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, 2010

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: 001-8133





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.)
|                                                               | 
|P.O. Box 4505
45 Glover Avenue
Norwalk, Connecticut            |  | 06856-4505                          
|(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   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

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



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  | x |  | Smaller reporting company |  |  ̈

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, 2010
|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.









---

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 Financial
Condition and Results of Operations section and other sections of this Quarterly Report on Form 10-Q, as well as in our 2009 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, 2010

Table of Contents



|                               |  |                                                                                       |  |     
|------------------------------ |  | ------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                       |  | Page
|Part I  FINANCIAL INFORMATION |  | 4                                                                                    
|                               |  |                                                                                      
|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   
|                               |  |                                                                                      
|                               |  | Financial Risk Management                                                             |  | 8   
|                               |  |                                                                                      
|                               |  | Capital Resources and Liquidity  Xerox Corporation                                   |  | 9   
|                               |  |                                                                                      
|Item 4.                        |  | Controls and Procedures                                                               |  | 13  
|                               | 
|Part II  OTHER INFORMATION    |  | 14                                                                                   
|                               |  |                                                                                      
|Item 1A.                       |  | Risk Factors                                                                          |  | 14  
|                               |  |                                                                                      
|Item 4.                        |  | (Removed and Reserved)                                                                |  | 14  
|                               |  |                                                                                      
|Item 6.                        |  | Exhibits                                                                              |  | 15  
|                               |  |                                                                                      
|Signatures                     |  |                                                                                       |  | 16  
|                               |  |                                                                                      
|Exhibit Index                  |  |                                                                                       |  | 17  



3



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PART IFINANCIAL INFORMATION



|Item 1. | 
|------- | 

XEROX CREDIT
CORPORATION

CONDENSED BALANCE SHEETS (UNAUDITED)

(in millions, except share data)

ASSETS



|                                                                            |  |               |       |                   |   |      
|--------------------------------------------------------------------------- |  | ------------- | ----- | ----------------- | - | -----
|                                                                            |  | March 31,2010 |       | December 
31,2009
|Assets:                                                                     |  |               |       |                   |   |      
|Note receivable - Xerox Corporation                                         |  | $             | 1,116 |                   | $ | 1,112
|Other assets                                                                |  |               | 1     |                   |   | 1    
|                                                                            |  |               |       |                   |   |      
|Total Assets                                                                |  | $             | 1,117 |                   | $ | 1,113
|                                                                            |  |               |       |                   |   |      
|                                                                           
|LIABILITIES AND SHAREHOLDERS EQUITY                                       
|Liabilities:                                                                |  |               |       |                   |   |      
|Current portion of notes payable                                            |  | $             | 10    |                   | $ |     
|Notes payable after one year                                                |  |               | 50    |                   |   | 60   
|Due to Xerox Corporation, net                                               |  |               | 4     |                   |   | 4    
|Other liabilities                                                           |  |               |      |                   |   | 1    
|                                                                            |  |               |       |                   |   |      
|Total Liabilities                                                           |  |               | 64    |                   |   | 65   
|                                                                            |  |               |       |                   |   |      
|Shareholders Equity:                                                       |  |               |       |                   |   |      
|Common stock, no par value, 2,000 shares authorized, issued and outstanding |  |               | 23    |                   |   | 23   
|Additional paid-in-capital                                                  |  |               | 219   |                   |   | 219  
|Retained earnings                                                           |  |               | 811   |                   |   | 806  
|                                                                            |  |               |       |                   |   |      
|Total Shareholders Equity                                                  |  |               | 1,053 |                   |   | 1,048
|                                                                            |  |               |       |                   |   |      
|Total Liabilities and Shareholders Equity                                  |  | $             | 1,117 |                   | $ | 1,113
|                                                                            |  |               |       |                   |   |      

