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OLYMPUS 2007 49
20. INFORMATION FOR CERTAIN LEASE TRANSACTIONS
LESSEE:
The Company and its consolidated subsidiaries lease certain machinery and equipment under the non-cancelable finance and operating
leases. Finance leases that do not transfer ownership to lessees are not capitalized and are accounted for in the same manner as operating
leases. Certain information for such non-capitalized finance leases for the years ended March 31, 2007 and 2006 was as follows:
Thousands of
Millions of yen U.S. dollars
(Equivalent amount) 2007 2006 2007
Acquisition cost ........................................................................................................ ¥10,592 ¥10,588 $ 88,267
Accumulated depreciation .......................................................................................... (5,391) (4,887) (44,925)
Estimated net book value ............................................................................................ ¥ 5,201 ¥ 5,701 $ 43,342
Thousands of
Millions of yen U.S. dollars
(Lease payments and pro forma information) 2007 2006 2007
Lease payments ........................................................................................................ ¥2,540 ¥2,488 21,167
Equivalent of depreciation expense .............................................................................. 2,377 2,305 19,808
Equivalent of interest expense ..................................................................................... 159 160 1,325
Equivalent of depreciation expense is computed using the straight-line method over the lease terms assuming no residual value. Equivalent
of interest expense is computed using the interest rate method over the lease terms for the difference between acquisition cost and total lease
payments.
Future minimum lease payments under the non-cancelable finance and operating leases having remaining terms in excess of one year as
of March 31, 2007 are as follows:
Thousands of
Millions of yen U.S. dollars
2007 .............................................................................................................................................. ¥1,938 $16,150
2008 and thereafter ........................................................................................................................... 3,284 27,367
Total minimum lease payments ............................................................................................................. ¥5,222 $43,517
LESSOR:
Certain machinery and equipment of its consolidated subsidiaries are leased under the finance leases. For the years ended March 31, 2007
and 2006, the amounts of machinery and equipment were summarized as follows:
Thousands of
Millions of yen U.S. dollars
2007 2006 2007
Lease income ........................................................................................................... ¥ — ¥412 $ —
Depreciation expense ................................................................................................ — 380 —
Estimated interest income ........................................................................................... ¥ — ¥ 28 $ —
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, its consolidated subsidiaries sold out all leased assets. As a result, certain accounts related to leased
object of lessor are not recorded at March 31, 2007 and 2006.
21. 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.