Annual Report 2012

3. Inventories
Inventories consisted of the following:
Millions of yen Thousands of U.S. dollars (Note 1)
2012 2011 2012
Finished goods and merchandises························································· ¥ 48,114 ¥ 42,697 $ 585,400
Raw materials ························································································ 11,852 8,975 144,202
Work in process ···················································································· 8,753 6,784 106,497
Packing and other ················································································· 2,885 2,487 35,102
Total ···························································································· ¥ ¥71,604 ¥ 60,943 $ 871,201
4. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local taxes based on income which, in aggregate,
resulted in a normal statutory tax rate of approximately 40.5% for the years ended March 31, 2012 and 2011.
The significant components of deferred tax assets and liabilities were as follows:
Millions of yen Thousands of U.S. dollars (Note 1)
2012 2011 2012
Deferred tax assets
Operating loss carryforwards for tax purposes ··························· ¥ 4,633 ¥ 4,516 $ 56,369
Intercompany profits··································································· 661 682 8,042
Valuation loss on inventories ······················································· 497 789 6,047
Allowance for bonuses to employees ········································· 830 828 10,099
Allowance for loss on clearance of business ······························· 739 792 8,991
Accounts receivable ··································································· 170 267 2,068
Loss on impairment of fixed assets ············································ 613 957 7,458
Excess of allowance for doubtful accounts over tax allowable amounts ······ 991 1,130 12,057
Accrued pension and severance liabilities ··································· 634 600 7,714
Accrued enterprise taxes ···························································· 300 258 3,650
Provision for loss on disaster ······················································ — 1,608 —
Unrealized loss on available-for-sale securities ···························· 4,343 — 52,841
Other·························································································· 2,924 2,047 35,577
Gross deferred tax assets ································································· ¥ 17,335 ¥ 14,474 $ 210,913
Less: Valuation allowance ································································· (3,628) (4,727) (44,142)
Total deferred tax assets ···································································
Deferred tax liabilities
¥ 13,707 ¥ 9,747 $ 166,771
Unrealized gain on available-for-sale securities ··························· 839 7,787 10,208
Revaluation reserve for land ······················································· 674 795 8,201
Revaluation reserve for intangible assets ···································· 1,165 1,323 14,174
Revaluation reserve for fixed assets - other ································ 1,135 470 13,809
Other·························································································· 228 143 2,774
Total deferred tax liabilities ·························································· ¥ 4,041 ¥ 10,518 $ 49,166
Net deferred tax assets (liabilities) ·························································· ¥ 9,666 ¥ (771) $ 117,605
Reconciliation of the differences between the statutory tax rates and the effective income tax rates was as follows:
2012 2011
Statutory tax rate ····························································································································· 40.5 % 40.5%
Expenses not deductible for tax purposes ·················································································· 2.4 3.5
Non-taxable dividend income ····································································································· (3.3) (2.5)
Loss in subsidiaries ···················································································································· 8.9 31.6
Effect of tax rate change ············································································································· 6.1 —
Amortization of goodwill ·············································································································· 8.6 1.1
Tax credits primarily for research and development costs···························································· (3.9) (4.9)
Operating loss carryforwards for tax purpose·············································································· (2.0) (3.5)
Other ·········································································································································· (2.8) (3.6)
Effective income tax rate ················································································································· 54.5 62.2
* Adjustment of deferred tax assets and liabilities following the change in the statutory tax rates
The “Act for Partial Revision of the Income Tax Act, etc. for the Purpose of Creating
Taxation System Responding to Changes in Economic and Social Structures” and the
“Act on Special Measures for Securing Financial Resources Necessary to Implement
Measures for Reconstruction following the Great East Japan Earthquake” were
promulgated on December 2, 2011.
Accordingly, the statutory tax rates for calculating deferred tax assets and liabilities (only
for the temporary difference expected to be eliminated after April 1, 2012) has changed
from 40.5% of the previous fiscal year to 37.8% for those expected to be recovered or
paid during the period from April 1, 2012 to March 31, 2015, and to 35.4% for those
expected to recovered or paid after April 1, 2015.
Following these changes, net deferred tax assets decreased ¥1,228 million (US$ 14,941
thousand), while income taxes deferred increased ¥664 million (US$ 8,079 thousand).
Nipro Corporation Annual Report 2012 36