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Xerox Corp. said Tuesday the U.S. Securities and Exchange Commission is investigating Affiliated Computer Services Inc., for certain accounting practices there.
Xerox bought ACS in 2010 in a multibillion-dollar deal. ACS is now part of Xerox’s services business.
The investigation is focused on whether revenue from some ACS equipment resale deals should have been presented on a net rather than gross basis, primarily in periods prior to the acquisition, Xerox states in an SEC filing. The transactions were not material to Xerox’s post-acquisition consolidated financial statements.
The company noted in the filing it had had received a Wells Notice from the SEC.
The notice is a letter the SEC sends to people or firms when it is planning to bring an enforcement action against them. The notice indicates the SEC staff has determined it may bring a civil action against a person or firm, and provides the person or firm with the opportunity to provide information as to why the enforcement action should not be brought.
Xerox states in the filing it has been cooperating fully with the SEC and has been advised by SEC staff that they will not recommend charges against Xerox.
Xerox acquired Texas-based ACS in a $6.4 billion cash and stock deal. The acquisition increased the firm’s services business, which now makes up more than half of Xerox’s total annual sales.
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