Pioneer 2015 Annual Report Download - page 22

a. Dividends
Under the Companies Act, companies can pay divi-
dends at any time during the fiscal year in addition to
the year-end dividend upon resolution of the share-
holders’ meeting. For companies that meet certain
criteria such as: (1) having a board of directors, (2)
having independent auditors, (3) having an audit and
supervisory board, and (4) the term of service of direc-
tors is prescribed as one year rather than two years
by its articles of incorporation, the board of directors
may declare dividends (except for dividends in kind)
at any time during the fiscal year if the Company has
prescribed so in its articles of incorporation. The Com-
pany meets all the above criteria.
Semiannual interim dividends may also be paid
once a year upon resolution by the board of direc-
tors if the articles of incorporation of the Company so
stipulate. The Companies Act provides certain limita-
tions on the amounts available for dividends or the
purchase of treasury stock. The limitation is defined as
the amount available for distribution to the sharehold-
ers, but the amount of net assets after dividends must
be maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of
Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to
10% of dividends must be appropriated as an addi-
tional paid-in capital (a component of capital surplus)
or as a legal reserve (a component of retained earn-
ings), depending on the equity account charged upon
the payment of such dividends, until the aggregate
amount of additional paid-in capital and legal reserve
equals 25% of the common stock. Under the Compa-
nies Act, the total amount of additional paid-in capital
and legal reserve may be reversed without limitation.
The Companies Act also provides that common
stock, legal reserve, additional paid-in capital, other
capital surplus and retained earnings can be trans-
ferred among the accounts under certain conditions
upon resolution of the shareholders’ meeting.
c. Treasury Stock and Treasury Stock
Acquisition Rights
The Companies Act also provides for companies to
purchase treasury stock and dispose of such trea-
sury stock by resolution of the board of directors. The
amount of treasury stock purchased cannot exceed
the amount available for distribution to the share-
holders which is determined by a specified formula.
Under the Companies Act, stock acquisition rights are
presented as a separate component of equity. The
Companies Act also provides that companies can
purchase both treasury stock acquisition rights and
treasury stock. Such treasury stock acquisition rights
are presented as a separate component of equity or
deducted directly from stock acquisition rights.
10. Income Taxes9. Equity
The Company and its Japanese subsidiaries are subject to Japanese national and local income taxes which, in the
aggregate, resulted in a normal effective statutory tax rate of approximately 36% and 38% for the years ended March 31,
2015 and 2014, respectively.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities as of March 31, 2015 and 2014, were as follows:
Japanese companies have been subject to the Companies Act of Japan (the “Companies Act”). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:
Millions of Yen
Thousands of
U.S. Dollars
2015 2014 2015
Deferred tax assets:
Write-down of inventories ¥ 2,961 ¥ 3,924 $ 24,675
Accrued expenses 4,619 4,539 38,492
Excess depreciation 2,530 2,907 21,083
Loss on impairment of property, plant and equipment 3,044 5,956 25,367
Loss on impairment of investment securities 671 6,834 5,592
Accrued pension and severance costs 9,291 10,651 77,425
Tax loss carryforwards 85,843 93,828 715,358
Others 3,636 1,813 30,300
Valuation allowance (105,883) (120,294) (882,358)
Total ¥ 6,712 ¥ 10,158 $ 55,934
Deferred tax liabilities:
Unrealized gain on available-for-sale securities (15) (421) (125)
Others (866) (1,045) (7,217)
Total (881) (1,466) (7,342)
Net deferred tax assets ¥ 5,831 ¥ 8,692 $ 48,592
2015 2014
Normal effective statutory tax rate 36.0% 38.0%
Expenses not deductible for income tax purposes 2.5 10.2%
Revenue not taxable for income tax purposes (0.6)%(1.1)%
Difference in foreign and Japanese tax rates (4.1)%(15.5)%
Valuation allowance 3.4 45.1%
Foreign tax credits 1.5 8.7%
Revision of net tax basis of investments relating to consolidated corporate tax system 2.6 –%
Others—net 2.9 5.7%
Actual effective tax rate 44.2% 91.1%
Reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the
accompanying consolidated statement of operations for the years ended March 31, 2015 and 2014, was as follows:
40 Pioneer Corporation Annual Report 2015 41
Pioneer Corporation Annual Report 2015