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130th Anniversary Toshiba Corporation 31
The Company’s investment policies and strategies are to assure adequate plan assets to provide for future payments
of pension and severance benefits to participants, with reasonable risks. The Company designs the basic target
allocation of the plan assets to mirror the best portfolio based on estimation of mid-term and long-term return on
the investments. The Company periodically reviews the actual return on the investments and adjusts the portfolio
to achieve the assumed long-term rate of return on the investments. The Company targets its investments in equity
securities at 40 percent or more of total investments, and investments in equity and debt securities at 75 percent or
more of total investments.
12. RESEARCH AND DEVELOPMENT COSTS
Research and development costs were expensed as incurred and amounted to ¥348,010 million ($3,252,430 thousand)
and ¥336,714 million for the years ended March 31, 2005 and 2004, respectively.
13. ADVERTISING COSTS
Advertising costs are expensed as incurred. Advertising costs amounted to ¥41,494 million ($387,794 thousand) and
¥40,156 million for the years ended March 31, 2005 and 2004, respectively.
14. FOREIGN EXCHANGE GAINS AND LOSSES
For the years ended March 31, 2005 and 2004, the net foreign exchange impacts were ¥1,772 million ($16,561 thousand)
gain and ¥2,183 million loss, respectively.
15. IMPAIRMENT OF LONG-LIVED ASSETS
Due to general price erosion, severe market competition and others, the Company recorded impairment charges of
¥1,088 million ($10,168 thousand) related to the manufacturing facilities of the Electronic Devices division, and
¥10,018 million related to the manufacturing facilities of the lithium-ion rechargeable battery business for the years
ended March 31, 2005 and 2004, respectively. These impairment charges are included under the caption other
expense in the accompanying consolidated statements of income.
16. INCOME TAXES
For the year ended March 31, 2004, the Company was permitted to file consolidated tax returns in Japan. In connection
therewith, a temporary surtax of 2.0 percent was assessed for the year ended March 31, 2004. As a result of the surtax,
and certain changes in the corporate tax rate, the Company‘s normal statutory tax rate changed from 42.1 percent to 43.9
percent for the year ended March 31, 2004 and to 40.7 percent for the years ended March 31, 2005 and thereafter.
A reconciliation between the reported income tax expense and the amount computed by multiplying the income
before income taxes, minority interest and equity in earnings (losses) of affiliates by the applicable statutory tax rate is
as follows:
Thousands of
Millions of yen U.S. dollars
Year ended March 31 2005 2004 2005
Expected income tax expense ¥45,001 ¥ 63,673 $420,570
Increase (decrease) in taxes resulting from:
Dividends 9,849 11,245 92,047
Non-deductible expenses for tax purposes 4,363 6,134 40,776
Net changes in valuation allowance 8,117 17,114 75,860
Tax rate difference relating to foreign subsidiaries (7,057) (4,187) (65,954)
Effect of income tax rate change —3,142 —
Other (4,329) 5,116 (40,458)
Income tax expense ¥55,944 ¥102,237 $522,841