Alpine 2011 Annual Report Download - page 29

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29
10. Derivative Financial Instruments
The Companies have entered into forward exchange contracts, currency option contracts and currency swap contracts with banks as hedges against
receivables denominated in foreign currencies.
These derivative financial transactions are executed by the Company’s accounting department solely for hedging purposes under the internal control rules
and the supervision by the Board of Directors. The Companies do not anticipate any credit loss from nonperformance by the counterparties to forward
exchange contracts because the counterparties are creditworthy securities companies of Japan.
Hedging derivative financial instruments used by the Companies and items hedged are as follows:
Hedging instruments: ……………………………… Forward foreign exchange contracts
Currency option contracts
Currency swap contracts
Hedged items: ……………………………………… Foreign currency trade receivables and payables,
The Companies evaluate hedge effectiveness semi-annually by comparing the cumulative changes in cash flows or the changes in fair value of hedged
items and the corresponding changes in the hedging derivative instruments.
The outstanding contract amounts of derivative financial transactions and their market values at March 31, 2011 and 2010, are summarized as follows:
The fair values of forward foreign exchange contracts were estimated based on the market as of March 31, 2011 and 2010.
The fair values of currency option contracts were estimated based on the offered price from the financial institutions. Lower figures of Currency option’s
Contract value total show the option premium. All currency option contracts are zero cost option contracts.
Millions of Yen
Contract value
2011 Total Over one year Fair value
Recognized gains (losses)
Currency related
Forward foreign exchange contracts
To sell U.S. dollars ¥2,510 ¥ – ¥ (26) ¥ (26)
To sell Euro 3,991 –(154) (154)
¥(180)
Millions of Yen
Contract value
2010 Total Over one year Fair value
Recognized gains (losses)
Currency related
Forward foreign exchange contracts
To sell U.S. dollars ¥3,104 ¥ – ¥ (58) ¥ (58)
To sell Euro 4,754 – 34 34
Currency option
To sell Euro 4,115 – – –
113 –
To buy Euro 2,058 – 496 496
145 –
¥472
Millions of Yen
Contract value
2011 Total Over one year Fair value
Recognized gains (losses)
Currency related
Forward foreign exchange contracts
To sell U.S. dollars $30,186 $ – $ (313) $ (313)
To sell Euro 47,998 – (1,852) (1,852)
$(2,165)