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Net deferred tax assets were included in the following accounts in the accompanying consolidated balance sheets. 

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The aggregate statutory income tax rate used for calculation of deferred tax assets and liabilities was 41.8% for the year ended March 31, 2002. Effective for years commencing on April 1, 2004 or later, according to the revised local tax law, income tax rates for enterprise taxes will be reduced as a result of introducing the assessment by estimation on the basis of the size of business. Based on the change of income tax rates, for calculation of deferred tax assets and liabilities, the Company and consolidated domestic subsidiaries used the aggregate statutory income tax rates of 41.8% for current items and 40.5% for non-current items at March 31, 2003. 

As a result of the change in the aggregate statutory income tax rates, net deferred tax assets decreased by ¥640 million (US$5,324 thousand) and income taxes—deferred on the consolidated state- ment of income, net unrealized holding gains on securities, revaluation reserve for land and minority interest increased by ¥728 million (US$6,057 thousand), ¥73 million (US$607 thousand), ¥8 million (US$67 thousand) and ¥7 million (US$58 thousand), respectively. 

## 14. Shareholders’ Equity 

Under the Commercial Code of Japan, the entire amount of the issue price of shares is required to be accounted for as capital, although a company may, by resolution of its Board of Directors, account for an amount not exceeding one-half of the issue price of the new shares as additional paid-in capital, which is included in capital surplus. 

Effective October 1, 2001, the Commercial Code provides that an amount equal to at least 10% of cash dividends and other cash appropriations shall be appropriated and set aside as a legal earnings reserve until the total amount of legal earnings reserve and additional paid-in capital equals 25% of com- mon stock. [The total amount of legal earnings reserve and additional paid-in capital of the Company has been reached to 25% of common stock, and therefore the Company is not required to provide legal earnings reserve any more.] The legal earnings reserve and additional paid-in capital may be used to eliminate or reduce a deficit by resolution of the shareholders’ meeting or may be capitalized by resolu- tion of the Board of Directors. On condition that the total amount of legal earnings reserve and additional paid-in capital remains being equal to or exceeding 25% of common stock, they are available for distrib- ution by the resolution of shareholders’ meeting. Legal earnings reserve is included in retained earnings in the accompanying financial statements. 

The maximum amount that the Company can distribute as dividends is calculated based on the non- consolidated financial statements of the Company in accordance with the Commercial Code. 

In accordance with customary practice in Japan, the appropriations are not accrued in the financial statements for the period to which they relate, but are recorded in the subsequent accounting period after shareholders’ approval has been obtained. Retained earnings at March 31, 2003 include amounts representing final cash dividends of ¥3,341 million (US$27,795 thousand), ¥9 (US$0.07) per share, and directors’ bonuses of ¥110 million (US$915 thousand), which were approved at the shareholders’ meeting held on June 25, 2003. 

