##### Table of Contents

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: June 30, 2009

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 July 31, 2009
|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 Financial Condition and Results of Operations section and other sections of
this Quarterly Report on Form 10-Q, as well as in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and our 2008 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.



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##### Table of Contents

XEROX CREDIT CORPORATION

Form 10-Q

June 30, 2009

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                                                               |  | 14
|                               | 
|Part II  OTHER INFORMATION    |  | 15                                                                                   
|                               |  |                                                                                      
|Item 1A.                       |  | Risk Factors                                                                          |  | 15
|                               |  |                                                                                      
|Item 6.                        |  | Exhibits                                                                              |  | 16
|                               | 
|Signatures                     |  | 17                                                                                   
|                               | 
|Exhibit Index                  |  | 18                                                                                   



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##### Table of Contents

PART IFINANCIAL INFORMATION

Item 
1.

XEROX CREDIT CORPORATION

CONDENSED BALANCE SHEETS (UNAUDITED)

(in millions, except share data)



|                                                                            |  |              |       |                  |   |      
|--------------------------------------------------------------------------- |  | ------------ | ----- | ---------------- | - | -----
|                                                                            |  | June 30,2009 |       | December 31,2008
|                                                                            |  |             
|ASSETS                                                                      |  |              |       |                  |   |      
|Assets:                                                                     |  |              |       |                  |   |      
|Note receivableXerox Corporation                                           |  | $            | 1,099 |                  | $ | 1,088
|Other assets                                                                |  |              | 2     |                  |   | 2    
|                                                                            |  |              |       |                  |   |      
|Total Assets                                                                |  | $            | 1,101 |                  | $ | 1,090
|                                                                            |  |              |       |                  |   |      
|                                                                            |  |             
|LIABILITIES AND SHAREHOLDERS EQUITY                                        |  |              |       |                  |   |      
|Liabilities:                                                                |  |              |       |                  |   |      
|Notes payable after one year                                                |  | $            | 60    |                  | $ | 60   
|Due to Xerox Corporation, net                                               |  |              | 3     |                  |   | 3    
|Other liabilities                                                           |  |              | 1     |                  |   | 1    
|                                                                            |  |              |       |                  |   |      
|Total Liabilities                                                           |  |              | 64    |                  |   | 64   
|                                                                            |  |              |       |                  |   |      
|Shareholders Equity:                                                       |  |              |       |                  |   |      
|Common stock, no par value, 2,000 shares authorized, issued and outstanding |  |              | 23    |                  |   | 23   
|Additional paid-in capital                                                  |  |              | 219   |                  |   | 219  
|Retained earnings                                                           |  |              | 795   |                  |   | 784  
|                                                                            |  |              |       |                  |   |      
|Total Shareholders Equity                                                  |  |              | 1,037 |                  |   | 1,026
|                                                                            |  |              |       |                  |   |      
|Total Liabilities and Shareholders Equity                                  |  | $            | 1,101 |                  | $ | 1,090
|                                                                            |  |              |       |                  |   |      

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 EndedJune 30, |    | Six Months EndedJune 30,
|                                         |  | 2009                       |    | 2008                     |   | 2009 |  | 2008
|Earned Income from Xerox note receivable |  | $                          | 11 |                          | $ | 16   |  | $    | 20 |  | $ | 30
|                                         |  |                            |    |                          |   |      |  |      |    |  |   |   
|Expenses:                                |  |                            |    |                          |   |      |  |      |    |  |   |   
|Interest                                 |  |                            | 1  |                          |   | 2    |  |      | 2  |  |   | 5 
|General and administrative               |  |                            |   |                          |   | 1    |  |      |   |  |   | 1 
|                                         |  |                            |    |                          |   |      |  |      |    |  |   |   
|Total Expenses                           |  |                            | 1  |                          |   | 3    |  |      | 2  |  |   | 6 
|                                         |  |                            |    |                          |   |      |  |      |    |  |   |   
|Income before income taxes               |  |                            | 10 |                          |   | 13   |  |      | 18 |  |   | 24
|Provision for income taxes               |  |                            | 4  |                          |   | 5    |  |      | 7  |  |   | 9 
|                                         |  |                            |    |                          |   |      |  |      |    |  |   |   
|Net Income                               |  | $                          | 6  |                          | $ | 8    |  | $    | 11 |  | $ | 15
|                                         |  |                            |    |                          |   |      |  |      |    |  |   |   