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



4



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XEROX CREDIT CORPORATION

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

(in millions)



|                                         |  |                             |   |      |   |  
|---------------------------------------- |  | --------------------------- | - | ---- | - | -
|                                         |  | Three Months EndedMarch 31,
|                                         |  | 2010                        |   | 2009
|Earned Income from Xerox note receivable |  | $                           | 9 |      | $ | 9
|Expenses:                                |  |                             |   |      |   |  
|Interest                                 |  |                             | 1 |      |   | 1
|                                         |  |                             |   |      |   |  
|Total Expenses                           |  |                             | 1 |      |   | 1
|                                         |  |                             |   |      |   |  
|Income before income taxes               |  |                             | 8 |      |   | 8
|Provision for income taxes               |  |                             | 3 |      |   | 3
|                                         |  |                             |   |      |   |  
|Net Income                               |  | $                           | 5 |      | $ | 5
|                                         |  |                             |   |      |   |  

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



5



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XEROX CREDIT CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)



|                                               |  |                             |    |   |      |   |    |  
|---------------------------------------------- |  | --------------------------- | -- | - | ---- | - | -- | -
|                                               |  | Three Months EndedMarch 31, |   
|                                               |  | 2010                        |    |   | 2009 |  
|Cash Flows from Operating Activities           |  |                             |    |   |      |   |    |  
|Net income                                     |  | $                           | 5  |   |      | $ | 5  |  
|                                               |  |                             |    |   |      |   |    |  
|Net cash provided by operating activities      |  |                             | 5  |   |      |   | 5  |  
|                                               |  |                             |    |   |      |   |    |  
|Cash Flows from Investing Activities           |  |                             |    |   |      |   |    |  
|Net advances to Xerox Corporation              |  |                             | (5 | ) |      |   | (5 | )
|                                               |  |                             |    |   |      |   |    |  
|Cash Flows from Financing Activities           |  |                             |   |   |      |   |   |  
|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.



6



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XEROX CREDIT CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Dollars in millions, unless otherwise indicated)

Note 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 2009 Annual Report on Form 10-K (2009 Annual Report), and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in annual 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 2009 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. Our financial statements reflect an allocation of general and administrative expenses for those costs incurred by XC on our behalf. By their nature, transactions involving related
parties cannot be presumed to be carried out on the same basis as transactions among wholly-unrelated parties.

Note 2 - Due to/from Xerox

Demand loans to XC totaled $1,116 and the interest rate in effect at March 31, 2010 was 3.44%.

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. The amount payable to XC was $4 as of March 31, 2010 and December 31, 2009. This amount is reported in our Condensed Balance Sheets as Due to Xerox Corporation, net.

Note 3 - Subsequent Event

The Company
provided notice of redemption of $10 Medium Term Notes to be redeemed in May 2010. These notes had an original maturity of 2013. The total redemption amount of $10 has been reclassified to the current portion of notes payable, consistent with our
intent to redeem these notes.



7



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|Item 2. | 
|------- | 

XEROX CREDIT
CORPORATION

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, 2010. 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

Earned income from the Master Demand Note, which represents a demand loan for accumulated cash transfers to XC, was $9 million for the first quarters of
2010 and 2009 reflecting relatively flat interest rates and balances for the comparable periods.

Interest expense was $1 million for the
first quarters of 2010 and 2009.

The effective income tax rate was 37.5% for the first quarters of 2010 and 2009 reflecting the U.S. federal
statutory rate of 35.0% and net state income taxes.

Capital Resources and Liquidity

Net cash provided by operating activities was $5 million for the first quarters of 2010 and 2009, reflective of net income for the comparable periods.

Net cash used in investing activities was $5 million for the first quarters of 2010 and 2009 and represents net advances to Xerox. 2010 and
2009 net advances to Xerox consisted of additional loans to Xerox of $9 million from interest on the Master Demand Note, net of $4 million of collections for the payment of taxes and interest.

There was no cash provided by or used in financing activities for the first quarters of 2010 or 2009.

As of March 31, 2010, we had $60 million of debt outstanding. As described in Note 3 to the Condensed Financial Statements, we provided notice of
redemption for $10 million of this debt; which will be redeemed in May 2010. We believe that the amount due under the Master Demand Note from XC of $1.1 billion at March 31, 2010 will be sufficient to meet our remaining obligations as they are
redeemed or mature.

Financial Risk Management

Given the nature of our operations, our exposures are limited to the fixed interest rate exposures embedded in the remaining unpaid debt and will further
decrease over time as debt is repaid. Our Master Demand Note with XC earns interest at a market rate.



