset by additional loans to Xerox of $24
million from interest on the demand loan.

Net cash used in financing activities was $25 million for the first quarter of 2007,
reflecting the payment of our 7.00% Medium Term Notes due 2012. No cash was used in or provided by financing activities for the first quarter of 2006.

As of March 31, 2007, we had $439 million of debt outstanding of which $279 million is due in 2007 and the remainder is due in 2012 and thereafter. We believe that the amounts due under the Master Demand Note with XC of
$1.4 billion at March 31, 2007 will be sufficient to meet our remaining obligations as they mature.

Financial Risk Management

Given the limited nature of our operations, our exposures are limited to the interest rate and currency exposures embedded in
the remaining unpaid debt and will further decrease over time as debt is repaid. Currently, we hold debt of $254 million that is denominated in Japanese Yen and therefore we are exposed to changes in foreign currency exchange rates that could affect
our results of operations and financial condition. However, these exposures are economically hedged with intercompany cross-currency interest rate swaps with XC. In addition, the debt that is denominated in Japanese Yen matures in June 2007. Our
Master Demand Note with XC earns interest at a market rate.



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READERS NOTE: THE FOLLOWING DISCUSSION HAS BEEN EXCERPTED DIRECTLY FROM XEROX CORPORATIONS QUARTERLY
REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2007. DEFINED TERMS HEREIN MAY NOT NECESSARILY HAVE THE SAME MEANING AS THE SAME DEFINED TERMS HAVE IN OTHER PARTS OF THIS DOCUMENT. SUCH TERMS SHOULD BE READ IN THE NARROW CONTEXT IN WHICH THEY
ARE DEFINED IN THIS SECTION. REFERENCES TO WE, OUR, AND US REFER TO XEROX CORPORATION. ADDITIONALLY, AMOUNTS AND EXPLANATIONS CONTAINED IN THIS SECTION ARE MEANT TO GIVE THE READER ONLY A GENERAL SENSE OF
XCS OPERATIONS, CAPITAL RESOURCES AND LIQUIDITY. ACCORDINGLY, THESE EXCERPTS SHOULD BE READ IN THE CONTEXT OF THE XC CONSOLIDATED FINANCIAL STATEMENTS, WHICH ARE INCORPORATED BY REFERENCE WITHIN XEROX CORPORATIONS QUARTERLY REPORT ON
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2007 FILED SEPARATELY WITH THE SEC.

Summary

Revenues



|                                                              |  |                             |       |   |      |   |       |        |  |    |   
|------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ----- | ------ |  | -- | --
|                                                              |  | Three MonthsEnded March 31, |       |   |      |  
|(in millions)                                                 |  | 2007                        |       |   | 2006 |   |       | Change | 
|Equipment sales(1)                                            |  | $                           | 931   |   |      | $ | 947   |        |  | (2 | %)
|Post sale and other revenue(2)                                |  |                             | 2,700 |   |      |   | 2,535 |        |  | 7  | % 
|Finance income                                                |  |                             | 205   |   |      |   | 213   |        |  | (4 | %)
|                                                              |  |                             |       |   |      |   |       |        |  |    |   
|Total Revenues                                                |  | $                           | 3,836 |   |      | $ | 3,695 |        |  | 4  | % 
|                                                              |  |                             |       |   |      |   |       |        |  |    |   
|Reconciliation to Condensed Consolidated Statements of Income |  |                             |       |   |      |   |       |        |  |    |   
|Sales                                                         |  | $                           | 1,707 |   |      | $ | 1,666 |        |  |    |   
|Less: Supplies, paper and other sales                         |  |                             | (776  | ) |      |   | (719  | )      |  |    |   
|                                                              |  |                             |       |   |      |   |       |        |  |    |   
|Equipment sales                                               |  | $                           | 931   |   |      | $ | 947   |        |  |    |   
|                                                              |  |                             |       |   |      |   |       |        |  |    |   
|Service, outsourcing and rentals                              |  | $                           | 1,924 |   |      | $ | 1,816 |        |  |    |   
|Add: Supplies, paper and other sales                          |  |                             | 776   |   |      |   | 719   |        |  |    |   
|                                                              |  |                             |       |   |      |   |       |        |  |    |   
|Post sale and other revenue                                   |  | $                           | 2,700 |   |      | $ | 2,535 |        |  |    |   
|                                                              |  |                             |       |   |      |   |       |        |  |    |   
|Memo: Color(3)                                                |  | $                           | 1,423 |   |      | $ | 1,214 |        |  |    |   



