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To: Sam who wrote (3545)	6/8/1998 1:41:00 PM
From: CPAMarty	Respond to of 9256

If, as is expected, investors acquire more than 50% of the Company's outstanding Common Stock in the "Offerings, then the amount of the Company's U.S. federal taxable income for any tax year ending after the date of the Offerings which may be offset by the Company's NOL carryforwards remaining after deconsolidation will be limited to an amount equal to the value of the Common Stock immediately before the ownership change multiplied by the long-term tax exempt rate then in effect (e.g., 5.15% for ownership changes occurring during June 1998). [My note: Can anyone explain the above more clearly to me?] " --------------------- after a 50 percent change in ownership, the U.S. tax code (Internal Revenue Code Section 382) limits use of net operating loss carryforwards, for a given year, to the lesser of; 1. what Maxtor has left after it leaves the consolidated group------- (see consolidated return regs) the point is that if the other members of the consolidated group have taxable income before Maxor leaves the group, the Maxtor's net operating loss can be used by these other members 2. Maxtor's market cap (generally speaking) times the long term tax exempt rate on the date of the 50% ownership change (this is an annual limit)