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46 OLYMPUS 2006
Future minimum lease payments under the non-cancelable finance and operating leases having remaining terms in excess of one year as
of March 31, 2006 are as follows:
Thousands of
Millions of yen U.S. dollars
2006 ................................................................................................................................................ ¥2,116 $18,400
2007 and thereafter ............................................................................................................................. 3,622 31,496
Total minimum lease payments ................................................................................................................ ¥5,738 $49,896
LESSOR:
Certain machinery and equipment of the consolidated subsidiaries are leased under the finance leases. For the years ended March 31, 2006
and 2005, the amounts of machinery and equipment were summarized as follows:
Thousands of
Millions of yen U.S. dollars
2006 2005 2006
Acquisition cost .......................................................................................................... ¥ — ¥ 6,251 $ —
Accumulated depreciation............................................................................................. —(3,385) —
Net book value ........................................................................................................... ¥ — ¥ 2,866 $ —
Thousands of
Millions of yen U.S. dollars
2006 2005 2006
Lease income.............................................................................................................. ¥412 ¥1,649 $3,583
Depreciation expense................................................................................................... 380 1,516 3,304
Estimated interest income.............................................................................................. 28 108 243
Estimated interest income is computed using the interest rate method over the lease terms for the difference between acquisition cost and
total lease receipts.
In the year ended March 31, 2006, the consolidated subsidiaries sold out all leased assets. As a result, certain accounts related to
leased object of lessor are not recorded at March 31, 2006.
19. 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 Company and its consolidated
subsidiaries are foreign exchange forward contracts, 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
transactions 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 creditwor-
thy multi-national commercial 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 associated with these contracts are considered by the
Company to be material.
Part of its consolidated subsidiaries also use stock-price swap contracts for speculation purposes within a limited amount. Stock-price
swap contracts are exposed to stock-price fluctuation risk.
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