|(1) | Equipment sales reflect the results of our technology investments and the associated product launches.
|--- | ------------------------------------------------------------------------------------------------------



|(2) | Post sale revenue is largely a function of the equipment placed at customer locations, the volume of prints and
copies that our customers make on that equipment, the mix of color pages, as well as associated services.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Color revenues represent a subset of total revenues.
|--- | ----------------------------------------------------

First quarter 2007 total revenues grew 4% compared to the first quarter 2006. Currency had a 3-percentage point positive impact on total revenues in the quarter.
Total revenues included the following:

| |  |  | 7% increase in post sale and other revenue including a 3-percentage point benefit from currency. Growth in color products, DMO, global services and paper, more than offset
a decline in light lens products.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 6% increase in service, outsourcing, and rentals revenue of $1,924 million due to technical service revenue and global services growth. Supplies, paper, and other sales of
$776 million grew 8% year-over-year due to supplies associated with strong color installations in previous periods and higher paper price levels.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 2% decline in equipment sales, including a 2-percentage point benefit from currency. Strong install activity in office color multifunction and high-end production color
were more than offset by overall price declines
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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between 5% and 10% and declines in black-and-white products and color printers. More than two-thirds of the first quarter 2007 equipment sales were generated from
products launched in the past 24 months.

| |  |  | 17% growth in color revenue. Color revenue of $1,423 million comprised 37% of total revenue in the first quarter 2007 compared to 33% in the first quarter 2006,
reflecting:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 22% growth in color post sale and other revenue. Color represented 34% of post sale and other revenue in the first quarter 2007 versus 29% in the first quarter 2006.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 9% growth in color equipment sales. Color sales represented 48% of total equipment sales in the first quarter 2007 versus 43% in the first quarter 2006.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 29% growth in color pages. Color pages represented 11% of total pages in the first quarter 2007 versus 8% in the first quarter 2006.
| | - | ------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 4% decline in finance income including a 2-percentage point benefit from currency.
| | - |  | ----------------------------------------------------------------------------------

Net Income

First quarter 2007 net income of $233 million, or $0.24 per diluted share increased $33
million or $0.04 per diluted share from the first quarter 2006, primarily reflecting:

| |  |  | Gross profit increase of $72 million due to increased revenue of $141 million as well as an improvement in gross margin of 0.4-percentage points.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Reductions in R,D&E and SAG of $36 million due primarily to continued cost management efforts.
| | - |  | ----------------------------------------------------------------------------------------------

| |  |  | In addition, a decrease in equity income of $33 million including a $23 million charge for our share of a previously disclosed Fuji Xerox restructuring charge.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

Capital Resources and Liquidity

The following table summarizes our cash flows and cash, cash equivalents and short-term investments as of and for the three months ended March 31, 2007 and 2006:



|                                                             |  |                    |       |   |      |   |              |  |   |      |  
|------------------------------------------------------------ |  | ------------------ | ----- | - | ---- | - | ------------ |  | - | ---- | -
|                                                             |  | Three Months Ended |      
|                                                             |  | March 31,          |      
|(in millions)                                                |  | 2007               |       |   | 2006 |   | AmountChange | 
|Net cash provided by operating activities                    |  | $                  | 187   |   |      | $ | 147          |  | $ | 40   |  
|Net cash provided by investing activities                    |  |                    | 16    |   |      |   | 56           |  |   | (40  | )
|Net cash (used in) provided by financing activities          |  |                    | (390  | ) |      |   | 62           |  |   | (452 | )
|Effect of exchange rate changes on cash and cash equivalents |  |                    | 6     |   |      |   | 11           |  |   | (5   | )
|                                                             |  |                    |       |   |      |   |              |  |   |      |  
|(Decrease) increase in cash and cash equivalents             |  |                    | (181  | ) |      |   | 276          |  |   | (457 | )
|Cash and cash equivalents at beginning of period             |  |                    | 1,399 |   |      |   | 1,322        |  |   | 77   |  
|                                                             |  |                    |       |   |      |   |              |  |   |      |  
|Cash and cash equivalents at end of period                   |  |                    | 1,218 |   |      |   | 1,598        |  |   | (380 | )
|Short-term investments                                       |  |                    | 65    |   |      |   | 196          |  |   | (131 | )
|                                                             |  |                    |       |   |      |   |              |  |   |      |  
|Total cash, cash equivalents and short-term investments      |  | $                  | 1,283 |   |      | $ | 1,794        |  | $ | (511 | )
|                                                             |  |                    |       |   |      |   |              |  |   |      |  

