Investment in Affiliates, at Equity

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

As disclosed in Note 1 - Basis of Presentation and Summary of Significant Accounting Policies and Note 7 - Divestitures, in November 2019 Xerox Holdings sold its remaining indirect 25% equity interest in Fuji Xerox, which had been previously accounted for as an equity method investment. Accordingly, our remaining Investment in Affiliates, at Equity at December 31, 2019 largely consists of several minor investments in entities in the Middle East region.

Investments in corporate joint ventures and other companies in which we generally have a 20% to 50% ownership interest were as follows:



	December 31,
	2019		2018
Fuji Xerox⁽¹⁾	$	—	$	1,360
Other⁽²⁾	46		43
Investments in affiliates, at equity	$	46	$	1,403

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(1)	Balance at December 31, 2018 reported in Other long-term assets of discontinued operations.


(2)	Balance at December 31, 2019 and 2018, respectively, reported in Other long-term assets.

Our equity in net income of our unconsolidated affiliates was as follows:



	Year Ended December 31,
	2019		2018		2017
Fuji Xerox⁽¹⁾	$	147	$	25	$	102
Other	8		8		13
Total Equity in net income of unconsolidated affiliates	$	155	$	33	$	115

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(1)	Equity in net income for Fuji Xerox is reported in Income from discontinued operations, net of tax for all years. The equity in net income for Fuji Xerox in 2019 is through the date of sale.

Fuji Xerox

Fuji Xerox is headquartered in Tokyo and operates in Japan, China, Australia, New Zealand, Vietnam and other areas of the Pacific Rim. Equity in net income of Fuji Xerox is affected by certain adjustments to reflect the deferral of profit associated with intercompany sales. These adjustments may result in recorded equity income that is different from that implied by our (former) 25% ownership interest. In addition, the Equity in net income of Fuji Xerox for the three years ended December 31, 2019, 2018 and 2017, includes after-tax restructuring and other charges of $20, $95 and $10, respectively.

We also received dividends from Fuji Xerox for the three years ended December 31, 2019, 2018 and 2017, which are reflected as a reduction in our investment upon receipt, of $69, $23 and $46, respectively.

Summarized financial information for Fuji Xerox is as follows:



	Through Date of Sale		Year Ended December 31,
	2019		2018		2017
Summary of Operations
Revenues	$	7,667	$	9,161	$	9,638
Costs and expenses	6,814		8,880		9,072
Income before income taxes	853		281		566
Income tax expense	258		160		144
Net Income	595		121		422
Less: Net income - noncontrolling interests	3		2		5
Net Income - Fuji Xerox	$	592	$	119	$	417

Balance Sheet	At Date of Sale		December 31, 2018		December 31, 2017
Assets
Current assets	$	4,876	$	4,179	$	4,315
Long-term assets	3,964		4,034		4,488
Total Assets	$	8,840	$	8,213	$	8,803
Liabilities and Equity
Short-term debt	$	49	$	130	$	428
Other current liabilities	1,932		1,827		2,079
Long-term debt	16		24		76
Other long-term liabilities	514		395		369
Noncontrolling interests	18		30		33
Fuji Xerox shareholders' equity	6,311		5,807		5,818
Total Liabilities and Equity	$	8,840	$	8,213	$	8,803

Yen/U.S. Dollar exchange rates used to translate are as follows:



Financial Statement	Exchange Basis	2019	2018	2017
Summary of Operations	Weighted average rate	109.03	110.28	112.14
Balance Sheet	Year-end rate	108.83	110.26	112.87

Transactions with Fuji Xerox

We have a Technology Agreement with Fuji Xerox whereby we receive royalty payments for their use of our Xerox brand trademark, as well as rights to access our patent portfolio in exchange for access to their patent portfolio. These payments are included in Services, maintenance and rentals revenues in the Consolidated Statements of Income. Refer to Note 27 - Subsequent Events for additional information regarding our Technology Agreement with FX.

We also have arrangements with Fuji Xerox whereby we purchase inventory from and sell inventory to Fuji Xerox. Pricing of the transactions under these arrangements is based upon terms the Company believes to be negotiated at arm's length. Our purchase commitments with Fuji Xerox are in the normal course of business and typically have a lead time of three months. In addition, we pay Fuji Xerox and they pay us for unique research and development costs. As disclosed in Note 7 - Divestitures, these agreements will continue after the sale of our Investment in Fuji Xerox.

Transactions with Fuji Xerox were as follows:



	Year Ended December 31,
	2019		2018		2017
Royalty revenue earned	$	99	$	96	$	103
Inventory purchases from Fuji Xerox	1,337		1,501		1,585
Inventory sales to Fuji Xerox	33		43		58
R&D payments received from Fuji Xerox	—		1		1
R&D payments paid to Fuji Xerox	4		8		14

As of December 31, 2019 and 2018, net amounts due to Fuji Xerox were $353 and $320, respectively.