Toshiba 1998 Annual Report Download - page 49

Toshiba Corporation Annual Report 1998 47.
13. INCOME TAXES:
The com pan y is subject to a n um ber of different taxes based on in com e wh ich, in the aggregate, in dicate a norm al
statutory tax rate in Japan of approximately 51.4 percen t for the years en ded March 31, 1998 and 1997. Due to a
chan ge in Japan ese incom e tax regulation s, the n ormal statutory tax rate in Japan was reduced to approxim ately 47.7
percent effective April 1, 1998. Th e revised tax rate was used in the m easurem ent of deferred tax assets an d liabilities
at March 31, 1998. A reconciliation between th e reported incom e tax expense an d th e am oun t com puted by multiply-
ing the incom e before in com e taxes and m in ority in terest by th e applicable norm al statutory tax rate is as follows:
Thousands of
Million s of yen U.S. dollars
Years ended March 31 1998 1997 1998
Com puted expected incom e tax expense . . . . . . . . . . . . . . . . . . . . . . ¥ 9,636 ¥64,484 $ 73,000
In crease (reduction ) in taxes resulting from:
Non -deductible expen ses for tax purposes . . . . . . . . . . . . . . . . . . . . 5,441 5,627 41,220
Net valuation allowance for losses of subsidiaries . . . . . . . . . . . . . . 3,550 2,695 26,894
Effect of chan ge in th e statutory tax rate . . . . . . . . . . . . . . . . . . . . . 8,668 –65,667
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,820) (1,213) (21,364)
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥24,475 ¥71,593 $185,417
The sign ificant com ponen ts of deferred tax assets an d deferred tax liabilities recorded on the con solidated balan ce
sh eets as of March 31, 1998 and 1997 are as follows: Thousands of
Million s of yen U.S. dollars
March 31 1998 1997 1998
Gross deferred tax assets:
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 33,433 ¥ 27,956 $ 253,280
Liabilities for severan ce in dem n ities . . . . . . . . . . . . . . . . . . . . . . . 96,833 100,420 733,584
Tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,104 27,502 273,515
Minim um pension liability adjustm ent . . . . . . . . . . . . . . . . . . . . . 28,099 –212,871
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,413 87,931 654,644
280,882 243,809 2,127,894
Valuation allowance for deferred tax assets . . . . . . . . . . . . . . . . . . (38,271) (38,647) (289,932)
Deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242,611 205,162 1,837,962
Gross deferred tax liabilities:
Retained earn ings appropriated for tax allowable reserves . . . . . . (23,425) (25,692) (177,462)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,302) (30,460) (229,561)
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53,727) (56,152) (407,023)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥188,884 ¥149,010 $1,430,939
Net curren t an d n on -curren t deferred tax assets at March 31, 1998 and 1997 are reflected in th e con solidated
balan ce sheets un der the caption s of prepaid expenses an d other curren t assets, ¥56,692 m illion ($429,485 thousan d)
an d ¥58,708 m illion , and oth er assets, ¥132,192 million ($1,001,454 th ousan d) an d ¥90,302 m illion, respectively.
The net ch anges in th e total valuation allowance for the years en ded March 31, 1998 and 1997 were a decrease of
¥376 m illion ($2,848 th ousand) an d an in crease of ¥2,615 m illion, respectively.
Available corporate tax loss carryforwards of certain subsidiaries at March 31, 1998 amoun ted to approxim ately
¥77,632 m illion ($588,121 thousan d), the m ajority of wh ich will expire during the period from 1999 th rough 2003.
Realization is dependen t on such subsidiaries generatin g sufficien t taxable in com e prior to expiration of the tax loss
carryforwards. Although realization is not assured, m an agem en t believes it is more likely than n ot th at all of the
deferred tax assets, less valuation allowan ce, will be realized. Th e am oun t of such net deferred tax assets con sidered
realizable, h owever, could be reduced in th e n ear term if estimates of future taxable incom e during the carryforward
period are reduced.
Deferred in com e tax liabilities h ave not been provided on un distributed earn ings of foreign subsidiaries an d
affiliated com pan ies deem ed indefinitely reinvested in foreign operation s. It is n ot practicable to estimate the
am oun t of the deferred in com e tax liabilities on such earn in gs.