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74 HOYA Annual Report 2009
No. 13
DERIVATIVES AND HEDGING ACTIVITIES
Derivatives and hedging activities as of March 31, 2009 and 2008 consisted of the following:
1. Conditions of transactions
The Group enters into derivative financial instruments (“derivatives”), including forward foreign exchange contracts and interest
rate swap contracts to hedge foreign exchange risk and interest rate exposures on certain assets and liabilities.
Foreign exchange forward contracts are utilized by the Group to reduce foreign currency exchange risks. The Group does not
enter into derivatives for trade or speculative purposes.
(1) Hedge accounting methods
Deferral hedging is applied. Loans payable denominated in foreign currencies for which foreign exchange forward contracts are
used to hedge the foreign currency fluctuations are translated at the contracted rate if the forward contracts qualify for hedge
accounting.
(2) Hedging methods and hedged items
Exchange risks are hedged based mainly on the Company’s ‘Internal Management Regulations’, and the Company has adopted a
policy of not conducting any speculative derivative trading.
Hedging method: Forward exchange contracts
Item hedged: Loans payable denominated in foreign currencies
There were no hedging instruments and hedged items as of March 31, 2009.
2. Fair value of transactions
Fair value of transactions as of March 31, 2009 was as follows:
Currency-related transactions:
Millions of Yen
Items
Contract
value
Contract over
one year Market value
Unrealized
gain (loss)
Forward foreign exchange contracts
Buy—USD ¥ 197 ¥ — ¥ 231 ¥ 34
EURO 12,383 2,426 12,034 (349)
Total ¥12,580 ¥2,426 ¥12,265 ¥(315)
Notes: 1. Market value:
Forward foreign exchange contract: Translated by forward exchange rates
2. Transactions which are translated at the contracted forward rates are excluded.
Interest rate swap:
Millions of Yen
Items
Contract
value
Contract over
one year Market value
Unrealized
gain (loss)
Interest rate swap
Receive floating pay fixed ¥4,342 ¥4,342 ¥(43) ¥(43)
Total ¥4,342 ¥4,342 ¥(43) ¥(43)
Notes: 1. The principal amount regarding the interest rate swap is notional. The figures do not indicate market risks relating to the derivative transactions
2. Calculation of market value is based on the prices provided by the financial institutions the Company entered into the interest rate swap contracts with.