Olympus 2010 Annual Report Download - page 52

50 OLYMPUS 2010
14. INCOME TAXES
Income taxes applicable to the Company and its domestic consolidated 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, 2010, 2009 and 2008.
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
consolidated financial statement purposes for the years ended March 31, 2010 and 2008.
The factors of significant differences for fiscal 2009 is not stated as net loss before income taxes was recorded.
2010 2009 2008
Japanese statutory tax rate .......................................................................................... 40.7% — 40.7%
Non-deductible expenses .......................................................................................... (3.5) —1.2
Effect of foreign tax rate differences.......................................................................... 0.3 —(0.8)
Increase (decrease) of allowance for evaluation ......................................................... 7.6 —(2.2)
Tax deduction for research and development ............................................................. (3.6) —(4.0)
Amortization of goodwill ............................................................................................ 4.3 —3.7
Other, net ................................................................................................................... (1.4) —0.2
Effective tax rate .......................................................................................................... 44.4% —38.8%
Significant components of deferred income tax assets and liabilities as of March 31, 2010 and 2009 were as follows:
Millions of yen
Thousands of
U.S. dollars
2010 2009 2010
Deferred income tax assets ..........................................................................................
Inventories ................................................................................................................. ¥8,406 ¥ 9,888 $93,400
Prepaid expenses....................................................................................................... 11,122 10,891 123,578
Accrued bonuses ....................................................................................................... 4,680 3,320 52,000
Unrealized intercompany profits ................................................................................ 6,101 5,194 67,789
Depreciation of property, plant and equipment .......................................................... 7,348 6,438 81,644
Depreciation of intangible assets ............................................................................... 7,041 10,340 78,233
Deferred assets ......................................................................................................... — 677 —
Severance and retirement allowances ....................................................................... 7,024 6,371 78,044
Securities .................................................................................................................. 9,454 7,788 105,044
Deficit carried forward ............................................................................................... 9,093 15,701 101,033
Other ......................................................................................................................... 9,758 7,979 108,424
Subtotal ..................................................................................................................... 80,027 84,587 889,189
Allowance for evaluation ............................................................................................ (27,781) (27,233) (308,678)
Total deferred income tax assets 52,246 57,354 580,511
Prepaid pension expenses ......................................................................................... (5,541) (5,803) (61,567)
Basis differences in assets acquired and liabilities assumed upon acquisition .......... (20,471) (23,542) (227,456)
Other ......................................................................................................................... (8,219) (4,456) (91,321)
Total deferred income tax liabilities ............................................................................. (34,231) (33,801) (380,344)
Net deferred income tax assets .................................................................................... ¥18,015 ¥ 23,553 $200,167
Note: The amounts of deferred income taxes which were included in other current liabilities were ¥1,031 million ($11,456 thousand ) and ¥883 million as of March 31, 2010
and 2009.
15. NET ASSETS
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a
company may, by a resolution of its board of directors, designate an amount not exceeding one-half of the prices of the new shares as
additional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (the “Law”), in cases where a dividend distribution of surplus is made, the smaller of an amount equal to
10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must
be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
Under the Law, all additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and other retained
earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements
of the Company in accordance with Japanese laws and regulations.