Cash Flows from Operating Activities

Net cash provided by operating activities of $187 million in the first quarter 2007 increased $40 million from first quarter 2006 primarily due to the following:

| |  |  | $121 million increase in pre-tax income.
| | - |  | ----------------------------------------

| |  |  | $25 million increase due to lower net tax payments primarily reflecting refunds received in 2007 of prior year estimated tax payments.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

| |  |  | $71 million decrease due to higher inventories primarily associated with our 2007 product launches.
| | - |  | ---------------------------------------------------------------------------------------------------

| |  |  | $17 million decrease due to a lower net run-off of finance receivables as the decline in new finance receivable originations has moderated over the past several years.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | $16 million decrease due to higher accounts receivable as a result of an increase in revenues partially offset by a $29 million sale of receivables.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



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Cash Flows from Investing Activities

Net cash provided by investing activities of $16 million in the first quarter 2007 decreased $40 million from first quarter 2006 primarily due to the following:

| |  |  | $138 million decrease in proceeds from divestitures and investments, as 2006 included $117 million distribution related to the sale of investments held by Ridge Re and a
$21 million distribution from the liquidation of our investment in Xerox Capital LLC.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | $37 million decrease due to higher capital expenditures and internal use software.
| | - |  | ----------------------------------------------------------------------------------

| |  |  | $109 million increase primarily due to the absence of the first quarter 2006 $103 million escrow deposit relating to the MPI litigation.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------

| |  |  | $24 million increase in net proceeds from sales of short-term investments.
| | - |  | --------------------------------------------------------------------------

Cash Flows from Financing Activities

Net cash used in financing activities was $390 million in the first quarter
2007. The decrease in cash of $452 million from first quarter 2006 was primarily due to the following:

| |  |  | $689 million decrease due to the absence of the net proceeds received from the March 2006 issuance of the 6.4% Senior Notes.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------

| |  |  | $100 million increase due to the first quarter 2006 payment of our liability to Xerox Capital LLC in connection with their redemption of Canadian deferred preferred
shares.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | $89 million increase due to lower first quarter 2007 net repayments on secured debt.
| | - |  | ------------------------------------------------------------------------------------

| |  |  | $14 million increase relating to the first quarter 2006 payment of preferred stock dividends. The conversion of our Series C Mandatory Convertible Preferred Stock occurred
in the third quarter 2006.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | $13 million increase due to lower purchases under our share repurchase program.
| | - |  | -------------------------------------------------------------------------------

| |  |  | $10 million increase due to higher proceeds from the issuance of common stock, resulting from increases in exercised stock options.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------

Customer Financing Activities and Debt

The following
represents our total finance assets associated with our lease and finance operations:



|                                   |  |               |       |                  |   |      
|---------------------------------- |  | ------------- | ----- | ---------------- | - | -----
|                                   |  | March 31,2007 |       | December 31,2006
|Total Finance receivables, net (1) |  | $             | 7,728 |                  | $ | 7,844
|Equipment on operating leases, net |  |               | 492   |                  |   | 481  
|                                   |  |               |       |                  |   |      
|Total Finance Assets, net          |  | $             | 8,220 |                  | $ | 8,325
|                                   |  |               |       |                  |   |      

(1) Includes (i) billed portion of finance receivables, net, (ii) finance receivables, net and
(iii) finance receivables due after one year, net as included in our Condensed Consolidated Balance Sheets.

