Pioneer 2012 Annual Report Download - page 45

Millions of Yen Thousands of U.S. Dollars
2012 2012
Carrying
Amount Fair Value
Unrealized
Gain/Loss
Carrying
Amount Fair Value
Unrealized
Gain/Loss
Cash and cash equivalents ¥ 45,953 ¥ 45,953 – $ 560,402 $ 560,402 –
Receivables:
Trade receivables 77,273 77,273 – 942,354 942,354 –
Allowance for doubtful receivables (*1) (1,044) (1,044) – (12,732) (12,732) –
76,229 76,229 – 929,622 929,622 –
Investment securities:
Available-for-sale securities 7,684 7,684 – 93,707 93,707 –
Total ¥129,866 ¥129,866 – $1,583,731 $1,583,731 –
Short-term borrowings ¥ 9,052 ¥ 9,052 – $ 110,390 $ 110,390 –
Current portion of long-term debt 71,373 71,373 – 870,402 870,402 –
Trade payables 73,276 73,276 – 893,610 893,610 –
Income taxes payable 5,503 5,503 – 67,110 67,110 –
Long-term debt 10,943 10,943 – 133,451 133,451 –
Total ¥170,147 ¥170,147 – $2,074,963 $2,074,963 –
Derivative transactions (*2) ¥ (129) ¥ (129) – $ (1,573) $ (1,573) –
according to the contractual terms. The Group
manages its credit risk from receivables on the basis
of internal guidelines, which include monitoring of
payment terms and balances of major customers by
each business administration department to identify
the default risk of customers in an early stage. With
respect to the derivative transactions, the Group
manages its exposure to credit risk by limiting its
transactions to high credit, major financial institutions
in accordance with its internal guidelines. Please see
Note 15 for more detail about derivatives.
The maximum credit risk exposure of financial
assets is limited to their carrying amounts as of
March 31, 2012 and 2011.
Market risk management (foreign exchange risk and
interest rate risk)
Foreign currency trade receivables and payables are
exposed to market risk resulting from fluctuations
in foreign currency exchange rates. Such foreign
exchange risk in the Company and certain
consolidated subsidiaries is hedged principally by
forward foreign currency contracts in accordance
with internal guidelines. Currency swaps are used
to manage exposure to future market risks from
changes in foreign currency exchange rate of bank
loans payables in foreign currencies based on the
internal guidelines.
Investment securities, mainly equity instruments
in the companies with which the Company has
business alliances, are monitored for their market
values on a regular basis.
Execution and management of derivative
transactions related to currency and interest rates
are managed by the corporate treasury department
based on the internal guidelines. Hedging policies
are discussed and determined among the president,
other directors who are responsible for finance,
business strategy, and each of business segments,
based on the internal guidelines. Outstanding
positions and fair value of derivatives are reported to
the directors in charge on a regular basis.
Liquidity risk management
Liquidity risk comprises the risk that the Group
cannot meet its contractual obligations in full on
maturity dates. The Company manages its liquidity
risk by holding adequate volumes of liquid assets,
along with adequate financial planning by the
corporate treasury department based on the liquidity
requirement schedule from each department.
(4) Fair value of financial instruments
Fair values of financial instruments are based on
quoted prices in active markets. If quoted prices
are not available, other rational valuation techniques
are used instead. Different assumptions may lead
to different fair values, since varying elements are
incorporated in calculating the fair value. As for
contract amount or any other information disclosed
in Note 15, the amount itself does not show the
market risk in relation to derivative transactions.
(a) Fair values of financial instruments for the years ended March 31, 2012 and 2011, were as follows:
*1. Allowance for doubtful receivables corresponding to trade receivables are to be deducted.
*2. Derivative transactions show the net amount after offsetting the receivables and payables.
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Pioneer Corporation Annual Report 2012