Sony 2003 Annual Report Download - page 218

Consolidated Financial Information 2003
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The valuation allowance mainly relates to deferred tax assets of Sony Corporation and certain consolidated
subsidiaries with operating loss carryforwards and tax credit carryforwards for tax purposes that are not
expected to be realized. The net changes in the total valuation allowance were increases of ¥86,422 million
and ¥53,595 million for the years ended March 31, 2001 and 2002, respectively, and a decrease of ¥136,140
million ($1,135 million) for the year ended March 31,2003.
As discussed in Note 10, ¥ 33,525 million ($279 million) of the decrease in the valuation allowance relates
to the realization of tax benefits from operating loss carryforwards that were acquired in connection with Sony’s
acquisition of companies within the Electronics, Music and Pictures businesses. The reversal of the valuation
allowance upon realization of tax benefit from operating loss carryforwards resulted in the reduction of
goodwill.
During the year ended March 31, 2003, approximately ¥19,000 million ($158 million) of tax benefits have
been realized through utilization of operating loss carryforwards.
Net deferred tax assets are included in the consolidated balance sheets as follows:
Yen in millions
Dollars in
millions
March 31 March 31,
2002 2003 2003
Current assets – Deferred income taxes ¥134,299 ¥143,999 $1,200
Other assets – Deferred income taxes 120,168 328,091 2,734
Current liabilities – Other (7,563) (10,561) (88)
Long-term liabilities – Deferred income taxes (159,573) (159,079) (1,326)
Net deferred tax assets ¥87,331 ¥302,450 $2,520
At March 31, 2003, no deferred income taxes have been provided on undistributed earnings of foreign
subsidiaries not expected to be remitted in the foreseeable future totaling ¥813,923 million ($6,783
million), and on the gain of ¥61,544 million on a subsidiary’s sale of stock arising from the issuance of
common stock of Sony Music Entertainment (Japan) Inc. in a public offering to third parties in November
1991, as Sony does not anticipate any significant tax consequences on possible future disposition of its
investment based on its tax planning strategies. The unrecognized deferred tax liabilities as of March 31,
2003 for such temporary differences amounted to ¥200,103 million ($1,668 million).
Operating loss carryforwards for tax purposes of Sony Corporation and certain consolidated
subsidiaries at March 31, 2003 amounted to ¥304,634 million ($2,539 million) and are available as an
offset against future taxable income. With the exception of ¥64,315 million ($536 million) with no
expiration period, total available operating loss carryforwards expire at various dates primarily up to 6
years. Tax credit carryforwards for tax purposes at March 31, 2003 amounted to ¥33,762 million ($281
million). With the exception of ¥9,969 million ($83 million) with no expiration period, total available tax
credit carryforwards expire at various dates primarily up to 10 years. Realization is dependent on such
companies generating sufficient taxable income prior to expiration of the loss carryforwards and tax credit