Konica Minolta 2015 Annual Report Download - page 129

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(c) Interest rate fluctuation risk
For debt instrument bearing variable interest rates, the Company enters into interest-rate swap contracts to hedge the potential
risk to cash flows of interest rate fluctuations. The Company uses these derivative transactions according to defined policies for
the purpose of reducing risk. No interest rate sensitivity analysis is conducted, as interest rate payments have only a slight
impact on profits and losses on the Group’s performance.
(4) Fair value of financial instruments
Fair value calculation method
The fair value of financial assets and financial liabilities is calculated as described below.
1) Derivative financial assets and liabilities
Fair value of currency derivatives is based on forward quotations and prices quoted by financial institutions that enter into these
contracts. Fair value of interest rate derivatives is based on prices quoted by financial institutions that enter into these contracts.
2) Investment securities
Where market prices are available, fair value is based on market prices. For financial instruments whose market prices are not
available, fair value is measured by discounting future cash flows or using other appropriate valuation methods, taking into account
the individual nature, characteristics and risks of the assets.
3) Borrowings
As short-term loans payable are to be settled in a short period of time, their fair value is assumed to be equivalent to the
carrying amounts.
For long-term borrowings with fixed interest rates, fair value is calculated by discounting the total amount of principal and
interest using assumed interest rate of a new similar borrowing. As the fair value of long-term borrowings with variable interest rates
is revised for each repricing period the carrying amounts,their fair value is assumed to be equivalent to carrying amounts.
4) Bonds
Fair value is calculated on the basis of market value.
5) Financial instruments other than those indicated above
Financial instruments other than those indicated above are mainly settled in the short term, so fair value is assumed to be
equivalent to their carrying amounts.
The carrying amounts and fair values of principal financial instruments are as follows:
Millions of yen Thousands of U.S. dollars
2015 2014 2013 2015
Carrying
amounts Fair value Carrying
amounts Fair value Carrying
amounts Fair value Carrying
amounts Fair value
Long-term loans payable ········· ¥ 63,697 ¥ 63,317 ¥ 89,045 ¥ 87,926 ¥ 87,498 ¥ 87,440 $ 530,057 $ 526,895
Bonds ······································································ 70,000 70,887 70,000 71,040 70,000 71,309 582,508 589,889
Total ············································································ ¥133,697 ¥134,204 ¥159,045 ¥158,966 ¥157,498 ¥158,749 $1,112,566 $1,116,785
(Note) Long-term borrowings and bonds include balances redeemable within one year.
128
KONICA MINOLTA, INC. Annual Report 2015
Foundation for GrowthBusiness StrategiesGrowth StrategyCompany Overview and Characteristics Financial Report