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)



|                                                                                  |  |                          |     |   |      |   |     |  
|--------------------------------------------------------------------------------- |  | ------------------------ | --- | - | ---- | - | --- | -
|                                                                                  |  | Six Months EndedJune 30, |    
|                                                                                  |  | 2009                     |     |   | 2008 |  
|Cash Flows from Operating Activities                                              |  |                          |     |   |      |   |     |  
|Net income                                                                        |  | $                        | 11  |   |      | $ | 15  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |     |   |      |   |     |  
|Net change in other assets and other liabilities                                  |  |                          | 1   |   |      |   |    |  
|                                                                                  |  |                          |     |   |      |   |     |  
|Net cash provided by operating activities                                         |  |                          | 12  |   |      |   | 15  |  
|                                                                                  |  |                          |     |   |      |   |     |  
|Cash Flows from Investing Activities                                              |  |                          |     |   |      |   |     |  
|Net advances to Xerox Corporation                                                 |  |                          | (12 | ) |      |   | (15 | )
|                                                                                  |  |                          |     |   |      |   |     |  
|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.



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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 2008 Annual Report on Form 10-K (2008 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 2008 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 $1,099 and the interest rate in effect at June 30, 2009 was 3.98%.

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 $3 as of June 30, 2009 and December 31, 2008. This amount is reported in our
Condensed Balance Sheet as Due to Xerox Corporation, net.

Note 3 - Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles a replacement of SFAS No. 162, Hierarchy of Generally Accepted Accounting Principles (the Codification). The Codification is the official single source of authoritative U.S. generally accepted accounting
principles (GAAP). All existing accounting standards are superseded. All other accounting guidance not included in the Codification will be considered non-authoritative. The Codification also includes all relevant Securities and Exchange
Commission (SEC) guidance organized using the same topical structure in separate sections within the Codification. The Codification is effective for our third-quarter 2009 financial statements. The Codification is not expected to change
GAAP. The principal impact on our financial statements from the Codification adoption is limited to disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (FAS 165). FAS 165 is intended to establish general standards of
accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires disclosure of the date through which an entity has evaluated subsequent events and
the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. FAS 165 is effective for our second quarter ended June 30, 2009.

Note 4 - Subsequent Events

We have performed an
evaluation of subsequent events through August 6, 2009, which is the date the financial statements were issued.



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##### Table of Contents

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 June 30, 2009. 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 $11 million and $16 million for the second quarters of 2009 and 2008, respectively, and $20 million and $30 million for the
six months ended June 30, 2009 and 2008, respectively. The decreases in 2009 primarily relate to lower interest rates and a lower Master Demand Note balance as compared to 2008 comparable periods.

Interest expense was $1 million and $2 million for the second quarters of 2009 and 2008, respectively, and $2 million and $5 million for the six months ended
June 30, 2009 and 2008, respectively. The decreases relate to lower debt levels primarily as a result of regularly scheduled payments as well as our early redemption of $100 million of debt in the third quarter of 2008.

The effective income tax rate was 37.4% and 37.5% for the second quarters of 2009 and 2008 respectively, and 37.4% and 37.3% for the six months ended June 30,
2009 and 2008, respectively, 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 $12 million and $15 million for the six months ended June 30, 2009 and
2008, respectively. The decrease primarily reflects lower net income.

Net cash used in investing activities was $12 million and $15 million for the
six months ended June 30, 2009 and 2008, respectively, and represents net advances to Xerox. 2009 net advances to Xerox consisted of additional loans to Xerox of $20 million from interest on the Master Demand Note, net of $8 million of
collections for the payment of taxes and interest. 2008 net advances to Xerox consisted of additional loans to Xerox of $30 million from interest on the Master Demand Note, net of $15 million of collections for the payment of taxes and interest.

