Nintendo 2016 Annual Report Download - page 40

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- 38 -
Lease transactions
1. Finance lease transactions
Information of finance leases as of March 31, 2015 and 2016 were omitted as they are immaterial.
2. Operating lease transactions
Future lease payments under non-cancelable operating leases
Previous fiscal year
(As of March 31, 2015)
Current fiscal year
(As of March 31, 2016)
Due within one year ¥ 1,337 million ¥ 1,337 million U.S.$ 11 million
Due after one year 2,498 6,631 58
Total ¥ 3,836 ¥ 7,968 U.S.$ 70
Financial instruments
1. Condition of financial instruments
(1) Policy for measures relating to financial instruments
Nintendo (the Company and its consolidated subsidiaries) invests its funds in highly safe financial assets such
as deposits. Nintendo utilizes derivatives to reduce risk as described below and for the purpose of improving
the investment yield on short-term financial assets, and does not enter into transactions for speculative
purposes.
(2) Details of financial instruments, related risks, and risk management system
Notes and accounts receivable - trade are exposed to credit risk from customers. In order to reduce this risk,
Nintendo monitors the financial position and transaction history, assesses creditworthiness and sets a
transaction limit for each customer. Since bonds included in securities and investment securities are mainly
those that are held to maturity and issued by financial institutions that have high creditworthiness, the credit
risk is minimal. Such bonds are also subject to foreign currency exchange risk and market risk. Nintendo
closely monitors the market price of such bonds and the financial position of the issuer and reviews their
status on a regular basis. Stocks included in investment securities are mainly those of companies with which
the Company has business relationships. These stocks are exposed to market risk, but the balance held is
immaterial.
Notes and accounts payable - trade and income taxes payable are all due within one year.
Derivative transactions include foreign exchange forward contracts, non-deliverable forward contracts and
currency option contracts to reduce risk of exchange rate fluctuations arising from deposits and trade
receivables denominated in foreign currencies. These transactions are conducted by the Finance Department
of the Company and the departments in charge of financial matters of its consolidated subsidiaries after
securing approval from the president or the director in charge within limits such as the balance of foreign
currency deposits. The status of derivative transactions is reported to the director in charge and the Board of
Directors on a regular basis. Since counterparties of such transactions are limited to financial institutions that
have high creditworthiness, Nintendo judges that risk due to default is minimal.
(3) Supplementary explanation regarding fair values of financial instruments
The fair values of financial instruments include values based on market prices and reasonably measured
values when market prices are unavailable. As variable factors are incorporated into the measurement of such
values, the values may vary depending on the assumptions used. In addition, the contract amounts of the
derivative transactions described in “Derivative transactions” do not represent the market risk of derivative
transactions.