Pioneer 2008 Annual Report Download - page 66

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PIONEER CORPORATION
64
Estimation of Fair Values—
The following notes summarize the major methods and assump-
tions used in estimating the fair values of financial instruments.
Short-term financial instruments are valued at their carry-
ing amounts included in the consolidated balance sheets,
which are reasonable estimates of fair value due to the rela-
tively short period to maturity of the instruments. This
approach is applied to cash and cash equivalents, trade
receivables, short-term borrowings and trade payables.
The carrying amounts and the fair values of available-for-
sale securities are disclosed in Note 6.
Sundry investments included non-marketable equity secu-
rities, amounting to ¥2,505 million and ¥1,321 million ($13,210
thousand) at March 31, 2007 and 2008, respectively, and mem-
berships amounting to ¥352 million and ¥341 million ($3,410
thousand) at March 31, 2007 and 2008, respectively. The
corresponding fair values of non-marketable equity securities
at those dates were not computed as such estimation is not
practicable. The fair values of memberships were estimated
based on the market price. The fair values of foreign currency
options were measured using valuation models.
The fair values of long-term receivables were estimated
by discounting estimated future cash flows using current
interest rates.
The fair values of long-term debt were estimated using a
discounted cash flow analysis based on incremental borrowing
rates for similar types of borrowing arrangements.
The fair values of forward exchange contracts were esti-
mated based on the quoted market rates of similar contracts.
The currency swap and the interest rate swap were valued at
estimated current replacement cost.
The fair values of contingent liabilities for guarantees of
loans are not significant.
22. Fair value of financial instruments:
The following table presents the carrying amounts and fair values of the Company’s financial instruments at March 31, 2007 and 2008:
Millions of Yen
Thousands of
U.S. Dollars
2007 2008 2008
Carrying
Amounts
Fair
Value
Carrying
Amounts
Fair
Value
Carrying
Amounts
Fair
Value
Assets:
Available-for-sale securities ¥ 22,265 ¥ 22,265 ¥ 32,357 ¥ 32,357 $ 323,570 $ 323,570
Sundry investments 352 418 341 372 3,410 3,720
Long-term receivables 99 96 152 147 1,520 1,470
Other fi nancial instruments:
Forward exchange contracts 55 55 201 201 2,010 2,010
Currency swap 1,693 1,693 22 22 220 220
Currency option – – 180 180 1,800 1,800
Liabilities:
Long-term debt, including current maturity (92,592) (85,713) (857,130)
Less—Capital lease obligations 5,102 2,591 25,910
Long-term debt—net (87,490) (82,687) (83,122) (79,674) (831,220) (796,740)
Other fi nancial instruments:
Forward exchange contracts (381) (381) (34) (34) (340) (340)
Currency swap (22) (22) (4,181) (4,181) (41,810) (41,810)
Currency option –– (176) (176) (1,760) (1,760)