Annual Report 2007 - Komatsu

FINANCIAL REVIEW
Interest Rate Risk
To reduce risks and hedge variability of cash flow, Komatsu engages
in certain interest rate swaps, cross-currency swaps and
cap option transactions for interest payment and interest receipt.
Certain interest rate swap contracts are not qualified as hedges
for financial reporting purposes 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 2008 2009 2010 2011 2012 Thereafter
Japanese yen bonds 1.20% ¥ 29,688 ¥ 30,000 ¥ 20,000 ¥ — ¥ 10,000 ¥ — ¥ — ¥ —
Euro medium-term notes (relating to variable interest rate) 5.10% 64,486 66,067 13,259 16,300 12,853 7,026 16,629 —
Loans, principally from banks (relating to variable interest rate) 2.23% 19,254 19,254 8,088 8,078 3,056 17 15 —
Loans, principally from banks (relating to fixed interest rate) 2.18% 75,611 77,204 12,993 45,172 13,037 3,831 1,763 408
Total ¥ 189,039 ¥ 192,525 ¥ 54,340 ¥ 69,550 ¥ 38,946 ¥ 10,874 ¥ 18,407 ¥ 408
Interest rate swaps, cross-currency swaps and interest caps
Millions of yen
Average interest rate
Expected maturity date
Receive Pay Fair value Total 2008 2009 2010 2011 2012 Thereafter
U.S. dollar interest rate swap 5.01% 4.62% ¥ 193 ¥ 145,687 ¥ 69,556 ¥ 48,242 ¥ 22,641 ¥ 5,248 ¥ — ¥ —
Yen/US$ cross-currency swap 1.09% 5.48% (899) 63,500 12,000 7,000 20,500 7,000 17,000 —
Yen/EUR cross-currency swap 0.88% 3.98% (1,173) 18,500 10,500 2,000 2,000 2,000 2,000 —
Euro interest cap — 4.01% 33 17,778 6,246 5,931 5,601 — — —
Others (61) 7,907 826 885 2,419 2,360 472 945
Total ¥ (1,907) ¥ 253,372 ¥ 99,128 ¥ 64,058 ¥ 53,161 ¥ 16,608 ¥ 19,472 ¥ 945
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 2008 2009 2010 2011 2012 Thereafter
Japanese yen bonds 1.20% $ 251,593 $ 254,238 $169,492 $ — $ 84,746 $ — $ — $ —
Euro medium-term notes (relating to variable interest rate) 5.10% 546,492 559,890 112,364 138,136 108,924 59,542 140,924 —
Loans, principally from banks (relating to variable interest rate) 2.23% 163,169 163,169 68,542 68,458 25,898 144 127 —
Loans, principally from banks (relating to fixed interest rate) 2.18% 640,771 654,271 110,110 382,813 110,483 32,466 14,941 3,458
Total $1,602,025 $1,631,568 $460,508 $589,407 $330,051 $ 92,152 $155,992 $ 3,458
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 2008 2009 2010 2011 2012 Thereafter
U.S. dollar interest rate swap 5.01% 4.62% $ 1,636 $1,234,636 $589,458 $408,831 $191,873 $ 44,474 $ — $ —
Yen/US$ cross-currency swap 1.09% 5.48% (7,619) 538,136 101,695 59,322 173,729 59,322 144,068 —
Yen/EUR cross-currency swap 0.88% 3.98% (9,941) 156,780 88,984 16,949 16,949 16,949 16,949 —
Euro interest cap — 4.01% 280 150,661 52,932 50,263 47,466 — — —
Others (517) 67,007 7,000 7,500 20,500 20,000 4,000 8,007
Total $ (16,161) $2,147,220 $840,069 $542,865 $450,517 $140,745 $165,017 $ 8,007
47 Annual Report 2007