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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Jason Rooks who wrote (2708)	3/26/1998 3:41:00 PM
From: Bryan V	Read Replies (2) \| Respond to of 60323

I am not assuming anything in regards to what SNDK has paid for taxes in 1996 and 1997, and what tax rate that reduces to. 1996 Income before taxes $15,625 Provision for income taxes $ 1,140 Effective 1996 tax rate = 7.3% 1997 Income before taxes $23,339 Provision for income taxes $ 3,500 Effective 1997 tax rate = 15% These are exactly the numbers stated by SNDK in the paragraph Provision for Income Taxes within ITEM 7: Management Discussion... What's confusing here is the difference between "effective" and "statutory". Effective accounts for the various deductions SNDK can claim to reduce taxable income, plus the direct credits that can be applied against their owed taxes. Their tax bracket in 1996 and 1997 was probably still in the 35% range, the "statutory" rate. They just managed to lower their taxes from 35% to 15% through applying losses carried forward from previous years. What they are telling us here is that they have no more losses to carry forward to use to reduce their tax burden. They'll be liable for the full 35% federal hit. Hope that helps. I'm no tax expert, so anyone else please dive in and correct me if I'm off base.