Oki 2009 Annual Report Download - page 44

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42 Annual Report 2009
18.
DERIVATIVES AND HEDGING ACTIVITIES
The Company and its subsidiaries primarily utilize comprehensive forward foreign exchange and currency swap contracts to hedge their exposure to
foreign exchange fluctuation relating to their receivables and payables. The Company and its subsidiaries also utilize interest-rate swaps to manage
the risks arising from interest-rate fluctuation and to equalize their financial costs for each fiscal year with regard to short-term and long-term debt
at variable interest rates.
As a matter of policy, the Company and its subsidiaries do not speculate in derivatives which are subject to significant market value fluctuation.
The Company and its subsidiaries do not anticipate any credit risk resulting from nonperformance by any of the counterparties to the derivative
transactions because all are financial institutions with high credit ratings. The Company and its subsidiaries have established internal rules for enter-
ing into and monitoring derivative transactions which prescribe the managers’ duties and the management of these positions as well as a reporting
system. Derivatives are controlled on a daily basis by the Financial Section, which has established an internal control system to supervise the proce-
dures and transaction limits, and are confirmed with the respective financial institutions by the Accounting Section.
19.
LEASES
Lease payments relating to finance leases started before March 31, 2008, accounted for as operating leases in the accompanying consolidated
financial statements amounted to ¥4,019 million ($41,010 thousand), ¥6,303 million and ¥5,137 million for the years ended March 31, 2009, 2008
and 2007, respectively.
The leases which were started on or before March 31, 2008 are principally accounted for as operating leases.
Leased assets held under finance leases accounted for as operating leases at March 31, 2009 and 2008 were as follows:
Millions of yen
Thousands of
U.S. dollars
2009 2008 2009
Machinery and equipment ¥6,039 ¥24,439 $61,622
Other 1,861 4,305 18,989
Less: Accumulated depreciation 4,280 10,701 43,673
¥3,620 ¥18,043 $36,938
Depreciation is computed by applying the straight-line method over the estimated useful lives of the related assets assuming that the Company
guarantees a nil residual value at the end of the term of each lease.
The following is a schedule of future minimum lease payments under finance leases accounted for as operating leases:
Year ending March 31, Millions of yen
Thousands of
U.S. dollars
2010 ¥1,449 $14,785
2011 and thereafter 2,349 23,969
¥3,798 $38,755
Minimum rental payments subsequent to March 31, 2009 required under operating leases with noncancelable lease terms in excess of one year are
summarized as follows:
Year ending March 31, Millions of yen
Thousands of
U.S. dollars
2010 ¥ 1,156 $ 11,795
2011 and thereafter 9,057 92,418
¥10,214 $104,224
20.
CONTINGENT LIABILITIES
At March 31, 2009, the Company and its consolidated subsidiaries had the following contingent liabilities:
Millions of yen
Thousands of
U.S. dollars
As guarantors of employees’ housing loans ¥1,197 $12,214