NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Income Taxes
(1) Significant components of deferred tax assets and liabilities as of March 31, 2015 and 2014 were as follows:
Millions of yen Thousands of U.S. dollars
2015 2014 2015
Deferred tax assets:
Loss carried forward for tax purposes Impairment loss
Liability for retirement benefit Reserve for apartment vacancy loss Advances from customers for rent income
Loss on devaluation of property, plant and equipment Elimination of unrealized gain
Bonuses payable
Allowance for doubtful accounts Deposits received
Loss on devaluation of real estate for sale Excess amortization on software
Reserve for fulfillment of guarantees
Reserve for warranty obligations on completed project Asset retirement obligations
Excess depreciation Sales promotion cost Accrued enterprise tax Other payable
Bad debt loss
Sales discount for construction contracts Loss on devaluation of securities Low-value assets
Others Sub-total
Less: valuation allowance Total deferred tax assets Deferred tax liabilities:
Reserve for special depreciation Net unrealized gain on other securities Fixed asset retirement expenses Total deferred tax liabilities Net deferred tax assets
46,999 23,035 3,581 3,333 2,551 1,427 374 741 705 518 424 278 207 82 125 134 183 128 77 88 34 16 12 244 85,311 (68,724) 16,586 (178) (236) (7) (422) 16,163
364,697 190,219 25,166 14,403 11,549 10,778 7,215 6,753 5,448 3,598 3,203 2,249 2,062 1,112 1,103 1,016 1,000 999 769 669 157 121 108 2,518 656,925 (496,008) 160,916 (2,508) (1,510) (54) (4,073) 156,842 43,825
22,858 3,024 1,730 1,387 1,295 867 811 654 432 384 270 247 133 132 122 120 120 92 80 18 14 13 302 78,942 (59,605) 19,337 (301) (181) (6) (489) 18,847
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(2) Reconciliation of the differences between the normal effective statutory tax rate and the actual effective tax rate for the years ended March 31, 2015 and 2014 were as follows:
2015 2014
Normal effective statutory tax rate Adjustments:
Effect from decrease in valuation reserve Impact of change in income tax rates
Entertainment and other expenses not deductible for income tax purposes Per capital portion of inhabitants taxes
Others
Actual effective tax rate
38.01%
(95.10) 4.98 9.23 1.94 (0.29) (41.23) 35.64%
(94.32) 37.26 8.10 1.66 (0.73) (12.39)
(3) Change in amount of deferred tax assets and liabilities due to the change in income tax rates The Act for Partial Revision of the Income Tax Act, etc.
(Act No. 9 of 2015) and The Act for Partial Revision of the Local Tax Act, etc. (Act No. 2 of 2015) were promulgated on March 31, 2015. Consequently, the corporate tax rate, etc. is changed from fiscal years beginning on or after April 1, 2015. Accordingly, the effective statutory tax rate used for the calculation of deferred tax assets and liabilities will change from 35.64% to 33.10% for temporary differences expected to be returned or paid in the consolidated fiscal year beginning April 1, 2015, and to 32.34% for temporary differences expected to be returned or paid in the consolidated fiscal years beginning on or after April 1, 2016.
As a result of these changes in tax rates, deferred tax
assets (net of deferred tax liabilities) have decreased
¥1,721 million ($14,322 thousand), income taxes-deferred have increased ¥1,739 million ($14,476
thousand), and net unrealized gains on “other securities”
have increased ¥18 million ($154 thousand).
Further, the limit on net operating loss deduction under the carry-forward system for tax losses incurred in consolidated fiscal years beginning on or after April 1, 2015 is reduced to the amount equivalent to 65% of taxable income for the respective year, and to 50% of taxable income for tax losses incurred in consolidated fiscal years beginning on or after April 1, 2017. As a result, the amount of the Company’s deferred tax assets decreased by ¥5,615 million ($46,725
thousand), and income taxes-deferred have increased by the same amount.
