Syntax-Brillian Reports $2.7 Million Increase in Second-Quarter Income Tax Expense

Syntax-Brillian Reports $2.7 Million Increase in Second-Quarter Income Tax Expense

Syntax-Brillian Corporation (Nasdaq:BRLC), a manufacturer and marketer of LCD and LCoSTM HDTVs and digital entertainment products, announced that it has recognized a $2.7 million income tax expense in the second quarter of fiscal 2007 which has been reflected in the company’s Form 10-Q report for the quarter. In a press release of February 8, 2007, the company had reported no income tax expense for the quarter. The effect is a reduction of $2.7 million, or $0.04 per diluted share, in previously reported second-quarter results and $2.7 million, or $0.05 per diluted share, in previously reported year-to-date results. As reported in the Form 10-Q, net income for the second quarter was $12.1 million, or $0.21 per diluted share; net income for the six months ended December 31, 2006 was $15.9 million, or $0.29 per diluted share.

In conjunction with the company’s Form 10-Q review of its unrecognized deferred tax assets, it was determined that the recognition of a deferred tax asset related to net operating losses originating prior to the Syntax-Brillian merger could not be used to offset income tax expense in the statement of operations. Instead, recognition of this asset must be recorded as a reduction of goodwill or other intangible assets associated with the merger. Further, the company is not able to reduce the valuation allowance for anticipated use of net operating losses in periods subsequent to the current fiscal year because of a recent history of pre-tax losses. The use of net operating losses results in a reduction in income taxes actually paid to the various taxing authorities; however, the treatment of those benefits for financial reporting purposes varies from the actual tax treatment.

The income tax provision of $2.7 million has been estimated based on the anticipated effective annual tax rate for the fiscal year ending June 30, 2007 of approximately 14.5% after removing the anticipated benefits of the pre-merger net operating losses.

In its filing on Form 10-Q, Syntax-Brillian also made other immaterial changes to the balance sheet from the balance sheet reported on February 8, 2007. The changes reflect changes in the purchase accounting related to the company’s acquisition of Vivitar Corporation on November 21, 2006. These changes did not impact net income for the quarter or six months ended December 31, 2006.

About Syntax-Brillian Corporation

Syntax-Brillian is one of the world’s leading manufacturers and marketers of LCD and LCoS™ HDTVs and digital entertainment products. The company’s lead products include its Olevia brand of widescreen HDTV-ready LCD TVs — one of the fastest growing global TV brands — and its next generation Gen II LCoS™ 720p and 1080p rear-projection HDTVs for the high-end video/audio market. Syntax-Brillian’s global supply chain, Asian operations and North American sales channels position the company as a market leader in consumer and high-end HDTV and digital entertainment products.

Brillian, UltraContrast, and LCoS are trademarks or registered trademarks of Syntax-Brillian Corporation. All other trademarks are the property of their respective owners.
Contacts

Syntax-Brillian Corporation
Wayne Pratt
Executive Vice President, Chief Financial Officer
602-389-8797
wayne.pratt {at} syntaxbrillian(.)com