Fujifilm's 'accounting' issues tug at Xerox

Todd Clausen
Democrat and Chronicle
Xerox Square in downtown Rochester.
  • Accounting issues at Fuji Xerox could impact Xerox even more.

Problems at a company halfway around the world are creating problems for Xerox Corp.

Fujifilm Holding Corp., partially owned by the stateside document technology company, said losses stemming from "inappropriate accounting" in the South Pacific are much larger than first thought.   

The Japanese camera and copier maker revealed this week that losses related to the issue have ballooned to $340 million, and that its own internal controls and oversight by management, top executives and its board were to blame.

As a result, six board members are being pushed out and the pay of the entire board as well as Chairman and CEO Shigetaka Komori along with President and COO Kenji Sukeno will be docked.

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Xerox, which owns a 25 percent stake in the company, said it was reviewing the report and was planning to seek additional information on the issue.

"We were not involved in the investigation, including in determining its scope and timing, and are therefore reliant on Fuji Xerox and Fujifilm to provide information to us," Xerox said in a statement. "As a result of this new information, we anticipate having to reflect the increase in the adjustments in our financial statements …"

Xerox first sounded the horn on problems at Fuji Xerox to investors during its first quarter earnings report when it took a $30 million charge related to a New Zealand subsidiary.

An independent review of the issues released this week showed that the issues also included properties in Australia. The review included examination of "tens of thousands" of contracts and found no other inappropriate practices.

More specifically, the issues stemmed from leasing agreements by Australian and New Zealand units. The independent review called for a number of issues, including supervisory oversight to be strengthened.

"Given our status as a minority investor, we have limited contractual and other rights to information with respect to Fuji Xerox matters," Xerox said. "We can provide no assurances relative to the outcome of any potential governmental investigations or any consequences thereof."

TCLAUSEN@Gannett.com

Reverse stock split complete

Xerox Corp. said it has completed a one-for-four reverse stock split, leaving shareholders with fewer but more valuable shares.

The move reduced the number of common stock shares by roughly 1.31 billion to 437.5 million. Shares were off slightly to $27.62 a share in midday trading.