SanDisk 2005 Annual Report Download - page 149

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Note 6: Income Taxes
The provision for income taxes consists of the following (in thousands):
January 1,
2006
January 2,
2005
December 28,
2003
Current:
Federal ....................................... $159,147 $138,558 $ 96,399
State......................................... 24,592 13,731 19,296
Foreign ....................................... 32,323 25,336 15,025
216,062 177,625 130,720
Deferred:
Federal ....................................... 15,663 (20,963) (50,467)
State......................................... (3,413) (78) (7,231)
Foreign ....................................... (1,389) — —
10,861 (21,041) (57,698)
Provision for income taxes .......................... $226,923 $156,584 $ 73,022
Income before provision for income taxes consisted of the following (in thousands):
January 1,
2006
January 2,
2005
December 28,
2003
United States .................................... $500,727 $414,968 $247,953
International ..................................... 112,580 8,232 (6,072)
Total .......................................... $613,307 $423,200 $241,881
The tax benefits associated with the exercise of stock options reduced taxes payable by $95.6 million in 2005 and
reduced taxes payable by $17.9 million in 2004. Such benefits are credited to capital in excess of par value when realized.
The Company’s provision for income taxes differs from the amount computed by applying the federal statutory
rates to income before taxes as follows:
January 1,
2006
January 2,
2005
December 28,
2003
U.S. Federal statutory rate ........................... 35.0% 35.0% 35.0%
State taxes, net of federal benefit ...................... 2.2 2.1 3.2
Utilization of credits . . ............................. (0.1) (0.2) (0.5)
Reversal of tax benefit previously taken on UMC shares .... — — 13.8
Tax exempt interest income .......................... (0.8) (0.5) (0.4)
Utilization of loss carryforward and change in valuation
allowance ..................................... 0.4 — (19.3)
Other .......................................... 0.3 0.6 (1.6)
37.0% 37.0% 30.2%
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax return reporting purposes.
F-30
Notes to Consolidated Financial Statements — (Continued)