Olympus 2005 Annual Report Download - page 43

O LYMPUS 20 05 41
10. INCO ME TAXES
Income taxes applicable to the Company and its domestic conso lidated subsidiaries consist of corporate tax, inhabitant tax and enterprise
tax, which in the aggregate resulted in normal statutory rates of approximately 40.7 % for the years ended March 31, 2005 and 41.8% fo r
the years ended March 31, 2004 and 2 0 03. Income taxes of foreign consolidated subsidiaries are based generally on tax rates applicable
in their countries of incorporation.
The following table summarizes the significant differences between the statutory tax rate and the Company’s effective tax rate for consoli-
dated financial statement purposes for the years ended March 31, 2005 , 2 004 and 2003.
2005 2004 2003
Japanese statutory tax rate ....................................................................................... 40.7% 41.8% 41.8%
Effect of foreign tax rate differences......................................................................... (37.1) (4.3) 2.7
Non-taxable dividend income ................................................................................. —— (0.4)
Non-deductible expenses ....................................................................................... 1 2.7 2 .1 0.3
Adjustments of deferred tax assets and liabilities
for enacted changes in tax laws and rates .............................................................. —— 1 .4
Impact of o perating losses generated/ (utilized) for certain subsidiaries .......................... 2.1 4.3 (2.0)
Increase of allowance for evaluation........................................................................ 282 .7 ——
Tax deduction for research and development............................................................. (23.9 ) ——
Amortization of consolidated adjustment accounts ...................................................... 21.4 ——
Other, net............................................................................................................ 7.9 0 .4 (0.6)
Effective tax rate..................................................................................................... 306.5% 4 4.3% 43 .2%
Significant compo nents of deferred income tax assets and liabilities as of March 31, 2005 and 2 0 04 were as follows:
Thousands of
Millions of yen U.S. dollars
2005 2004 2005
Deferred income tax assets:
Inventories........................................................................................................... ¥ 8,305 ¥ 5,078 $ 7 5 ,500
Depreciation of property, plant and equipment .......................................................... 4 ,268 4,0 99 38,800
Depreciation of intangible assets............................................................................. 4,162 2,651 37,836
Severance and retirement allo wances....................................................................... 2,910 2,255 2 6 ,455
Prepaid expenses ................................................................................................. 6,127 4 ,588 55,7 00
Marketable and investment securities ....................................................................... 4,94 8 4,984 4 4,982
Deferred assets .................................................................................................... 288 268 2,618
Unrealized intercompany pro fits.............................................................................. 6,325 6,111 57 ,500
Accrued bonuses .................................................................................................. 3,213 3,62 8 29,209
Deficit carried forward .......................................................................................... 19,272 —175,200
Other ................................................................................................................. 6,908 3,945 6 2,800
Subtotal.............................................................................................................. 66,726 37,607 6 06,600
Allowance for evaluation ....................................................................................... (30,546) —(277,691 )
Total deferred income tax assets ................................................................................ 36,180 37,607 3 28,909
Prepaid pension expenses...................................................................................... (1,956) (3,54 9) (17,7 82)
Net unrealized holding gains on securities................................................................ (3,31 6) (2,49 2) (30,1 4 5)
Other ................................................................................................................. (9,230) (5,096) (83,90 9 )
Total deferred income tax liabilities............................................................................ (14,502) (11,137) (131,8 36)
Net deferred income tax assets ................................................................................. ¥ 21,6 78 ¥ 26,470 $ 197,07 3
11. SHAREHO LDERS’ EQ UITY
Under the Code, the following are provided:
·The maximum amount that the Co mpany can distribute as dividends is calculated based on the non-consolidated financial statements of the
Company in accordance with the Code.
·The entire amount of the issue price of shares is required to be accounted for as capital, although a company may, by resolution of its
Board of Directors, account for an amount not exceeding one-half of the issue price of the new shares as additional paid-in capital, which is
included in capital surplus.