8



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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, 2010. 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 XEROX CORPORATIONS CAPITAL RESOURCES AND LIQUIDITY. ACCORDINGLY, THESE EXCERPTS SHOULD BE READ IN THE CONTEXT OF THE XEROX CORPORATION CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, WHICH ARE INCLUDED IN XEROX CORPORATIONS QUARTERLY
REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2010 FILED SEPARATELY WITH THE SEC.

Capital Resources and
Liquidity

Cash Flow Analysis

The following table summarizes our cash and cash equivalents for the three months ended March 31, 2010 and 2009:



|                                                             |  |                             |        |   |      |   |       |        |  |   |        |  
|------------------------------------------------------------ |  | --------------------------- | ------ | - | ---- | - | ----- | ------ |  | - | ------ | -
|                                                             |  | Three MonthsEnded March 31, |        |   |      |  
|(in millions)                                                |  | 2010                        |        |   | 2009 |   |       | Change | 
|Net cash provided by operating activities                    |  | $                           | 375    |   |      | $ | 22    |        |  | $ | 353    |  
|Net cash used in investing activities                        |  |                             | (1,566 | ) |      |   | (207  | )      |  |   | (1,359 | )
|Net cash used in financing activities                        |  |                             | (1,565 | ) |      |   | (482  | )      |  |   | (1,083 | )
|Effect of exchange rate changes on cash and cash equivalents |  |                             | (33    | ) |      |   | (13   | )      |  |   | (20    | )
|                                                             |  |                             |        |   |      |   |       |        |  |   |        |  
|Decrease in cash and cash equivalents                        |  |                             | (2,789 | ) |      |   | (680  | )      |  |   | (2,109 | )
|Cash and cash equivalents at beginning of period             |  |                             | 3,799  |   |      |   | 1,229 |        |  |   | 2,570  |  
|                                                             |  |                             |        |   |      |   |       |        |  |   |        |  
|Cash and Cash Equivalents at End of Period                   |  | $                           | 1,010  |   |      | $ | 549   |        |  | $ | 461    |  
|                                                             |  |                             |        |   |      |   |       |        |  |   |        |  

Cash Flows from Operating Activities

Net cash provided by operating activities was $375 million in the first quarter 2010 reflecting the inclusion of ACS as well as $75 million of cash
outflows for acquisition-related costs. The $353 million increase in cash from first quarter 2009 was primarily due to the following:



| |  |  | $337 million increase due to higher accounts payable and accrued compensation primarily related to the timing of accounts payable payments, as well as
increased compensation, benefit and other accruals.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $173 million increase in pre-tax income before restructuring, amortization of purchased intangibles and the Venezuelan currency devaluation.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $71 million increase primarily from the settlement of derivative contracts.
| | - |  | ---------------------------------------------------------------------------



| |  |  | $48 million increase due to lower restructuring payments for previously reported actions.
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | $28 million increase due to the absence of payments for the settlement of securities-related litigation.
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | $18 million increase due to higher net run-off of finance receivables.
| | - |  | ----------------------------------------------------------------------



| |  |  | $364 million decrease from higher accounts receivables due to higher revenues, the timing of revenue in the quarter and lower sales of receivables as
compared to fourth quarter 2009.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities

Net cash used in investing activities was $1,566 million in the first quarter 2010. The $1,359 million decrease in cash from first quarter 2009 was
primarily due to the 2010 acquisitions of ACS for $1,495 million and IBS for $29 million as compared to $145 million for GISs acquisition of ComDoc, Inc. in 2009.