As of March 31, 2007,
approximately 27% of total debt was secured by finance receivables and other assets compared to 29% at December 31, 2006. Our debt maturities are as follows:



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|               |  |               |       |                                   |   |                   |  |            |    |  |   |      
|-------------- |  | ------------- | ----- | --------------------------------- | - | ----------------- |  | ---------- | -- |  | - | -----
|               |  | UnsecuredDebt |       | Debt Securedby FinanceReceivables |   | OtherSecured Debt |  | Total Debt
|Second Quarter |  | $             | 303   |                                   | $ | 149               |  | $          | 3  |  | $ | 455  
|Third Quarter  |  |               | 3     |                                   |   | 188               |  |            | 3  |  |   | 194  
|Fourth Quarter |  |               | 2     |                                   |   | 659               |  |            | 3  |  |   | 664  
|2007           |  |               | 308   |                                   |   | 996               |  |            | 9  |  |   | 1,313
|2008           |  |               | 8     |                                   |   | 719               |  |            | 6  |  |   | 733  
|2009           |  |               | 1,058 |                                   |   | 101               |  |            | 5  |  |   | 1,164
|2010           |  |               | 689   |                                   |   | 49                |  |            | 2  |  |   | 740  
|2011           |  |               | 802   |                                   |   | 10                |  |            |   |  |   | 812  
|Thereafter     |  |               | 2,188 |                                   |   | 1                 |  |            | 3  |  |   | 2,192
|               |  |               |       |                                   |   |                   |  |            |    |  |   |      
|Total          |  | $             | 5,053 |                                   | $ | 1,876             |  | $          | 25 |  | $ | 6,954
|               |  |               |       |                                   |   |                   |  |            |    |  |   |      

Liquidity, Financial Flexibility and Funding Plans:

We manage our worldwide liquidity using internal cash management practices, which are subject to (1) the statutes, regulations and practices of each of the
local jurisdictions in which we operate, (2) the legal requirements of the agreements to which we are a party and (3) the policies and cooperation of the financial institutions we utilize to maintain and provide cash management services.

Our credit ratings as of March 31, 2007 were as follows:



|                             |  |                      |  |          |  |                                                                                                                                                                                                        
|---------------------------- |  | -------------------- |  | -------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                             |  | Senior UnsecuredDebt |  | Outlook  |  | Comments                                                                                                                                                                                               
|Moodys Investors Service(1) |  | Baa3                 |  | Positive |  | The Moodys rating was upgraded from Ba1 in November 2006. The outlook remains positive since being upgraded in November 2006.                                                                         
|Standard & Poors (S&P)(2)  |  | BB+                  |  | Positive |  | The S&P rating was upgraded from BB- in March 2006 and the outlook was revised from stable to positive in January 2007. The rating was put on Credit Watch with positive
implications on April 2, 2007.
|Fitch Ratings(3)             |  | BBB-                 |  | Stable   |  | The Fitch rating was upgraded from BB+ in August 2006.                                                                                                                                                 

---

|(1) | In November 2006, Moodys upgraded the Senior Unsecured rating from Ba1 to Baa3, a one notch upgrade. Moodys maintains a Positive Outlook on the credit. In
conjunction with the upgrade to investment grade ratings for the senior unsecured debt, Moodys has withdrawn all Loss Given Default assessments and Speculative Grade Liquidity ratings as they are only appropriate for non-investment grade
issuers. Moodys ratings upgrades also included: Senior unsecured shelf registration to Baa3 from Ba1; Trust preferred to Ba1 from Ba2; subordinated shelf registration to Ba1 from Ba2 and preferred shelf registration to Ba1 from Ba2. On
April 2, 2007, Moodys affirmed its ratings and positive outlook on Xerox, stating they are not affected by the Companys potential acquisition of Global Imaging Systems.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | In March 2006, S&P upgraded the Senior Unsecured and Corporate Credit rating from BB- to BB+, a two notch upgrade. At the same time, S&P revised its outlook from
Positive to Stable on all associated ratings, affirmed the short-term speculative-grade rating at B-1 and upgraded the ratings on Subordinated debt from B to BB- and Preferred Stock from B- to B+. As a result of the rating change, S&P removed
Xerox from Credit Watch in March 2006. In January 2007, S&P revised its outlook from Stable to Positive on all associated ratings. On April 2, 2007, S&P placed its ratings of Xerox on CreditWatch with positive implications, reflecting
the announcement of the agreement in principal to acquire Global Imaging Systems. S&P stated further that following the completion of the acquisition the corporate credit rating would be raised to BBB- (an investment grade rating), with a stable
outlook.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | In August 2006, Fitch upgraded its debt ratings and assigned a stable outlook on Xerox. Fitch had upgraded the senior unsecured debt of Xerox from BB+ to BBB- and also
upgraded the Trust Preferred securities from BB- to BB, both one notch upgrades. On April 2, 2007, Fitch affirmed Xeroxs ratings and stable outlook following Xeroxs announcement of an agreement in principal to acquire Global Imaging
Systems.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our credit ratings, which are periodically reviewed by major rating agencies, have substantially improved over the past
three years. We are currently rated investment grade by Moodys Investors Service and Fitch Ratings. As noted above, S&P has stated that upon the completion of the acquisition of Global Imaging Systems, it will raise our corporate credit
rating to BBB-, an investment grade rating.

