Toshiba 2002 Annual Report Download - page 51

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TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation between the reported income tax expense (benefit) and the amount computed by multiplying the
income (loss) before income taxes, minority interest and equity in earnings of affiliates by the applicable statuto-
ry tax rate is as follows: Thousands of
Millions of yen U.S. dollars
Year ended March 31 2003 2002 2003
Expected income tax expense (benefit) ¥22,365 ¥(158,585) $186,375
Increase in taxes resulting from:
Non-deductible expenses for tax purposes 5,076 3,256 42,300
Net changes in valuation allowance 15,571 41,575 129,758
Effect of income tax rate change 4,373 —36,442
Other 1,147 (161) 9,558
Income tax expense (benefit) ¥48,532 ¥(113,915) $404,433
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2003 and 2002 are
as follows:
Thousands of
Millions of yen U.S. dollars
March 31 2003 2002 2003
Gross deferred tax assets:
Inventories ¥ 24,970 ¥ 24,805 $ 208,083
Accrued pension and severance costs 103,998 97,788 866,650
Tax loss carryforwards 194,248 180,125 1,618,733
Minimum pension liability adjustment 298,303 205,946 2,485,858
Accrued bonus 38,920 27,746 324,333
Depreciation and amortization 34,528 38,793 287,733
Other 107,176 136,165 893,135
802,143 711,368 6,684,525
Valuation allowance for deferred tax assets (65,880) (77,644) (549,000)
Deferred tax assets 736,263 633,724 6,135,525
Gross deferred tax liabilities:
Retained earnings appropriated for tax
allowable reserves (12,888) (15,661) (107,400)
Unrealized gains on securities (12,341) (18,356) (102,842)
Gain on securities contributed to employee
retirement benefit trusts (17,257) (17,763) (143,808)
Other (16,299) (17,450) (135,825)
Deferred tax liabilities (58,785) (69,230) (489,875)
Net deferred tax assets ¥677,478 ¥564,494 $5,645,650
The net changes in the total valuation allowance for the years ended March 31, 2003 and 2002 were a
decrease of ¥11,764 million ($98,033 thousand) and an increase of ¥35,447 million, respectively.
Tax loss carryforwards of the Company at March 31, 2003 amounted to approximately ¥487,788 million
($4,064,900 thousand), the majority of which will expire during the period from 2004 through 2008. The
Company utilized tax loss carryforwards of ¥31,272 million ($260,600 thousand) to recognize income tax benefits
for the current year.
Realization of tax loss carryforwards and other deferred tax assets is dependent on the Company generating suffi-
cient taxable income prior to their expiration or the Company exercising certain available tax strategies. Although real-
ization is not assured, management believes it is more likely than not that all of the deferred tax assets, less the valuation
allowance, will be realized. The amount of such net deferred tax assets considered realizable, however, could be
reduced in the near term if estimates 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 affil-
iates deemed indefinitely reinvested in foreign operations. As of March 31, 2003, and 2002, the undistributed earn-
ings of the foreign subsidiaries not subject to deferred tax liabilities were ¥107,328 million ($894,400 thousand), and
¥103,248 million, respectively. It is not practicable to estimate the amount of the deferred income tax liabilities on
such earnings.
During the year ended March 31, 2002, a foreign subsidiary issued 35 shares of ¥1,000 million par value
redeemable preferred stock totaling ¥35,000 million to the third parties. This preferred stock is included in
minority interest in the consolidated subsidiaries. Holders of the preferred stock have no voting rights and are to
receive preferred dividends quarterly, based on LIBOR, which currently approximates 1.06 percent per annum.
On October 1, 2001, an amendment (“Amendment”) to the Japanese Commercial Code became effective. The
Amendment eliminates the stated par value of Toshiba Corporation’s outstanding shares which results in all out-
standing shares having no par value as of October 1, 2001. The Amendment also provides that share
issuances after September 30, 2001 will be of shares with no par value. Before the Amendment, Toshiba
16.
ISSUANCE OF
PREFERRED STOCK
BY A SUBSIDIARY
17.
SHAREHOLDERS’
EQUITY
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