Ricoh 2006 Annual Report Download - page 42

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The Company and its domestic subsidiaries are subject to a National Corporate tax of 30%, an inhabitant tax of approximately 6% and a deductible
Enterprise tax approxim ately 8%, which in the aggregate resulted in the norm al statutory tax rate of approxim ately 41%. Based on an enacted
change in the Japanese tax laws in March 2003, the norm al statutory tax rate was reduced to approxim ately 41% effective April 1, 2004, and such rate
has been used in calculating the future expected tax effects of temporary differences and carryforwards expected to be settled or realized on or after
April 1, 2004. The norm al statutory tax rate differs from the effective tax rate for the years ended March 31, 2004, 2005 and 2006 as a result of the
following:
2004 2005
2006
Normal statutory tax rate 42% 41%
41%
Nondeductible expenses 1 1
0
Tax benefits not recognized on operating losses of certain consolidated subsidiaries 2 1
2
Utilization of net operating loss carryforward not previously recognized ( 1) ( 2)
( 2 )
Tax credit for increased research and development expense ( 3) ( 3)
( 3 )
Effect of change in enacted tax rate 1 –
–
Other, net ( 2) ( 1)
( 1 )
Effective tax rate 40% 37%
37%
Nondeductible expenses include directors’ bonuses and entertainment expenses.
The tax effects of tem porary differences and carryforwards giving rise to the consolidated deferred income tax assets and liabilities as of March 31,
2005 and 2006 are as follows:
Thousands of
Millions of Yen U.S. Dollars
2005
2006 2006
Assets:
Accrued expenses ¥ 20,717
¥ 21,417 $183,051
Property, plant and equipment 3,458
3,014 25,761
Accrued pension and severance costs 33,781
30,888 264,000
Net operating loss carryforwards 5,993
4,941 42,231
Other 27,400
29,601 253,000
91,349
89,861 768,043
Less- Valuation allowance ( 7,079)
(8,197) (70,060)
¥ 84,270
¥ 81,664 $ 697,983
Liabilities:
Sales-type leases ¥ ( 6,548)
¥ (6,460) $ (55,214)
Undistributed earnings of foreign subsidiaries and affiliates ( 17,092)
(18,618) (159,128)
Net unrealized holding gains on available-for-sale securities ( 4,592)
(6,613) (56,521)
Basis difference of acquired intangible assets ( 11,482)
(9,372) (80,103)
Other ( 13,765)
(13,498) (115,367)
¥ ( 53,479)
¥ (54,561) $(466,333)
Net deferred tax assets ¥ 30,791
¥ 27,103 $ 231,650
Net deferred tax assets as of March 31, 2005 and 2006 are included in the consolidated balance sheets as follows:
Thousands of
Millions of Yen U.S. Dollars
2005
2006 2006
Deferred incom e taxes and other ( Current Assets) ¥ 37,812
¥40,632 $347,282
Lease deposits and other ( Non-current Assets) 42,393
38,053 325,239
Accrued expenses and other ( Current Liabilities) ( 647)
(208) (1,777)
Deferred incom e taxes ( Long-Term Liabilities) ( 48,767)
(51,374) (439,094)
¥ 30,791
¥27,103 $231,650
41 ANNUAL REPORT 2006