Investment in Affiliates, at Equity
Investments in corporate joint ventures and other companies in which we generally have a 20% to 50% ownership interest were as follows:
|
| | | | | | | | |
| | December 31, |
| | 2013 | | 2012 |
Fuji Xerox | | $ | 1,224 |
| | $ | 1,317 |
|
All other equity investments | | 61 |
| | 64 |
|
Investments in Affiliates, at Equity | | $ | 1,285 |
| | $ | 1,381 |
|
Our equity in net income of our unconsolidated affiliates was as follows:
|
| | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2013 | | 2012 | | 2011 |
Fuji Xerox | | $ | 156 |
| | $ | 139 |
| | $ | 137 |
|
Other investments | | 13 |
| | 13 |
| | 12 |
|
Total Equity in Net Income of Unconsolidated Affiliates | | $ | 169 |
| | $ | 152 |
| | $ | 149 |
|
Fuji Xerox
Fuji Xerox is headquartered in Tokyo and operates in Japan, China, Australia, New Zealand and other areas of the Pacific Rim. Our investment in Fuji Xerox of $1,224 at December 31, 2013, differs from our implied 25% interest in the underlying net assets, or $1,329, due primarily to our deferral of gains resulting from sales of assets by us to Fuji Xerox.
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 25% ownership interest.
Summarized financial information for Fuji Xerox is as follows:
|
| | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2013 | | 2012 | | 2011 |
Summary of Operations | | | | | | |
Revenues | | $ | 11,415 |
| | $ | 12,633 |
| | $ | 12,367 |
|
Costs and expenses | | 10,479 |
| | 11,783 |
| | 11,464 |
|
Income before income taxes | | 936 |
| | 850 |
| | 903 |
|
Income tax expense | | 276 |
| | 279 |
| | 312 |
|
Net Income | | 660 |
| | 571 |
| | 591 |
|
Less: Net income - noncontrolling interests | | 5 |
| | 6 |
| | 5 |
|
Net Income - Fuji Xerox | | $ | 655 |
| | $ | 565 |
| | $ | 586 |
|
Balance Sheet | | | | | | |
Assets: | | | | | | |
Current assets | | $ | 4,955 |
| | $ | 5,154 |
| | $ | 5,056 |
|
Long-term assets | | 5,160 |
| | 6,158 |
| | 6,064 |
|
Total Assets | | $ | 10,115 |
| | $ | 11,312 |
| | $ | 11,120 |
|
Liabilities and Equity: | | | | | | |
Current liabilities | | $ | 3,114 |
| | $ | 3,465 |
| | $ | 3,772 |
|
Long-term debt | | 978 |
| | 1,185 |
| | 817 |
|
Other long-term liabilities | | 680 |
| | 917 |
| | 700 |
|
Noncontrolling interests | | 28 |
| | 27 |
| | 25 |
|
Fuji Xerox shareholders' equity | | 5,315 |
| | 5,718 |
| | 5,806 |
|
Total Liabilities and Equity | | $ | 10,115 |
| | $ | 11,312 |
| | $ | 11,120 |
|
Yen/U.S. Dollar exchange rates used to translate are as follows:
|
| | | | | | | | | | | |
Financial Statement | | Exchange Basis | | 2013 |
| | 2012 |
| | 2011 |
|
Summary of Operations | | Weighted average rate | | 97.52 |
| | 79.89 |
| | 79.61 |
|
Balance Sheet | | Year-end rate | | 105.15 |
| | 86.01 |
| | 77.62 |
|
Transactions with Fuji Xerox
We receive dividends from Fuji Xerox, which are reflected as a reduction in our investment. Additionally, 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 Outsourcing, maintenance and rental revenues in the Consolidated Statements of Income. 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.
Transactions with Fuji Xerox were as follows:
|
| | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2013 | | 2012 | | 2011 |
Dividends received from Fuji Xerox | | $ | 60 |
| | $ | 52 |
| | $ | 58 |
|
Royalty revenue earned | | 118 |
| | 132 |
| | 128 |
|
Inventory purchases from Fuji Xerox | | 1,903 |
| | 2,069 |
| | 2,180 |
|
Inventory sales to Fuji Xerox | | 145 |
| | 147 |
| | 151 |
|
R&D payments received from Fuji Xerox | | 2 |
| | 2 |
| | 2 |
|
R&D payments paid to Fuji Xerox | | 21 |
| | 15 |
| | 21 |
|
As of December 31, 2013 and 2012, net amounts due to Fuji Xerox were $85 and $110, respectively.
