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Date: Thursday October 10, 2013 10:21:42 pm
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    Stocks Fall as U.S. SEC Investigates Xerox's Accounting Practices
    Xerox Corp. fell after the company said the Securities and Exchange Commission is investigating accounting practices at one of its units, Affiliated Computer Services Inc., an outsourcing company Xerox acquired in 2010. Executive vice president Lynn Blodgett and two other unidentified people — a current employee and a former one — got a Wells notice from the SEC, the company said. That means the SEC is considering civil enforcement action against them.

    The company also said that the president of its services business has received a "Wells notice" from the agency.

    In a regulatory filing Tuesday, Xerox said the investigation is focused on whether revenue associated with certain ACS equipment resale deals with several customers should have been presented on a net rather than gross basis, primarily in periods prior to the acquisition. ACS is now a part of Xerox's services business.

    Xerox noted the deals were not material to the company's postacquisition financial statements. The company said it will continue to cooperate fully with the SEC.

    Xerox said the SEC's staff has advised that it will not recommend charges against Xerox.

    The company also said that Lynn R. Blodgett, Xerox's executive vice president and president of the Xerox Services business, has received a "Wells notice" in connection with the investigation. Two other individuals–one a current employee and one a former employee–have also received Wells notices, the company said.

    Mr. Blodgett previously served as chief executive of ACS and became an executive vice president of Xerox when the company acquired ACS. He became president of Xerox Services in 2012.

    A Wells notice from the SEC is a warning to a company or individual that its staff intends to recommend to commissioners that they file a civil action or proceeding against that company or individual.

    All three individuals have advised Xerox that they intend to make submissions seeking to persuade the SEC that civil enforcement actions should not be brought against them.

    Xerox has been working to refashion itself into a company focused on services like document management, bill processing and IT outsourcing. The transition has been bumpy, however, as Xerox balances falling sales of printers and copiers with the high cost of growing its services business.

    In July, the company reported its second-quarter earnings fell 12% as write-downs and weaker document-technology revenue continued to weigh on results.

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