Olympus 2015 Annual Report Download - page 55

Derivatives for which the hedge accounting is applied
As of March 31, 2014 Millions of yen
Notional amount Fair value
Forward foreign exchange contracts, accounted for by special hedge accounting:
To buy U.S. dollars ................................................................................................ ¥11,243 *
To buy other currencies ......................................................................................... 6 *
To sell U.S. dollars ................................................................................................. 39,765 *
To sell other currencies.......................................................................................... 16,480 *
Interest rate swap contracts, accounted for
by special hedge accounting shortcut method:
Receive floating / pay fixed .................................................................................... 284,900 **
As of March 31, 2015 Millions of yen Thousands of U.S. dollars
Notional amount Fair value Notional amount Fair value
Forward foreign exchange contracts, accounted for by special hedge accounting:
To buy U.S. dollars ................................................................................................ ¥ 6,599 * $ 54,992 *
To buy other currencies ......................................................................................... 296 * 2,467 *
To sell U.S. dollars ................................................................................................. 49,588 * 413,233 *
To sell other currencies.......................................................................................... 26,128 * 217,733 *
Interest rate swap contracts, accounted for
by special hedge accounting shortcut method:
Receive floating / pay fixed ...................................................................................... 208,000 ** 1,733,333 **
The fair value of forward foreign exchange contracts is estimated based on market prices for contracts with similar terms.
The fair value of interest rate swap contracts is estimated by obtaining quotes from financial institutions.
* Forward foreign exchange contracts are accounted for as part of accounts receivable and accounts payable. Therefore, the fair value of the contracts is included in the fair value of
underlying accounts receivable and accounts payable.
** Interest rate swap contracts are accounted for as part of long-term debt. Therefore, the fair value of the contracts is included in the fair value of underlying long-term debt.
30. Segment Information
(1) Overview of reportable segments
The reportable segments of the Olympus Group are components of the Company whose separate financial information is available.
Thesesegments are periodically evaluated by the Board of Directors in deciding how to allocate management resources and in
assessingperformance.
The Olympus Group has established business divisions at the Company, Olympus Medical Systems Corp. and Olympus Imaging Corp.
Each business division formulates comprehensive strategies for Japan and abroad with respect to products and services handled and
deploys business activities.
Accordingly, being composed of segments, based on these business divisions, that are categorized according to products and ser-
vices,the Olympus Group has the following four reportable segments: Medical Business, Scientific Solutions Business, Imaging Business
and Others.
The Medical Business manufactures and sells medical endoscopes, surgical endoscopes, endotherapy devices and other products. The
Scientific Solutions Business manufactures and sells biological microscopes, industrial microscopes, industrial endoscopes, non-destructive
testing equipment and other products. The Imaging Business manufactures and sells digital cameras, voice recorders and other products.
The Others Business manufactures and sells biomedical materials, conducts system development and other business activities.
Effective from the year ended March 31, 2015, the name of the reportable segment previously known as the Life Science and Industrial
Business has been changed to the Scientific Solutions Business. This change has no impact on segment information.
(2) Method of calculating amounts of net sales, profit (loss), assets and other items
The accounting policies of the segments are basically the same as those described in the significant accounting policies in Note 1 “Summary
of significant accounting policies.” Segment profit or loss corresponds to operating income on the consolidated statements of operations.
The internal sales or transfer among segments are based on actual market prices.
29. Derivative Financial Instruments
The Company and its consolidated subsidiaries use 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 derivatives used by the Company and its con-
solidated subsidiaries are forward foreign exchange contracts, currency options, currency swaps and interest rate swaps. Almost all deriva-
tive 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
financial instruments are executed by finance departments of the Company or its subsidiaries.
The Company’s and its consolidated subsidiaries’ trade payables that are denominated in foreign currencies which meet specific
matching criteria and have been hedged by forward foreign exchange contracts are translated at the foreign exchange rate stipulated
inthecontracts (special hedge accounting for forward foreign exchange contracts).
Interest rate swaps that qualify for hedge accounting and meet specific 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 shortcut method for interest rate swaps).
The counterparties to the derivative financial instruments of the Company and its consolidated subsidiaries are substantial and credit
worthy multinational commercial banks or other financial 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 (loss) for outstanding
derivative financial instruments by risk category and instrument type as of March 31, 2014 and 2015:
Derivatives for which the hedge accounting is not applied
Millions of yen
As of March 31, 2014 Notional amount Fair value
Unrealized
gain (loss)
Forward foreign exchange contracts:
To buy U.S. dollars .................................. ¥ 396 ¥ 9 ¥ 9
To buy other currencies ........................... 20,193 (269) (269)
To sell U.S. dollars ................................... 3,312 (31) (31)
To sell other currencies ............................ 3,129 6 6
Foreign exchange option contracts:
Put option ............................................... 3,584 154 154
Foreign currency swap contracts:
Receive British pounds / pay Euro ........... 1,418 0 0
Receive other currencies /
pay other currencies .............................. 7,295 16 16
Millions of yen Thousands of U.S. dollars
As of March 31, 2015 Notional amount Fair value
Unrealized
gain (loss) Notional amount Fair value
Unrealized
gain (loss)
Forward foreign exchange contracts:
To buy U.S. dollars .................................. ¥3,098 ¥ 124 ¥ 124 $25,817 $ 1,033 $ 1,033
To buy other currencies ........................... 6,872 (23) (23) 57,267 (192) (192)
To sell U.S. dollars ................................... 8,548 (1,349) (1,349) 71,233 (11,242) (11,242)
To sell other currencies ............................ 9,056 (225) (225) 75,467 (1,875) (1,875)
Foreign exchange option contracts:
Put option ............................................... 7,630 208 208 63,583 1,733 1,733
Foreign currency swap contracts:
Receive British pounds / pay Euro ........... — — — — — —
Receive other currencies /
pay other currencies .............................. 5,491 11 11 45,758 92 92
The fair values of foreign exchange option contracts and currency swap contracts are estimated by obtaining quotes from financial insti-
tutions. The fair value of forward foreign exchange contracts is estimated based on market prices for contracts with similar terms.
Notes to the Consolidated Financial Statements
107
OLYMPUS Annual Report 2015
106 OLYMPUS Annual Report 2015