Nikon 2008 Annual Report Download - page 45

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Nikon Annual Report 2008 43
Selling, general and administrative expenses for the fiscal years ended March 31, 2008 and 2007 principally consisted of
the following:
Thousands of
Millions of Yen U.S. Dollars
2008 2007 2008
Advertising expenses ¥ 75,275 ¥ 57,730 $ 751,326
Provision of warranty costs 6,545 4,904 65,330
Employees’ salaries 34,152 33,258 340,870
Net periodic retirement benefit cost 3,015 2,742 30,093
Employees’ bonuses and others 17,689 16,730 176,558
Research and development costs 58,373 47,218 582,628
11. Selling, General and Administrative Expenses
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 40.6% for the fiscal years ended March 31, 2008 and 2007.
The tax effects of significant temporary differences and loss carry-forwards which result in deferred tax assets and
liabilities at March 31, 2008 and 2007, were as follows:
Thousands of
Millions of Yen U.S. Dollars
2008 2007 2008
Deferred tax assets:
Write-down of inventories ¥ 23,164 ¥ 17,869 $ 231,198
Warranty reserve 3,009 2,572 30,035
Liability for employees’ retirement benefits 6,769 8,432 67,557
Depreciation and amortization 15,028 14,141 149,991
Net operating loss carryforwards 9
Accrued bonus 5,008 4,505 49,988
Other 10,851 9,986 108,309
Total ¥ 63,829 ¥ 57,514 $ 637,078
Deferred tax liabilities:
Deferred gains on sales of property to be replaced ¥ 4,924 ¥ 5,599 ¥ 49,145
Unrealized gain on available-for-sale securities 5,693 15,095 56,823
Undistributed earnings of foreign subsidiaries 8,258 6,264 82,419
Other 733 652 7,321
Total ¥ 19,608 ¥ 27,610 $ 195,708
Net deferred tax assets ¥ 44,221 ¥ 29,904 $ 441,370
A valuation allowance of ¥2,613 million ($26,076 thousand) in 2008 and ¥1,859 million in 2007 were deducted from the
amounts calculated above.
A reconciliation between the normal effective statutory tax rate for the fiscal years ended March 31, 2008 and 2007, and
the actual effective tax rates reflected in the consolidated statements of income is as follows:
Year ended March 31,
2008 2007
Normal statutory tax rate 40.6 % 40.6 %
Tax credit for research and development costs (2.7) (2.7)
Tax difference of consolidated subsidiaries (3.3) (2.1)
Tax effect on retained earnings for foreign subsidiaries 1.7 2.0
Other-net (1.3) (0.2)
Actual effective tax rate 35.3 % 37.6 %
The assumptions used to measure the fair value of 2007 Stock Options which was granted at August 27, 2007.
Estimate method: Black-Scholes option pricing model
Volatility of stock price: 43.022%
Estimate remaining outstanding period: fifteen years
Estimate dividend: ¥18.00 per share
Interest rate with risk free: 1.898%