SanDisk 2006 Annual Report Download - page 138

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Note 11: Income Taxes
The provision for income taxes consists of the following (in thousands):
December 31,
2006
January 1,
2006
January 2,
2005
Current:
Federal ....................................... $174,320 $159,147 $138,558
State......................................... 27,788 24,592 13,731
Foreign ....................................... 63,841 32,323 25,336
265,949 216,062 177,625
Deferred:
Federal ....................................... (22,623) 15,663 (20,963)
State......................................... (9,585) (3,413) (78)
Foreign ....................................... (3,548) (1,389) —
(35,756) 10,861 (21,041)
Provision for income taxes .......................... $230,193 $226,923 $156,584
Income before provision for income taxes consisted of the following (in thousands):
December 31,
2006
January 1,
2006
January 2,
2005
UnitedStates .................................... $193,845 $500,727 $414,968
International ..................................... 236,863 112,580 8,232
Total .......................................... $430,708 $613,307 $423,200
The tax benefit associated with the exercise of stock options was credited to capital in excess of par value in the
amount of $61.5 million, $95.6 million and $17.9 million in fiscal 2006, 2005 and 2004, respectively, when realized.
In fiscal 2006, $4.6 million of tax benefit associated with the exercise of stock options was credited goodwill.
The Company’s provision for income taxes differs from the amount computed by applying the federal statutory
rates to income before taxes as follows:
December 31,
2006
January 1,
2006
January 2,
2005
U.S. Federal statutory rate ........................... 35.0% 35.0% 35.0%
State taxes, net of federal benefit ...................... 3.1 2.2 2.1
Non-deductible stock option expense ................... 2.9 — —
Write-off of acquired in-process technology .............. 18.3 — —
Tax exempt interest income .......................... (2.7) (0.8) (0.5)
Foreign earnings at other than U.S. rates ................ (2.3) — —
Other .......................................... (0.8) 0.6 0.4
53.5% 37.0% 37.0%
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.
Annual Report
F-39
Notes to Consolidated Financial Statements — (Continued)