Nintendo 2003 Annual Report Download - page 67

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Only the Company enters into foreign exchange forward contracts and currency option contracts.
It is the Company’s policy to enter into derivative transactions within the limits of foreign currency deposits, and not for
speculative purposes.
The Company has foreign exchange forward contracts to reduce risk of exchange rate fluctuations and currency option
contracts to reduce risk of exchange rate fluctuations and yield improvement of short-term financial assets.
Foreign exchange forward contracts and currency option contracts bear risks resulting from exchange rate fluctuations.
Counterparties to derivative transactions are limited to high confidence level financial institutions. The Company does not
anticipate any risk due to default.
Derivative transactions entered into by the Company are made only by the treasury department under approval by the
president and a director in charge of those transactions.
Note 4. Derivatives
Losses incurred from the application of the lower of cost or market valuation of inventories have been charged to cost of sales
in the accompanying consolidated statements of income. These losses amounted to ¥12,515 million ($104,290 thousand) and
¥9,878 million ($82,319 thousand) for the years ended March 31, 2003 and 2002, respectively.
Note 5. Inventories
63
Nintendo Co., Ltd. and consolidated subsidiaries
The Company had no derivative contracts outstanding at March 31, 2003 and 2002.