Olympus 2002 Annual Report Download - page 40

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Estimated interest income is computed using interest rate method over the lease terms for the difference between acquisition cost
and total lease receipts.
Future minimum lease receipts under these finance lease arrangements as of March 31, 2002 are as follows:
Thousands of
Millions of yen U.S. dollars
2003 .................................................................................................................................................................. ¥1,377 $11,016
2004 and thereafter............................................................................................................................................. 2,497 19,976
Total future minimum lease receipts.................................................................................................................. ¥3,874 $30,992
15. DERIVATIVE FINANCIAL INSTRUMENTS
The Company and its consolidated subsidiaries uses derivative financial instruments in the normal course of their business to
manage the exposure to fluctuations in foreign exchange rates and interest rates. The primary classes of derivative used by the
Company and its consolidated subsidiaries are foreign exchange forward contracts, currency options, and interest rate swaps.
Almost all-derivative transactions are used to hedge interest rates and foreign currency positions in connection with their business.
Accordingly, market risk in these derivatives is largely offset by opposite movements in the underlying positions. Management
assesses derivative transactions and market risks surrounding these transactions according to the Company’s policy regarding deriva-
tive transactions. Contracts of derivative financial instruments are executed by finance department of the Company or foreign
subsidiaries in accordance with the internal rules approved by the Company’s board of directors or with the approval and under
the directions of a responsible director of foreign subsidiaries.
The counter-parties to the derivative financial instruments of the Company and its consolidated subsidiaries are substantial
and creditworthy multi-international commercial banks or other financial institutions that are recognized market makers. Neither
the risks of counter-party non-performance nor the economic consequences of counter-party non-performance associated with
these contacts are considered by the Company to be material.
The following table summarized the underlying notional transaction amounts, book values and fair values for outstanding
derivative financial instruments by risk category and instrument type as of March 31, 2002 and 2001:
(As of March 31, 2002) Millions of yen Thousands of U.S. dollars
Notional Amount Book Value Fair Value Notional Amount Book Value Fair Value
Foreign exchange forward contracts:
To buy U.S. dollars .................................. ¥ 58 ¥— ¥ 58 $ 464 $— $ 464
To buy British pounds ............................. 577 — 583 4,616 — 4,664
(As of March 31, 2001) Millions of yen
Notional Amount Book Value Fair Value
Foreign exchange forward contracts:
To buy U.S. dollars .............................................................................................................. ¥ 388 ¥ — ¥ 393
To buy Euro.......................................................................................................................... 3,994 — 3,912
To buy other currency.......................................................................................................... 6—6
Currency option agreements:
To pay other currency .......................................................................................................... 538 — 542
The forward contracts on the foreign currency receivable and payables translated into Japanese yen at the forward exchange rate in
the accompanying consolidated financial statements are not included in the above amounts.
The fair value of currency option agreements are estimated by obtaining quotes from financial institutions. The fair value of
foreign exchange forward contracts are estimated based on market prices for contracts with similar terms.
16. SUBSEQUENT EVENT
At the general meeting held on June 27, 2002, the shareholders approved a cash dividend totaling ¥1,718 million ($13,744
thousand) or ¥6.50 ($0.05) per share and payment of bonuses to directors totaling ¥45 million ($360 thousand). In accordance
with the Code, the declaration of this dividend and the payment of these bonuses have not been reflected in the accompanying
consolidated financial statements as of March 31, 2002.