There was no cash provided by or used in financing activities for the six months ended June 30, 2009 or 2008.

As of June 30, 2009, we had $60 million of debt outstanding. Of this amount, $10 million matures in 2013 and the remainder matures in 2014. We believe that
the amount due under the Master Demand Note from XC of $1.1 billion at June 30, 2009 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.



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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 JUNE 30, 2009. 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 JUNE 30, 2009 FILED SEPARATELY WITH THE SEC.

Capital Resources and Liquidity

The following table summarizes our cash and cash equivalents:



|                                                             |  |                          |       |   |      |   |       |        |  |   |    
|------------------------------------------------------------ |  | ------------------------ | ----- | - | ---- | - | ----- | ------ |  | - | ---
|                                                             |  | Six MonthsEnded June 30, |       |   |     
|(in millions)                                                |  | 2009                     |       |   | 2008 |   |       | Change
|Net cash provided by operating activities                    |  | $                        | 631   |   |      | $ | 494   |        |  | $ | 137
|Net cash used in investing activities                        |  |                          | (243  | ) |      |   | (350  | )      |  |   | 107
|Net cash used in financing activities                        |  |                          | (400  | ) |      |   | (404  | )      |  |   | 4  
|Effect of exchange rate changes on cash and cash equivalents |  |                          | 4     |   |      |   | 4     |        |  |   |   
|                                                             |  |                          |       |   |      |   |       |        |  |   |    
|Decrease in cash and cash equivalents                        |  |                          | (8    | ) |      |   | (256  | )      |  |   | 248
|Cash and cash equivalents at beginning of period             |  |                          | 1,229 |   |      |   | 1,099 |        |  |   | 130
|                                                             |  |                          |       |   |      |   |       |        |  |   |    
|Cash and cash equivalents at end of period                   |  | $                        | 1,221 |   |      | $ | 843   |        |  | $ | 378
|                                                             |  |                          |       |   |      |   |       |        |  |   |    

Cash Flows from Operating Activities

Net cash provided by operating activities was $631 million for the six months ended June 30, 2009. The $137 million increase in cash from the six months ended June 30, 2008 was primarily due to
the following:



| |  | $327 million decrease in pre-tax income before litigation and restructuring.
|- |  | ----------------------------------------------------------------------------



| |  | $373 million increase from accounts receivables reflecting lower revenue, improved collections and benefits from the sale of accounts receivables.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $247 million increase as a result of lower inventory levels reflecting focused supply chain actions in light of lower sales volume.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  | $34 million increase due to lower placements of equipment on operating leases reflecting lower install activity.
|- |  | ----------------------------------------------------------------------------------------------------------------



| |  | $11 million increase due to higher net run-off of finance receivables.
|- |  | ----------------------------------------------------------------------



| |  | $130 million decrease due to lower accounts payable and accrued compensation primarily related to lower purchases and the timing of payments to suppliers.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $106 million decrease due to higher restructuring payments associated with previously reported actions.
|- |  | -------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities

Net cash used in
investing activities was $243 million for the six months ended June 30, 2009. The $107 million increase in cash from the six months ended June 30, 2008 was primarily due to the following:



| |  | $134 million increase due to lower escrow and other restricted investments. 2008 reflects the funding of the escrow account for the Carlson litigation settlement.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $55 million increase due to lower capital expenditures (including internal use software) reflecting focused management on our capital requirements.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $27 million decrease due to lower cash receipts from asset sales.
|- |  | -----------------------------------------------------------------



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Cash Flows from Financing Activities

