Phoenix Tech. (PTEC) To Settle TNTA Transfer-Pricing Dispute; Will Result in $5.2M Tax Reduction

November 17, 2009 8:59 AM EST

Phoenix Technologies Ltd. (NASDAQ: PTEC) today announced an agreement with the Taiwan National Tax Authority (TNTA) to settle a transfer-pricing dispute for the 2000 through 2006 tax years. The agreement will result in a $5.2 million reduction of the taxes previously accrued by the Company in respect of those years.

During the fiscal year ended September 30, 2009, the Company submitted a proposal to the Taiwan National Tax Authority for a re-examination of the allocation of expenses under Taiwanese transfer pricing guidelines for the fiscal years 2000 through 2006. The Company has now received final tax assessments from the TNTA in respect of each of these years that are in accordance with the proposal submitted by the Company. The assessments call for total tax and interest payments of approximately $4.0 million, of which approximately $1.9 million had previously been paid by Phoenix. Accordingly, during the current fiscal quarter ending December 31, 2009, the Company intends to make payments to the TNTA totaling $2.1 million in final settlement of its liabilities for taxes and interest for these years.

In accordance with its policies regarding the accounting for uncertain tax positions, the Company had previously recorded tax and interest expenses totaling approximately $9.2 million for the relevant years. As a result of the settlement, the final assessment of $4.0 million, and the intended payment described above, the Company now expects to record a net reduction of tax expense relating to these years of approximately $5.2 million in the current fiscal quarter ending December 31, 2009.

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