Ricoh 2007 Annual Report Download - page 50

49 ANNUAL REPORT 2007
The net changes in the total valuation allowance for the years ended
March 31, 2005, 2006 and 2007 were a decrease of ¥1,931 million, an
increase of ¥1,118 million and an increase of ¥4,202 million ($35,610
thousand), respectively. The increase for the year ended March 31, 2007
included an increase ¥1,463 million ($12,398 thousand) resulting from
deferred tax assets from acquisitions. The valuation allowance
primarily relates to deferred tax assets of the consolidated subsidiaries
with net operating loss carryforwards for tax purposes that are not
expected to be realized.
In assessing the realizability of deferred tax assets, Ricoh considers
whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences
become deductible and whether loss carryforwards are utilizable. Ricoh
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods in which the
deferred tax assets are deductible, Ricoh believes it is more likely than
not that the benefits of these deductible differences, net of the existing
valuation allowance will be realized. The amount of the deferred tax
asset considered realizable, however, would be reduced if estimates of
future taxable income during the carryforward period are reduced.
As of March 31, 2007, certain subsidiaries had net operating losses
carried forward for income tax purposes of approximately ¥27,289
million ($231,263 thousand) which were available to reduce future
income taxes, if any. Approximately ¥1,911 million ($16,195
thousand) of the operating losses will expire within 3 years and ¥9,410
million ($79,746 thousand) will expire within 4 years to 7 years. The
remainder principally have an indefinite carryforward period.
Ricoh has not recognized a deferred tax liability for certain portion of
the undistributed earnings of its foreign subsidiaries of ¥215,390
million ($1,825,339 thousand) as of March 31, 2007 because Ricoh
considers these earnings to be permanently reinvested. Calculation of
related unrecognized deferred tax liability is not practicable.
10. SHORT-TERM BORROWINGS
Short-term borrowings as of March 31, 2006 and 2007 consist of the following:
Weighted average Thousands of
interest rate Millions of Yen U.S. Dollars
2006 2007 2006 2007 2007
Borrowings, principally from banks 3.8% 2.4% ¥16,056 ¥21,682 $183,746
Commercial paper 3.1 3.7 66,464 69,991 593,144
¥82,520 ¥91,673 $776,890
These short-term borrowings included borrowings, principally from
banks and commercial paper denominated in foreign currencies
amounting to ¥ 55,212 million and ¥ 57,480 million ($487,119
thousand) as of March 31, 2006 and 2007, respectively.
The Company and certain of its subsidiaries enter into the contracts
with financial institutions regarding lines of credit and overdrawing.
Those same financial institutions hold the issuing programs of
commercial paper and medium-term notes. Ricoh had aggregate lines
of credit of ¥801,630 million and ¥806,526 million ($6,834,966
thousand) as of March 31, 2006 and 2007, respectively. Unused lines of
credit amounted to ¥703,949 million and ¥693,791 million ($5,879,585
thousand) as of March 31, 2006 and 2007, respectively, of which
¥252,843 million and ¥237,854 million ($2,015,712 thousand) related
to commercial paper and ¥154,458 million and ¥129,855 million
($1,100,466 thousand) related to medium-term notes programs at
prevailing interest rates and the unused portion is available for
immediate borrowings.
Net deferred tax assets as of March 31, 2006 and 2007 are included in the consolidated balance sheets as follows:
Thousands of
Millions of Yen U.S. Dollars
2006 2007 2007
Deferred income taxes and other (Current Assets) ¥40,632 ¥44,682 $378,661
Lease deposits and other (Non-current Assets) 38,053 35,652 302,136
Accrued expenses and other (Current Liabilities) (208) (366) (3,102)
Deferred income taxes (Long-Term Liabilities) (51,374) (44,183) (374,432)
¥27,103 ¥35,785 $303,263