Notes to Consolidated Financial Statements
NSK Ltd. and Consolidated Subsidiaries For the year ended March 31, 2007
4. Inventories
Inventories at March 31, 2007 and 2006 were as follows:
| Millions of yen | Thousands of U.S. dollars |
||
| As of March 31, | 2007 | 2006 | 2007 |
|---|---|---|---|
| Finished products | ¥ 59,504 | ¥ 55,130 | $504,271 |
| Work in process | 26,187 | 27,488 | 221,924 |
| Raw materials and supplies | 19,351 | 18,718 | 163,992 |
| ¥105,043 | ¥101,337 | $890,195 | |
5. Depreciation
Depreciation of property, plant and equipment for the years ended March 31, 2007 and 2006 amounted to ¥34,504 million ($292,407 thousand) and ¥29,438 million, respectively.
6. Short-Term Debt
At March 31, 2007 and 2006, short-term debt consisted of the following:
| Millions of yen | Thousands of U.S. dollars |
||
As of March 31, |
2007 | 2006 | 2007 |
|---|---|---|---|
| Bank loans | ¥74,214 | ¥65,707 | $628,932 |
| Commercial paper | - | 5,000 | - |
| ¥74,214 | ¥70,707 | $628,932 | |
Short-term bank loans are principally unsecured and consist of notes maturing generally within one year. The interest rates applicable to the loans at March 31, 2007 and 2006 ranged principally from 0.43 percent to 7.50 percent and from 0.40 percent to 6.85 percent, respectively.
Commercial Paper is unsecured and matures generally within three months. The interest rates applicable at March 31, 2006 ranged principally from 0.14 percent to 0.15 percent.
7. Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries comprise corporation tax, inhabitants’ taxes and enterprise tax which, in the aggregate, resulted in a statutory tax rate of 40.5 percent for both 2007 and 2006. Income taxes of the foreign subsidiaries are based generally on the tax rates applicable in their countries of incorporation.
The effective tax rates reflected in the consolidated statement of income for the years ended March 31, 2007 and 2006 differ from the statutory tax rate for the following reasons:
| Year ended March 31, | 2007 | 2006 |
|---|---|---|
| Statutory tax rates | 40.5% | 40.5% |
| Effect of: | ||
| Expenses not deductible for income tax purposes | 3.2 | 3.0 |
| Tax credits | (5.3) | (4.8) |
| Different tax rates applied to income of foreign subsidiaries | (3.0) | (2.2) |
| Elimination of dividend income | 1.9 | - |
| Changes in valuation allowance | - | 3.2 |
| Equity in earnings of affiliated companies | (2.8) | (3.5) |
| Other, net | 0.9 | 1.9 |
| Effective tax rates | 35.4% | 38.1% |
The significant components of deferred tax assets and liabilities as of March 31, 2007 and 2006 were as follows:
| Millions of yen | Thousands of U.S. dollars |
||
| As of March 31, | 2007 | 2006 | 2007 |
|---|---|---|---|
| Deferred tax assets: | |||
| Accrued retirement benefits | ¥ 13,593 | ¥ 19,100 | $ 115,195 |
| Property, plant and equipment | 2,031 | 2,187 | 17,212 |
| Accrual payroll expenses | 4,407 | 3,045 | 37,347 |
| Accrued bonuses | 4,311 | 4,103 | 36,534 |
| Net loss carryforward | 15,636 | 14,368 | 132,508 |
| Inventories | 3,486 | 3,295 | 29,542 |
| Loss on devaluation of investment securities | 598 | 621 | 5,068 |
| Other | 10,343 | 9,371 | 87,653 |
| Valuation allowance | (26,855) | (25,089) | (227,585) |
| Total deferred tax assets | 27,553 | 31,004 | 233,500 |
| Deferred tax liabilities: | |||
| Depreciation | (3,698) | (4,205) | (31,339) |
| Unrealized holding gain on securities | (26,010) | (31,238) | (220,424) |
| Gain on contribution of securities to employees’ retirement benefit trust |
(13,010) | (14,089) | (110,254) |
| Other | (11,474) | (11,273) | (97,237) |
| Total deferred tax liabilities | (54,194) | (60,806) | (459,271) |
| Net deferred tax liabilities | ¥(26,640) | ¥(29,801) | $(225,763) |
8. Accrued Expenses and Other Current Liabilities
At March 31, 2007 and 2006, accrued expenses and other current liabilities consisted of the following:
| Millions of yen | Thousands of U.S. dollars |
||
| As of March 31, | 2007 | 2006 | 2007 |
|---|---|---|---|
| Accrued bonuses | ¥12,145 | ¥11,202 | $102,924 |
| Dividends payable | 4,900 | 3,540 | 41,525 |
| Other | 39,275 | 37,069 | 332,839 |
| ¥56,320 | ¥51,812 | $477,288 | |