Ricoh 2005 Annual Report Download - page 42

41 ANNUAL REPORT 2005
Net deferred tax assets as of March 31, 2004 and 2005 are included in the consolidated balance sheets as follows:
Thousands of
Millions of Yen U.S. Dollars
2004 2005 2005
Deferred income taxes and other ( Current Assets) ¥ 41,213 ¥37,812 $353,383
Lease deposits and other ( Non-current Assets) 47,122 42,393 396,196
Accrued expenses and other ( Current Liabilities) ( 578) (647) (6,047)
Deferred income taxes ( Long-Term Liabilities) (36,295) (48,767) (455,766)
¥ 51,462 ¥30,791 $287,766
The net changes in the total valuation allowance for the years ended
March 31, 2003, 2004 and 2005 was decreases of ¥2,107 million, ¥183
million and ¥1,931 million ( $18,047 thousand) , respectively. The
valuation allowance primarily relates to deferred tax assets of the
consolidated subsidiaries with net operating loss carryforwards for tax
purposes that are not expected to be realized.
In assessing the realizability of deferred tax assets, Ricoh considers
whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences
become deductible and whether loss carryforwards are utilizable. Ricoh
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods in which the
deferred tax assets are deductible, Ricoh believes it is more likely than
not that the benefits of these deductible differences, net of the existing
valuation allowance will be realized. The amount of the deferred tax
asset considered realizable, however, would be reduced if estimates of
future taxable income during the carryforward period are reduced.
As of March 31, 2005, certain subsidiaries had net operating losses
carried forward for income tax purposes of approximately ¥17,530
million ( $163,832 thousand) which were available to reduce future
income taxes, if any. Approximately ¥1,293 million ( $12,084
thousand) of the operating losses will expire within 3 years and ¥9,595
million ( $89,673 thousand) will expire within 4 to 7 years. The
remainder principally have an indefinite carryforward period.
The Company has not recognized a deferred tax liability for certain
portion of the undistributed earnings of its foreign subsidiaries of
¥157,159 million ( $1,468,776 thousand) as of March 31, 2005 because
the Company currently does not expect those unremitted earnings to
reverse and become taxable to the Company in the foreseeable future. A
deferred tax liability will be recognized when the Company no longer
plans to permanently reinvest undistributed earnings. Calculation of
related unrecognized deferred tax liability is not practicable.
9 . SHORT-TERM BORROWINGS
Short-term borrowings as of March 31, 2004 and 2005 consist of the following:
Weighted average Thousands of
interest rate Millions of Yen U.S. Dollars
2004 2005 2004 2005 2005
Borrowings, principally from banks 1.7% 3 .5 % ¥19,359 ¥ 8,641 $80,757
Commercial paper 0.8 2 .9 49,593 30,069 281,019
¥68,952 ¥38,710 $361,776
The Company and certain of its subsidiaries enter into the contracts
with financial institutions regarding lines of credit and overdrawing.
Those same financial institutions hold the issuing programs of
commercial paper and medium-term notes. Unused lines of credit
amounted to ¥634,273 million and ¥689,993 million ( $6,448,533
thousand) as of March 31, 2004 and 2005, respectively, of which
¥182,764 million and ¥219,291 million ( $2,049,449 thousand) related
to commercial paper and ¥131,966 million and ¥128,346 million
( $1,199,495 thousand) related to medium-term notes programs at
prevailing interest rates.