US NETWORK equipment maker Cisco Systems is expected to record a one-off tax charge reaching $150 million (€104 million) following a tax ruling involving fellow US tech firm Xilinx.
The US Court of Appeals has overturned a 2005 decision and ruled against Xilinx, which has its European headquarters in Ireland. This will directly impact Cisco Systems.
The court ruled that Xilinx must pay taxes on stock-based compensation awarded to employees working in Ireland.
Although Cisco Systems, which employs 200 people across Ireland, was not named in the case, the courts decision will affect its tax bill for a period of time before the 2005 fiscal year.
The firm revealed in a regulatory filing that the move could reduce profits by up to 3 cents per share in the quarter to the end of July. The decision could also reduce up to $320 million in additional paid-in capital but is not expected to impact cash flows for the fourth quarter this year.
The company said it does not believe it will have a material impact on future results of operations, cash flow or financial position.
The decision follows the announcement of up to 2,000 job cuts at the global company in February.
At the time the group also said it expected revenue in the current, fiscal third quarter to fall 15 per cent to 20 per cent from a year ago.
The estimated figures revealed a higher decline than the average analyst forecast for a 10.5 per cent fall to $8.8 billion. The group also added that product orders in January had dipped 20 per cent compared to the previous year. – (Additional reporting Bloomberg and Reuters)