Agreement to Acquire Global Imaging Systems, Inc. (Global Imaging):

The agreement to acquire Global Imaging for $1.5 billion is an all-cash transaction and is structured as a two-step acquisition including a cash tender offer for
all outstanding shares of Global Imaging common stock, followed by a cash merger in which we would acquire any remaining outstanding shares. We plan to fund the Global Imaging acquisition with a combination of cash on hand and by borrowing under our
2006 Credit Facility. We expect amounts borrowed under the 2006 Credit Facility will be paid down during the balance of 2007 using cash flows from operations. Although we intend to continue our share repurchase program, repurchases are expected to
be at a slower rate for the remainder of 2007 as cash flows from operations are directed to repay borrowings for the Global Imaging acquisition.

SummaryFinancial Flexibility and Liquidity:

Our liquidity is a function of our ability to successfully generate cash flows
from a combination of efficient operations and improvement therein, access to capital markets, securitizations, funding from third parties and borrowings secured by our finance receivables portfolios. As of March 31, 2007, total cash, cash
equivalents and short-term investments was $1.3 billion and our borrowing capacity under our 2006 Credit Facility was $1.235 billion, reflecting no outstanding borrowings and outstanding letters of credit totaling $15 million. Our ability to
maintain positive liquidity going forward depends on our ability to continue to generate cash from operations and have access to the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory
and other market factors that are beyond our control.

Financial Risk Management

We are exposed to market risk from foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. We manage our exposure to these market risks
through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. These derivative financial instruments are utilized to hedge economic exposures as well as reduce earnings and cash
flow volatility resulting from shifts in market rates. As permitted, certain of these derivative contracts have been designated for hedge accounting treatment under SFAS No. 133. Certain of our derivatives do not qualify for hedge accounting
but are effective as economic hedges of our inventory purchases and



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##### Table of Contents

currency exposure. These derivative contracts are accounted for using the mark-to-market accounting method and accordingly are exposed to some level of volatility.
Under this method, the contracts are carried at their fair value on our Condensed Consolidated Balance Sheets within Other assets and Other liabilities. The level of volatility will vary with the type and amount of derivative hedges outstanding, as
well as fluctuations in the currency and interest rate market during the period. The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.

We enter into limited types of derivative contracts, including interest rate and cross currency interest rate swap agreements, foreign currency spot, forward and
swap contracts and net purchased foreign currency options to manage foreign currency exposures. Our primary foreign currency market exposures include the Japanese Yen, Euro, British Pound Sterling, Canadian Dollar and Brazilian Real. The fair
market values of all our derivative contracts change with fluctuations in interest rates and/or currency rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial
instruments are held solely as risk management tools and not for trading or speculative purposes.

By their nature, all derivative instruments
involve, to varying degrees, elements of market and credit risk not recognized in our financial statements. The market risk associated with these instruments resulting from currency exchange and interest rate movements is expected to offset the
market risk of the underlying transactions, assets and liabilities being hedged. We do not believe there is a significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions
are executed with a diversified group of major financial institutions. Further, our policy is to deal with counterparties having a minimum investment-grade or better credit rating. Credit risk is managed through the continuous monitoring of
exposures to such counterparties.

Some of our derivative and other material contracts at March 31, 2007 require us to post cash collateral or
maintain minimum cash balances in escrow. These cash amounts are reported in our Condensed Consolidated Balance Sheets within Other current assets or Other long-term assets, depending on when the cash will be contractually released.

