Olympus 2002 Annual Report Download - page 37

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Included in the consolidated statement of income for the years ended March 31, 2002 and 2001, are employees’ severance and
retirement benefit expense comprising of the following:
Thousands of
Millions of yen U.S. dollars
2002 2001 2002
Service costs — benefits earned during the year ................................................................. ¥4,727 ¥4,621 $37,816
Interest cost on projected benefit obligation....................................................................... 2,433 2,513 19,464
Expected return on plan assets............................................................................................. (2,066) (2,124) (16,528)
Amortization of actuarial difference .................................................................................... 2,857 —22,856
Amortization of prior service costs ...................................................................................... (344) —(2,752)
Amortization of net transition obligation ........................................................................... 1,556 1,556 12,448
Severance and pension benefit expense ............................................................................... ¥9,163 ¥6,566 $73,304
The discount rate and the rate of expected return on plan assets used by the Company are 2.5% and 3.5%, respectively.
The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year
using the estimated number of total service years. Past service costs and net transition obligation are both recognized as expense in
equal amounts over 5 years, and actuarial difference is recognized as income (or expense) in equal amounts over 5 years.
9. INCOME TAXES
Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporate tax, inhabitant tax and
enterprise tax, which in the aggregate resulted in normal statutory rates of approximately 41.8% for the years ended March 31,
2002, 2001 and 2000. Income taxes of foreign consolidated subsidiaries are based generally on tax rates applicable in their coun-
tries of incorporation.
The following table summarizes the significant differences between the statutory tax rate and the Company’s effective tax rate
for the consolidated financial statement purposes for the years ended March 31, 2002, 2001 and 2000.
2002 2001 2000
Japanese statutory tax rate.................................................................................................... 41.8% 41.8% 41.8%
Effect of foreign tax rate differences.................................................................................. (1.2) 2.4 (6.1)
Non-taxable dividend income........................................................................................... (1.0) (1.0) (4.4)
Non-deductible expenses................................................................................................... 3.3 1.5 11.2
Adjustments of deferred tax assets and liabilities
for enacted changes in tax laws and rates........................................................................ —— 22.8
Impact of operating losses (utilized)/generated for certain subsidiaries........................... 7.9 (0.8) (11.1)
Other, net........................................................................................................................... (1.1) 1.5 4.2
Effective tax rate................................................................................................................... 49.7% 45.4% 58.4%
Significant components of deferred income tax assets and liabilities as of March 31, 2002 and 2001 were as follows:
Thousands of
Millions of yen U.S. dollars
2002 2001 2002
Deferred income tax assets:
Inventories ......................................................................................................................... ¥ 8,142 ¥ 7,529 $65,136
Depreciation of property, plant and equipment............................................................... 3,994 3,959 31,952
Severance and retirement allowances ................................................................................ 2,792 1,529 22,336
Prepaid expenses ................................................................................................................ 2,642 2,608 21,136
Marketable and Investment securities............................................................................... 3,323 191 26,584
Deferred assets ................................................................................................................... 837 1,261 6,696
Unrealized intercompany profits....................................................................................... 6,103 6,492 48,824
Other.................................................................................................................................. 9,846 7,741 78,768
Total deferred income tax assets........................................................................................... ¥37,679 ¥ 31,310 $301,432
Total deferred income tax liabilities..................................................................................... (3,126) (2,675) (25,008)
Net deferred income tax assets............................................................................................. ¥34,553 ¥ 28,635 $276,424