XML 39 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
Investment in Affiliates, at Equity
 6 Months Ended
Jun. 30, 2018
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Affiliates, at Equity
Investment in Affiliates, at Equity
Our Equity in net income (loss) of unconsolidated affiliates was as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Fuji Xerox
$
17

 
$
18

 
$
(53
)
 
$
55

Other
2

 
2

 
4

 
5

Total Equity in net income (loss) of unconsolidated affiliates
$
19

 
$
20

 
$
(49
)
 
$
60


Fuji Xerox
Equity in net income (loss) of Fuji Xerox is affected by certain adjustments required to reflect the deferral of profit associated with intercompany sales. These adjustments may result in recorded equity income (loss) that is different from that implied by our 25% ownership interest. In addition, the Equity in net income (loss) of Fuji Xerox for the three and six months ended June 30, 2018 includes after-tax restructuring and other charges of $4 and $83, respectively.
In 2018, in connection with the completion of the audits of Fuji Xerox’s fiscal year-end financial statements as of and for the years ended March 31, 2016 and 2017, as well the review of Fuji Xerox’s unaudited interim financial statements as of and for the nine months ended December 31, 2017 and 2016, additional adjustments and misstatements were identified. These additional adjustments and misstatements were to the previously reported Net income of Fuji Xerox for the period from 2010 through 2017 and are incremental to the items that had been identified by the IIC (or Fujifilm's independent investigation committee). These incremental adjustments primarily relate to Fuji Xerox’s Asia Pacific subsidiaries and involve improper revenue recognition, including revenue associated with leasing transactions, additional provisions for bad debt allowances and other asset impairments. In certain instances, some of the adjustments related to inappropriate accounting and reporting practices in the Fuji Xerox Asia Pacific subsidiaries where previous misstatements were identified.
Fuji Xerox recorded a cumulative charge of JPY 12 billion (approximately $110 based on the Yen/U.S. Dollar average exchange rate for the quarter ended March 31, 2018 of 108.07) in their net loss for the quarter ended March 31, 2018 (our first quarter 2018) related to the correction of these additional adjustments and misstatements. Our recognition of 25% of Fuji Xerox’s net loss for Xerox’s first quarter 2018 included an approximately $28 charge related to these adjustments and misstatements. We determined that the impact of the out-of-period misstatements was not material to Xerox’s consolidated financial statements for any individual prior quarter or year and the adjustment to correct the misstatements is not expected to be material to our full year 2018 results.
Summarized financial information for Fuji Xerox was as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Summary of Operations
 
 
 
 
 
 
 
Revenues
$
2,226

 
$
2,325

 
$
4,691

 
$
4,884

Costs and expenses
2,098

 
2,191

 
4,869

 
4,543

Income (Loss) before Income Taxes
128

 
134

 
(178
)
 
341

Income tax expense
50

 
32

 
11

 
76

Net Income (Loss)
78

 
102

 
(189
)
 
265

Less: Net income attributable to noncontrolling interests
1

 
1

 
1

 
2

Net Income (Loss) – Fuji Xerox
$
77

 
$
101

 
$
(190
)
 
$
263

Weighted Average Exchange Rate(1)
109.05

 
111.01

 
108.54

 
112.42

_____________________________
(1)
Represents Yen/U.S. Dollar exchange rate used to translate.