Olympus 2012 Annual Report Download - page 85

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, 2012 and 2011. Income taxes of foreign consolidated subsidiaries are based generally on tax rates
applicable in their countries of incorporation.
The following table summarizes the reconciliation between the statutory tax rate and the Company’s effective tax rate for consolidated financial statement purposes for the years
ended March 31, 2012 and 2011.
The reconciliation for the year ended 2012 is not stated as net loss before income taxes was recorded.
2012 2011
Japanese statutory tax rate ...................................................................................................................................................................... —40.7%
Non-deductible expenses ..................................................................................................................................................................... —8.1
Effect of lower tax rates applied for overseas subsidiaries ...................................................................................................................... —(19.3)
Increase in valuation allowance ............................................................................................................................................................ —27.7
Amortization of goodwill ....................................................................................................................................................................... —17.0
Other, net ............................................................................................................................................................................................ —4.2
Effective tax rate ..................................................................................................................................................................................... —78.4%
Significant components of deferred tax assets and liabilities as of March 31, 2012 and 2011 were as follows:
Millions of yen
Thousands of
U.S. dollars
2012 2011 2012
Deferred tax assets
Inventories .............................................................................................................................................................. ¥ 6,461 ¥ 7,706 $ 80,763
Prepaid expenses .................................................................................................................................................... 7,382 11,574 92,275
Accrued bonuses .................................................................................................................................................... 5,077 4,874 63,463
Investments in consolidated subsidiaries ................................................................................................................... 4,859 —60,738
Unrealized intercompany profits................................................................................................................................ 1,873 1,650 23,413
Depreciation of property, plant and equipment ........................................................................................................... 5,593 7,157 69,913
Amortization of intangible assets .............................................................................................................................. 4,962 6,062 62,025
Provision for retirement benefits ............................................................................................................................... 8,092 6,746 101,150
Securities ............................................................................................................................................................... 9,873 9,766 123,413
Loss on funds invested ............................................................................................................................................ —51,765 —
Loss carry forward .................................................................................................................................................. 25,121 24,402 314,013
Other ...................................................................................................................................................................... 21,158 16,005 264,472
Subtotal .................................................................................................................................................................. 100,451 147,707 1,255,638
Valuation allowance ................................................................................................................................................. (61,026) (85,257) (762,825)
Total deferred tax assets .............................................................................................................................................. 39,425 62,450 492,813
Prepaid pension expenses ....................................................................................................................................... (7,961) (5,691) (99,513)
Basis differences in assets acquired and liabilities assumed upon acquisition ............................................................. (18,785) (20,243) (234,813)
Other ...................................................................................................................................................................... (10,961) (11,577) (137,012)
Total deferred tax liabilities .......................................................................................................................................... (37,707) (37,511) (471,338)
Net deferred tax assets ............................................................................................................................................... ¥ 1,718 ¥ 24,939 $ 21,475
Note : For the year ended March 31, 2011, the above includes items resulting from a correction made to accounting treatment pertaining to the segregation and settlement of losses on financial assets. However, the treatment of those losses
for income taxes purposes is uncertain at this time, therefore, it is currently not known whether they will constitute deductible temporary differences. In addition, in view of this uncertainty, a full valuation allowance is recognized against
such items.
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 for Special Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction following the Great East Japan Earthquake” (Act No.117 of
2011) were promulgated on December 2, 2011 and the staged reduction of the national corporate tax rate and a special reconstruction corporate tax will be introduced effective for
fiscal years beginning on or after April 1, 2012.
As a result, the effective statutory tax rate used to measure the Company’s deferred tax assets and liabilities was changed from 40.7% to 38.0% for the temporary differences
expected to be realized or settled in the period from April 1, 2012 to March 31, 2015, and from 40.7% to 35.6% for temporary differences expected to be realized or settled from
fiscal years beginning April 1, 2015. The effect of the announced reduction of the effective statutory tax rate was to decrease deferred tax assets, net by ¥741 million ($9,263
thousand) and net unrealized losses on hedging derivatives, net of taxes by ¥13 million ($163 thousand) and increase deferred income taxes by ¥805 million ($10,063 thousand) and
OLYMPUS 󱚈 Annual Report 2012 83