Honda 2009 Annual Report Download - page 65

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(Equity Price Risk)
Honda is exposed to equity price risk as a result of its
holdings of marketable equity securities. Marketable equity
securities included in Honda’s investment portfolio are held for
purposes other than trading, and are reported at fair value,
with unrealized gains or losses, net of deferred taxes, included
in accumulated other comprehensive income (loss) in the
stockholders’ equity section of the consolidated balance
sheets. At March 31, 2008 and 2009, the estimated fair value
of marketable equity securities was ¥120.0 billion and ¥54.8
billion, respectively.
Legal Proceedings
Various legal proceedings are pending against us. We believe
that such proceedings constitute ordinary routine litigation
incidental to our business. With respect to product liability,
personal injury claims or lawsuits, we believe that any judgment
that may be recovered by any plaintiff for general and special
damages and court costs will be adequately covered by our
insurance and accrued liabilities. Punitive damages are claimed
in certain of these lawsuits. We are also subject to potential
liability under other various lawsuits and claims including 71
purported class actions in the United States.
Honda records a contingent liability when it is probable that
an obligation has been incurred and the amount of loss can be
reasonably estimated. Honda reviews these pending lawsuits
and claims periodically and adjusts the amounts recorded for
these contingent liabilities, if necessary, by considering the
nature of lawsuits and claims, the progress of the case and the
opinions of legal counsel. Honda does not record liabilities for
lawsuits or potential claims that it believes an unfavorable
outcome or when a reasonable estimate of the amount or
range of loss cannot be determined. After consultation with
legal counsel, and taking into account all known factors
pertaining to existing lawsuits and claims, Honda believes that
the ultimate outcome of such lawsuits and pending claims
including 71 purported class actions in the United States
should not result in liability to Honda that would be likely to
have an adverse material effect on its consolidated fi nancial
position, results of operations or cash fl ows.
Currency & Interest Rate Swaps
2008 2009
Yen (millions) Yen (millions)
Receiving
side
currency
Paying
side
currency
Expected maturity date
Average
receive
rate
Average
pay
rate
Receive/Pay
Contract
amount Fair value Contract
amount Within 1 year 1-2 year 2-3 year 3-4 year 4-5 year Thereafter Fair value
JP¥ US$ Fix/Float ¥286,141 37,036 ¥190,565 65,428 67,478 28,140 20,748 6,010 2,761 29,896 1.18% 1.44%
Float/Float 153,023 19,641 163,797 18,257 24,508 69,185 50,027 1,820 — 12,220 1.22% 1.83%
JP¥ CA$ Fix/Float
2,685 (480) 2,137 2,137 — — — — — 42 0.95% 1.36%
Other Other Fix/Float
165,885 34,731 275,013 — 58,570 — 104,070 112,373 — 17,461 5.07% 2.07%
Float/Float
55,279 13,161 35,499 35,499 — — — — — 1,578 1.63% 1.35%
Total
¥663,013
104,089 ¥667,011 121,321 150,556 97,325 174,845 120,203 2,761 61,197
Annual Report 2009 63