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40 Annual Report 2008
8.
INCOME TAXES
Deferred tax assets and liabilities at March 31, 2008 and 2007 consisted of the following:
Millions of yen
Thousands of
U.S. dollars
2008 2007 2008
Deferred tax assets:
Loss carryforwards ¥ 27,618 ¥ 26,511 $ 276,180
Nondeductible accrued bonuses 5,700 5,176 57,000
Nondeductible retirement benefits 18,916 15,189 189,160
Nondeductible write-downs of inventories 3,002 1,811 30,020
Nondeductible loss on impairment of fixed assets 1,685 —16,850
Other 5,170 8,286 51,700
Gross deferred tax assets 62,094 56,975 620,940
Less: Valuation allowance (47,545) (43,498) (475,450)
Total deferred tax assets 14,548 13,476 145,480
Deferred tax liabilities:
Nondeductible unrealized gain on contribution of securities to a pension trust (1,567) —(15,670)
Net unrealized holding gain on other securities (480) (9,552) (4,800)
Other (102) (119) (1,020)
Total deferred tax liabilities (2,149) (9,672) (21,490)
Net deferred tax assets ¥ 12,398 ¥ 3,804 $ 123,980
Net deferred tax assets are included in the consolidated balance sheets as follows:
Millions of yen
Thousands of
U.S. dollars
2008 2007 2008
Other current assets ¥ 7,504 ¥ 5,977 $ 75,040
Other assets 4,922 153 49,220
Other current liabilities (29) (21) (290)
Other long-term liabilities —(2,304) —
Net deferred tax assets ¥12,398 ¥ 3,804 $123,980
Income taxes applicable to the Company and its domestic consolidated subsidiaries comprised corporation tax, inhabitants’ taxes and enterprise
tax, which, in the aggregate, resulted in a statutory tax rate of approximately 41% for the years ended March 31, 2008, 2007 and 2006. Income
taxes of the overseas consolidated subsidiaries are based generally on the tax rates applicable in their respective countries of incorporation. A rec-
onciliation between the statutory tax rate and the effective tax rates as a percentage of income before income taxes, minority interests and equity
in earnings of affiliates for the years ended March 31, 2008 and 2006 is summarized as follows, and the corresponding reconciliation for the year
ended March 31, 2007 has been omitted since loss before income taxes, minority interests and equity in losses of affiliates was recorded.
2008 2007 2006
Statutory tax rate 41.0% — 41.0%
Additions to (deductions from) income taxes resulting from:
Increase in valuation allowance for deferred tax assets 80.9 — 10.1
Permanent nondeductible differences such as entertainment expenses 10.8 — 6.9
Permanent differences not recognized for tax purposes such as dividends received (7.1) — (3.5)
Nondeductible temporary differences arising form unrealized profit (18.2) — —
Differences between the Company's statutory tax rate and the overseas consolidated
subsidiaries' effective tax rates (9.3) — (2.3)
Other, net (16.8) — (1.8)
Effective tax rates 81.3% — 50.4%