Olympus 2011 Annual Report Download - page 52

50 OLYMPUS 2011
13. INCOME TAXES
Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporate tax, inhabitants’ tax and
enterprise tax, which in the aggregate resulted in normal statutory rates of approximately 40.7% for the years ended March 31, 2011, 2010
and 2009. 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, 2011 and 2010.
The factors of significant differences for fiscal 2009 is not stated as net loss before income taxes was recorded.
2011 2010 2009
Japanese statutory tax rate .......................................................................................... 40.7% 40.7% —
Non-deductible expenses .......................................................................................... 7.1 (3.5) —
Effect of foreign tax rate differences.......................................................................... (16.9) 0.3 —
Increase (decrease) of allowance for evaluation ......................................................... 11.2 7.6 —
Tax deduction for research and development ............................................................. —(3.6) —
Amortization of goodwill ............................................................................................ 19.8 4.3 —
Other, net ................................................................................................................... 3.7 (1.4) —
Effective tax rate .......................................................................................................... 65.6% 44.4% —
Significant components of deferred income tax assets and liabilities as of March 31, 2011 and 2010 were as follows:
Millions of yen
Thousands of
U.S. dollars
2011 2010 2011
Deferred income tax assets
Inventories ................................................................................................................. ¥ 7,666 ¥ 8,406 $ 95,825
Prepaid expenses....................................................................................................... 11,574 11,122 144,675
Accrued bonuses ....................................................................................................... 4,874 4,680 60,925
Unrealized intercompany profits ................................................................................ 1,650 6,101 20,625
Depreciation of property, plant and equipment .......................................................... 6,820 7,348 85,250
Depreciation of intangible assets ............................................................................... 6,062 7,041 75,775
Severance and retirement allowances ....................................................................... 6,746 7,024 84,325
Securities .................................................................................................................. 9,766 9,454 122,075
Deficit carried forward ............................................................................................... 25,076 9,093 313,450
Other ......................................................................................................................... 14,652 9,758 183,150
Subtotal ..................................................................................................................... 94,886 80,027 1,186,075
Allowance for evaluation ............................................................................................ (32,038) (27,781) (400,475)
Total deferred income tax assets 62,848 52,246 785,600
Prepaid pension expenses ......................................................................................... (5,691) (5,541) (71,138)
Basis differences in assets acquired and liabilities assumed upon acquisition .......... (20,243) (20,471) (253,038)
Other ......................................................................................................................... (11,577) (8,219) (144,711)
Total deferred income tax liabilities ............................................................................. (37,511) (34,231) (468,887)
Net deferred income tax assets .................................................................................... ¥ 25,337 ¥ 18,015 $ 316,713
Note: The amounts of deferred income taxes which were included in other current liabilities were ¥1,023 million ($12,787 thousand) and ¥1,031 million as of March 31, 2011
and 2010, respectively.
14. 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 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.