Issue of Annual Report 2010

a) Methods for Determining Market Value of Financial Instruments and Matters Concerning Marketable Securities and Derivative Transactions
(1) Cash and cash equivalents, (2) Notes and accounts receivable
Book value is used since the variance between market value and book value is small due to the settlement of these accounts in the near future.
(3) Marketable and investment securities
In determining market value, the stock market price is used for stocks. In the absence of a market price quotation, fair value on public and
corporate bonds is determined as follows. Such bonds are first sorted in sets according to maturity and credit rating. Yield on a government
bond with a similar maturity or another appropriate indicator is then applied as a benchmark, and a spread taking into account credit rating
and maturity of a set of bonds is added on top of the benchmark rate. This rate approximating future cash flow of that set of bonds is then
applied as the discount rate in calculating the set’s present value. For matters pertaining to respective marketable securities to be held to
maturity, refer to “11. Marketable Securities and Investment Securities” in the Notes to Consolidated Financial Statements.
(4) Long-term loans receivable
Within the Sapporo Group, the fair value of long-term loans receivable is calculated as follows. Loans are first sorted in sets according to
maturity and credit risk. Yield on a government bond with a similar maturity or another appropriate indicator is then applied as a benchmark,
and a spread taking into account credit risk and maturity of a set of loans is added on top the benchmark rate. This rate approximating future
cash flow of that set of loans is then applied as the discount rate in calculating the set’s present value. The fair value of potentially doubtful
receivables is calculated either at present value using the same discount rate formula, or based on the projected amount of collateral or
guarantees deemed recoverable.
(1) Accounts payable, (2) Short-term bank loans, (3) Liquor taxes payable, and (4) Income taxes payable
Book value is used since the variance between market value and book value is small due to the short-term settlement of these accounts.
(5) Corporate bonds
The market value of bonds issued by the Company is calculated based on market price for bonds that have market prices.
(6) Long-term debt
For long-term debt, the method for determining fair value is to discount the sum total of the outstanding principal and interest by the estimated
interest-rate cost of refinancing it. Some long-term debt with variable interest rates backed by interest rate swaps is subject to special
treatment. The method for determining the fair value of variable-rate debt backed by interest rate swaps is to discount the sum total of the
outstanding principal and net flow on interest rates by the estimated interest-rate cost of refinancing it.
b) Financial Instruments for Which the Assessment of Market Value Is not Feasible
Millions of yen
Carrying value
Thousands of
U.S. dollars (Note 1)
Carrying value
Unlisted stocks, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥14,460 $177,550
Bonds with stock acquisition rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,843 47,190
Dealers’ deposits for guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,936 392,141
c) Estimate of Monetary Claims and Maturing Marketable Securities Due for Redemption After the Consolidated Account Settlement
Millions of yen Thousands of U.S. dollars (Note 1)
Inside one
year
After one
year and
inside five
years
After five
years and
inside ten
years
After ten
years
Inside one
year
After one
year and
inside five
years
After five
years and
inside ten
years
After ten
years
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . ¥12,957 – – – $159,103 – – –
Notes and accounts receivable—trade . . . . . . . . . . . . 61,353 – – – 753,352 – – –
Marketable securities and Investment securities
Held-to-maturity debt securities . . . . . . . . . . . . . . . 2 200 – – 26 2,456 – –
Long-term loans receivable . . . . . . . . . . . . . . . . . . . . . . 348 9,472 925 – 4,278 116,301 11,354 –
¥74,661 ¥9,672 ¥925 – $916,759 $118,757 $11,354 –
SAPPORO HOLDINGS LIMITED
Annual Report 2010
47