Cash Flows from Financing Activities

Net cash used in financing activities was $1,565 million in the first quarter 2010. The $1,083 million decrease in cash from first quarter 2009 was
primarily due to the following:



| |  |  | First quarter 2010 reflects the repayment of $1,733 million of ACSs debt and $14 million of debt issuance costs for the Bridge Loan Facility
commitment, which was terminated in December 2009. These payments
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



9



---

| | were offset by net proceeds of $100 million from borrowings under the Credit Facility and net proceeds of $8 million on other debt. First quarter 2009 reflects the repayment of 2009 Senior Notes
of $879 million, net proceeds of $503 million from borrowings under the Credit Facility and net payments of $41 million primarily for foreign short-term borrowings.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $115 million increase due to proceeds from the issuance of common stock primarily as a result of the exercise of stock options issued under the former
ACS plan.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

ACS Acquisition

On February 5, 2010, we acquired all of the outstanding equity of ACS in a cash-and-stock transaction, valued at approximately $6.2 billion, net of
cash acquired. The table below details the consideration transferred to acquire ACS:



|                                         |  |                  |      
|---------------------------------------- |  | ---------------- | -----
|(in millions)                            |  | February 
5,2010
|Xerox common stock issued                |  | $                | 4,149
|Cash consideration, net of cash acquired |  |                  | 1,495
|Value of exchanged stock options         |  |                  | 168  
|Series A convertible preferred stock     |  |                  | 349  
|                                         |  |                  |      
|Net Consideration  cash/non-cash        |  | $                | 6,161
|                                         |  |                  |      

Refer to Note 4, Acquisitions, in the Condensed Consolidated Financial
Statements for additional information regarding the ACS acquisition.

Customer Financing Activities

The following represents our Total finance assets, net associated with our lease and finance operations:



|                                   |  |               |       |                   |   |      
|---------------------------------- |  | ------------- | ----- | ----------------- | - | -----
|(in millions)                      |  | March 31,2010 |       | December 
31,2009
|Total Finance receivables, net(1)  |  | $             | 6,735 |                   | $ | 7,027
|Equipment on operating leases, net |  |               | 528   |                   |   | 551  
|                                   |  |               |       |                   |   |      
|Total Finance Assets, net          |  | $             | 7,263 |                   | $ | 7,578
|                                   |  |               |       |                   |   |      



|(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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The reduction of $315 million in Total finance assets, net
includes unfavorable currency of $149 million.

Our lease contracts permit customers to pay for equipment over time rather than at the date of
installation; therefore, we maintain a certain level of debt (that we refer to as financing debt) to support our investment in these lease contracts, which are reflected in Total Finance assets, net. For this financing aspect of our business, we
maintain an assumed 7:1 leverage ratio of debt to equity as compared to our finance assets. Based on this leverage, the following represents the breakdown of total debt between financing debt and core debt:



|                  |  |               |       |                   |   |      
|----------------- |  | ------------- | ----- | ----------------- | - | -----
|(in millions)     |  | March 31,2010 |       | December 
31,2009
|Financing debt(1) |  | $             | 6,355 |                   | $ | 6,631
|Core debt         |  |               | 3,609 |                   |   | 2,633
|                  |  |               |       |                   |   |      
|Total Debt        |  | $             | 9,964 |                   | $ | 9,264
|                  |  |               |       |                   |   |      



|(1) | Financing debt includes $5,893 million and $6,149 million as of March 31, 2010 and December 31, 2009, respectively, of debt associated with Total finance
receivables, net and is the basis for our calculation of equipment financing interest expense. The remainder of the financing debt is associated with Equipment on operating leases.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



10



---

The following summarizes our debt as of March 31, 2010 and December 31, 2009:



|                                             |  |               |        |   |                  |   |       |  
|-------------------------------------------- |  | ------------- | ------ | - | ---------------- | - | ----- | -
|(in millions)                                |  | March 31,2010 |        |   | December 31,2009 |  
|Principal debt balance                       |  | $             | 9,791  |   |                  | $ | 9,122 |  
|Net unamortized discount                     |  |               | 1      |   |                  |   | (11   | )
|Fair value adjustments                       |  |               | 172    |   |                  |   | 153   |  
|                                             |  |               |        |   |                  |   |       |  
|Total Debt                                   |  |               | 9,964  |   |                  |   | 9,264 |  
|Less: Current maturities and short-term debt |  |               | (1,296 | ) |                  |   | (988  | )
|                                             |  |               |        |   |                  |   |       |  
|Total Long-term Debt                         |  | $             | 8,668  |   |                  | $ | 8,276 |  
|                                             |  |               |        |   |                  |   |       |  

