David Dyer, President and Chief Executive Officer of the Company stated, "They have worked hard for nearly a year to cooperate fully with the United States Attorney's Office, and are pleased that it has determined to close its investigation."
As a result of the reduction in the buying office commission rate and other unrelated adjustments that are also to be reflected in the amended tax returns, THUSA expects to pay approximately $15.4 million in additional federal income taxes and $2.7 million in interest for these four years, taking into account the effect of changes in other tax attributes, including net operating loss carry forwards. The effect of adjusting the buying office commission rate for the four fiscal years results in a tax provision in fiscal 2005 of approximately $12 million, after taking into account previously established reserves for this matter.
Background of the Investigation and Hong Kong Tax Matters As previously disclosed on September 24, 2004, THUSA had received a grand jury subpoena issued by the USAO seeking documents generally related to domestic and/or international buying office commissions since 1990 and that certain of THUSA's current and former employees had received subpoenas.
Several domestic and international subsidiaries of the Company pay buying office commissions to THEH, a British Virgin Islands corporation which is a wholly-owned and consolidated subsidiary of the Company, pursuant to contracts to provide or otherwise secure through sub-agents certain services, including product development, sourcing, production scheduling and quality control functions. The Company disclosed that the USAO investigation was focused on the appropriateness of the commission rate paid by the Company's subsidiaries to THEH, as well as other related tax matters.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
