JVC 2004 Annual Report Download - page 50

Victor Company of Japan, Limited48.
These derivative financial transactions are executed and
managed by the Company’s accounting department and are
authorized by the Director responsible for accounting matters
under the supervision by the Board of Directors.
The following summarizes hedging derivative financial instru-
ments used by the Companies and items hedged:
Hedging instruments: Hedged items:
Forward exchange contracts Foreign currency
and option contracts trade receivables and
trade payables,
future transaction
denominated in a
foreign currency
Interest rate swap contracts Interest on bonds
The Companies evaluate hedge effectiveness by comparing the
cumulative changes in cash flows from or the changes in fair value
of hedged items and the corresponding changes in the hedging
derivative instruments.
The following tables summarize fair value information as of
March 31, 2004 and 2003 of derivative transactions for which
hedge accounting has not been applied:
Millions of yen
Contract Fair Recognized
March 31, 2004 amount value gain (loss)
Swap contracts:
Receive floating/pay fixed ¥7,046 ¥(454) ¥(454)
Millions of yen
Contract Fair Recognized
March 31, 2003 amount value gain (loss)
Swap contracts:
Receive floating/pay fixed ¥8,013 ¥(530) ¥(530)
Thousands of U.S. dollars
Contract Fair Recognized
March 31, 2004 amount value gain (loss)
Swap contracts:
Receive floating/pay fixed $66,472 $(4,283) $(4,283)
The fair value of interest swap contracts is estimated based on
the quotes obtained from financial institutions.
13. LEASE INFORMATION
Lessee:
The Companies lease certain buildings, machinery and equipment
and other assets under non-capitalized finance and operating
leases. Finance leases which do not transfer ownership to lessees
are not capitalized and are accounted for in the same manner as
operating leases. Certain information for such non-capitalized
finance and operating leases is as follows.
(1) A summary of assumed amounts of acquisition cost, accumulated
depreciation and net book value at March 31, 2004 and 2003 are
as follows:
Millions of yen
Acquisition Accumulated Net book
cost depreciation value
2004:
Buildings and structures ¥ 1,860 ¥ 822 ¥1,038
Machinery and equipment 17,172 9,769 7,403
Others 418 248 170
¥19,450 ¥10,839 ¥8,611
Millions of yen
Acquisition Accumulated Net book
cost depreciation value
2003:
Buildings and structures ¥ 1,505 ¥ 687 ¥ 818
Machinery and equipment 18,237 8,903 9,334
Others 527 270 257
¥20,269 ¥9,860 ¥10,409
Thousands of U.S. dollars
Acquisition Accumulated Net book
cost depreciation value
2004:
Buildings and structures $ 17,547 $ 7,755 $ 9,792
Machinery and equipment 162,000 92,160 69,840
Others 3,944 2,340 1,604
$183,491 $102,255 $81,236
(2) Future minimum lease payments under the non-capitalized
finance and operating leases at March 31, 2004 and 2003 are
as follows:
Thousands of
Millions of yen U.S. dollars
Finance leases 2004 2003 2004
Due within one year ¥3,551 ¥ 3,768 $33,500
Due after one year 5,241 7,108 49,443
¥8,792 ¥10,876 $82,943
Thousands of
Millions of yen U.S. dollars
Operating leases 2004 2003 2004
Due within one year ¥1,314 ¥1,506 $12,396
Due after one year 1,844 2,654 17,396
¥3,158 ¥4,160 $29,792
(3) Lease payments, assumed depreciation charges and assumed
interest charges for the years ended March 31, 2004, 2003 and
2002 are as follows:
Thousands of
Millions of yen U.S. dollars
2004 2003 2002 2004
Lease payments ¥4,041 ¥3,727 ¥4,253 $38,123
Assumed
depreciation
charges 3,660 3,367 3,780 34,528
Assumed interest
charges 334 290 466 3,151
(4) Assumed depreciation charges are computed using the
straight-line method over lease terms assuming no residual value.
(5) The excess amount of total lease payments over acquisition cost
of leased property is deemed as accumulated interest expenses and
allocated for each period on the basis of the interest method.