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Notes to Consolidated Financial Statements
6. DERIVATIVE TRANSACTIONS
The Company and its consolidated subsidiaries have entered
into foreign currency forward exchange contracts, currency
options and foreign currency swap contracts to hedge risks
of exchange rate fluctuations of foreign currency monetary
assets and liabilities, interest rate swap contracts to hedge
risks of interest rate fluctuations, and commodity forward
contracts, etc., for copper and aluminum to hedge risks of
price fluctuations. The Company and its consolidated subsidiaries
use derivative transactions for managing market risk
related to recorded assets and liabilities as well as for future
commitments, and not for speculation or dealing purposes.
The Company and its consolidated subsidiaries deal with
highly rated international financial institutions and trading
concerns as counterparties to these transactions to minimize
credit risk exposure. Derivative transactions are entered into
by each operational division, and the processing of the transactions
is controlled and reviewed by administrative divisions,
in accordance with established policies that restrict dealing in
derivatives, including limits on authorities and amounts.
Additional information for derivative transactions as of and for the years ended March 31, 2012 and 2011 is as follows:
Millions of yen
2012 2011
Contracts for which hedge
accounting is not adopted
Contracts for which hedge
accounting is adopted*
Contracts for which hedge
accounting is not adopted
Contracted Fair Recognized Contracted Fair Contracted Fair Recognized
amount value gain (loss) amount value amount value gain (loss)
Contracts for which hedge
accounting is adopted*
Contracted Fair
amount value
Foreign currency forward
exchange contracts:
Buy............................. ¥ 3,346 ¥2 ¥2 ¥16,065 ¥532 ¥ 4,728 ¥ 5 ¥ 5 ¥14,044 ¥145
Sell.............................. 4,401 (5) (5) 11,153 (232) 9,274 (61) (61) 7,525 (148)
Commodity forward
contracts for copper:
Buy............................. 1,715 (1) (1) — — 1,914 0 0 — —
Sell.............................. 1,702 0 0 — — 1,926 (1) (1) 569 1
Copper swap contracts... — — — 872 73 — — — 626 29
¥11,164 ¥(4) ¥(4) ¥28,090 ¥373 ¥17,842 ¥(57) ¥(57) ¥22,764 ¥ 27
Thousands of U.S. dollars
2012
Contracts for which hedge
accounting is not adopted
Contracts for which hedge
accounting is adopted*
Contracted
amount
Fair
value
Recognized
gain (loss)
Contracted
amount
Fair
value
Foreign currency forward
exchange contracts:
Buy............................. $ 40,711 $ 24 $ 24 $195,462 $6,473
Sell.............................. 53,547 (61) (61) 135,698 (2,823)
Commodity forward
contracts for copper:
Buy............................. 20,866 (12) (12) — —
Sell.............................. 20,708 0 0 — —
Copper swap contracts... — — — 10,610 888
$135,832 $(49) $(49) $341,769 $4,538
* Certain interest rate swap contracts (contracted amount ¥63,142 million (US$768,244 thousand) and ¥64,129 million for the years ended
March 31, 2012 and 2011) meeting certain hedging criteria are excluded from the table above. Certain foreign currency forward exchange
contracts (contracted amount “Buy” ¥13,625 million (US$165,774 thousand) and ¥9,632 million, “Sell” ¥107,156 million (US$1,303,760
thousand) and ¥98,077 million for the years ended March 31, 2012 and 2011, respectively) meeting certain hedging criteria are excluded from
the table above. See Note 4.
Annual Report 2012
SUMITOMO ELECTRIC
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