Oki 2012 Annual Report Download - page 39

Annual Report 2012 37
2012 2011
20112012 2012
Income taxes applicable to the Company and domestic consolidated subsidiaries comprised corporation tax, inhabitants’ taxes and en-
terprise tax, which, in the aggregate, resulted in a statutory tax rate of approximately 41% for the years ended March 31, 2012 and 2011.
Income taxes of the overseas consolidated subsidiaries are based generally on the tax rates applicable in their respective countries of in-
corporation. A reconciliation between the statutory tax rate and the effective tax rates as a percentage of income before income taxes and
minority interests for the year ended March 31, 2012 is summarized as follows, and the corresponding reconciliation for the year ended
March 31, 2011 has been omitted since a loss before income taxes and minority interests was recorded.
Statutory tax rate
Additions to (deductions from) income taxes resulting from:
Permanent differences not recognized for tax purposes such as dividends received
Permanent nondeductible differences such as entertainment expenses
Decrease in valuation allowance for deferred tax assets
Other, net
Effective tax rates
41.0 %
(2.5)
2.8
(8.4)
(4.6)
28.3 %
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Following the promulgation on December 2 , 2011 of the “Act for Partial Revision of the Income Tax Act , etc. for the Purpose of Creating
Taxation System Responding to Changes in Economic and Social Structures” (Act No.114 of 2011) and the “Act on Special Measures for
Securing Financial Resources Necessary to Implement Measures for Reconstruction following the Great East Japan Earthquake” (Act No.117
of 2011), Japanese corporation tax rates will be reduced and a special reconstruction corporation tax, a surtax for reconstruction funding
after the Great East Japan Earthquake, will be imposed for the fiscal years beginning on or after April 1, 2012. In line with these revisions, the
Company changed the statutory tax rate used to calculate deferred tax assets and liabilities from 41% to 38% for temporary differences ex-
pected to reverse during the period from the fiscal year beginning on April 1, 2012 to the fiscal year beginning on April 1, 2014. Similarly, the
Company changed the statutory tax rate to calculate deferred tax assets and liabilities from 41% to 36% for temporary differences expected
to reverse from the fiscal years beginning on or after April 1, 2015. As a result of this change, net deferred tax assets (after netting deferred
tax liabilities) decreased by ¥51 million ($621 thousand), and income taxes – deferred and net unrealized losses on securities increased by
¥62 million ($756 thousand) and ¥11 million ($134 thousand), respectively, as of and for the fiscal year ended March 31, 2012.
From the fiscal year beginning on April 1, 2012, the use of operating loss carryforwards for tax purposes will be limited to 80% of the current
year taxable income before deducting operating loss carryforwards for tax purposes. As a result, deferred tax assets decreased by ¥532 million
($6,487 thousand), and income taxes – deferred increased by ¥532 million ($6,487 thousand), as of and for the fiscal year ended March 31, 2012.
10. SHAREHOLDERS’ EQUITY
Corporation Law of Japan (the “Law”) provides that amounts from additional paid-in capital and retained earnings may be distributed to
the shareholders at any time by resolution of the shareholders or by the Board of Directors if certain provisions are met subject to the
extent of the applicable sources of such distributions. The Law further provides that amounts equal to 10% of such distributions be trans-
ferred to the capital reserve included in additional paid-in capital or the legal reserve included in retained earnings based on the applicable
sources of such distributions until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account.
Additional paid-in capital increased ¥3,438 million due to the share exchange in which a subsidiary became a wholly-owned subsidiary
on June 1, 2010.
Pursuant to a resolution of the special meeting of shareholders held on December 21, 2010, the Company issued Class A preferred
stocks through an allocation of new shares to third parties (the total amount of the share issuance was ¥30,000 million).
Furthermore, the Company reduced the capital stock by ¥47,940 million, and the entire amount was transferred to additional
paid-in capital.
Pursuant to a resolution of the ordinary general meeting of shareholders held on June 29, 2011, the Company reduced the additional
paid-in capital by ¥91,569 million ($1,116,695 thousand), and the entire amount was transferred to retained earnings (accumulated deficit).
As a result, capital stock and additional paid-in capital amounted to ¥44,000 million ($536,585 thousand) and ¥21,554 million ($262,853
thousand), respectively, as of March 31, 2012.
11. RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for the years ended March 31, 2012 and 2011 were as follows:
Millions of yen
Thousands of
U.S. dollars
¥ 13,768 ¥ 13,109 $ 159,865
12. GAIN ON NEGATIVE GOODWILL
For the year ended March 31, 2011, the Company recognized gain due to the share exchange in which a subsidiary became a wholly-
owned subsidiary.