Annual Report 2006 - Komatsu

FINANCIAL REVIEW
Interest Rate Risk
To reduce risks and hedge variability of cash flow, the companies
engage in certain interest rate swaps, cross-currency swaps
and cap option transactions for interest payment and interest receipt.
Certain interest rate swap contracts do not qualify as
hedges and are recorded at the fair value and the resultant gains
and losses are recognized as income and expenses.
The following tables provide information concerning debt
obligations excluding capital lease obligations (including due
within one year), interest rate swaps, cross-currency swaps and
interest caps. For debt obligations, the tables present fair value,
principal cash flows and related weighted average interest rates
by expected maturity dates. For interest rate and cross-currency
swaps, the following tables present fair value, notional amounts
and weighted average receive and pay interest rates. For interest
caps, the following tables present fair value, notional amounts
and its average strike rate.
Long-term debt excluding capital lease obligations (including due within one year)
Millions of yen
Expected maturity date
Average interest rate Fair value Total 2007 2008 2009 2010 2011 Thereafter
Japanese yen bonds 1.46% ¥ 29,465 ¥ 30,000 ¥ — ¥ 20,000 ¥ — ¥ 10,000 ¥ — ¥ —
Euro medium-term notes (relating to variable interest rate) 4.49% 57,071 59,440 26,246 5,207 15,616 5,381 6,990 —
Loans, principally from banks (relating to variable interest rate) 0.77% 43,462 43,462 37,618 52 5,741 18 20 13
Loans, principally from banks (relating to fixed interest rate) 1.74% 98,940 101,558 9,298 27,783 32,669 25,349 4,860 1,599
Total ¥ 228,938 ¥ 234,460 ¥ 73,162 ¥ 53,042 ¥ 54,026 ¥ 40,748 ¥ 11,870 ¥ 1,612
Interest rate swaps, cross-currency swaps and interest caps
Millions of yen
Average interest rate
Expected maturity date
Receive Pay Fair value Total 2007 2008 2009 2010 2011 Thereafter
U.S. dollar interest rate swap 4.52% 3.82% ¥ 1,454 ¥ 124,926 ¥ 59,022 ¥ 40,387 ¥ 20,063 ¥ 5,454 ¥ — ¥ —
Yen/US$ cross-currency swap 0.95% 5.09% (2,201) 53,500 16,500 12,000 12,000 6,000 7,000 —
Yen/EUR cross-currency swap 0.45% 2.80% (770) 14,000 9,000 1,000 2,000 2,000 — —
Euro interest cap — 4.02% 14 16,224 86 5,670 5,384 5,084 — —
Others (26) 4,232 621 801 881 1,929 — —
Total ¥ (1,529) ¥ 212,882 ¥ 85,229 ¥ 59,858 ¥ 40,328 ¥ 20,467 ¥ 7,000 ¥ —
Long-term debt excluding capital lease obligations (including due within one year)
Thousands of U.S. dollars
Expected maturity date
Average interest rate Fair value Total 2007 2008 2009 2010 2011 Thereafter
Japanese yen bonds 1.46% $ 251,838 $ 256,410 $ — $170,940 $ — $ 85,470 $ — $ —
Euro medium-term notes (relating to variable interest rate) 4.49% 487,786 508,034 224,325 44,504 133,470 45,991 59,744 —
Loans, principally from banks (relating to variable interest rate) 0.77% 371,470 371,470 321,521 444 49,069 154 171 111
Loans, principally from banks (relating to fixed interest rate) 1.74% 845,641 868,018 79,470 237,462 279,222 216,658 41,539 13,667
Total $1,956,735 $2,003,932 $625,316 $453,350 $461,761 $348,273 $101,454 $ 13,778
Interest rate swaps, cross-currency swaps and interest caps
Thousands of U.S. dollars
Average interest rate
Expected maturity date
Receive Pay Fair value Total 2007 2008 2009 2010 2011 Thereafter
U.S. dollar interest rate swap 4.52% 3.82% $ 12,427 $1,067,744 $504,462 $345,188 $171,479 $ 46,615 $ — $ —
Yen/US$ cross-currency swap 0.95% 5.09% (18,812) 457,265 141,026 102,564 102,564 51,282 59,829 —
Yen/EUR cross-currency swap 0.45% 2.80% (6,581) 119,658 76,923 8,547 17,094 17,094 — —
Euro interest cap — 4.02% 120 138,667 735 48,462 46,017 43,453 — —
Others (222) 36,170 5,307 6,846 7,530 16,487 — —
Total $ (13,068) $1,819,504 $728,453 $511,607 $344,684 $174,931 $ 59,829 $ —
47 Annual Report 2006