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To: Robert Scott who wrote (41)	11/12/2002 8:52:15 AM
From: Howard Bennett	Read Replies (1) \| Respond to of 81

I understand the expensing of stock options -- and it is this: Companies get a tax break JUST for exercising options...i.e. they are encouraged to do so. I'll demonstrate my point by an example (and I have many): (Note MXIM's tac benefit is much larger -- $30mil -- than the expense itself $10m). excerpt from Maxim Integrated Products most recent 10-k filing with the SEC... biz.yahoo.com LIQUIDITY AND CAPITAL RESOURCES The Company’s primary sources of funds for the three months ended September 28, 2002 were from net cash generated from operating activities of $125.4 million and proceeds from the issuance of 1.5 million shares of the Company’s common stock in the amount of $10.7 million associated with the Company’s stock option programs. Another source of cash from the Company’s stock option programs is the tax deductions that arise from exercise of options. These tax benefits amounted to $29.6 million in the three months ended September 28, 2002.

To: Robert Scott who wrote (41)	11/12/2002 9:06:16 AM
From: Howard Bennett	Read Replies (1) \| Respond to of 81

>certain pro forma adjustments I'm not an corporate accountant but aren't there two treatments of this? We have the quarterly report (balance sheet, income statement, cash flow) and then there is the TAX treatment of amortizing pro-forma adjustments. It this true? The tax treatment of these adjustments feeds good (or bad) things back to the balance sheet, income statement, cash flow statement for coming quarters. The pro-forma adjustments are for things like goodwill impairment (paid too much for an acquisition).... and other items. Regarding this...I heard that the Bush admin is planning to make changes to accelerate depreciation deduction for technology related expenditures and perhaps the rate at which (from a tax point of view) goodwill can be written off. Also, regarding Japan, they still have some $400 billion in bad loans from their late 1980's bubble. Maybe they didn't accelerate the rate at which pro-form type adjustments could be handled w.r.t. taxes.