READERS NOTE: THIS CONCLUDES THE DISCUSSION EXCERPTED DIRECTLY FROM XEROX CORPORATIONS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31,
2007.



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READERS NOTE: THE FOLLOWING DISCUSSION HAS BEEN EXCERPTED DIRECTLY FROM THE XEROX CORPORATION CURRENT
REPORT ON FORM 8-K DATED APRIL 30, 2007 WHICH IS BEING INCLUDED HEREIN GIVEN ITS RELEVANCE TO XEROX CORPORATIONS LIQUIDITY.

On
April 30, 2007, Xerox Corporation (Xerox or we) amended and restated its $1.25 billion unsecured revolving credit facility that was entered into in April 2006 (the 2006 Credit Facility). The amended and
restated facility, with affiliates of Citibank, N.A. and JPMorgan Chase Bank, N.A., as lead arrangers and bookrunners, and a group of lenders (the 2007 Credit Facility), has been increased to $2 billion and includes a $300 million letter
of credit subfacility. The 2007 Credit Facility also includes an accordion feature, which would allow us to increase from time to time, with willing lenders, the overall size of the facility to an aggregate amount not to exceed $2.5 billion. The
2007 Credit Facility matures on April 30, 2012, although we have the right to request a one year extension on each of the first and second anniversaries of the facility.

On April 30, 2007, Xerox also entered into a $1 billion interim bridge credit facility with Citibank, N.A., as administrative agent, Citigroup Global Markets Inc. and J. P. Morgan Securities Inc., as
joint lead arrangers and joint bookrunners, and a group of lenders (the Interim Facility, each of the 2007 Credit Facility and the Interim Facility individually a facility, and collectively the
facilities). The Interim Facility matures on April 28, 2008.

The proceeds of the facilities will be used to provide working capital
for Xerox and its subsidiaries and for general corporate purposes.

Our obligations under the facilities are unsecured and are not guaranteed by any
of our subsidiaries. However, if in the future any of our domestic subsidiaries guarantees any debt for money borrowed by Xerox of more than $100 million, that subsidiary is required to guaranty Xeroxs obligations under the facilities as well.
In the event any of our subsidiaries borrows under the 2007 Credit Facility, its borrowings thereunder would be guaranteed by Xerox.

The facilities
contain various conditions to borrowing, events of default and affirmative, negative and financial maintenance covenants, which are substantially identical to those included in the 2006 Credit Facility, which are described in our Annual Report on
Form 10-K for the year ended December 31, 2006.

READERS NOTE: THIS CONCLUDES THE DISCUSSION EXCERPTED DIRECTLY FROM THE XEROX
CORPORATION CURRENT REPORT ON FORM 8-K DATED APRIL 30, 2007.



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##### Table of Contents

Item 4. Controls and Procedures



|(a) | Evaluation of Disclosure Controls and Procedures
|--- | ------------------------------------------------

The Companys management evaluated, with the participation of our principal executive officer and principal financial officer, or persons performing similar functions, the effectiveness of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer have
concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports that we file or submit under the Securities Exchange Act
of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms relating to Xerox Credit Corporation, and was accumulated and communicated to the
Companys management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.



|(b) | Changes in Internal Controls
|--- | ----------------------------

In
connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no change identified in our internal control over financial reporting that occurred during the last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART IIOTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Our liquidity is dependent on the liquidity of XC, as our sole monetary asset is
the Master Demand Note.

As of March 31, 2007, our sole monetary asset is the Master Demand Note from Xerox Corporation.
As a result, our liquidity is dependent upon the liquidity of XC. Accordingly, certain disclosures contained herein relate to events and transactions that affect the liquidity of Xerox.

Xerox Corporations operating results and liquidity have improved over the last several years which further mitigate realizability risk of our
Master Demand Note. Specifically, Xerox Corporations net income was $1.21 billion, $978 million and $859 million for the years ended December 31, 2006, 2005 and 2004, respectively. Operating cash flows of Xerox Corporation were $1.62
billion, $1.42 billion and $1.75 billion for the years ended December 31, 2006, 2005 and 2004, respectively. In addition, Xerox Corporations credit ratings were improved to investment grade for Moodys and Fitch during 2006.