Net cash used in financing activities was $400 million for the six months ended June 30, 2009. The $4 million increase in cash from the six months ended June 30, 2008 was primarily due to the
following:



| |  | $712 million increase due to the absence of purchases under the Companys share repurchase program.
|- |  | ---------------------------------------------------------------------------------------------------



| |  | $107 million increase primarily due to lower debt payments on secured financings.
|- |  | ---------------------------------------------------------------------------------



| |  | $837 million decrease due to lower net proceeds on unsecured debt. 2009 reflects the repayment of the 2009 Senior Notes of $879 million, net payments of $96 million on the
Credit Facility and $41 million primarily for foreign short-term borrowings. These payments were partially offset by proceeds from the issuance of $750 million in Senior Notes. 2008 reflects the issuance of $1.4 billion in Senior Notes, as well as,
net payments of $550 million on the Credit Facility and net payments of $279 million on other debt.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Customer Financing
Activities

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



|                                   |  |              |       |                  |   |      
|---------------------------------- |  | ------------ | ----- | ---------------- | - | -----
|(in millions)                      |  | June 30,2009 |       | December 31,2008
|Total Finance receivables, net(1)  |  | $            | 7,041 |                  | $ | 7,278
|Equipment on operating leases, net |  |              | 566   |                  |   | 594  
|                                   |  |              |       |                  |   |      
|Total Finance Assets, net          |  | $            | 7,607 |                  | $ | 7,872
|                                   |  |              |       |                  |   |      



|(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 $265 million in Total finance assets, net includes favorable currency
of $109 million.

The following summarizes our debt:



|                                             |  |              |        |   |                  |   |        |  
|-------------------------------------------- |  | ------------ | ------ | - | ---------------- | - | ------ | -
|(in millions)                                |  | June 30,2009 |        |   | December 31,2008 |  
|Principal debt balance                       |  | $            | 7,885  |   |                  | $ | 8,201  |  
|Less: Net unamortized discount               |  |              | (6     | ) |                  |   | (6     | )
|Add: SFAS No. 133 fair value adjustments     |  |              | 158    |   |                  |   | 189    |  
|                                             |  |              |        |   |                  |   |        |  
|Total Debt                                   |  |              | 8,037  |   |                  |   | 8,384  |  
|Less: Current maturities and short-term debt |  |              | (1,342 | ) |                  |   | (1,610 | )
|                                             |  |              |        |   |                  |   |        |  
|Total Long-Term Debt                         |  | $            | 6,695  |   |                  | $ | 6,774  |  
|                                             |  |              |        |   |                  |   |        |  

Our lease contracts permit customers to pay for equipment over time rather than at the date of installation
and therefore we maintain a certain level of debt, which 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)     |  | June 30,2009 |       | December 31,2008
|Financing debt(2) |  | $            | 6,655 |                  | $ | 6,888
|Core debt         |  |              | 1,382 |                  |   | 1,496
|                  |  |              |       |                  |   |      
|Total Debt        |  | $            | 8,037 |                  | $ | 8,384
|                  |  |              |       |                  |   |      





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|(2) | Financing debt includes $6,161 million and $6,368 million as of June 30, 2009 and December 31, 2008, 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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sales of Accounts Receivables

During the second quarter
2009, we sold $373 million of accounts receivables without recourse, as compared to $237 million in the first quarter 2009 and $168 million in the second quarter 2008. Fees associated with these sales were approximately $3 million, $2 million and $1
million, respectively. $358 million of receivables sold to date remained uncollected by the third party purchasers as of June 30, 2009. We do not have any current or future liability for these non-recourse sales.

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.

We are
currently rated investment grade by all major rating agencies. As of June 30, 2009 the ratings for our senior unsecured debt were as follows:



|                         |  |                      |  |         
|------------------------ |  | -------------------- |  | --------
|                         |  | Senior UnsecuredDebt |  | Outlook 
|                         |  |                     
|Moodys                  |  | Baa2                 |  | Stable  
|                         |  |                     
|Standard & Poors (S&P) |  | BBB                  |  | Negative
|                         |  |                     
|Fitch                    |  | BBB                  |  | Negative