Sales of Accounts Receivables

We have facilities in the U.S., Canada and several countries in Europe that enable us to sell, on an on-going basis, certain accounts receivable without
recourse to third-parties. The accounts receivables sold are generally short-term trade receivables with a payment due date of less than 60 days. Accounts receivables sales for the first quarter 2010 and 2009 were as follows:



|                                                         |  |                              |      |   |      |   |    
|-------------------------------------------------------- |  | ---------------------------- | ---- | - | ---- | - | ---
|                                                         |  | Three MonthsEnded March 
31,
|(in millions)                                            |  | 2010                         |      |   | 2009
|Accounts receivable sales                                |  | $                            | 477  |   |      | $ | 237
|Fees associated with sales                               |  |                              | 4    |   |      |   | 2  
|Prior quarter accounts receivable sales                  |  |                              | 606  |   |      |   | 246
|Estimated (decrease) increase on operating cash
flows(1) |  |                              | (124 | ) |      |   | 8  



|(1) | Generally represents the difference between current and prior quarter receivable sales.
|--- | ---------------------------------------------------------------------------------------

Liquidity and Financial Flexibility

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.

We are currently rated investment grade by all major rating agencies. As of March 31, 2010, the ratings were as follows:



|                 |  |                       |  |         
|---------------- |  | --------------------- |  | --------
|                 |  | Senior Unsecured
Debt |  | Outlook 
|Moodys          |  | Baa2                  |  | Stable  
|                 |  |                      
|Standard & Poors |  | BBB-                  |  | Stable  
|                 |  |                      
|Fitch            |  | BBB                   |  | Negative

Our liquidity is a function of
our ability to successfully generate cash flows from a combination of efficient operations and access to capital markets. Our ability to maintain positive liquidity going forward depends on our ability to continue to generate cash from operations
and access to financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory and other market factors that are beyond our control.

The following is a discussion of our liquidity position as of March 31, 2010:



| |  |  | As of March 31, 2010, total cash and cash equivalents was $1.0 billion and our borrowing capacity under our Credit Facility was $1.9 billion,
reflecting $100 million of outstanding borrowings and no letters of credit.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cash flows from operations were $375 million for the three months ended March 31, 2010. Over the past two years we have consistently
delivered strong cash flow from operations, driven by the strength of our annuity
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



11



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| | based revenue model. Cash flows from operations were $2,208 million and $939 million for the years ended December 31, 2009 and 2008, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our principal debt maturities are in line with historical and projected cash flows and are spread over the next ten years as follows (in millions):
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



|                    |  |        |      
|------------------- |  | ------ | -----
|Year                |  | Amount
|Q2 2010             |  | $      | 975  
|Q3 2010             |  |        | 279  
|Q4 2010             |  |        | 8    
|2011                |  |        | 824  
|2012                |  |        | 1,116
|2013                |  |        | 1,065
|2014                |  |        | 820  
|2015                |  |        | 1,251
|2016                |  |        | 951  
|2017                |  |        | 501  
|2018                |  |        | 1,001
|2019 and thereafter |  |        | 1,000
|                    |  |        |      
|Total               |  | $      | 9,791
|                    |  |        |      

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, 2010.



12



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|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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13



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PART IIOTHER INFORMATION



|Item 1A. | Risk Factors
|-------- | ------------

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

As of March 31, 2010, 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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 and funding from third parties. As of March 31, 2010, Xeroxs total cash and cash equivalents was $1.0 billion, and its borrowing capacity under its Credit Facility was $1.9
billion, reflecting outstanding borrowings of $100 million. 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.



|Item 4. | (Removed and Reserved)
|------- | ----------------------



14



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|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|               | 
|Exhibit 3 (b)  |  | By-Laws of Registrant, as amended and restated 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|               | 
|Exhibit 31 (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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



15



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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 6, 2010 |  | BY:                      |  | /s/ John F. Rivera           
|                  |  |                          |  | John F. Rivera               
|                  |  |                          |  | Vice President, Treasurer and
|                  |  |                          |  | Chief Financial Officer      



16



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Exhibit Index



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|               | 
|Exhibit 3 (b)  |  | By-Laws of Registrant, as amended and restated 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|               | 
|Exhibit 31 (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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



17