Konica Minolta 2003 Annual Report Download - page 38

KONICA M INOLTA HOLDINGS, INC. 2 0 0 3
Pag e 36
7. Income Taxes
The statutory tax rate used for calculating deferred tax assets and deferred
tax liabilities as of March 31, 2003 and 2002 was 42.1%.
At March 31, 2003 and 2002, the reconciliation of the statutory tax rate
to the effective income tax rate is as follows:
2003 2002
Statutory tax rate 42.1% 42.1%
Unrecognized tax effect (8.5) —
Accumulated deficit —(13.6)
Other, net (0.5) (2.7)
Effective tax rate 33.1% 25.8%
Statutory effective tax rate used for the calculation of non-current
deferred tax assets and liabilities is mainly 40.5% (prior fiscal year was
42.1%). Due to the change in the tax rate, amounts of deferred tax assets
(net of deferred tax liabilities) decreased by ¥346 million and deferred income
taxes increased by ¥367 million.
At March 31, 2003 and 2002, significant components of deferred tax
assets and liabilities are as follows:
Thousands of
Millions of yen U.S. dollars
2003 2002 2003
Gross deferred tax assets:
Tax effect on loss of a consolidated
subsidiary previously not recognized ¥ 3,810 ¥ 3,057 $ 31,697
Tax loss carryforwards 4,820 9,459 40,100
Reserve for employees’ retirement
allowance 15,046 15,451 125,175
Inventories, etc 6,970 2,631 57,987
Other, net 20,439 16,477 170,042
Subtotal 51,085 47,075 425,000
Valuation allowance (6,587) (6,764) (54,800)
Deferred tax assets total 44,497 40,311 370,191
Total gross deferred tax liabilities (7,517) (8,521) (62,537)
Net deferred tax assets ¥36,980 ¥31,789 $307,654
Deferred tax assets relating to operating losses are recorded because
the Japanese accounting standard requires that the benefit of tax loss carry-
forwards be estimated and recorded as an asset, with deduction of a valua-
tion allowance if it is expected that some portion or all of the deferred tax
assets will not be realized.
8. Research and Development Expenses
Total amounts charged to income for the fiscal years ended March 31, 2003
and 2002 are ¥30,308 million (US$252,153 thousand) and ¥29,171 million,
respectively.
9. Shareholders’ Equity
Retained earnings at March 31, 2003 and 2002 include a legal reserve of
¥69,052 million and ¥56,251 million, respectively. The Japanese Commercial
Code provides that an mount equal to at least 10 percent of cash dividends
and other distribution from retained earnings paid by the Company and its
subsidiaries be appropriated as a legal reserve. No further appropriation is
required when the total amount of the additional paid-in capital and the legal
reserve equals 25 percent of their respective stated capital.
On June 25, 2003 the ordinary general shareholders’ meeting approved
a cash dividend to be paid to shareholders on record as of March 31, 2003
totaling ¥1,786 million, at rate of ¥5.00 per a share. The meeting also
approved a treasury stock purchase program in which the Company is
authorized to repurchase up to 35 million shares within the acquisition cost of
¥20 billion later than the date of the next ordinary general shareholders’
meeting to reduce the outstanding shares.
10. Contingent Liabilities
The Company and its subsidiaries were contingently liable, as of March 31,
2003, for loans guaranteed of ¥122 million (US$1,015 thousand).
11. Lease Transactions
Information on the Company’s and consolidated subsidiaries’ finance lease
transactions (except for those which are deemed to transfer the ownership of
the leased assets to the lessee) and operating lease transactions is as
follows:
Accounting for Finance Leases
Finance leases other than those which are deemed to transfer the ownership
of the leased assets to lessees are accounted for mainly by a method similar
to that used for ordinary operating leases.
Lessee
1. Finance Leases
Thousands of
Millions of yen U.S. dollars
2003 2002 2003
Machinery and equipment ¥10,724 ¥11,826 $ 89,218
Tools and furniture 9,369 6,913 77,945
Others 507 451 4,218
20,601 19,192 171,389
Less: Accumulated depreciation (10,570) (9,392) (87,937)
Net book value 10,031 9,799 83,453
Depreciation ¥4,311 ¥ 3,463 $ 35,865
Depreciation is based on the straight-line method over the lease terms of
the lease assets.