Toshiba 2001 Annual Report Download - page 61

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Interest rate swap agreements and currency swap agreements are used to limit the company’s exposure
to losses in relation to underlying debt instruments and a certain foreign currency denominated accounts
receivable resulting from adverse fluctuations in foreign currency exchange and interest rates. These
agreements mature during the period 2001 to 2011. The related differentials to be paid or received
under the interest rate swaps are recognized in interest expense over the terms of the agreements.
Currency swaps are accounted for in a manner similar to the accounting for forward exchange contracts.
The company’s forward exchange contract amounts, the aggregate notional principal amounts of inter-
est rate swap agreements and the principal amounts of currency swap agreements outstanding at March
31, 2001 and 2000 are summarized below:
Thousands of
Millions of yen U.S. dollars
March 31 2001 2000 2001
Forward exchange contracts:
To sell foreign currencies ¥157,532 ¥240,949 $1,270,419
To buy foreign currencies 30,829 60,569 248,621
Interest rate swap agreements 432,884 401,136 3,491,000
Currency swap agreements 132,836 84,588 1,071,258
The estimated fair values of the company’s financial instruments at March 31, 2001 and 2000 are
summarized as follows:
Thousands of
Millions of yen U.S. dollars
2001 2000 2001
Carrying Estimated Carrying Estimated Carrying Estimated
March 31 amount fair value amount fair value amount fair value
Nonderivatives:
Assets—
Long-term finance
receivables, net ¥ 143,292 ¥ 145,043 ¥ 116,961 ¥ 119,443 $ 1,155,581 $ 1,169,702
Liabilities—
Long-term debt,
including current
portion (1,260,771) (1,299,526) (1,380,097) (1,400,086) (10,167,508) (10,480,048)
Derivative financial
instruments:
Forward exchange
contracts (592) (5,474) 1,849 5,308 (4,774) (44,145)
Interest rate swap
agreements — (5,042) — (3,416) — (40,661)
Currency swap agreements (9,403) (10,038) 4,550 5,355 (75,831) (80,952)
The above table excludes the financial instruments for which fair values approximate their carrying
values and those related to leasing activities.
In assessing the fair value of these financial instruments, the company has used a variety of methods
and assumptions, which were based on estimates of market conditions and risks existing at that time.
For certain instruments, including cash and cash equivalents, notes and accounts receivable, trade,
finance receivables, net, short-term borrowings, notes payable, trade, accounts payable, trade and
accounts payable, other and accrued expenses, it was assumed that the carrying amount approximated
fair value for the majority of these instruments because of their short maturities. Quoted market prices
were used for a part of marketable securities and other investments. Other techniques, such as estimat-
ed discounted value of future cash flows, and replacement cost, have been used to determine fair value
for the remaining financial instruments. These estimated fair values are not necessarily indicative of the
amounts that could be realized in a current market exchange.
Marketable securities and other investments includes investment securities which represent holdings in
a number of non-public companies. The aggregate carrying amount of these investments in non-public
companies was ¥103,147 million ($831,831 thousand) and ¥90,690 million at March 31, 2001 and
2000, respectively. However, the corresponding fair value of these investments at those dates was not
computed as such estimation was not practicable.