HAMPTON, Va., Oct 30 /PRNewswire-FirstCall/ -- Measurement Specialties, Inc. (Nasdaq: MEAS), a designer and manufacturer of sensors and sensor-based systems, announces the impact of the recently adopted German Business Tax Reform 2008 on current year financial statements.
The German Business Tax Reform 2008, which became effective on August 17, 2007, reduces the corporate income tax rate in Germany, resulting in a reduction in the combined German tax rate from approximately 39% to 31%. Although this tax rate change will have a favorable impact on tax expense associated with profits earned in Germany in FY08 and beyond, the Company is required by financial accounting standards to revalue its net deferred tax asset due to this change.
The Company's net deferred tax asset in Germany is primarily due to the tax benefit resulting from the Net Operating Loss carry-forward acquired through the purchase of HL Planartechnik in November 2005. As a result of the new tax reform and associated decrease in effective tax rate in Germany, the value of the deferred tax asset has been reduced by approximately $1 million, from $4.3 million to $3.3 million. This charge will be reflected in the Company's second quarter results.
Mark Thomson, Company CFO commented, "While this tax rate change is expected to result in an additional income tax expense of approximately 7 cents per diluted share in the second quarter of FY08, this is a discrete, non-cash income tax expense driven by the revaluation of the net deferred tax asset, and will help to lower our overall effective tax rate in future years as our profits in Germany increase as a percent of total global earnings. Other than the impact of the discrete non-cash adjustment to the net deferred tax asset, the tax rate change will not have a material effect on our overall effective tax rate for fiscal year 2008."
About Measurement Specialties.
Measurement Specialties, Inc. (MEAS) designs and manufactures sensors and sensor-based systems to measure precise ranges of physical characteristics such as pressure, temperature, position, force, vibration, humidity and photo optics. MEAS uses multiple advanced technologies - including piezoresistive, electro-optic, electro-magnetic, capacitive, application specific integrated circuits (ASICs), micro-electromechanical systems (MEMS), piezoelectric polymers and strain gauges - to engineer sensors that operate precisely and cost effectively.
This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements may be identified by such words or phrases: "should," "intends," "is subject to," "expects," "will," "continue," "anticipate," "estimated," "projected," "may," "we believe," "future prospects," or similar expressions. The forward- looking statements above involve a number of risks and uncertainties. Factors that might cause actual results to differ include, but are not limited to, success of any reorganization; ability to raise additional funds; conditions in the general economy and in the markets served by the Company; competitive factors, such as price pressures and the potential emergence of rival technologies; interruptions of suppliers' operations affecting availability of component materials at reasonable prices; timely development and market acceptance, and warranty performance of new products; success in integrating prior acquisitions; changes in product mix, costs and yields, fluctuations in foreign currency exchange rates; uncertainties related to doing business in Hong Kong and China; changes in the Company's tax position; legislative initiatives; and the risk factors listed from time to time in the Company's SEC reports. The Company from time-to-time considers acquiring or disposing of business or product lines. Forward-looking statements do not include the impact of acquisitions or dispositions of assets, which could affect results in the near term. Actual results may differ materially. The Company assumes no obligation to update the information in this issue.
Company Contact: Mark Thomson, CFO, (757) 766-4224
|SOURCE Measurement Specialties, Inc.|
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