Eisai Co., Ltd. Annual Report 2001 - Eisai GmbH

36
III. Actual lease payments, Depreciation expense, Interest expense under finance leases
Eisai Annual Report 2001
Thousands of
Millions of yen U.S. dollars
2001 2000 2001
Actual lease payments ¥1,343 ¥1,566 $10,831
Depreciation expense 1,230 1,505 9,919
Interest expense 83 109 669
Depreciation expense for leased assets, which is not reflected in the accompanying statements of income, is computed using the
straight-line method over the estimated useful lives of the leased assets.
Interest expense for leased assets, which is not reflected in the accompanying statements of income, is computed using the
interest method based on the differences between the lease fees and the respective acquisition cost of the assets which are considered
to be interest-bearing.
(b) The minimum rental payments under noncancelable operating leases at March 31, 2001 and 2000, were as follows:
Millions of yen
Thousands of
U.S. dollars
2001 2000 2001
Due within one year ¥ 749 ¥ 641 $ 6,040
Due after one year 2,178 1,920 17,565
Total ¥2,927 ¥2,561 $23,605
Note 11. Derivatives
The Group enters into foreign currency forward contracts to hedge foreign exchange risk associated with certain assets and liabilities
for export sales and contract research denominated in foreign currencies.
All derivative transactions are entered into to hedge foreign currency exposures incorporated within its business. Accordingly,
market risk in these derivatives is basically offset by opposite movements in the value of hedge assets or liabilities. The Group does not
hold or issue derivatives for trading purposes.
Because the counterparties to these derivatives are limited to major international financial institutions, the Group does not
anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate the
authorization and credit limit amount.
The Group had the following derivatives contracts outstanding at March 31, 2001 and 2000.
Millions of yen Thousands of U.S. dollars
2001 2001
Contract Fair Unrealized Contract Fair Unrealized
amount value gain (loss) amount value gain (loss)
Foreign currency forward contracts:
Buying Japanese yen ¥7,515 ¥6,313 ¥(1,202) $60,605 $50,911 $(9,694)
Selling U. S. dollar 7,199 7,700 (501) 58,057 62,097 (4,040)
Millions of yen
Contract
2000
Fair Unrealized
amount value gain (loss)
Foreign currency forward contracts:
Buying Japanese yen ¥5,248 ¥5,635 ¥387
Foreign currency forward contracts amounts which are assigned to associated assets or liabilities and are reflected on the
consolidated balance sheet at March 31, 2000, and are not subject to the disclosure of market value information.
Note 12. Contingencies
The Group was contingently liable under guarantees, primarily for housing loans to employees made by third parties and the factoring
contract with a bank for certain trade accounts payables, of ¥1,685 million ($13,589 thousand) at March 31, 2001.
The Group was also contingently liable for trade notes discounted with banks in the amount of ¥447 million ($3,605 thousand) at
March 31, 2001. The banks retain a right of recourse against the Group in the event of nonpayment by customers. The Company’s
management believes that the likelihood of such banks exercising recourse is remote.
The loss on Vitamin E settlement of ¥2,688 million ($21,677 thousand) were associated with civil settlement reached with indirect
purchasers of synthetic vitamin E in the United States. Additional information on this issue regarding damages compensation is not
available. The European Commission is continuing an investigation and future losses related to vitamin E cases could not be estimated.