Nikon 1999 Annual Report Download - page 24

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8. SHAREHOLDERS’ EQUITY
The Code requires at least 50% of the issue price of new shares, with a minimum of the par value thereof, to be designated as stated capital as
determined by resolution of the Board of Directors. Proceeds in excess of amounts designated as stated capital are credited to additional
paid-in capital.
The Code also requires companies to appropriate from retained earnings to legal reserve an amount equal to at least 10% of all cash
payments which are made as an appropriation of retained earnings until such reserve equals 25% of stated capital. This reserve amount, which
is included in retained earnings, totals ¥4,964 million ( $41,185 thousand ) and ¥4,814 million as of March 31, 1999 and 1998, respectively, and is
not available for dividends but may be used to reduce a deficit by resolution of the shareholders.
The Company may transfer portions of additional paid-in capital and legal reserve to stated capital by resolution of the Board of Directors.
The Company may also transfer portions of unappropriated retained earnings, available for dividends, to stated capital by resolution of the
shareholders.
Under the Code, the Company may issue new shares of common stock to existing shareholders without consideration as a stock split
pursuant to resolution of the Board of Directors. The Company may make such a stock split to the extent that the aggregate par value of the
shares outstanding after the stock split does not exceed the stated capital. However, the amount calculated by dividing the total amount of
shareholders’ equity by the number of outstanding shares after the stock split shall not be less than ¥50.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends are applicable. Interim
dividends may also be paid upon resolution of the Board of Directors, subject to certain limitations imposed by the Code.
Under the Code, the Company may resolve to repurchase its treasury stock for retirement and related reduction of retained earnings
pursuant to resolution of the Board of Directors, subject to approval by the shareholders.
At the general shareholders’ meeting held on June 29, 1999, the Company’s shareholders approved that the Company is authorized to
repurchase, at management’s discretion, up to 3,500 million shares of Company’s stock for the purpose of canceling the shares by charging
repurchased amounts to retained earnings.
Under the Code, the amount available for dividends is based on retained earnings as recorded on the Company’s books. At March 31, 1999,
retained earnings as recorded on the Company’s books were ¥53,416 million ($443,108 thousand), which is available for future dividends
subject to the approval of the shareholders and legal reserve requirements.
9. INCOME TAXES
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a
normal effective statutory tax rates of approximately 48%, 51% and 51% for the years ended March 31, 1999, 1998 and 1997, respectively.
On March 31, 1999, a tax reform law was enacted in Japan, which changed the normal effective statutory tax rate from approximately 48%
to 42%, effective for years beginning April 1, 1999.
The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at March 31,
1999 were as follows: Thousands of
Millions of Yen U.S. Dollars
Deferred tax assets:
Devaluation of inventories ¥ 5,082 $ 42,159
Depreciation and amortization 5,116 42,444
Tax loss carryforwards 5,759 47,776
Other 2,860 23,733
¥18,819 $156,112
Deferred tax liabilities :
Deferred profits on sales of property to be replaced (2,073) (17,200 )
Other (952 ) (7,899 )
¥ (3,025 ) $ (25,099 )
Net deferred tax assets ¥15,793 $131,013
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