Millions of yen Thousands of U.S. dollars
2015 2014 2015
Short-term borrowings, with average interest rate of 0.90%
Current portion of long-term debt, with average interest rate of 2.69%
Current portion of lease obligations, with average interest rate of 5.38%
Long-term debt, due 2016 to 2031, with average interest rate of 0.80%
Lease obligations, long-term, due 2016 to 2021, with average interest rate of 4.82%
Total
— 2,940 1,575 27,077 4,154 35,747
499 191,443 19,598 59,885 53,676 325,102 60
23,005 2,355 7,196 6,450 39,067 11. Short-term Borrowings and Long-term Debt
(1) Short-term borrowings, long-term debt and lease obligations at March 31, 2015 and 2014 consisted of the following:
(Note)
To calculate “average interest rate,” weighted-average rates and fiscal year-end balances are used. Please note, however, that the current portion of lease obligations and lease obligations (net of the current portion) are recorded in the consolidated balance sheet in the amount before deducting the interest portion from total lease expenses for certain consolidated subsidiaries, and that such lease obligations are not included in the calculation of the average interest rate.
(2) The amounts of long-term debt and lease obligations (excluding their current portion) scheduled for repayment in five years from the consolidated settlement of accounts were as follows:
Millions of yen Due after 1 through 2 years Due after 2 through 3 years Due after 3 through 4 years Due after 4 through 5 years
Long-term debt Lease obligations
Thousands of U.S. dollars Due after 1 through 2 years Due after 2 through 3 years Due after 3 through 4 years Due after 4 through 5 years
Long-term debt Lease obligations
746 2,141
6,213 17,821
659 2,060
5,490 17,144
610 1,676
5,083 13,947
510 567
4,251 4,726
(5) Securities and investment securities which have been deposited with the Legal Affairs Bureau at March 31, 2015 and 2014 were as follows:
Millions of yen Thousands of U.S. dollars
2015 2014 2015
Deposit for operation stipulated in Building Lots and Buildings Transaction Business Act
Deposit for housing construction warranty Deposit for housing defect warranty
Advanced payment certificate in accordance with Payment and Settlement Regulations
49 820 107 919
456 7,414 960 7,661 54
891 115 920
(4) Secured borrowings with pledge of collateral at March 31, 2015 and 2014 were as follows:
Millions of yen Thousands of U.S. dollars
2015 2014 2015
Current portion of long-term debt Long-term debt
Total
2,940 27,077 30,017
185,323
— 185,323 22,270
— 22,270
(3) Assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2015 and 2014 were as follows:
Millions of yen Thousands of U.S. dollars
2015 2014 2015
Cash and cash equivalents Securities
Buildings and structures Land
Investment securities
Others in Investments and other assets (Membership right) Total
17 92 56,450 81,385 1,128 420 139,493
141
— 218,016 597,299 637 3,495 819,590 17
— 26,199 71,777 76 420 98,490
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(6) Bonds at March 31, 2015 and 2014 consisted of the following:
(Note) Figures in parentheses represent the current portion.
(7) The amounts of bonds maturity in five years from the consolidated settlement of accounts were as follows:
Millions of yen Thousands of U.S. dollars
Company name Name of bond Issuance date 2015 2014 2015
Leopalace21 Corporation
12th unsecured straight bond
September 30, 2009
Leopalace21 Corporation
13th unsecured straight bond
October 31, 2014
Total — —
Company name Name of bond Interest rate (%) Collateral Date of maturity
Leopalace21 Corporation
12th unsecured
straight bond 1.04 None September 30, 2016
Leopalace21 Corporation
13th unsecured
straight bond 0.39 None October 31, 2019
Total — — — —
Millions of yen Due within 1 year Due after 1
through 2 years
Due after 2 through 3 years
Due after 3 through 4 years
Due after 4 through 5 years
Thousands of U.S. dollars Due within 1 year Due after 1
through 2 years
Due after 2 through 3 years
Due after 3 through 4 years
Due after 4 through 5 years 1,480
— 1,480
7,655 (4,660) 37,446 (7,489) 45,102 (12,149) 920
(560) 4,500 (900) 5,420 (1,460)
1,460
12,149
1,260
10,485
900
7,489
900
7,489
900
7,489
Millions of yen Thousands of U.S. dollars
2015 2014 2015
Current account overdraft agreements and commitment line Less amount utilized
Balance available
10,000
— 10,000
8,321
— 8,321 1,000
— 1,000 12. Commitment Line
For efficient procurement of working capital, the Company maintains current account overdraft agreements and commitment line contracts with financial institutions. As of the end of the current fiscal year, the unexercised portion of facilities based on the contract was as follows: