Olympus 2010 Annual Report Download - page 45

OLYMPUS 2010 43
currency on a monthly basis and enters into forward foreign exchange contracts to hedge such risk. In order to mitigate the interest rate risk
for loans payable and bonds bearing interest at variable rates, the Group may also enter into interest rate swap transactions.
For marketable securities and investment securities, the Group periodically reviews the fair values of such financial instruments and the
financial position of the issuers. In addition, the Group continuously evaluates whether securities other than those classified as held-to-
maturity should be maintained taking into account their fair values and relationships with the issuers.
In conducting derivative transactions, the division in charge of each derivative transaction follows the internal policies, which set forth
delegation of authority and maximum upper limit on positions. Monthly reports including actual transaction data are submitted to director
in charge of treasury function and the Board of directors for their review.
(c) Monitoring of liquidity risk (the risk that the Group may not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates its cash flow plans on a timely basis to manage liquidity risk.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available,
fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions
and factors could result in different fair value. In addition, the notional amounts of derivatives in Note 25 “Derivative financial instruments”
are not necessarily indicative of the actual market risk involved in derivative transactions.
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2010 and estimated fair value are shown in the
following table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value
(Please refer to Notes 2) below).
(As of March 31, 2010) Millions of yen
Carrying Value
Estimated Fair
Value Difference
Assets
1) Cash and time deposits .................................................................................................. ¥ 206,783 ¥ 206,783 ¥ —
2) Notes and accounts receivable ..................................................................................... 154,239 154,239 —
3) Investment securities ..................................................................................................... 118,016 118,016 —
Total Assets ......................................................................................................................... ¥ 479,038 ¥ 479,038 ¥ —
Liabilities
1) Notes and accounts payable ......................................................................................... ¥ 74,074 ¥ 74,074 ¥ —
2) Short-term borrowings ................................................................................................... 75,073 75,073 —
3) Bonds, including current maturities ............................................................................. 130,400 130,484 84
4) Long-term debt, including current maturities ............................................................. 456,008 458,392 2,384
Total Liabilities .................................................................................................................... ¥ 735,555 ¥ 738,023 ¥ 2,468
Derivatives* ............................................................................................................................. ¥ (1,380) ¥ (1,380) ¥ —
(As of March 31, 2010) Thousands of U.S. dollars
Carrying Value
Estimated Fair
Value Difference
Assets
1) Cash and time deposits .................................................................................................. $ 2,297,589 $ 2,297,589 $ —
2) Notes and accounts receivable ..................................................................................... 1,713,767 1,713,767 —
3) Investment securities ..................................................................................................... 1,311,289 1,311,289 —
Total Assets ......................................................................................................................... $ 5,322,645 $ 5,322,645 $ —
Liabilities
1) Notes and accounts payable ......................................................................................... $ 823,044 $ 823,044 $ —
2) Short-term borrowings ................................................................................................... 834,144 834,144 —
3) Bonds, including current maturities ............................................................................. 1,448,889 1,449,822 933
4) Long-term debt, including current maturities ............................................................. 5,066,756 5,093,244 26,489
Total Liabilities .................................................................................................................... $ 8,172,833 $ 8,200,254 $ 27,422
Derivatives* ............................................................................................................................. $ (15,333) $ (15,333) $ —
*The value of assets and liabilities arising from derivatives is shown at net value, and with the amount in parentheses representing net liability position.
Notes:
1) Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Cash and time deposits and Notes and accounts receivable
Since these items are settled in a short period of time, their carrying value approximates fair value.