Sony 2001 Annual Report Download - page 116

Download and view the complete annual report

Please find page 116 of the 2001 Sony annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

Sony Corporation Annual Report 2001
114
Sony has entered into purchased foreign currency option contracts in the notional principal amounts of
¥495,949 million and ¥479,132 million ($3,833 million) at March 31, 2000 and 2001, respectively. The majority
of these contracts expire up to three months after the balance sheet date. Sony has also entered into written
foreign currency option contracts in the notional principal amounts of ¥574,656 million and ¥724,091 million
($5,793 million) at March 31, 2000 and 2001, respectively. The majority of these contracts are part of range
forward contract arrangements and expire in the same month with the corresponding purchased foreign currency
option contracts described above. In addition to the range forward contracts, Sony enters into written foreign
currency option contracts in order to minimize its hedging costs. The fair values of such foreign currency
options were estimated based on market quotations.
Sony has entered into interest rate swap agreements and interest rate and currency swap agreements which
mature from 2001 to 2015 to reduce its exposure resulting from adverse fluctuations in interest rates or foreign
currency exchange rates on underlying debt instruments. At March 31, 2000 and 2001, the aggregate notional
principal amounts of the interest rate swap agreements were ¥225,801 million and ¥215,971 million ($1,728
million), respectively, and those of the interest rate and currency swap agreements were ¥362,437 million and
¥278,573 million ($2,229 million), respectively. The fair values of such agreements were estimated based on
the discounted amounts of net future cash flows.
Sony’s life insurance subsidiary often enters into written government bond futures option contracts in order
to secure the yields of bond investments on hand. Their notional principal amounts were ¥102,580 million at
March 31, 2000. The subsidiary did not have such contracts at March 31, 2001. For accounting purposes, those
transactions do not qualify for hedge accounting. Accordingly, those written bond futures option contracts were
marked to market. The fair values of such written bond futures option contracts were estimated based on
market quotations. The average fair value and the net gain or loss from those written bond futures option
contracts during the years ended March 31, 1999, 2000 and 2001 were insignificant.
The estimated fair values of Sony’s financial instruments, both on and off the balance sheets excluding cash
and cash equivalents, time deposits, notes and accounts receivable, trade, short-term borrowings and notes and
accounts payable, trade that are carried at amounts which approximate fair value and excluding debt and equity
securities disclosed in Note 8, are summarized as follows:
Yen in millions Dollars in millions
March 31 March 31,
2000 2001 2001
Carrying Estimated Carrying Estimated Carrying Estimated
amount fair value amount fair value amount fair value
Long-term debt including
the current portion . . . . . . . . . . . . ¥(972,337) ¥(1,893,521) ¥(1,014,525) ¥(1,395,706) $(8,116) $(11,166)
Forward exchange contracts . . . . . . 986 2,479 (7,864) (17,226) (63) (138)
Currency option contracts
purchased . . . . . . . . . . . . . . . . . . . 7,422 7,422 5,964 5,964 48 48
Currency option contracts written . . (2,892) (2,892) (6,897) (6,897) (55) (55)
Interest rate swap agreements . . . . (253) (457) (2,469) (3,797) (20) (30)
Interest rate and currency swap
agreements . . . . . . . . . . . . . . . . . . — (32,362) —(9,032) —(72)
Bond futures option contracts
written . . . . . . . . . . . . . . . . . . . . . . (179) (179) ————