Sony 1999 Annual Report Download - page 66

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page
Sony Corporation Annual Report 1999
As required under FAS 87 “Employers’ Accounting for
Pensions”, the assumptions are reviewed in accordance
with changes in circumstances. Such changes in
assumptions are the primary reason for the fluctuation
in the projected benefit obligation and unrecognized
actuarial loss.
Under FAS 87, Sony has recorded a pension liability
to cover the amount of the projected benefit obligation
in excess of plan assets, considering unrealized items
and the minimum pension liability. The minimum pen-
sion liability which Sony has recognized on substantially
all of the Japanese plans represents the excess of accu-
mulated benefit obligation over plan assets and accrued
pension and severance costs. A corresponding amount
was recognized as an intangible asset to the extent of
unrecognized prior service cost, and the balance was
recorded as a component of accumulated other compre-
hensive income, net of tax. The accumulated benefit
obligation of the Japanese plans was ¥389,310 million
and ¥461,815 million ($3,848,458 thousand) as of
March 31, 1998 and 1999, respectively.
As discussed in Note 9, Sony Corporation contributed
certain marketable equity securities to an employee
retirement benefit trust. The securities held in this trust
are qualified as plan assets under U.S. GAAP.
14. Income taxes
Income before income taxes and income tax expense
comprise the following:
Yen in millions Dollars in thousands
Year ended March 31 Year ended
1997 1998 1999 March 31, 1999
Income before income taxes:
Sony Corporation and subsidiaries in Japan . . . . . . . . . . ¥226,847 ¥293,520 ¥195,903 $1,632,525
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 85,582 160,229 172,225 1,435,208
¥312,429 ¥453,749 ¥368,128 $3,067,733
Income taxes—Current:
Sony Corporation and subsidiaries in Japan . . . . . . . . . . ¥125,028 ¥145,890 ¥ 85,970 $ 716,417
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 44,032 64,223 72,416 603,466
¥169,060 ¥210,113 ¥158,386 $1,319,883
Income taxes—Deferred:
Sony Corporation and subsidiaries in Japan . . . . . . . . . . ¥ (6,543) ¥ 7,221 ¥ 16,433 $ 136,942
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 1,053 (2,466) 2,154 17,950
¥ (5,490) ¥ 4,755 ¥ 18,587 $ 154,892
Sony is subject to a number of different income taxes
which, in the aggregate, indicate a statutory rate in
Japan of approximately 51% for the years ended March
31, 1997 and 1998, and approximately 48% for the year
ended March 31, 1999, respectively. Due to the changes
in Japanese income tax regulations, the statutory rate
was reduced from 51% to 48% effective April 1, 1998
and was further reduced from 48% to 42% effective
April 1, 1999. The respective newly enacted rates were
used in calculating the future expected tax effects of
temporary differences as of March 31, 1998 and 1999.
The effect of the change in the tax rate on the balance
of deferred tax assets and liabilities was insignificant as
of March 31, 1998 and reduced the net deferred tax
liability and income tax expense by approximately ¥13,400
million ($111,667 thousand) as of March 31, 1999.