Nikon 2000 Annual Report Download - page 26

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24
10. DERIVATIVES
The Company and consolidated subsidiaries enter into derivative financial instruments (“derivatives”), including foreign exchange forward con-
tracts, currency option contracts and interest rate swap contracts to hedge foreign exchange risk and interest rate exposures.
The Company and consolidated subsidiaries do not hold or issue derivatives for trading purposes.
Derivatives are subject to market risk and credit risk. Market risk is the exposure created by potential fluctuations in market conditions,
including interest or foreign exchange rates. Credit risk is the possibility that a loss may result from a counterparty’s failure to perform accord-
ing to the terms and conditions of the contract.
Because the counterparties to those derivatives are limited to major international financial institutions, the Company and consolidated
subsidiaries do not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Company and consolidated subsidiaries have been made in accordance with internal policies
which regulate the authorization and credit limit amount.
Derivatives contracts outstanding at March 31, 2000 were as follows:
Thousands of
Millions of Yen U.S. Dollars
2000 2000
Contract or Net Contract or Net
Notional Unrealized Notional Unrealized
Amount Gain (Loss) Amount Gain (Loss)
Forward Exchange Contracts:
Selling U.S.$ ¥ 5,252 ¥ 70 $ 49,480 $ 662
Selling EUR 6,016 266 56,673 2,508
Buying YEN ¥15,733 ¥ 682 $148,214 $ 6,429
Buying EUR 3,691 (165) 34,767 (1,558)
Currency Option Contracts:
Selling Call U.S.$ ¥ 1,073 $ 10,111
Option premiums 24 ¥ 9 222 $ 81
Buying Put U.S.$ 1,035 9,750
Option premiums 24 (4) 222 (41)
Interest Rate Swaps:
(fixed rate receipt, floating rate payment) ¥40,000 ¥ 1,490 $376,825 $ 14,034
(fixed rate payment, floating rate receipt) 20,000 (460) 188,413 (4,333)
¥60,000 ¥ 1,030 $565,238 $ 9,701
Forward exchange contracted amounts which are assigned to associated assets or liabilities and are reflected on the balance sheet at year
end are not subject to the disclosure of market value information.
11. CONTINGENT LIABILITIES
Contingent liabilities at March 31, 2000 were as follows:
Thousands of
Millions of Yen U.S. Dollars
As the endorser of trade notes receivable discounted with banks ¥ 926 $ 8,725
As the guarantor of bank loans and indebtedness, principally of employees,
unconsolidated subsidiaries and associated companies 13,315 125,438
¥ 14,241 $134,163