Olympus 2013 Annual Report Download - page 50

96 OLYMPUS Annual Report 2013 97OLYMPUS Annual Report 2013
Interest rate swaps that qualify for hedge accounting and meet specifi c matching criteria are not remeasured at market value, but
thedifferential to be paid or received under the swap agreements are accrued and included in interest expense or income (special hedge
accounting short-cut method for interest rate swaps).
The counterparties to the derivative fi nancial instruments of the Company and its consolidated subsidiaries are substantial and credit-
worthy multi-national commercial banks or other fi nancial institutions that are recognized market makers. Neither the risks of counterparty
non-performance nor the economic consequences of counterparty non-performance associated with these contracts are considered by the
Company to be material.
The following table summarizes the underlying notional transaction amounts, fair values and unrealized gain or (loss) for outstanding
derivative fi nancial instruments by risk category and instrument type as of March 31, 2012 and 2013:
Derivatives for which the hedge accounting is not applied
As of March 31, 2012 Millions of yen
Notional amount Fair value
Unrealized
gain or (loss)
Foreign exchange forward contracts:
To buy U.S. dollars ................................. ¥ 82 ¥ 0 ¥ 0
To buy other currencies .......................... 21,098 (494) (494)
To sell U.S. dollars .................................. 1,041 18 18
To sell other currencies ........................... 3,191 (111) (111)
Foreign exchange option contracts:
Put option .............................................. 3,800 84 84
Foreign currency swap contracts:
Receive British pounds / pay Euro ........... 5,405 5 5
Receive other currencies /
pay other currencies ............................. 5,466 17 17
Millions of yen Thousands of U.S. dollars
As of March 31, 2013 Notional amount Fair value
Unrealized
gain or (loss) Notional amount Fair value
Unrealized
gain or (loss)
Foreign exchange forward contracts:
To buy U.S. dollars ................................. ¥ 115 ¥ 1 ¥ 1 $ 1,223 $ 11 $ 11
To buy other currencies .......................... 17,061 (183) (183) 181,500 (1,947) (1,947)
To sell U.S. dollars .................................. 1,354 (26) (26) 14,404 (277) (277)
To sell other currencies ........................... 4,391 (74) (74) 46,713 (787) (787)
Foreign exchange option contracts:
Put option .............................................. 3,967 80 80 42,202 851 851
Foreign currency swap contracts:
Receive British pounds / pay Euro .......... 2,081 (8) (8) 22,138 (85) (85)
Receive other currencies /
pay other currencies ............................. 5,888 7 7 62,638 74 74
The fair values of foreign exchange option contracts and currency swap contracts are estimated by obtaining quotes from fi nancial institutions. The fair value of foreign exchange forward
contracts is estimated based on market prices for contracts with similar terms.
Operating Lease Transactions (Lessor):
Future minimum lease payments under the non-cancelable operating leases having remaining terms in excess of one year were as follows:
As of March 31, 2012 Millions of yen
Due within
one year
Due after
one year
Total minimum
lease payments
¥2,173 ¥2,635 ¥4,808
As of March 31, 2013 Millions of yen Thousands of U.S. dollars
Due within
one year
Due after
one year
Total minimum
lease payments
Due within
one year
Due after
one year
Total minimum
lease payments
¥2,685 ¥3,029 ¥5,714 $28,564 $32,223 $60,787
33. Other Comprehensive Income
The following table presents reclassifi cation adjustments and corresponding tax effects allocated to each component of other comprehen-
sive income for the years ended March 31, 2012 and 2013:
Millions of yen
Thousands of
U.S. dollars
2012 2013 2013
Net unrealized holding gains (losses) on available-for-sale securities, net of taxes:
Amount arising during the year ...................................................................................................... ¥ (2,676) ¥ 4,636 $ 49,319
Reclassifi cation adjustments for gains and losses included in net income ...................................... (2,183) (368) (3,915)
Amount before tax effect ............................................................................................................... (4,859) 4,268 45,404
Tax effect ....................................................................................................................................... 1,463 (1,103) (11,734)
Net unrealized holding gains (losses) on available-for-sale securities, net of taxes .................................. (3,396) 3,165 33,670
Net unrealized gains (losses) on hedging derivatives, net of taxes:
Amount arising during the year ...................................................................................................... 1,268 (18) (191)
Reclassifi cation adjustments for gains and losses included in net income ...................................... (1,692) 1,494 15,893
Amount before tax effect ............................................................................................................... (424) 1,476 15,702
Tax effect ....................................................................................................................................... (86) (188) (2,000)
Net unrealized gains (losses) on hedging derivatives, net of taxes ......................................................... (510) 1,288 13,702
Foreign currency translation adjustments:
Amount arising during the year ...................................................................................................... (6,858) 43,516 462,936
Reclassifi cation adjustments for gains and losses included in net income ...................................... — 629 6,692
Foreign currency translation adjustments .............................................................................................. (6,858) 44,145 469,628
Pension liabilities adjustment of foreign subsidiaries:
Amount arising during the year ...................................................................................................... (5,557) (4,173) (44,394)
Reclassifi cation adjustments for gains and losses included in net income ...................................... 313 782 8,319
Amount before tax effect ............................................................................................................... (5,244) (3,391) (36,075)
Tax effect ....................................................................................................................................... 1,797 1,435 15,266
Pension liabilities adjustment of foreign subsidiaries .............................................................................. (3,447) (1,956) (20,809)
Share of other comprehensive income of companies accounted for by the equity method:
Amount arising during the year ...................................................................................................... (2) 5 53
Share of other comprehensive income of companies accounted for by the equity method .................... (2) 5 53
Total other comprehensive income ........................................................................................................ ¥(14,213) ¥46,647 $496,244
34. Derivative Financial Instruments
The Company and its consolidated subsidiaries use derivative fi nancial instruments in the normal course of their business to manage the ex-
posure to fl uctuations in foreign exchange rates and interest rates. The primary classes of derivatives used by the Company and its consoli-
dated subsidiaries are foreign exchange forward contracts, currency options, currency swaps 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 derivative transactions. Contracts of derivative
fi nancial instruments are executed by fi nance departments of the Company or its subsidiaries.
The Company’s and its consolidated subsidiaries’ trade payables that are denominated in foreign currencies which meet specifi c
matching criteria and have been hedged by foreign exchange forward contracts are translated at the foreign exchange rate stipulated in
thecontracts (special hedge accounting for foreign exchange forward contracts).