Sony 2003 Annual Report Download - page 194

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Consolidated Financial Information 2003
- 108 -
(2) Fair value of financial instruments:
The estimated fair values of Sony’s financial instruments are summarized as follows. The following summary
excludes cash and cash equivalents, time deposits, notes and accounts receivable, trade, short-term
borrowings, notes and accounts payable, trade and deposits from customers in the banking business that
are carried at amounts which approximate fair value. The summary also excludes debt and equity securities
which are disclosed in Note 8.
Yen in millions
March 31
2002 2003
Notional
amount
Carrying
amount
Estimated
fair value
Notional
amount
Carrying
amount
Estimated
fair value
Long-term debt including
the current portion −¥(1,079,403) ¥(1,323,772) −¥(841,824) ¥(924,665)
Foreign exchange forward contracts ¥1,042,836 (37,243) (37,243) ¥1,139,330 (11,753) (11,753)
Currency option contracts purchased 357,052 1,267 1,267 484,456 2,868 2,868
Currency option contracts written 423,826 (2,933) (2,933) 238,760 (1,975) (1,975)
Interest rate swap agreements 256,501 (6,699) (6,699) 181,443 (8,446) (8,446)
Interest rate and currency swap
agreements 228,433 5,550 5,550 24,588 (1,330) (1,330)
Embedded derivatives 342,846 3,740 3,740 446,463 1,755 1,755
Dollars in millions
March 31, 2003
Notional
amount
Carrying
amount
Estimated
fair value
Long-term debt including
the current portion −$(7,016) $(7,706)
Foreign exchange forward contracts $9,494 (98) (98)
Currency option contracts purchased 4,037 24 24
Currency option contracts written 1,990 (16) (16)
Interest rate swap agreements 1,512 (70) (70)
Interest rate and currency swap
agreements 205 (11) (11)
Embedded derivatives 3,721 15 15
The following are explanatory notes regarding the estimation method of fair values in the above table.
Long-term debt including the current portion
The fair values of long-term debt, including the current portion, were estimated based on either the market
value or the discounted amounts of future cash flows using Sony’s current incremental debt rates for
similar liabilities.
Derivative financial instruments
The fair values of foreign exchange forward contracts and foreign currency option contracts were
estimated based on market quotations. The fair values of interest rate and currency swap agreements
were estimated based on the discounted amounts of future net cash flows. The fair values of convertible
rights, which were a majority of embedded derivatives, were estimated based on the market price of stock