Oki 2013 Annual Report Download - page 40

38 Annual Report 2013
7. FINANCIAL INSTRUMENTS
(a) Summary of fi nancial instruments
The Group mainly uses short-term deposits and highly safe marketable securities for fund management, and raises its funds primarily through bor-
rowings from fi nancial institutions and issuance of corporate bonds.
The Group strives to mitigate credit risks associated with notes and accounts receivable from customers, which are operating receivables, by
carrying out customer credit investigations in accordance with regulations for the management of accounts receivable of individual companies.
For borrowings, the Group raises short-term funds mainly for working capital and long-term funds for working capital and capital investment. For
borrowings exposed to the interest rate risk, the Group applies derivative instruments (interest rate swap transactions) to hedge its risk.
The Group executes and manages derivative transactions in accordance with Oki Group’s policy.
(b) Disclosure about fair value of fi nancial instruments
The fair values of fi nancial instruments at March 31, 2013 and 2012 were summarized as follows:
*1 Cash and deposits are included in “Cash and cash equivalents” and “Time deposits” in the consolidated balance sheets.
*2 It comprises the allowance for doubtful receivables in respect to Notes and accounts receivable.
*3 Securities and investments in securities are included in “Cash and cash equivalents,” “Securities,” “Investments in and advances to
unconsolidated subsidiaries and affi liates” or “Other investments in securities” in the consolidated balance sheets.
*4 Long-term debt that will be reimbursed within one year is classifi ed as “Current portion of long-term debt” in the consolidated balance sheets.
*5 Long-term account payable-other is included in “Other long-term liabilities” in the consolidated balance sheets.
*6 The amount of the receivables and payables derived from derivative transactions is presented on a net basis and the amounts in parenthe-
ses are liabilities as the result of netting.
Notes:
1. Fair value measurements of fi nancial instruments and investment in securities and derivative transaction
Assets
(1) Cash and deposits, and (2) Notes and accounts receivable
These fair values are presented at amount recorded in balance sheets, since they are settled in a short period of time and their fair value
reasonably approximates the amount recorded in the balance sheets.
(3) Securities and investments in securities
The fair value of securities is based on the market price on the stock exchange. The fair value of bond is based on the quotes presented
by the fi nancial institutions.
Liabilities
(1) Notes and accounts payable, (2) Short-term borrowings, and (3) Other accrued expenses
These fair values are presented at amount recorded in balance sheets, since they are settled in a short period of time and their fair value
reasonably approximates the amount recorded in the balance sheets.
(4) Long-term debt
The fair value is based primarily on the method of calculation whereby the sum of principal and interest amounts is discounted by an assumed
interest rate to be applied for newly borrowed long-term loans. Some long-term borrowings with fl oating interest rates and related interest
rate swaps are accounted for using special accounting treatment applicable to interest rate swaps. Hence, the fair value of a long-term bor-
rowing is based on the method of calculation whereby the sum of principal and interest, treated in combination with the said interest rate
swap, is discounted by a reasonably estimable interest rate to be applied for newly borrowed long-term loans under similar borrowing terms.
(5) Long-term accounts payable-other
Fair values of long-term accounts payable are calculated by dividing into a specifi c period of time to discount at a reasonable rate.
Derivative transactions
Described in Note15.
Millions of yen Thousands of U.S. dollars
2013 2012 2013
Amount
recorded
in balance
sheet
Fair
value Difference
Amount
recorded
in balance
sheet
Fair
value Difference
Amount
recorded
in balance
sheet
Fair
value Difference
(1) Cash and deposits (*1)
¥ 29,904 ¥ 29,904 ¥ — ¥ 45,193 ¥ 45,193 ¥ — $ 321,548 $ 321,548 $ —
(2) Notes and accounts receivable 123,886 112,137 1,332,107
Allowance for doubtful receivables (*2) (7,040) (10,763) (75,698)
116,846 116,846 — 101,373 101,373 — 1,256,408 1,256,408 —
(3) Securities and investments in securities (*3) 26,271 25,017 (1,254) 52,738 51,825 (913) 282,483 269,000 (13,483)
Total assets 173,021 171,767 (1,254) 199,306 198,392 (913) 1,860,440 1,846,956 (13,483)
(1) Notes and accounts payable 63,416 63,416 — 66,307 66,307 — 681,892 681,892 —
(2) Short-term borrowings 56,371 56,371 — 53,837 53,837 — 606,139 606,139 —
(3) Other accrued expenses 31,666 31,666 — 29,758 29,758 — 340,494 340,494 —
(4) Long-term debt (*4) 64,153 64,147 (5) 82,641 82,940 299 689,817 689,752 (53)
(5) Long-term accounts payable-other (*5) 21,864 21,764 (99) 26,863 26,455 (407) 235,096 234,021 (1,064)
Total liabilities 237,471 237,366 (104) 259,408 259,300 (108) 2,553,451 2,552,322 (1,118)
Derivative transactions (*6) ¥ (1,604) ¥ (1,604) ¥ — ¥ (1,101) ¥ (1,101) ¥ — $ (17,247) $ (17,247) $ —
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS