JVC 2005 Annual Report Download - page 50

Significant components of the Companies’ deferred tax assets and
liabilities at March 31, 2005 and 2004 are as follows:
Thousands of
Millions of yen U.S. dollars
2005 2004 2005
Deferred tax assets:
Loss on devaluation
of inventory ¥03,479 ¥04,017 $032,514
Accrued expenses not
deductible for tax purposes 7,111 10,028 66,458
Accrual for losses on
business restructuring —1,269 —
Depreciation 9,186 8,920 85,850
Retirement and severance
benefits 4,907 5,272 45,860
Tax loss carryforwards 16,538 17,746 154,561
Other 10,274 11,295 96,019
Total gross deferred
tax assets 51,495 58,547 481,262
Less valuation allowance (22,745) (28,808) (212,570)
Net deferred tax assets 28,750 29,739 268,692
Deferred tax liabilities:
Net unrealized holding
gains on securities (2,269) (3,223) (21,206)
Other (1,021) (1,299) (9,542)
Total gross deferred
tax liabilities (3,290) (4,522) (30,748)
Net deferred tax assets ¥25,460 ¥25,217 $237,944
8SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans of certain of the Company’s consolidated
subsidiaries consist of notes maturing generally in three months.
The applicable annual interest rates on short-term bank loans out-
standing at March 31, 2005 and 2004 range from 0.01% to
12.81% and from 0.04% to 10.22%, respectively.
Long-term debt at March 31, 2005 and 2004 is as follows:
Thousands of
Millions of yen U.S. dollars
2005 2004 2005
1.5% unsecured convertible
bonds due in 2005 ¥ — ¥010,968 $ —
0.55% unsecured convertible
bonds due in 2005 19,528 19,528 182,505
2.15% unsecured bonds
due in 2005 9,500 9,500 88,785
1.68% unsecured bonds
due in 2006 20,000 20,000 186,916
1.89% unsecured bonds
due in 2007 10,000 10,000 93,458
1.50% guaranteed notes
due in 2005 7,073 6,864 66,103
Loans, primarily from banks
with interest principally
at 1.19% to 6.10%
Unsecured 20,479 26,405 191,392
86,580 103,265 809,159
Less current portion 56,235 16,928 525,561
¥30,345 ¥086,337 $283,598
The 0.55% unsecured convertible bonds are redeemable prior
to their stated maturity, in whole or in part, at the option of the
Company at prices ranging from 103% to 100% of the principal
amount. The price at which shares of common stock shall be
issued upon conversion is ¥1,487 ($13.90) per share, subject to
adjustments under certain circumstances.
The aggregate annual maturities of long-term debt at March 31,
2005 are as follows:
Thousands of
Year ending March 31 Millions of yen U.S. dollars
2006 ¥56,235 $525,561
2007 20,135 188,178
2008 10,139 94,757
2009 71 663
¥86,580 $809,159
9EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS
Employees of Japanese companies are compulsorily included in
the Welfare Pension Insurance Scheme operated by the govern-
ment. Employers are legally required to deduct employees’ welfare
pension insurance contributions from their payroll and to pay them
to the government together with employers’ own contributions. For
companies that have established their own Employees’ Pension
Fund which meets certain legal requirements, it is possible to
transfer a part of their welfare pension insurance contributions
(referred to as the substitutional portion of the government’s
scheme) to their own Employees’ Pension Fund under the govern-
ment’s permission and supervision.
Based on the newly enacted Defined Benefit Corporate Pension
Law, the Company and its consolidated domestic subsidiaries
decided to restructure their Employees’ Pension Fund and were
permitted by the Minister of Health, Labor and Welfare on July 1,
2002 to be released from their future obligation for payments for
the substitutional portion of the Welfare Pension Insurance
Scheme. Plan assets for the substitutional portion maintained by
the Employees’ Pension Fund were transferred back to the govern-
ment on April 2004.
The Company and its consolidated domestic subsidiaries
applied the transitional provisions as prescribed in paragraph 47-2
of the JICPA Accounting Committee Report No. 13, “Practical
Guideline for Accounting of Retirement Benefits (Interim Report)”,
and the effect of transferring of the substitutional portion was rec-
ognized on the date permission was received from the Minister of
Health, Labor and Welfare. As a result, in the year ended March
31, 2003, the Company and its consolidated domestic subsidiaries
recorded gains on the release from the substitutional portion of the
government’s Welfare Pension Insurance Scheme amounting to
¥3,456 million, which was calculated based on the amounts of the
substitutional portion of the projected benefit obligations, the relat-
ed plan assets, and the related unrecognized items.
48 Victor Company of Japan, Limited