Casio 2006 Annual Report Download - page 35

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Annual Report 2006
6. Derivative Transactions
Status of derivative transactions
The Group utilizes interest rate swap and swaption contracts as derivative transactions to hedge interest rate risks arising from nor-
mal business transactions and improve the efficiency of the utilization of available funds.
The Group also utilizes forward foreign currency contracts and currency options to hedge currency fluctuation risks arising from
the export of products and materials for products in addition to hedging through increases in overseas production and the overseas
procurement of materials.
The derivative transactions are solely made with highly rated financial institutions; therefore, the Group does not expect any
credit risks.
The Group utilizes derivatives following the internal regulation for derivatives, which stipulates policy, objective, scope, organi-
zation, procedures and financial institutions to deal with, and has a reporting system for derivative transactions reflecting proper
internal control functions.
Fair value of derivative transactions
The aggregate amounts contracted to be paid or received and the fair values of derivative transactions of the Group at March 31,
2006 and 2005 were as follows:
Currency-related derivatives:
Millions of Yen Thousands of U.S. Dollars
2006 2005 2006
Contract amount Contract amount Contract amount
Due after Fair Realized Due after Fair Realized Due after Fair Realized
Total one year value gain (loss) Total one year value gain (loss) Total one year value gain (loss)
Forward contracts:
To sell:
U.S. dollars... ¥22,161 ¥— ¥22,697 ¥(536) ¥18,610 ¥— ¥19,228 ¥ (618) $189,410 $— $193,991 $(4,581)
Euros............ 10,488 — 10,830 (342) 26,953 — 27,350 (397) 89,641 — 92,564 (2,923)
Sterling pounds ... 1,565 — 1,590 (25) 1,680 — 1,714 (34) 13,376 — 13,590 (214)
Total ............ ¥34,214 ¥— ¥35,117 ¥(903) ¥47,243 ¥— ¥48,292 ¥(1,049) $292,427 $— $300,145 $(7,718)
To buy:
U.S. dollars... ¥115 ¥— ¥117 ¥2 ¥— ¥— ¥— ¥— $983 $— $1,000 $17
Total ............ ¥115 ¥— ¥117 ¥2 ¥— ¥— ¥— ¥— $983 $— $1,000 $17
Interest rate swap and option-related derivatives:
The Group has entered into interest rate swap agreements to reduce its exposure resulting from adverse fluctuations in interest rate
on underlying debt instruments. They are all designated as hedges meeting certain hedging criteria and there are no transactions
that need to disclose contract amount, fair value and realized gain or loss to be reported for the years ended March 31, 2006 and
2005.
7. Short-term Borrowings and Long-term Debt
Short-term borrowings represent unsecured bank loans and its average interest rates were 1.0% and 0.7% per annum at March
31, 2006 and 2005, respectively.
Long-term debt at March 31, 2006 and 2005 consisted of:
Thousands of
Millions of Yen U.S. Dollars
2006 2005 2006
2.05% unsecured bonds due in 2005......................................................... ¥ — ¥30,000 $—
2.575% unsecured bonds due in 2007....................................................... 10,000 10,000 85,470
1.42% unsecured bonds due in 2009......................................................... 10,000 10,000 85,470
0% unsecured bonds with stock acquisition rights due in 2010 .................. 20,000 20,000 170,940
Unsecured loans principally from banks at interest rates of 0.36%
to 1.83% maturing through 2012 ............................................................ 80,197 685,445
Unsecured loans principally from banks at interest rates of 0.35%
to 1.83% maturing through 2011 ............................................................ 83,810
Total...................................................................................................... 120,197 153,810 1,027,325
Less amount due within one year ............................................................... 20,747 39,655 177,325
¥99,450 ¥114,155 $ 850,000
0% unsecured bonds with stock acquisition rights provide, among other conditions, for conversion into shares of common
stock at the conversion prices per share of ¥1,642 ($14.03), subject to change in certain circumstances.