Annual Report 2012


>> P.62

ESTIMATEDFAIRVALUEOFFINANCIALINSTRUMENTSTHECARRYINGVALUEOFfiNANCIALINSTRUMENTSONTHECONSOLIDATEDBAL-ANCESHEETSASOFMARCH31,2012AND2011,THEESTIMATEDFAIRVALUEANDTHEDIFFERENCEBETWEENTHEMARESHOWNINTHEFOLLOWINGTABLE.THETABLEDOESNOTINCLUDEfiNANCIALINSTRUMENTSFORWHICHITISEXTREMELYDIFfiCULTTODETERMINETHEFAIRVALUE.MILLIONSOFYEN2012CARRYINGVALUEESTIMATEDFAIRVALUEDIFFERENCEASSETSCASHANDDEPOSITS¥96,698¥96,698¥—ACCOUNTSANDNOTESRECEIVABLE—TRADE77,89577,895—INVESTMENTSINSECURITIES49,10846,765(2,343)TOTALASSETS¥223,701¥221,358¥(2,343)LIABILITIESACCOUNTSANDNOTESPAYABLE—TRADE¥75,275¥75,275¥—SHORT-TERMLOANS,INCLUSIVEOFCURRENTPORTIONOFLONG-TERMLOANS72,04972,448(399)BONDS74,57372,1712,402LONG-TERMLOANS406,163408,758(2,595)TOTALLIABILITIES¥628,060¥628,652¥(592)DERIVATIVETRANSACTIONS*¥(53,178)¥(53,836)¥(658)MILLIONSOFYEN2011CARRYINGVALUEESTIMATEDFAIRVALUEDIFFERENCEASSETSCASHANDDEPOSITS¥74,064¥74,064¥—ACCOUNTSANDNOTESRECEIVABLE—TRADE78,31478,314—INVESTMENTSINSECURITIES67,71665,282(2,434)TOTALASSETS¥220,094¥217,660¥(2,434)LIABILITIESACCOUNTSANDNOTESPAYABLE—TRADE¥76,750¥76,750¥—SHORT-TERMLOANS,INCLUSIVEOFCURRENTPORTIONOFLONG-TERMLOANS55,78356,049(266)BONDS74,95175,618(667)LONG-TERMDEBT,EXCLUSIVEOFBONDS332,481334,377(1,896)TOTALLIABILITIES¥539,965¥542,794¥(2,829)DERIVATIVETRANSACTIONS*¥(77,567)¥(78,419)¥(852)REGARDINGDERIVATIVES,THEGROUPHASENTEREDINTO:1)FORWARDFOR-EIGNEXCHANGECONTRACTSANDCURRENCYSWAPCONTRACTSTOHEDGEFOR-EIGNCURRENCYEXCHANGERISKARISINGFROMRECEIVABLESANDPAYABLESDENOMINATEDINFOREIGNCURRENCIESANDFUNDSFORBUSINESSINVESTMENT;2)BUNKERFUELSWAPCONTRACTSTOHEDGETHERISKOFBUNKERFUELPRICEflUCTUATION;3)FORWARDFREIGHTAGREEMENTSTOHEDGETHERISKOFflUCTUA-TIONOFMARKETPRICES;AND4)INTEREST-RATESWAPCONTRACTSTOHEDGETHERISKOFINTERESTRATEflUCTUATIONARISINGFROMINTERESTPAYABLESFORLONG-TERMPAYABLESANDBONDS.FORINFORMATIONONHEDGEACCOUNTINGPOLICIESOFTHEGROUP,SEE1.SUMMARYOFSIGNIfiCANTACCOUNTINGPOLICIES(P)DERIVATIVESANDHEDG-INGACTIVITIES.THECOMPANYMONITORSREGULARLYTHECONDITIONOFSIGNIfiCANTBUSI-NESSPARTNERSBYEACHRELATEDBUSINESSDIVISIONWITHWHOMTHECOM-PANYHASACCOUNTSRECEIVABLEFORBUSINESSORLOANSRECEIVABLE,ANDMANAGESTHEOUTSTANDINGBALANCESANDDUEDATESBYCOUNTERPARTIES,TOMINIMIZETHERISKOFDEFAULTARISINGFROMANYDECLINEINTHEfiNANCIALCONDITIONOFCOUNTERPARTIES.ITSCONSOLIDATEDSUBSIDIARIESALSOMONITORTHECONDITIONOFACCOUNTSRECEIVABLESANDLOANRECEIVABLESUNDERASIMILARMANAGEMENTPOLICY.THEGROUPBELIEVESTHATTHECREDITRISKOFDERIVATIVESISINSIGNIfiCANTASTHEGROUPENTERSINTODERIVATIVESTRANSACTIONSONLYWITHfiNANCIALINSTITUTIONSWHICHHAVEASOUNDCREDITPROfiLE.FORTRADERECEIVABLESANDPAYABLESDENOMINATEDINFOREIGNCUR-RENCIESANDFUTURELOANSRELATEDINVESTMENTINVESSELS,THECOMPANYHASENTEREDINTOCURRENCYSWAPANDFORWARDFOREIGNEXCHANGECON-TRACTSTOHEDGEFOREIGNCURRENCYEXCHANGERATEflUCTUATIONRISK,ANDINTEREST-RATESWAPCONTRACTSTOMINIMIZEINTERESTRATEflUCTUATIONRISKOFLOANSANDBONDS.FORMARKETABLESECURITIESANDINVESTMENTSINSECURITIES,THECOMPANYCONTINUOUSLYREVIEWSTHECONDITIONOFHOLD-INGSECURITIESCONSIDERINGTHESTOCKMARKETANDTHERELATIONSHIPWITHISSUINGCOMPANIES,TAKINGINTOACCOUNTMARKETVALUEOFSECURITIESANDfiNANCIALCONDITIONOFISSUINGCOMPANIESINACCORDANCEWITHIN-TERNALREGULATIONS.THECOMPANYENTERSINTODERIVATIVETRANSACTIONSWITHTHEAPPROV-ALFROMAUTHORIZEDOFfiCERSINACCORDANCEWITHINTERNALREGULATIONS,WHICHSETFORTHTRANSACTIONAUTHORITYANDMAXIMUMUPPERLIMITONPO-SITIONS.RESULTSOFDERIVATIVETRANSACTIONSAREREGULARLYREPORTEDATTHEEXECUTIVEOFfiCERSMEETING.ITSCONSOLIDATEDSUBSIDIARIESALSOMANAGEDERIVATIVETRANSACTIONSUNDERTHESAMEREGULATIONS.THECOMPANYMANAGESLIQUIDITYRISKBYMAINTAININGLIQUIDINSTRU-MENTSBASEDONREPORTSFROMEACHBUSINESSGROUP.THEFAIRVALUEOFfiNANCIALINSTRUMENTSISBASEDONMARKETPRICE,IFAVAILABLE.WHENTHEREISNOMARKETPRICE,FAIRVALUEISREASONABLYESTI-MATED.FAIRVALUECANflUCTUATEBECAUSEDIFFERENTASSUMPTIONSMAYBEADOPTEDFORCALCULATIONOFFAIRVALUECONSIDERINGVARIOUSFACTORS.INAD-DITION,THENOTIONALAMOUNTSOFDERIVATIVESINNOTE15.DERIVATIVESANDHEDGINGACTIVITIESARENOTNECESSARILYINDICATIVEOFTHEACTUALMARKETEXPOSUREINVOLVEDINTHEDERIVATIVETRANSACTIONS.62ANNUALREPORT2012


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