Page 76 of the QLGC proforma balance sheet as of
April 2, 2000 shows a line 'Retained Earnings'
(3rd from bottom). The column, Historical Ancor March 31, 2000, shows a negative $52,998k. To the right of this number is $21,916k and this number is footnoted as 'b'.
Page 80 explains that the merger will result in a positive cash flow item of $21,900,000 to QLGC by virtue of
Ancor's net operating loss carryforwards. The cash flow
is the result of QLGC taxable income of $52,998,000 being
shielded from income taxation.
The $21.9m saved in taxes is a windfall. While good
analysts will value QLGC earnings as though fully taxed, nevertheless, the $21,900,000 savings are real and will be spent bt QLGC to accelerate the company's ramp. |
