Toshiba 1999 Annual Report Download - page 63

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61.
TOSHIBA ANNUAL REPORT 1999
14. SHAREHOLDERS’ EQUITY:
RETAINED EARNINGS–
Retained earnings at March 31, 1999 and 1998 include the legal reserve of ¥78,388 million ($647,835 thousand) and ¥76,419
million, respectively. The Japanese Commercial Code provides that an amount equal to at least 10 percent of cash dividends and
other distributions from retained earnings paid by the parent company and its Japanese subsidiaries be appropriated as a legal
reserve. No further appropriations are required when the legal reserve of each legal entity equals 25 percent of its stated capital.
The legal reserve is not available for dividends but may be used to reduce a deficit or may be transferred to stated capital.
The amount of retained earnings available for dividends is based on the parent company’s retained earnings determined in
accordance with generally accepted accounting principles and the Commercial Code in Japan. Retained earnings at March 31,
1999 include year-end dividends of ¥9,656 million ($79,802 thousand) for the year ended March 31, 1999 which are expected to
be formally approved at the general shareholders’ meeting held in June 1999, and will be payable subsequently.
The significant components of deferred tax assets and deferred tax liabilities recorded on the consolidated balance sheets as of
March 31, 1999 and 1998 are as follows:
Thousands of
Millions of yen U.S. dollars
March 31 1999 1998 1999
Gross deferred tax assets:
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 23,048 ¥ 33,433 $ 190,479
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,373 96,833 730,355
Tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,839 36,104 395,364
Minimum pension liability adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . 92,363 28,099 763,331
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,236 86,413 886,248
358,859 280,882 2,965,777
Valuation allowance for deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . (42,184) (38,271) (348,628)
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316,675 242,611 2,617,149
Gross deferred tax liabilities:
Retained earnings appropriated for tax allowable reserves . . . . . . . . . . . (19,778) (23,425) (163,454)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,871) (30,302) (172,488)
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,649) (53,727) (335,942)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥276,026 ¥188,884 $2,281,207
Net current and non-current deferred tax assets at March 31, 1999 and 1998 are reflected in the consolidated balance sheets
under the captions of prepaid expenses and other current assets, ¥53,173 million ($439,446 thousand) and ¥56,692 million, and
other assets, ¥222,853 million ($1,841,760 thousand) and ¥132,192 million, respectively.
The net changes in the total valuation allowance for the years ended March 31, 1999 and 1998 were an increase of ¥3,913
million ($32,339 thousand) and a decrease of ¥376 million, respectively.
Available corporate tax loss carryforwards of certain subsidiaries at March 31, 1999 amounted to approximately ¥116,458
million ($962,463 thousand), the majority of which will expire during the period from 2000 through 2004. Realization is dependent
on such subsidiaries generating sufficient taxable income prior to expiration of the tax loss carryforwards. Although realization
is not assured, management believes it is more likely than not that all of the deferred tax assets, less valuation allowance, will be
realized. The amount of such net deferred tax assets considered realizable, however, could be reduced in the near term if esti-
mates of future taxable income during the carryforward period are reduced.
Deferred income tax liabilities have not been provided on undistributed earnings of foreign subsidiaries and affiliated com-
panies deemed indefinitely reinvested in foreign operations. It is not practicable to estimate the amount of the deferred income
tax liabilities on such earnings.