Issue of Annual Report 2010

2 Management of market risks (risks from exchange-rate and interest-rate volatility)
With regard to operating receivables and payables denominated in foreign currencies, the Company and certain of its subsidiaries use
forward foreign exchange contracts to limit to within a certain scope risks stemming from exchange-rate volatility. Interest rate swaps are
also used to control volatility risks involved in the interest rates on borrowings.
For marketable and investment securities, the Company and its major subsidiaries periodically assess the market value of the securities
and the financial condition, etc. of the issuer (business partners), and, as necessary, review the holding status of such securities,
taking into account their relationship with the business partner in question.
Derivative transactions are executed and managed pursuant to standards of internal control. These controls clearly stipulate matters
pertaining to derivatives, including their purpose, product range, transaction counterparties, settlement approval procedures, the segregation
of duties within executive departments, and the system for reporting such transactions. The balance and status of income (loss) for
derivative transactions is reported periodically to the Board of Directors.
3 Management of liquidity risk associated with fund procurement (risk of failing to meet payment due dates)
To minimize financial liabilities, the Sapporo Group has a cash management system (CMS) to centrally manage fund allocation to the
Company and its significant subsidiaries. Financial divisions within the Group formulate plans for fund procurement and fund management
in an effort to manage liquidity risk.
(4) Supplementary Explanation of Matters Concerning Fair Value, Etc., of Financial Instruments
Market value of financial instruments contains fair values that are rationally calculated in cases for which no market price is available. Because
variable factors are incorporated into the calculation of this value, the adoption of different terms and assumptions can cause fair value to vary.
Furthermore, notional amounts contracted in derivative transactions, as described in the notes pertaining to derivative transactions, are not a
full expression of the market risk associated with derivative transactions.
2. Matters Concerning Fair Value, Etc., of Financial Instruments
Amounts, market value and their variances reported in the consolidated balance sheets for the fiscal year ended December 31, 2010 are as
follows. Items for which the assessment of market value is not feasible were omitted.
Millions of yen Thousands of U.S. dollars (Note 1)
Carrying
value
Fair value
Unrealized
gain (loss)
Carrying
value
Fair value
Unrealized
gain (loss)
(1) Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 12,957 ¥ 12,957 – $ 159,103 $ 159,103 –
(2) Notes and accounts receivable—trade . . . . . . . . . . . . . . . . . . . . . . . . 61,353 753,352
Allowance for doubtful receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . (81) (997)
Sub total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,272 61,272 – 752,355 752,355 –
(3) Marketable securities and Investment securities
1 Held-to-maturity debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 204 (2) 2,482 2,503 (22)
2 Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,368 23,368 – 286,932 286,932 –
(4) Long-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,745 131,933
Allowance for doubtful receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . (195) (2,395)
Sub total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,550 10,550 (0) 129,538 129,540 (2)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥108,349 ¥108,351 ¥ (2) $1,330,410 $1,330,433 $ (24)
(1) Notes and accounts payable—trade . . . . . . . . . . . . . . . . . . . . . . . . . . 24,348 24,348 – $ 298,973 $ 298,973 –
(2) Short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,177 4,177 – 51,293 51,293 –
(3) Liquor taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,253 34,253 – 420,594 420,594 –
(4) Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,819 1,819 – 22,331 22,331 –
(5) Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,000 52,920 (920) 638,507 649,804 (11,297)
(6) Long-term bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,315 122,400 (1,086) 1,489,619 1,502,952 (13,333)
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥237,912 ¥239,918 ¥ (2,006) $2,921,318 $2,945,947 $(24,630)
(7) Derivative transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ (11) ¥ (11) – $ (136) $ (136) –
SAPPORO HOLDINGS LIMITED
46 Annual Report 2010