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Vizrt reaches a settlement with the Israeli Tax Authorities for payment of a substantially lower amount than original assessment

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Bergen, Norway, June 26, 2014, Vizrt Ltd. (Oslo Main List: VIZ).

Reference is made to the press release dated January 2, 2014, related to the tax assessment received for the years 2008-2009, and to tax orders received for the years 2006 and 2007, as disclosed in the Consolidated Financial Statements, totaling USD 72.5 million. The Company reached a settlement today with the Israeli Tax Authorities (ITA) for all open and disputed years 2006-2012.

The settlement includes a cash payment of USD 18.0 million, to be paid within 30 days from signing the settlement agreement. Such payment will result in an additional “taxes on income” expense of USD 3.80 million in the statement of income for Q2 2014, whereas the tax provision will be decreased by USD 14.2 million.

Additionally, as part of the settlement, the Company also agreed to forego a possible future capital tax benefit of USD 10.5 million, which could have been utilized only against possible future capital gains, if applicable. The Company retains a capital gain tax benefit of USD 1.5 million. The agreement to forego the possible future capital tax benefit has no effect on the Company’s Consolidated Financial Statements.

As part of the settlement, the ITA re-classified the intercompany intellectual property license granted by the Company in consideration for royalties as an asset sale. In an effort to conclude this tax issue and given that the final assessment is substantially lower than the original assessment, the Company believes that this settlement is a satisfactory and pragmatic outcome. As a result, no intercompany royalties will be paid to the Company from 2014 onwards and no taxes on income will be due from royalties. However, the ITA accepted the Company’s intercompany royalty and related tax calculations and therefore no additional tax payments are due for 2013.

Martin Burkhalter, CEO, commented: “We are pleased to have successfully reached an agreement with the ITA for all years under dispute 2006-2012. Considering that the ITA tax assessment and tax orders issued, totaled USD 72.5 million, we are satisfied with the outcome of our negotiations and the final settlement of USD 18.0 million, which is close to the tax provisions we have made for this case. We believe that resolving this issue removes the uncertainty in the capital market.”

The above amounts are based on the current exchange rate.

 

Investor and media contact:

Martin Burkhalter / CEO / +41 22 365 75 01 / MBurkhalter@vizrt.co

 

About Vizrt:

Vizrt provides real-time 3D graphics, studio automation, sports analysis and asset management tools for the broadcast industry - interactive and virtual solutions, animations, maps, weather, video editing and compositing tools. Vizrt's products are used by the world's leading broadcasters, including: CNN, CBS, Fox, the BBC, BSkyB, Al Jazeera, ITN, ZDF, Star TV, Network 18, TV Today, CCTV, and NHK. Furthermore, many world-class production houses and corporate institutions such as the Stock Exchanges in New York and London use Vizrt systems.

Vizrt is a public company traded on the Oslo Main List: VIZ, ISIN: IL0010838154. For further information please refer to www.vizrt.com

Copyright © Vizrt. All rights reserved. This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Vizrt and its affiliates. These statements are based on the current expectations or beliefs of Vizrt's management and are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties relate to changes in technology and market requirements, the company’s concentration on one industry, decline in demand for the company’s products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Vizrt undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.