Oki 2011 Annual Report Download - page 36

34 Annual Report 2011
7. FINANCIAL INSTRUMENTS
(a) Summary of financial instruments
The Group mainly uses short-term deposits and highly safe marketable securities for fund management, and raises its funds primarily
through borrowings from financial institutions and issuance of corporate bonds.
The Group strives to mitigate credit risks associated with notes and accounts receivable from customers, which are operating receiv-
ables, by carrying out customer credit investigations in accordance with regulations for the management of accounts receivable of
individual companies.
For borrowings, the Group raises short-term funds mainly for working capital and long-term funds mainly for capital investment. For
borrowings exposed to the interest rate risk, the Group applies derivative instruments (interest rate swap transactions) to hedge its risk.
The Group executes and manages derivative transactions in accordance with Oki Group’s policy.
(b) Disclosure about fair value of financial instruments
The fair values of financial instruments at March 31, 2011 and 2010 are summarized as follows:
(1) Cash and deposits (*1)
(2) Notes and accounts receivable
(3) Securities and investments
in securities (*2)
Total assets
(1) Notes and accounts payable
(2) Short-term borrowings
(3) Other accrued expenses
(4) Long-term debt (*3)
(5) Long-term accounts payable (*4)
Total liabilities
Derivative transactions (*5)
Amount
recorded in
balance
sheet
Fair
value Difference
Amount
recorded in
balance
sheet
Fair
value Difference
Amount
recorded in
balance sheet Fair
value Difference
2011 2010 2011
Millions of yen Thousands of U.S. dollars
¥ 45,959
113,729
51,140
210,829
53,923
73,938
26,214
78,112
32,478
264,668
¥ (1,428)
¥ 45,959
113,729
50,353
210,042
53,923
73,938
26,214
78,198
31,562
263,838
¥ (1,428)
¥—
—
(786)
(786)
—
—
—
86
(916)
(830)
¥—
¥ 57,844
118,324
42,348
218,517
54,930
66,122
23,213
106,344
1,016
251,627
¥ (864)
¥ 57,844
118,324
40,879
217,048
54,930
66,122
23,213
106,617
1,016
251,900
¥ (864)
¥—
—
(1,469)
(1,469)
—
—
—
273
—
273
¥—
$ 553,722
1,370,228
616,144
2,540,108
649,674
890,819
315,831
941,108
391,301
3,188,771
$ (17,204)
$ 553,722
1,370,228
606,662
2,530,626
649,674
890,819
315,831
942,144
380,265
3,178,771
$ (17,204)
$—
—
(9,469)
(9,469)
—
—
—
1,036
(11,036)
(10,000)
$—
*1 Cash and deposits are included in “Cash and cash equivalents” and “Time deposits” in the consolidated balance sheets.
*2 Securities and investments in securities are included in “Cash and cash equivalents”, “Securities”, “Investments in and advances to
unconsolidated subsidiaries and affiliates” or “Other investments in securities” in the consolidated balance sheets.
*3 Long-term debt that will be reimbursed within one year is classified as “Current portion of long-term debt” in the consolidated balance sheets.
*4 Long-term account payable is included in “Other long-term liabilities” in the consolidated balance sheets.
*5 The amount of the receivables and payables derived from derivative transactions is presented on a net basis and the amounts in
parentheses are liabilities as the result of netting.
Notes:
1. Fair value measurements of financial instruments and investment in securities and derivative transaction
Assets
(1) Cash and deposits, and (2) Notes and accounts receivable
These fair value are presented at amount recorded in balance sheets, since they are settled in a short period of time and their fair
value reasonably approximates the amount recorded in the balance sheets.
(3) Securities and investments in securities
The fair value of securities is based on the market price on the stock exchange. The fair value of bond is based on the quotes pre-
sented by the financial institutions.
Liabilities
(1) Notes and accounts payable, (2) Short-term borrowings, and (3) Other accrued expenses
These fair values are presented at amount recorded in balance sheets, since they are settled in a short period of time and their fair
value reasonably approximates the amount recorded in the balance sheets.
(4) Long-term debt
The fair value is based primarily on the method of calculation whereby the sum of principal and interest amounts is discounted by an
assumed interest rate to be applied for newly borrowed long-term loans. Some long-term borrowings with floating interest rates and
related interest rate swaps are accounted for using special accounting treatment applicable to interest rate swaps. Hence, the fair
value of a long-term borrowing is based on the method of calculation whereby the sum of principal and interest, treated in combina-
tion with the said interest rate swap, is discounted by a reasonably estimable interest rate to be applied for newly borrowed long-term
loans under similar borrowing terms.
(5) Long-term accounts payable
Fair values of long-term accounts payable are calculated by dividing into a specific period of time to discount at a reasonable rate.
Derivative transactions
Described in Note 22.