Canon 2007 Annual Report Download - page 60

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58
Available-for-sale securities Millions of yen Thousands of U.S. dollars
Cost Fair Value Cost Fair Value
Due within one year ¥ 51 ¥ 51 $ 447 $ 447
Due after one year through five years 3,430 3,638 30,088 31,912
Due after five years 3,822 4,726 33,526 41,456
Equity securities 12,666 22,316 111,105 195,755
¥19,969 ¥30,731 $175,166 $269,570
Held-to-maturity securities Millions of yen Thousands of U.S. dollars
Cost Fair Value Cost Fair Value
Due within one year ¥10,115 ¥10,115 $ 88,728 $ 88,728
Equity price risk
Canon holds marketable securities included in current assets as
short-term investments, which consist generally of highly-liquid
and low-risk instruments. Investments included in noncurrent
assets are held as long-term investments. Canon does not hold
marketable securities and investments for trading purposes.
Maturities and fair values of such marketable securities and
investments were as follows at December 31, 2007.
Foreign currency exchange rate and interest
rate risk
Canon operates internationally, exposing it to the risk of
changes in foreign currency exchange rates. Derivative financial
instruments are comprised principally of foreign currency
exchange contracts utilized by the Company and certain of its
subsidiaries to reduce the risk. Canon assesses foreign currency
exchange rate risk by continually monitoring changes in the
exposures and by evaluating hedging opportunities. Canon
does not hold or issue derivative financial instruments for
trading purposes. Canon is also exposed to credit-related
losses in the event of non-performance by counterparties to
derivative financial instruments, but it is not expected that any
counterparties will fail to meet their obligations, because most
of the counterparties are internationally recognized financial
institutions and contracts are diversified across a number of
major financial institutions.
Canon’s international operations expose Canon to the risk of
changes in foreign currency exchange rates. Canon uses foreign
exchange contracts to manage certain foreign currency exchange
exposures principally from the exchange of U.S. dollars and euros
into Japanese yen. These contracts are primarily used to hedge
the foreign currency exposure of forecasted intercompany sales
and intercompany trade receivables which are denominated in
foreign currencies. In accordance with Canon’s policy, a specific
portion of foreign currency exposure resulting from forecasted
intercompany sales are hedged using foreign exchange contracts
which principally mature within three months.
The following table provides information about Canon’s
major derivative financial instruments related to foreign currency
exchange transactions existing at December 31, 2007. All of
the foreign exchange contracts described in the following table
have a contractual maturity date in 2008.
Millions of yen U.S.$ euro Others Total
Forwards to sell foreign currencies:
Contract amounts ¥361,582 ¥294,355 ¥41,303 ¥697,240
Estimated fair value (6,253) (5,132) (62) (11,447)
Forwards to buy foreign currencies:
Contract amounts ¥ 29,826 ¥ 2,451 ¥14,620 ¥ 46,897
Estimated fair value (53) 9 (38) (82)
Thousands of U.S. dollars U.S.$ euro Others Total
Forwards to sell foreign currencies:
Contract amounts $3,171,772 $2,582,061 $362,307 $6,116,140
Estimated fair value (54,851) (45,018) (543) (100,412)
Forwards to buy foreign currencies:
Contract amounts $ 261,632 $ 21,500 $128,245 $ 411,377
Estimated fair value (465) 79 (334) (720)