Pioneer 2013 Annual Report Download - page 44

(1) Group Policy for financial instruments
The Group has a policy to invest cash surplus, if any,
only in short-term deposits or other financial instru-
ments which have a similar nature. The Group raises
funds by bank loans and/or from capital markets
through bonds. Derivatives are used, not for specula-
tive purposes, to manage exposure to financial risks
as described in (2) below.
(2) Nature and extent of risks arising from financial in-
struments
Receivables such as trade receivables are exposed to
customer credit risk. Although receivables in foreign
currencies are exposed to the market risk of fluctuation
in foreign currency exchange rates, the position, net
of payables in foreign currencies, is hedged by using
forward foreign currency contracts. Investment securi-
ties, mainly equity instruments in the companies with
which the Company has business and capital alliance,
are exposed to the risk of market price fluctuations.
Payment terms of payables, such as trade pay-
ables, are less than one year. Payables in foreign
currencies arising from imports of raw materials and
finished products are exposed to the market risk of
fluctuation in foreign currency exchange rates.
Long-term loans bear floating interest rates, and
are exposed to variable interest rate risk based on the
short-term prime rate and TIBOR.
Derivatives include forward foreign currency con-
tracts which are used to manage exposure to market
risks from changes in foreign currency exchange rates
of receivables and payables and currency swaps which
are used to manage exposure to market risks from
changes in foreign currency exchange rates of loan
receivables and bank loans. Please see Note 16 for
more detail about derivatives.
(3) Risk management for financial instruments
Credit risk management
Credit risk is the risk of economic loss arising from a
counterparty’s failure to repay or service debt accord-
ing 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 early stage. With respect to the deriva-
tive transactions, the Group manages its exposure to
credit risk by limiting its transactions to high credit,
major financial institutions in accordance with its in-
ternal guidelines. Please see Note 16 for more detail
about derivatives.
The maximum credit risk exposure of financial as-
sets is limited to their carrying amounts as of March
31, 2013 and 2012.
13. Loss on Disaster and Insurance Income for Disaster
14. Restructuring Costs
15. Financial Instruments and Related Disclosures
The Group recorded insurance proceeds, for which the amounts were fixed, on damaged property, plant and equipment
and inventories for its consolidated subsidiaries which were damaged by flooding that occurred in Thailand during
October 2011, as insurance income for disaster in the consolidated statement of operations for the years ended
March 31, 2013 and 2012.
Loss on disaster consists of loss due to flooding that occurred in Thailand. A breakdown of loss on disaster for the
years ended March 31, 2013 and 2012, was as follows:
Restructuring costs for the year ended March 31, 2013, were mainly for the special termination benefits.
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Loss related to property, plant and equipment –¥1,767 –
Loss related to inventories –4,727 –
Others ¥490 2,834 $5,213
Total ¥490 ¥9,328 $5,213
Pioneer Corporation Annual Report 2013
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