Toshiba 2003 Annual Report Download - page 54

The interest rate swap agreements utilized by the Company effectively convert a portion of its floating-rate
debt to a fixed-rate basis for the next 10 years.
The Company expects to reclassify ¥744 million ($6,200 thousand) of net losses on derivative financial instruments
from accumulated other comprehensive income (loss) to earnings during the next twelve months due to the col-
lection of accounts receivable denominated in foreign currency and the payment of variable interest associated with
the floating-rate debts.
At March 31, 2003, there were no significant gains or losses on derivative financial instruments or portions
thereof that were either ineffective as hedges, excluded from assessment of hedge effectiveness, or where the under-
lying risk did not occur.
The Company’s forward exchange contract amounts, the aggregate notional principal amounts of interest rate swap
agreements, currency swap agreements, and currency options outstanding at March 31, 2003 and 2002 are sum-
marized below:
Thousands of
Millions of yen U.S. dollars
March 31 2003 2002 2003
Forward exchange contracts:
To sell foreign currencies ¥ 82,290 ¥ 98,878 $ 685,750
To buy foreign currencies 29,333 29,036 244,442
Interest rate swap agreements 355,517 410,377 2,962,642
Currency swap agreements 133,571 114,560 1,113,092
Currency options 101,922 8,195 849,350
(2) Fair value of financial instruments
The estimated fair values of the Company’s financial instruments at March 31, 2003 and 2002 are summarized as
follows: Millions of yen
2003 2002
Carrying Estimated Carrying Estimated
March 31 amount fair value amount fair value
Nonderivatives:
Assets:
Long-term finance receivables, net ¥ 109,394 ¥ 107,256 ¥ 129,489 ¥ 132,267
Liabilities:
Long-term debt, including current portion (1,225,399) (1,247,035) (1,159,679) (1,181,925)
Derivative financial instruments:
Forward exchange contracts 238 238 384 384
Interest rate swap agreements (2,534) (2,534) (3,994) (3,994)
Currency swap agreements (3,611) (3,611) (6,853) (6,853)
Currency options (575) (575) (31) (31)
Thousands of U.S. dollars
2003
Carrying Estimated
March 31 amount fair value
Nonderivatives:
Assets:
Long-term finance receivables, net $ 911,617 $ 893,800
Liabilities:
Long-term debt, including current portion (10,211,659) (10,391,958)
Derivative financial instruments:
Forward exchange contracts 1,983 1,983
Interest rate swap agreements (21,117) (21,117)
Currency swap agreements (30,092) (30,092)
Currency options (4,792) (4,792)
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 instru-
ments, 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 estimated 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 include investment securities, which represent holdings in a number of
52 TOSHIBA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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