Xeroxs liquidity is a function of its ability to successfully generate cash flow from a combination of efficient operations
and improvement therein, access to capital markets, securitizations, funding from third parties and borrowings secured by Xeroxs finance receivables portfolios. As of March 31, 2007, Xeroxs total cash, cash equivalents and
short-term investments was $1.3 billion, and as of April 30, 2007, its borrowing capacity under its $2.0 billion 2007 Credit Facility and $1.0 billion 2007 Interim Bridge Credit Facility was approximately $2.985 billion, reflecting no
outstanding borrowings and $15 million of letters of credit that have been utilized. Xerox also has funding available through various secured borrowing arrangements. Xerox believes its liquidity (including operating and other cash flows that it
expects to generate) will be sufficient to meet operating requirements as they occur; however, Xeroxs ability to maintain sufficient liquidity going forward depends on its ability to generate cash from operations and access to the capital
markets, secured borrowings, securitizations and funding from third parties, all of which are subject to general economic, financial, competitive, legislative, regulatory and other market factors that are beyond its control.



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##### Table of Contents

Item 6. Exhibits



|           |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---------- |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |  |    
|Exhibit 3  |  | (a) |  | Articles of Incorporation of Registrant filed with the Secretary of State of Delaware on September 23, 1980, as amended by Certificates of Amendment thereto filed with the
Secretary of State of Delaware on September 12, 1980 and September 19, 1988, as further amended by Certificate of Change of Registered Agent filed with the Secretary of State of Delaware on October 7, 1986, Certificate of Ownership
and Merger filed with the Secretary of State of Delaware on April 30, 1992 and Certificate of Correction of Certificate of Ownership and Merger filed with the Secretary of State of Delaware on March 3, 1994.
|           |  |    
|           |  |     |  | Incorporated by reference to Exhibit 3(a) to Registrants Annual Report on Form 10-K for the Year Ended December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|           |  |    
|           |  | (b) |  | By-Laws of Registrant, as amended through September 1, 1992.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|           |  |    
|           |  |     |  | Incorporated by reference to Exhibit 3(b) to Registrants Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|           |  |    
|Exhibit 31 |  | (a) |  | Certification of CEO Pursuant to Rule 13a-14(a) or Rule 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|           |  |    
|           |  | (b) |  | Certification of CFO Pursuant to Rule 13a-14(a) or Rule 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|           |  |    
|Exhibit 32 |  |     |  | Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             













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##### Table of Contents

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 CREDIT CORPORATION (Registrant)
|                  |  |  | 
|Date: May 9, 2007 |  |  |  | BY:                                   |  | /S/ JOHN F. RIVERA                                                  
|                  |  |  |  |                                       |  | John F. Rivera Vice President, Treasurer and Chief Financial Officer



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##### Table of Contents

Exhibits



|           |  |    |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---------- |  | -- | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 3  |  | (a | ) |  | Articles of Incorporation of Registrant filed with the Secretary of State of Delaware on September 23, 1980, as amended by Certificates of Amendment thereto filed with the
Secretary of State of Delaware on September 12, 1980 and September 19, 1988, as further amended by Certificate of Change of Registered Agent filed with the Secretary of State of Delaware on October 7, 1986, Certificate of Ownership
and Merger filed with the Secretary of State of Delaware on April 30, 1992 and Certificate of Correction of Certificate of Ownership and Merger filed with the Secretary of State of Delaware on March 3, 1994.
|           |  |   
|           |  |    |   |  | Incorporated by reference to Exhibit 3(a) to Registrants Annual Report on Form 10-K for the Year Ended December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|           |  |   
|           |  |    |   |  | By-Laws of Registrant, as amended through September 1, 1992.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|           |  |   
|           |  |    |   |  | Incorporated by reference to Exhibit 3(b) to Registrants Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|           |  |   
|Exhibit 31 |  | (a | ) |  | Certification of CEO Pursuant to Rule13a-14(a) or Rule15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|           |  |   
|           |  | (b | ) |  | Certification of CFO Pursuant to Rule13a-14(a) or Rule15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|           |  |   
|Exhibit 32 |  |    |   |  | Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



20