Olympus 2005 Annual Report Download - page 46

44 O LYMPUS 2 00 5
Future minimum lease payments under the non-cancelable finance and operating leases having remaining terms in excess of one year as
of March 31, 2005 are as follows:
Thousands of
Millions of yen U.S. dollars
2005 ................................................................................................................................................ ¥1,933 $ 17,573
2006 and thereafter............................................................................................................................. 2,908 26,436
Total minimum lease payments................................................................................................................ ¥4,841 $ 44,00 9
LESSO R:
Certain machinery and equipment of the Company and its consolidated subsidiaries are leased under the finance leases. For the years ended
March 31, 2005 and 2004, the amounts of machinery and equipment were summarized as follows:
Thousands of
Millions of yen U.S. dollars
2005 2004 2005
Acquisition cost .......................................................................................................... ¥ 6,2 51 ¥ 6,6 66 $ 56 ,827
Accumulated depreciation............................................................................................. (3,385) (3 ,578 ) (30,7 72)
Net book value ........................................................................................................... ¥ 2,86 6 ¥ 3,08 8 $ 26,055
Thousands of
Millions of yen U.S. dollars
2005 2004 2005
Lease income.............................................................................................................. ¥1,64 9 ¥1,776 $14,991
Depreciation expense................................................................................................... 1,516 1,606 13,782
Estimated interest income.............................................................................................. 108 140 982
Estimated interest income is computed using the interest rate method over the lease terms for the difference between acquisitio n cost and
to tal lease receipts.
Future minimum lease receipts under these finance lease arrangements as of March 31, 2005 are as follows:
Thousands of
Millions of yen U.S. dollars
2005 ................................................................................................................................................. ¥1,193 $1 0,845
2006 and thereafter .............................................................................................................................. 1,767 16,064
Total minimum lease payments ................................................................................................................. ¥2,960 $ 26,909
17. DERIVATIVE FINANCIAL INSTRUMENTS
The Company and its consolidated subsidiaries use derivative financial instruments in the normal course of their business to manage the expo-
sure to fluctuations in foreign exchange rates and interest rates. The primary classes of derivatives used by the Co mpany and its co nsolidated
subsidiaries are foreign exchange forward co ntracts, currency options, and interest rate swaps. Almost all derivative 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
transactio ns according to the Company’s policy regarding derivative transactions. Contracts of derivative financial instruments are executed
by finance departments of the Company or subsidiaries.
The counter-parties to the derivative financial instruments of the Company and its consolidated subsidiaries are substantial and creditwo r-
thy multi-national co mmercial banks or other financial institutions that are recognized market makers. Neither the risks of counter-party non-
performance nor the economic consequences of counter-party non-performance asso ciated with these contracts are considered by the
Company to be material.
Part of its consolidated subsidiaries also use sto ck-price swap co ntracts for speculation purposes within a limited amount. Stock-price
swap co ntracts are exposed to stock-price fluctuation risk.
The following table summarizes the underlying notional transaction amounts, book values and fair values fo r o utstanding derivative finan-
cial instruments by risk category and instrument type as of March 31, 2005 and 2004: