Omron 2001 Annual Report Download - page 42

11. Foreign
Operations
12. Amounts per
Share
The Company and its domestic subsidiaries are subject to a number of taxes based on income, which in the
aggregate resulted in a normal tax rate of approximately 42.0% in 2001 and 2000, and 48.0% in 1999. An
amendment to Japanese tax regulations was enacted into law on March 31, 1999. As a result of this amendment,
the normal income tax rate was reduced from 48.0% to 42.0% effective April 1, 1999. Deferred income tax
assets and liabilities as of March 31, 1999 were measured at the newly enacted tax rate.
The approximate effects of temporary differences and tax credit and loss carryforwards that gave rise to
deferred tax balances at March 31, 2001 and 2000 were as follows:
Millions of yen Thousands of U.S. dollars
2001 2000 2001
Deferred Deferred Deferred Deferred Deferred Deferred
tax tax tax tax tax tax
assets liabilities assets liabilities assets liabilities
Inventory valuation ............................................ ¥ 1,882 ¥ — ¥ 1,477 ¥ — $ 15,180 $ —
Accrued bonuses and vacations ....................... 4,067 — 3,224 — 32,802 —
Termination and retirement benefits.................. 10,809 — 9,312 — 87,167 —
Enterprise taxes................................................. 1,094 — 896 — 8,826 —
Intercompany profits ......................................... 2,270 — 2,208 — 18,304 —
Marketable securities ........................................ — 3,370 — 10,766 — 27,180
Allowance for doubtful receivables ................... 611 116 879 308 4,927 932
Bad debt expenses ........................................... 4,118 — 2,368 — 33,210 —
Gain on sale of land........................................... — 1,311 — 1,076 — 10,572
Minimum pension liability adjustment ............... 5,251 — ——42,344 —
Other temporary differences ............................. 8,596 4,424 5,464 4,416 69,318 35,675
Tax credit carryforwards.................................... 3,473 — 3,245 — 28,006 —
Subsidiaries’ operating loss carryforwards ....... 4,415 — 5,104 — 35,607 —
Subtotal ............................................................. 46,586 9,221 34,177 16,566 375,691 74,359
Valuation allowance........................................... (7,795) — (6,485) — (62,864) —
Total........................................................... ¥38,791 ¥9,221 ¥27,692 ¥16,566 $312,827 $74,359
The total valuation allowance increased by ¥1,310 million ($10,565 thousand), ¥1,681 million and ¥2,162 million
in 2001, 2000 and 1999, respectively.
As of March 31, 2001, certain subsidiaries had operating loss carryforwards approximating ¥11,065 million
($89,234 thousand) available for reduction of future taxable income, most of which expire in various amounts
through 2006.
The Company has not provided for Japanese income taxes on unremitted earnings of subsidiaries to the
extent that they are believed to be indefinitely reinvested. The unremitted earnings of the foreign subsidiaries
which are considered to be indefinitely reinvested and for which Japanese income taxes have not been provided
were ¥50,052 million ($403,645 thousand) and ¥41,900 million at March 31, 2001 and 2000, respectively. It is not
practicable to estimate the amount of unrecognized deferred Japanese income taxes on these unremitted earn-
ings. Dividends received from domestic subsidiaries are expected to be substantially free of tax.
Net sales and total assets of foreign subsidiaries for the years ended March 31, 2001, 2000 and 1999 were as
follows:
Thousands of
Millions of yen U.S. dollars
2001 2000 1999 2001
Net sales.......................................................................... ¥170,434 ¥158,122 ¥167,546 $1,374,468
Total assets ..................................................................... ¥141,966 ¥115,532 ¥122,039 $1,144,887
The Company accounts for its earnings per share in accordance with SFAS No.128, “Earnings per Share.”
Basic net income per share has been computed by dividing net income available to common shareholders by the
weighted-average number of common shares outstanding during each year. Diluted net income per share reflects
the potential dilution of convertible bonds and stock options, and has been computed by the if-converted
method for convertible bonds and by the treasury stock method for stock options.
40 Omron Corporation