Cisco to Record $130 Million Tax-Related Charge

Computer networking gear maker Cisco Systems Inc. on Friday said current fourth-quarter earnings per share will be 2 cents to 3 cents lower due to a tax-related charge.

San Jose, Calif.-based Cisco said in a Securities and Exchange Commission filing that the U.S. Court of Appeals for the Ninth Circuit changes the company's tax treatment of certain stock option expenses before 2005, even though Cisco was not a named party to the case.

The court's decision overturns a 2005 ruling in U.S. Tax Court that said Xilinx Inc. did not have to share stock option costs related to the company's research and development and cost-sharing arrangements.

In the filing, Cisco said it will record a charge of $130 million in the quarter. It also said the decision reduces its paid-in capital by $310 million to $320 million, or the amount investors put into the company during stock issuances.

Cisco said the decision will not have a material impact on future operations or finances.

Shares of Cisco fell one cent to close at $18.50 in Friday's regular session, and lost 7 cents in after-hours trading.

(This version CORRECTS to clarify Cisco not a named party to the court ruling)

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