International Rectifier to Correct Cash Flow Statements
Staff Reporter -- EDN, May 16, 2006
El Segundo, Calif.-based digital, analog and mixed signal ICs provider International Rectifier (IR) reported Monday that it has filed an extension for its Form 10-Q for the fiscal quarter ended March 31.
The extension is required pending the completion of a review of the company’s classification of excess tax benefits from the exercise of stock options under the newly adopted SFAS No. 123R (Share-Based Payments).
As part of that review, IR has determined it should correct the classification in its consolidated cash flow statements for the excess tax benefits generated from the exercise of stock options.
In fiscal Q1 and Q2, the company presented these excess tax benefits as operating cash flows, while SFAS 123R requires their presentation as financing cash flows. IR does not believe this change will impact its previously announced earnings and financial position for the quarter ended March 31.
For the six months ended December 31, 2005, the excess tax benefit from options exercised was $4.3 million, principally attributed to the three months ended September 30, 2005. As a consequence of this correction, net cash provided by operating activities will be reduced by $4.3 million and net cash provided by financing activities will be increased by such amount. The change in classification does not affect the overall net change in cash and cash equivalents for these periods, the company noted.
Also, the change in cash flow classification of excess tax benefit from options exercised has no effect on the unaudited consolidated statements of income for the three months ended September 30, 2005 or for the three or six months ended December 31, 2005, and has no effect on the unaudited consolidated balance sheets reported as of September 30, 2005 or December 31, 2005.
As a result, IR said it intends to file Forms 10-Q/A for the fiscal quarters ended December 31, 2005 and September 30, 2005, correcting the classification of the excess tax benefit in the consolidated statements of cash flows included in those reports to correct the accounting treatment as discussed above.
The company anticipates it will be able to file the Form 10-Q for the quarter ended March 31 within the five calendar day time period specified in Rule 12b-25.
