Toshiba 1998 Annual Report Download - page 51

Toshiba Corporation Annual Report 1998 49.
The com pan y and several subsidiaries have en tered in to forward exch ange con tracts with ban ks as hedges against
assets an d liabilities denom inated in foreign currencies. Th e forward exch ange con tracts related to accoun ts receivable
an d payable, and com m itm ents on future trade transaction s denom inated in foreign curren cies m ature primarily
with in a few mon th s subsequen t to th e balance sh eet date. Gain s an d losses explicitly deferred, arising from con tracts
related to future trade transaction s, are insignifican t. Forward exch ange con tracts related to lon g-term indebtedn ess
denom inated in foreign currencies m ature in 1998, which correspond with the m aturities of such in debtedn ess. As
th ese foreign exch ange forward con tracts are utilized solely for hedgin g purposes, th e resulting gains or losses are
offset again st foreign exch ange gain s or losses on the underlyin g hedged assets an d liabilities. Gains and losses related
to qualifyin g hedges of firm com m itm en ts den om inated in foreign curren cies are deferred an d are recogn ized in
incom e wh en th e hedged transaction occurs.
In terest rate swap agreem en ts an d curren cy swap agreem en ts are used to lim it the com pan y’s exposure to losses in
relation to un derlying debt instrum ents and a certain foreign curren cy denom inated accoun ts receivable resulting
from adverse fluctuation s in foreign curren cy exchan ge an d interest rates. These agreem ents m ature durin g th e period
1998 to 2008. The related differentials to be paid or received un der th e in terest rate swaps are recogn ized in interest
expen se over the term s of the agreements. Curren cy swaps are accoun ted for in a man n er sim ilar to the accoun tin g
for forward exch ange con tracts.
The com pan y’s forward exch ange con tract amoun ts, the aggregate notion al principal am oun ts of in terest rate swap
agreem ents an d th e prin cipal am ounts of curren cy swap agreem en ts outstandin g at March 31, 1998 and 1997 are
sum m arized below: Thousands of
Million s of yen U.S. dollars
March 31 1998 1997 1998
Forward exch ange con tracts:
To sell foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥241,779 ¥311,515 $1,831,659
To buy foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,296 13,750 93,152
Interest rate swap agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454,349 253,467 3,442,038
Currency swap agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,866 61,195 1,044,439
The estim ated fair values of th e com pan y’s finan cial in strum en ts at March 31, 1998 and 1997 are sum m arized
as follows: Million s of yen Thousands of U.S. dollars
1998 1997 1998
Carryin g Estim ated Carryin g Estim ated Carryin g Estim ated
March 31 am ount fair value amoun t fair value am oun t fair value
Non derivatives:
Assets–
Marketable securities . . . . . . . . . . ¥ 120,748 ¥ 249,998 ¥ 126,770 ¥ 321,887 $ 914,758 $ 1,893,924
Other investments . . . . . . . . . . . . 136,992 201,194 155,682 197,379 1,037,818 1,524,197
Long-term finance
receivables, net . . . . . . . . . . . . . . 107,520 110,655 96,167 99,866 814,546 838,295
Liabilities–
Long-term debt,
includin g current portion . . . . . (1,379,902) (1,402,365) (923,853) (944,108) (10,453,803) (10,623,977)
Derivative fin ancial instrum en ts:
Forward exch ange con tracts . . . . (1,037) (1,999) (1,170) (5,656) (7,856) (15,144)
In terest rate swap agreem en ts . . . . – (5,146) – (3,150) – (38,985)
Currency swap agreements . . . . . (2,508) (2,218) (2,080) (2,584) (19,000) (16,803)
The above table excludes th e finan cial in strum ents for wh ich fair values approximate their carrying values an d
th ose related to leasing activities.