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38
11. Income Taxes
The Group is subject to a number of different income taxes. The applicable statutory tax rates in Japan for the years
ended March 31, 1998, 1999, and 2000 were, in the aggregate, approximately 51%, 47%, and 42%, respectively.
The components of income taxes are as follows: Yen U.S. Dollars
(millions) (thousands)
Years ended March 31 1998 1999 2000 2000
Current ¥111,220 ¥57,588 ¥65,595 $ 618,821
Deferred (1,731) (2,053) (37,216) (351,095)
Changes in deferred tax rate (939) (856) ——
Income taxes ¥108,550 ¥54,679 ¥28,379 $ 267,726
A reconciliation of the differences between the reported total income tax rate and applicable statutory income tax
rate for the year ended March 31, 2000 is as follows:
Applicable statutory income tax rate 42.0%
Increase (decrease) in tax rate:
Amortization of goodwill 15.5%
Valuation allowance for deferred tax assets (13.5%)
Equity in earnings of affiliates, net (9.6%)
Non-deductible expenses for tax purposes 4.6%
Other (1.1%)
Reported total income tax rate 37.9%
The significant components of deferred tax assets and liabilities at March 31, 1999 and 2000 are as follows:
Yen U.S. Dollars
(millions) (thousands)
1999 2000 2000
Deferred tax assets:
Tax loss carryforwards ¥189,443 ¥193,307 $ 1,823,651
Accrued severance benefits 23,125 31,793 299,934
Provision for loss on repurchase of computers 19,328 20,646 194,773
Intercompany profits on inventories and property, plant and equipment
12,365 13,635 128,632
Accrued employee benefits 2,148 13,441 126,802
Accrued enterprise taxes 2,935 3,518 33,189
Other 16,988 19,734 186,170
Gross deferred tax assets 266,332 296,074 2,793,151
Less: Valuation allowance (203,906) (199,557) (1,882,613)
Total deferred tax assets 62,426 96,517 910,538
Deferred tax liabilities:
Retained earnings appropriated for tax deductible reserves (48,088) (43,598) (411,302)
Other (7,311) (6,154) (58,057)
Gross deferred tax liabilities (55,399) (49,752) (469,358)
Net deferred tax assets (liabilities) ¥7,027 ¥46,765 $ 441,179
Net deferred tax assets (liabilities) are included in the consolidated balance sheets as follows:
Yen U.S. Dollars
(millions) (thousands)
At March 31 1999 2000 2000
Other current assets ¥23,309 ¥40,287 $380,066
Investments and long-term loans—other 967 14,507 136,858
Other current liabilities (2,338) (1,663) (15,689)
Other long-term liabilities (14,911) (6,366) (60,056)
Net deferred tax assets (liabilities) ¥7,027 ¥46,765 $441,179
Notes to Consolidated Financial Statements