Toshiba 2005 Annual Report Download - page 74

32 Toshiba Corporation 130th Anniversary
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2005 and 2004 are as follows:
Thousands of
Millions of yen U.S. dollars
March 31 2005 2004 2005
Gross deferred tax assets:
Inventories ¥ 21,565 ¥ 22,583 $ 201,542
Accrued pension and severance costs 112,275 107,187 1,049,299
Tax loss carryforwards 123,788 127,045 1,156,897
Minimum pension liability adjustment 156,348 167,189 1,461,196
Accrued bonus 42,300 45,214 395,327
Depreciation and amortization 30,781 38,873 287,673
Other 130,596 116,780 1,220,524
617,653 624,871 5,772,458
Valuation allowance for deferred tax assets (88,818) (81,297) (830,075)
Deferred tax assets ¥528,835 ¥543,574 $4,942,383
Thousands of
Millions of yen U.S. dollars
March 31 2005 2004 2005
Gross deferred tax liabilities:
Retained earnings appropriated for tax allowable reserves ¥(18,887) ¥ (15,525) $(176,514)
Unrealized gains on securities (23,410) (17,312) (218,785)
Gain on securities contributed to employee retirement benefit trusts (17,381) (17,381) (162,439)
Other (13,402) (13,774) (125,252)
Deferred tax liabilities (73,080) (63,992) (682,990)
Net deferred tax assets ¥455,755 ¥479,582 $4,259,393
The net changes in the total valuation allowance for the years ended March 31, 2005 and 2004 were an increase of
¥7,521 million ($70,290 thousand) and an increase of ¥15,417 million, respectively.
The Company’s tax loss carryforwards for each of the corporate and local taxes at March 31, 2005 amounted to
¥261,910 million ($2,447,757 thousand) and ¥416,757 million ($3,894,925 thousand), respectively, the majority of
which will expire during the period from 2005 through 2011. The Company utilized tax loss carryforwards of ¥55,882
million ($522,262 thousand) and ¥22,668 million ($211,850 thousand) to reduce current corporate and local taxes,
respectively, during the year ended March 31, 2005.
Realization of tax loss carryforwards and other deferred tax assets is dependent on the Company generating sufficient
taxable income prior to their expiration or the Company exercising certain available tax strategies. Although realization
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 deemed
indefinitely reinvested in foreign operations. As of March 31, 2005 and 2004, the undistributed earnings of the foreign
subsidiaries not subject to deferred tax liabilities were ¥124,375 million ($1,162,383 thousand), and ¥95,908 million,
respectively. It is not practicable to estimate the amount of the deferred income tax liabilities on such earnings.
17. ISSUANCE OF STOCK BY A SUBSIDIARY
In March 2004, Toshiba Samsung Storage Technology Corporation (“TSST”), issued 294 shares of its common stock to
Samsung Electronics Co., Ltd. for ¥13,713 million. TSST is engaged in the business of product development, manufacturing
and sales of Optical Disc Drives and was established in December 2003 as a wholly owned subsidiary of the Company.
As a result of this transaction, the Company recognized a gain of ¥6,391 million, representing the excess of issuance
price per share of ¥47 million over its average carrying amount of the net equity held in TSST. The gain from stock
issuance by TSST is included under the caption other income in the accompanying consolidated statements of income
for the year ended March 31, 2004. The transaction decreased the Company’s interest in TSST to 51.0 percent.
18. SHAREHOLDERS’ EQUITY
> RETAINED EARNINGS Retained earnings at March 31, 2005 and 2004 included a legal reserve of ¥13,980 million
($130,654 thousand) and ¥13,122 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 Toshiba Corporation and
its Japanese subsidiaries be appropriated as a legal reserve. No further appropriations are required when the total
amount of the additional paid-in capital and the legal reserve equals 25 percent of their respective stated capital. The