Canon 2009 Annual Report Download - page 93

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91
December 31
Millions of yen
Thousands of
U.S. dollars
2009 2008 2009
To sell foreign currencies ¥ 494,314 ¥ 350,959 $ 5,372,978
To buy foreign currencies 30,978 35,247 336,717
Cash fl ow hedge
Changes in the fair value of derivative fi nancial instruments des-
ignated as cash fl ow hedges, including foreign exchange con-
tracts associated with forecasted intercompany sales, are
reported in accumulated other comprehensive income (loss).
These amounts are subsequently reclassifi ed into earnings
through other income (deductions) in the same period as the
hedged items affect earnings. Substantially all amounts recorded
in accumulated other comprehensive income (loss) at year-end
are expected to be recognized in earnings over the next 12
months. Canon excludes the time value component from the
assessment of hedge effectiveness. Changes in the fair value of
a foreign exchange contract for the period between the date
that the forecasted intercompany sales occur and its maturity
date are recognized in earnings and not considered hedge inef-
fectiveness.
Derivatives not designated as hedges
Canon has entered into certain foreign exchange contracts to
primarily offset the earnings impact related to fl uctuations in
foreign currency exchange rates associated with certain assets
denominated in foreign currencies. Although these foreign
exchange contracts have not been designated as hedges as
required in order to apply hedge accounting, the contracts are
effective from an economic perspective. The changes in the fair
value of these contracts are recorded in earnings immediately.
Contract amounts of foreign exchange contracts as of
December 31, 2009 and 2008 are set forth below:
Derivatives designated as hedging instruments
December 31, 2009
Millions of yen
Thousands of
U.S. dollars
Balance sheet location Fair value Fair value
Liabilities:
Foreign exchange contracts Other current liabilities ¥ 644 $ 7,000
Derivatives not designated as hedging instruments
December 31, 2009
Millions of yen
Thousands of
U.S. dollars
Balance sheet location Fair value Fair value
Assets:
Foreign exchange contracts Prepaid expenses and
other current assets ¥ 752 $ 8,174
Liabilities:
Foreign exchange contracts Other current liabilities 6,566 71,370
Fair value of derivative instruments in the consolidated balance sheet
The following tables present Canon’s derivative instruments measured at gross fair value as refl ected in the consolidated balance
sheet as of December 31, 2009.
Canon AR09_FS_0325_ipc .indd 91 10.3.26 2:47:12 PM