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103
Hitachi, Ltd. Annual Report 2010
Interest rate exposure:
Changes in fair values of interest rate swaps designated as hedging instruments for the variability of cash flows associated
with long-term debt obligations are reported in AOCI. These amounts subsequently are reclassified into interest charges as
a yield adjustment in the same period in which the hedged debt obligations affect earnings.
Interest charges for the years ended March 31, 2009 and 2008 include net losses of ¥347 million and ¥194 million, respectively,
which represent the component of hedging instruments excluded from the assessment of hedge effectiveness. Interest charges
for the years ended March 31, 2009 and 2008 include a net gain of ¥553 million and a net loss of ¥730 million, respectively,
which represents the component of hedge ineffectiveness.
It is expected that a net loss of approximately ¥740 million ($7,957 thousand) recorded in AOCI related to interest rate
swaps will be reclassified into interest charges as a yield adjustment of the hedged debt obligations during the year ending
March 31, 2011.
The contract or notional amounts of derivative financial instruments held as of March 31, 2010 and 2009 are summarized
as follows:
Millions of yen
Thousands of
U.S. dollars
2010 2009 2010
Forward exchange contracts:
To sell foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥204,084 ¥237,177 $2,194,452
To buy foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,659 128,035 1,007,086
Cross currency swap agreements:
To sell foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,381 106,329 842,806
To buy foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,778 131,111 1,158,903
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354,492 406,725 3,811,742
Option contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 935 7,552 10,054
The following tables, “Effective portion of derivatives designated as hedging instruments and related hedged items” and
“Ineffective portion and amount excluded from effectiveness test,” show the effects of derivative instruments for fair value
hedges on the consolidated statement of operations for the year ended March 31, 2010:
Effective portion of derivatives designated as hedging instruments and related hedged items
2010
Hedging instruments Related hedged items
Derivatives Location
Millions
of yen
Thousands
of U.S.
dollars Items Location
Millions
of yen
Thousands
of U.S.
dollars
Forward
exchange
contracts
Other income . . . . . . ¥ 5,871 $ 63,129 Accounts
receivable
and accounts
payable
Other income . . . . . . ¥(5,877) $(63,194)
Cross currency
swap
agreements
Interest charges . . . . (6,368) (68,473) Long-term
debt
Interest charges . . . . 6,514 70,043
¥ (497) $ (5,344) ¥ 637 $ 6,849
Ineffective portion and amount excluded from effectiveness test
2010
Derivatives Location Millions of yen
Thousands of
U.S. dollars
Forward exchange contracts Other income . . . . . . . . . . . . . . . . . . . . . . ¥ (175) $ (1,882)
Cross currency swap agreements Other income . . . . . . . . . . . . . . . . . . . . . . 3,206 34,473
Interest rate swaps Interest charges . . . . . . . . . . . . . . . . . . . . 580 6,237
¥3,611 $38,828