Olympus 2008 Annual Report Download - page 57

OLYMPUS 2008 55
Thousands of
Millions of yen U.S. dollars
(Lease payments and pro forma information) 2008 2007 2008
Lease payments ........................................................................................................... ¥2,612 ¥2,540 $24,876
Equivalent of depreciation expense .............................................................................. 2,434 2,377 23,181
Equivalent of interest expense ..................................................................................... 194 159 1,848
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, 2008 were as follows:
Thousands of
Millions of yen U.S. dollars
2008 ...................................................................................................................................................... ¥2,269 $21,610
2009 and thereafter ................................................................................................................................. 3,950 37,619
Total minimum lease payments ............................................................................................................... ¥6,219 $59,229
22. DERIVATIVE FINANCIAL INSTRUMENTS
The Company and its consolidated subsidiaries use derivative financial instruments in the normal course of their business to manage
the exposure 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, currency swaps and interest rate swaps. Almost all
derivative transactions are used to hedge interest rates and foreign currency positions in connection with their business. Accordingly, mar-
ket risk in these derivatives is largely offset by opposite movements in the underlying positions. Management assesses derivative transac-
tions 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 counterparties to the derivative financial instruments of the Company and its consolidated subsidiaries are substantial and cred-
itworthy 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 counterparty 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.
The following table summarizes the underlying notional transaction amounts, book values and fair values for outstanding derivative
financial instruments by risk category and instrument type as of March 31, 2008 and 2007:
(As of March 31, 2008) Millions of yen Thousands of U.S. dollars
Notional amount Book value Fair value Notional amount Book value Fair value
Foreign exchange forward contracts
To buy U.S. dollars .................................... ¥ 271 ¥ — ¥ 273 $ 2,581 $ — $ 2,600
To buy other currencies ............................ 2,265 — 2,316 21,571 — 22,057
To sell U.S. dollars .................................... 27,503 — 27,503 261,933 — 261,933
To sell British pounds ............................... 3,524 — 3,205 33,562 — 30,524
To sell other currencies ............................ 1,461 — 1,452 13,914 — 13,829
Foreign exchange option contracts
Put option ................................................. 6,274 131 475 59,752 1,248 4,524
Interest rate swap contracts ........................ 250 — (12) 2,381 — (114)
(As of March 31, 2007) Millions of yen
Notional amount Book value Fair value
Foreign exchange forward contracts
To buy U.S. dollars ............................................................................................................... ¥ 206 ¥ — ¥ 206
To buy other currencies ....................................................................................................... 1,835 — 1,823
To sell U.S. dollars ............................................................................................................... 5,456 — 5,369
To sell British pounds .......................................................................................................... 4,235 — 4,175
To sell other currencies ....................................................................................................... 4,507 — 4,460
Foreign exchange option contracts
Put option ............................................................................................................................. 3,970 72 98
Interest rate swap contracts .................................................................................................. 250 — (23)