Olympus 2003 Annual Report Download - page 35

OLYMPUS 2003 
The discount rate and the rate of expected return on plan assets used by the Company are .% and .%, respectively. The esti-
mated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using the esti-
mated number of total service years. Prior service costs and net transition obligation are both recognized as expense (or income) in
equal amounts over years, and actuarial gains (or losses) are recognized as income (or expense) in equal amounts over years.
The Company and its domestic consolidated subsidiaries did not apply the transitional provisions as prescribed in paragraph -
of the JICPA Accounting Committee Report No., “Practical Guideline for Accounting of Retirement Benefit (Interim Report)”.
In case the Company and its domestic consolidated subsidiaries applied the transitional provisions as prescribed in paragraph -
of the guidelines, the Company and its consolidated domestic subsidiaries recorded gains on the release from the substitutional por-
tion of the government’s welfare Pension Insurance Scheme amounting to ¥, million ($, thousand).
9. income t axes
Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporate tax, inhabitants’ tax and
enterprise tax, which in the aggregate resulted in normal statutory rates of approximately .% for the years ended M arch , ,
 and . Income taxes of foreign consolidated subsidiaries are based generally on tax rates applicable in their countries of incor-
poration.
The following table summarizes the significant differences between the statutory tax rate and the Company’s effective tax rate for
consolidated financial statement purposes for the years ended March , ,  and .
2003 2002 2001
Japanese statutory tax rate ....................................................................................... 41.8% 41.8% 41.8%
Effect of foreign tax rate differences...................................................................... 2.7 (1.2) 2.4
Non-taxable dividend income................................................................................ (0.4) (1.0) (1.0)
Non-deductible expenses....................................................................................... 0.3 3.3 1.5
Adjustments of deferred tax assets and liabilities
for enacted changes in tax laws and rates............................................................. 1.4 ——
Impact of operating losses (utilized)/generated for certain subsidiaries .................. (2.0) 7.9 (0.8)
Other, net ............................................................................................................. (0.6) (1.1) 1.5
Effective tax rate ..................................................................................................... 43.2% 49.7% 45.4%
Significant components of deferred income tax assets and liabilities as of March ,  and  were as follows;
t h ousan d s of
mil l ion s of yen u.s. dol l a r s
2003 2002 2003
Deferred income tax assets:
Inventories............................................................................................................ ¥ 5,727 ¥8,142 $47,725
Depreciation of property, plant and equipment...................................................... 3,862 3,994 32,183
Severance and retirement allowances ..................................................................... 4,565 2,792 38,042
Prepaid expenses................................................................................................... 4,834 2,642 40,283
Marketable and investment securities .................................................................... 6,190 3,323 51,584
Deferred assets...................................................................................................... 463 837 3,858
Unrealized intercompany profits............................................................................ 6,393 6,103 53,275
Other.................................................................................................................... 11,175 9,846 93,125
Total deferred income tax assets .............................................................................. ¥43,209 ¥37,679 $360,075
Total deferred income tax liabilities ......................................................................... (3,914) (3,126) (32,616)
Net deferred income tax assets................................................................................. ¥39,295 ¥34,553 $327,459
The effective tax rate used for calculation of deferred income tax assets and liabilities was .% for the year ended March ,
. Effective for the year commencing on April ,  or later, according to the revised local tax law, income tax rates for enter-
prise taxes will be reduced as a result of introducing the assessment by estimation on the basis of the size of business. Based on the
change of income tax rates, for calculation of deferred income tax assets and liabilities, the Company and consolidated domestic sub-
sidiaries used the effective tax rates of before change and after change for current items and non-current items, respectively, for the
year ended March , .
As the result of the change in the effective tax rates, deferred income tax assets decreased by ¥ million ($, thousand) and
income taxes-deferred increased by ¥ million ($, thousand) compared with what would have been recorded under the previous
local tax law.
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