Brother International 2012 Annual Report Download - page 43

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42
The assumptions used to measure fair value of 2012 Stock Option (directors)
Estimate method: Black-Scholes option pricing model
Volatility of stock price: 40.48%
Estimated remaining outstanding period: 11 years
Estimated dividend rate: 1.57%
Risk free interest rate: 1.10%
The assumptions used to measure fair value of 2012 Stock Option (executive officers)
Estimate method: Black-Scholes option pricing model
Volatility of stock price: 39.76%
Estimated remaining outstanding period: 9 years
Estimated dividend rate: 1.60%
Risk free interest rate: 0.91%
12. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate
of approximately 40% for the years ended March 31, 2012 and 2011.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31, 2012 and 2011 were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2012 2011 2012
Deferred Tax Assets:
Inventories ¥ 7,844 ¥ 8,399 $ 95,659
Accrued bonuses 2,301 2,548 28,061
Accrued expenses 1,498 1,780 18,268
Allowance for doubtful accounts 6,755 8,105 82,378
Warranty reserve 895 1,597 10,915
Employees’ retirement benefits 942 1,340 11,488
Write-down of investment securities 3,039 3,910 37,061
Depreciation 2,862 3,285 34,902
Tax loss carryforwards 13,945 16,065 170,061
Other 4,836 5,038 58,975
Less valuation allowance (24,148) (24,324) (294,488)
Total deferred tax assets ¥ 20,769 ¥ 27,743 $ 253,280
Deferred Tax Liabilities:
Securities withdrawn from retirement benefit trust ¥ (2,845) ¥ (3,262) $ (34,695)
Prepaid pension cost (4,215) (5,111) (51,402)
Differences between book and tax bases of property, plant and equipment (1,909) (2,381) (23,280)
Undistributed earnings of foreign subsidiaries (3,964) (3,458) (48,341)
Unrealized gain on available-for-sale securities (758) (863) (9,244)
Other (851) (750) (10,379)
Total deferred tax liabilities ¥ (14,542) ¥ (15,825) $ (177,341)
Net deferred tax assets ¥ 6,227 ¥ 11,918 $ 75,939
Notes to Consolidated Financial Statements
Brother Industries, Ltd. and Consolidated Subsidiaries
Year ended March 31, 2012