Nintendo 2009 Annual Report Download - page 41

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37
The Company and certain consolidated subsidiaries enter into foreign exchange forward contracts and currency option
contracts.
It is the Company’s policy to enter into derivative transactions within the limits of foreign currency deposits, and not for
speculative purposes.
The Company has foreign exchange forward contracts to reduce risk of exchange rate fluctuations and currency option contracts
to reduce risk of exchange rate fluctuations and yield improvement of short-term financial assets.
Foreign exchange forward contracts and currency option contracts bear risks resulting from exchange rate fluctuations.
Counterparties to derivative transactions are limited to high confidence level financial institutions. The Company does not
anticipate any risk due to default.
Derivative transactions entered into by the Company and certain consolidated subsidiaries are made by the finance department
or the department in charge of financial matters. They are to be approved by the president and the director in charge of those
transactions of the Company. Subject consolidated subsidiaries are to report transaction status on a regular basis to the director in
charge.
Derivative contracts as of March 31, 2009 and 2008 were as follows:
Note 11. Derivatives
Contract amount Unrealized
gain (loss)
Fair value
Japanese Yen in Millions
¥
Exchange forward contracts
Selling British Pound
Buying Japanese Yen
Currency options
Written call options:
Euro
(Premium)
Purchased put options
Euro
(Premium)
Total
¥11,284
4,686
101,583
1,377
33,861
1,377
¥11,159
4,475
1,521
1,072
¥124
(210)
(143)
(305)
¥(534)
As of March 31, 2009 Contract amount Unrealized
gain (loss)
Fair value
Japanese Yen in Millions
¥
Exchange forward contracts
Selling British Pound
Buying Japanese Yen
Currency options
Written call options:
U.S. Dollar
(Premium)
Euro
(Premium)
Purchased put options
U.S. Dollar
(Premium)
Euro
(Premium)
Total
¥18,345
8,287
154,005
1,123
216,293
1,569
51,335
1,123
108,146
1,569
¥17,890
8,924
1,275
1,614
880
1,464
¥455
636
(152)
(44)
(242)
(104)
¥547
As of March 31, 2008 Contract amount Unrealized
gain (loss)
Fair value
U.S. Dollars in Thousands
$
$115,145
47,818
1,036,561
14,055
345,520
14,055
$113,871
45,671
15,522
10,941
$1,274
(2,147)
(1,466)
(3,113)
$(5,453)
[Note] No derivative contracts were due after one year.
The fair value of exchange forward contracts is estimated based on the forward exchange rate as of March 31, 2009 and 2008, respectively. The fair value of currency options is
estimated based on price quoted by correspondent financial institutions where we have agreements on derivative transactions.