In the fiscal year ended March 31, 1994, the company adopted, effective April 1, 1993, SFAS No. 109, "Accounting for Income Taxes." The cumulative effect as of April 1, 1993 of the accounting change resulting from adoption of SFAS No. 109 was to decrease net income by 1,603 million yen or 1.04 per share. Financial statements for prior fiscal years have not been restated. Information shown below for those prior years was determined under the provisions of APB Opinion No. 11.
The components of income tax expense are as follows:
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In thousands of
In millions of yen U.S. dollars
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Year ended March 31 1993 1994 1995 1995
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Current ...........................................................Y 15,131 Y 32,339 Y 62,165 $ 714,541
Deferred .......................................................... 5,303 (6,808) (10,717) (123,184)
Charge equivalent to tax benefits of
certain subsidiaries not recognized in loss year ................ 1,585 ----- ----- -----
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22,019 25,531 51,448 $ 591,357
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The company is subject to a number of different income taxes which, in the aggregate, indicate a normal statutory tax rate in Japan of approximately 52 percent for the year ended March 31, 1993, and 51 percent for the years ended March 31, 1994 and 1995. A reconciliation between the reported total income tax expense and the amount computed by multiplying the income (loss) before tax by the applicable normal statutory income tax rate is as follows:
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In thousands of
In millions of yen U.S. dollars
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Year ended March 31 1993 1994 1995 1995
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Current "expected" tax expense (benefit) ..........................Y (19,598) Y 12,807 Y 38,109 $ 438,035
Increase (decrease) in taxes resulting from:
a) Subsidiaries in loss position,
recognizing valuation allowance ............................... ----- 9,627 8,033 92,333
b) Non-deductible expense for tax purposes ....................... 4,549 3,724 4,087 46,977
c) Amortization of discount on bonds with warrants ............... 3,705 1,646 786 9,035
d) Subsidiaries in loss position receiving no tax benefit ........ 36,425 ----- ----- -----
e) Disposition of an investment in a consolidated subsidiary ..... (1,275) ----- ----- -----
f) Other ......................................................... (1,787) (2,273) 433 4,977
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Actual total income tax expenses ..................................Y 22,019 Y 25,531 Y 51,448 $ 591,357
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The significant components of deferred tax assets and liabilities at March 31, 1994 and 1995 are as follows:
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In thousands of
In millions of yen U.S. dollars
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March 31 1994 1995 1995
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Deferred tax assets:
Intercompany profit on inventories and tangible fixed assets
between consolidated companies ..................................................Y 39,688 Y 40,365 $ 463,966
Accrued pension and severance costs ............................................... 38,180 42,944 493,609
Other accruals--Noncurrent ........................................................ 22,861 27,627 317,552
Loss carryforwards ................................................................ 96,698 97,493 1,120,609
Other ............................................................................. 25,698 33,496 385,011
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223,125 241,925 2,780,747
Less--Valuation allowance ......................................................... 113,564 120,840 1,388,965
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Total ...........................................................................Y 109,561 Y 121,085 $ 1,391,782
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Deferred tax liabilities:
Tax deductible reserve ............................................................Y 33,189 Y 31,442 $ 361,402
Tax on undistributed earnings ..................................................... 7,902 8,648 99,402
Other ............................................................................. 4,019 7,161 82,311
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Y 45,110 Y 47,251 $ 543,115
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The valuation allowance is primarily related to deferred tax assets of certain consolidated subsidiaries with operating loss carryforwards which are not expected to be realized. The net changes in the total valuation allowance for the years ended March 31, 1994 and 1995 were increases of 8,776 million yen and 7,276 million yen ($83,632 thousand), respectively.
At March 31, 1995, for tax return purposes, tax loss carryforwards of consolidated subsidiaries amounted to approximately 196,034 million yen ($2,253,264 thousand) and will expire primarily during the period from 1996 through 2000 and in 2007 and 2008. For the year ended March 31, 1993, loss carryforwards were utilized to offset taxes otherwise payable of certain subsidiaries and the resulting tax benefits have been shown as an extraordinary credit.
