Honda 2013 Annual Report Download - page 47

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The tables below provide information about our derivatives
related to foreign currency exchange rate risk as of March 31,
2012 and 2013. For forward exchange contracts and cur-
rency options, the table presents the contract amounts and
fair value. All forward exchange contracts and currency con-
tracts to which we are a party have original maturities within
one year.
Foreign Exchange Risk
Fiscal years ended March 31 2012 2013
Yen (millions) Average
contractual
rate
Yen (millions) Average
contractual
rate
Contract
amount Fair value
Contract
amount Fair value
Forward Exchange Contracts
To sell US$ ¥301,538 (10,554) 79.47 ¥390,548 (33,197) 85.72
To sell EUR 18,895 (1,023) 103.83 14,751 (2,311) 99.80
To sell CA$ 63 (1) 81.09 13 375 92.10
To sell GBP 4,047 (19) 130.69 6,230 17 143.55
To sell other foreign currencies 87,342 (6,040) various 108,215 (14,318) various
To buy US$ 5,674 34 81.20 3,441 493.92
To buy other foreign currencies 4,346 109 various 7,656 100 various
Cross-currencies 201,744 588 various 216,905 1,441 various
Total ¥623,649 (16,906) ¥747,759 (47,889)
Currency Option Contracts
Option purchased to sell US$ ¥ 27,216 —various ¥ 2,020 33 various
Option written to sell US$ 51,874 (2,148) various 2,019 (9) various
Option purchased to sell other
foreign currencies — — — 53 1various
Option written to sell other foreign
currencies — — — 53 —various
Total ¥ 79,090 (2,148) ¥ 4,145 25
Interest Rate Risk
Honda is exposed to market risk for changes in interest rates
related primarily to its debt obligations and finance receiv-
ables. In addition to short-term financing such as commercial
paper, Honda has long-term debt with both fixed and floating
rates. Our finance receivables are primarily fixed rate. Interest
rate swap agreements are mainly used to manage interest
rate risk exposure and to convert floating rate financing to
fixed rate financing (normally three-five years) in order to
match financing costs with income from finance receivables.
Foreign currency and interest rate swap agreements used
among different currencies, also serve to hedge foreign cur-
rency exchange risk as well as interest rate risk.
The following tables provide information about Honda’s
financial instruments that were sensitive to changes in inter-
est rates at March 31, 2012 and 2013. For finance receiv-
ables and long-term debt, these tables present principal cash
flows, fair value and related weighted average interest rates.
For interest rate swaps and currency and interest rate swaps,
the table presents notional amounts, fair value and weighted
average interest rates. Variable interest rates are determined
using formulas such as LIBOR+a and an index.
Honda Motor Co., Ltd. 45