Sony 2006 Annual Report Download - page 131

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Net deferred tax assets are included in the consolidated
balance sheets as follows:
Dollars in
Yen in millions millions
March 31 2005 2006 2006
Current assets—
Deferred income taxes . . . .
¥141,154 ¥ 221,311 $ 1,892
Other assets—
Deferred income taxes . . . .
240,396 178,751 1,528
Current liabilities—
Other . . . . . . . . . . . . . . . . .
(12,025) (15,789) (136)
Long-term liabilities—
Deferred income taxes . . . . (72,227) (216,497) (1,850)
Net deferred tax assets . . . . ¥297,298 ¥ 167,776 $ 1,434
At March 31, 2006, no deferred income taxes have been
provided on undistributed earnings of foreign subsidiaries not
expected to be remitted in the foreseeable future totaling
¥1,065,809 million ($9,109 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, 2006 for such temporary differences amounted to ¥228,546
million ($1,953 million).
Operating loss carryforwards for corporate income tax and
local income tax purposes of Sony Corporation and certain
consolidated subsidiaries in Japan at March 31, 2006 amounted
to ¥121,530 million ($1,039 million) and ¥484,397 million ($4,140
million), respectively, which are available as an offset against
future taxable income. Deferred tax asset on the operating loss
carryforwards for corporate income tax and local income tax in
Japan are calculated by multiplying approximately 28% and
13%, respectively.
Operating loss carryforwards for tax purposes of certain
foreign consolidated subsidiaries at March 31, 2006 amounted
to ¥173,624 million ($1,484 million).
With the exception of ¥111,265 million ($951 million) with no
expiration period, total available operating loss carryforwards
expire at various dates primarily up to 7 years.
Tax credit carryforwards for tax purposes at March 31, 2006
amounted to ¥39,443 million ($337 million). With the exception
of ¥9,116 million ($78 million) with no expiration period, total
available tax credit carryforwards expire at various dates primarily
up to 9 years.
Realization of deferred tax assets related to loss carryforwards
and tax credit carryforwards is dependent on whether sufficient
taxable income will be generated prior to expiration period.
Although realization is not assured, management believes it is
more likely than not that all of the deferred tax assets, less
valuation allowance, will be realized. The amount of such net
deferred tax assets considered realizable, however, could be
changed in the near term if estimates of future taxable income
during the carryforward period are changed.
22. Reconciliation of the differences between basic and diluted net income per share (“EPS”)
(1) Income before cumulative effect of accounting changes and net income allocated to each class of stock:
Dollars in
Yen in millions millions
Years ended March 31 2004 2005 2006 2006
Income before cumulative effect of an accounting change allocated to common stock . . . ¥90,756 ¥168,498 ¥122,308 $1,046
Income allocated to subsidiary tracking stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (128) 53 1,308 11
Income before cumulative effect of an accounting change . . . . . . . . . . . . . . . . . . . . . . . . . ¥90,628 ¥168,551 ¥123,616 $1,057
Net income allocated to common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥88,639 ¥163,785 ¥122,308 $1,046
Net income allocated to subsidiary tracking stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (128) 53 1,308 11
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥88,511 ¥163,838 ¥123,616 $1,057
As discussed in Note 2, the earnings allocated to subsidiary
tracking stock were determined based on the subsidiary track-
ing stockholders’ economic interest. The accumulated losses of
SCN (the subsidiary tracking stock entity as discussed in Note
16) used for computation of earnings per share attributable to
subsidiary tracking stock were ¥1,764 million and ¥1,358 million
as of March 31, 2004 and 2005, respectively.
As discussed in Notes 2 and 16, on October 26, 2005, the
Board of Directors of Sony Corporation decided to terminate all
shares of subsidiary tracking stock and convert such shares to
shares of Sony common stock at a conversion rate of 1.114
share of Sony common stock per share of subsidiary tracking