Income Taxes

12 Months Ended

Mar. 31, 2011

Income Taxes [Abstract]

INCOME TAXES

16. INCOME TAXES

Domestic and foreign components of income before income taxes, equity in net income of affiliated companies, and net (income) loss attributable to noncontrolling interests were summarized as follows:

										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011
Japan	¥	9,097		¥	9,445		¥	12,553		$	109,920
Foreign		(5,358	)		(6,322	)		(4,926	)		(64,741	)
Total	¥	3,739		¥	3,123		¥	7,627		$	45,179

Domestic and foreign components of income taxes expense consist of:

										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011
Current:
Japan	¥	2,882		¥	2,851		¥	2,214		$	34,824
Foreign		581			310			503			7,020
	¥	3,463		¥	3,161		¥	2,717		$	41,844
Deferred:
Japan	¥	(1,398	)	¥	(1,726	)	¥	522		$	(16,892	)
Foreign		(73	)		139			(26	)		(882	)
	¥	(1,471	)	¥	(1,587	)	¥	496		$	(17,774	)
Total income taxes	¥	1,992		¥	1,574		¥	3,213		$	24,070

Income taxes in Japan applicable to the Companies, imposed by the national, prefectural and municipal governments, in the aggregate resulted in normal effective statutory tax rates of approximately 40.7% for the years ended March 31, 2011, 2010 and 2009. Foreign subsidiaries are subject to income taxes of the countries in which they operate.

The Companies are subject to a number of different taxes based on income. The effective income tax rates differed from the normal statutory rates for the following reasons for the years ended March 31, 2011, 2010 and 2009:

	2011			2010			2009
Normal Japanese statutory rates		40.7	%		40.7	%		40.7	%
Increase (decrease) in taxes resulting from:
Permanently non-deductible expenses		10.3			13.0			5.8
Change in valuation allowance		18.2			(7.9	)		4.1
Undistributed earnings of associated companies		3.1			2.6			(2.1	)
Differences in foreign subsidiaries’ tax rate		(4.4	)		(5.4	)		(3.4	)
Tax exemption		(0.8	)		(1.1	)		(0.3	)
Unrecognized tax benefits		3.1			6.5			(1.0	)
Impairment losses on goodwill		(12.9	)
Other — net		(4.0	)		2.0			(1.7	)
Effective tax rates		53.3	%		50.4	%		42.1	%

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances as of March 31, 2011 and 2010 were as follows:

											Thousands of
	Millions of Yen										U.S. Dollars
	2011					2010					2011
	Deferred			Deferred		Deferred			Deferred		Deferred			Deferred
	Tax			Tax		Tax			Tax		Tax			Tax
	Assets			Liabilities		Assets			Liabilities		Assets			Liabilities
Sales returns	¥	550				¥	783				$	6,646
Allowance for doubtful receivables		50					333					604
Accruals not currently deductible		333					298					4,024
Inventory valuation		1,816					1,583					21,943
Accrued bonuses		1,342					1,166					16,216
Impairment charges on marketable securities and investments		1,541					1,571					18,620
Advanced depreciation on property, plant and equipment				¥	1,679				¥	1,712				$	20,288
Undistributed earnings of associated companies					1,846					1,852					22,305
Net unrealized gain on marketable securities and investments					2,904					3,762					35,089
Net realized gain on exchange of investments					1,920					2,187					23,200
Capitalized supplies		232					205					2,803
Enterprise taxes		190					173					2,296
Accrued vacation		763					832					9,219
Asset retirement obligation		268					238					3,238
Pension expense		1,484					1,351					17,931
Tangible fixed assets		1,624					1,442					19,623
Tax loss carryforwards		4,053					3,185					48,973
Intangible assets					2,233					2,726					26,982
Investment in subsidiaries		540			1,042		540			1,878		6,525			12,591
Other temporary differences		478			160		138			119		5,776			1,933
Total		15,264			11,784		13,838			14,236		184,437			142,388
Valuation allowance		(4,910	)				(3,452	)				(59,328	)
Total	¥	10,354		¥	11,784	¥	10,386		¥	14,236	$	125,109		$	142,388

The valuation allowance increased by ¥1,458 million ($17,617 thousand) and ¥1,809 million for the years ended March 31, 2011 and 2010, respectively.

As a result of changing the Companies’ legal structure, the Companies reversed certain of valuation allowance for the year ended March 31, 2010. Accordingly, the Companies utilized ¥721 million of tax loss carryforwards, and recognized the tax benefits of ¥293 million for the year ended March 31, 2010.

As of March 31, 2011, certain subsidiaries had loss carryforwards which are available to offset future taxable income of such subsidiaries expiring as follows:

	Millions of		Thousands of
Year Carryforward Expires	Yen		U.S. Dollars
2012	¥	181	$	2,187
2013		730		8,821
2014		989		11,950
2015		564		6,815
2016		1,097		13,255
2017		2,736		33,059
2018		3,015		36,431
Thereafter		941		11,370
Total	¥	10,253	$	123,888

There was no portion of undistributed earnings of foreign subsidiaries and foreign corporate joint ventures which were deemed to be permanently invested as of March 31, 2011 and 2010.

A reconciliation of beginning and ending amount of unrecognized tax benefits was as follows:

										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011
Balance at beginning of year	¥	321		¥	106		¥	420		$	3,879
Additions based on tax positions related to the current year		58			232			20			701
Additions for tax positions of prior years					50
Reductions for tax positions of prior years		(191	)		(41	)					(2,308	)
Settlements with tax authorities					(26	)		(334	)
Balance at end of year	¥	188		¥	321		¥	106		$	2,272

Total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is ¥188 million ($2,272 thousand) and ¥321 million as of March 31, 2011 and 2010, respectively.

Based on each of the items of which the Company is aware as of March 31, 2011, no significant changes to the unrecognized tax benefits are expected within the next twelve months.

The Companies recognize interest and penalties accrued related to unrecognized tax benefits in income taxes in the consolidated statements of income. Total amounts of interest and penalties recognized in the consolidated statements of income for the years ended March 31, 2011, 2010 and 2009 were not material.

The Companies file income tax returns in Japan and various foreign tax jurisdictions. In Japan the Companies are no longer subject to regular income tax examinations by the tax authorities for years before 2009 with few exceptions. For other countries, the Companies are no longer subject to regular income tax examinations by the tax authorities for years before 2006 with few exceptions. In the year ended March 31, 2009, the transfer pricing examination of certain domestic subsidiaries’ 2002 to 2007 fiscal year and certain the U.S. subsidiaries’ 2003 and 2004 fiscal year was completed.