Notes to Consolidated Financial Statements The Group is subject to a number of different income taxes. The applicable statutory tax rates in Japan for the years ended March 31, 1998, 1999, and 2000 were, in the aggregate, approximately 51%, 47%, and 42%, respectively.  A reconciliation of the differences between the reported total income tax rate and applicable statutory income tax rate for the year ended March 31, 2000 is as follows: The significant components of deferred tax assets and liabilities at March 31, 1999 and 2000 are as follows: Net deferred tax assets (liabilities) are included in the consolidated balance sheets as follows: 38 Yen U.S. Dollars (millions) (thousands) Years ended March 31 1998 1999 2000 2000 Current ¥111,220 ¥57,588 ¥ 65,595 $ 618,821 Deferred (1,731) (2,053) (37,216) (351,095) Changes in deferred tax rate (939) (856) — — Income taxes ¥108,550 ¥54,679 ¥ 28,379 $ 267,726 The components of income taxes are as follows: Applicable statutory income tax rate 42.0% Increase (decrease) in tax rate: Amortization of goodwill 15.5% Valuation allowance for deferred tax assets (13.5%) Equity in earnings of affiliates, net (9.6%) Non-deductible expenses for tax purposes 4.6% Other (1.1%) Reported total income tax rate 37.9% Yen U.S. Dollars (millions) (thousands) 1999 2000 2000 Deferred tax assets: Tax loss carryforwards ¥ 189,443 ¥ 193,307 $ 1,823,651 Accrued severance benefits 23,125 31,793 299,934 Provision for loss on repurchase of computers 19,328 20,646 194,773 Intercompany profits on inventories and property, plant and equipment  12,365 13,635 128,632 Accrued employee benefits 2,148 13,441 126,802 Accrued enterprise taxes 2,935 3,518 33,189 Other 16,988 19,734 186,170 Gross deferred tax assets 266,332 296,074 2,793,151 Less: Valuation allowance (203,906) (199,557) (1,882,613) Total deferred tax assets 62,426 96,517 910,538 Deferred tax liabilities: Retained earnings appropriated for tax deductible reserves (48,088) (43,598) (411,302) Other (7,311) (6,154) (58,057) Gross deferred tax liabilities (55,399) (49,752) (469,358) Net deferred tax assets (liabilities) ¥ 7,027 ¥ 46,765 $ 441,179 Yen U.S. Dollars (millions) (thousands) At March 31 1999 2000 2000 Other current assets ¥ 23,309 ¥40,287 $380,066 Investments and long-term loans—other 967 14,507 136,858 Other current liabilities (2,338) (1,663) (15,689) Other long-term liabilities (14,911) (6,366) (60,056) Net deferred tax assets (liabilities) ¥ 7,027 ¥46,765 $441,179 11. Income Taxes