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. 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 June 30, 2009:



| |  | As of June 30, 2009, total cash and cash equivalents was $1.2 billion and our borrowing capacity under our Credit Facility was $1.8 billion, reflecting $150 million
outstanding borrowings and no outstanding letters of credit. In addition, we currently have approximately $1.0 billion available under our secured borrowing arrangement with General Electric Capital Corporation (the Loan Agreement). This
Agreement is in place through 2010, and has not been accessed in almost three and a half years.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Cash flows from operations were $631 million and $494 million for the six months ended June 30, 2009 and 2008, respectively. Cash flows from operations were $939
million for the 2008 full-year and included $615 million in net payments for securities litigation. We expect 2009 full-year operating cash flows of about $1.5 billion.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The first half of 2009 total debt decreased by $347 million and we expect to reduce debt by over $1 billion for the full-year. Our debt maturities are in line with
historical and projected cash flows and are spread over the next ten years as follows (in millions):
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|                    |  |        |      
|------------------- |  | ------ | -----
|Year                |  | Amount
|Q3 2009             |  | $      | 475  
|Q4 2009             |  |        | 157  
|2010                |  |        | 969  
|2011                |  |        | 802  
|2012                |  |        | 1,145
|2013                |  |        | 1,065
|2014                |  |        | 819  
|2015                |  |        |     
|2016                |  |        | 951  
|2017                |  |        | 501  
|2018 and thereafter |  |        | 1,001
|                    |  |        |      
|Total               |  | $      | 7,885
|                    |  |        |      

Contractual Cash Obligations and Other Commercial Commitments and Contingencies

In April 2009, we signed two seven year contracts with Computer Sciences Corporation (CSC) for approximately $39 million for mainframe application
development and maintenance services and $51 million for mainframe computing services support in North America. These contracts replace the EDS mainframe applications, maintenance and support and mainframe process contracts in North America, which
expire in June 2010 and December 2013, respectively.

In February 2009, we signed a six year contract with Hindustan Computers Limited
(HCL) for approximately $100 million for mid range processing services in North America and Europe. This contract replaces the EDS server management contract, which expired in June 2009.

Financial Risk Management

We are exposed to market risk
from changes in 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 to reduce earnings and cash flow volatility resulting from shifts in market rates. We
enter into limited types of derivative contracts, including interest rate swap agreements, foreign currency spot, forward and swap contracts and net purchased foreign currency options to manage interest rate and foreign currency exposures. Our
primary foreign currency market exposures include the Yen, Euro, and Pound Sterling. 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.

We are required to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. As permitted, certain of these
derivative contracts have been designated for hedge accounting treatment. Certain of our derivatives that do not qualify for hedge accounting are effective as economic hedges. These derivative contracts are likewise required to be recognized each
period at fair value and therefore do result in some level of volatility. 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 markets during the
period. The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.

By their nature,
all derivative instruments involve, to varying degrees, elements of market and credit risk. 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



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believe there is 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.

The current market events have not required us to materially modify or change
our financial risk management strategies with respect to our exposures to interest rate and foreign currency risk. Refer to Note 10  Financial Instruments  for further discussion and information on our financial risk management
strategies.

READERS NOTE: THIS CONCLUDES THE DISCUSSION EXCERPTED DIRECTLY FROM XEROX CORPORATIONS QUARTERLY REPORT ON FORM 10-Q FOR
THE QUARTER ENDED JUNE 30, 2009.



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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.



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##### Table of Contents

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
June 30, 2009, 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, funding from third parties and borrowings secured by Xeroxs finance receivables portfolios. As of June 30, 2009, Xeroxs total Cash and cash
equivalents was $1.2 billion, and its borrowing capacity under its Credit Facility was $1.8 billion, reflecting outstanding borrowings of $150 million. Xerox also has funding available through a secured borrowing arrangement with General Electric
Capital Corporation. 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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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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



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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: August 6, 2009 |  |  |  | By:                                   |  | /s/    John F. Rivera                               
|                     |  |  |  |                                       |  | John F. Rivera                                      
|                     |  |  |  |                                       |  | Vice President, Treasurer andChief Financial Officer



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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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



18