No. DN-66

Reporting Manual for Consolidation (Non EDP) date issued8/ 31/2009

date revised 6/12/2010

FORMAT ID / ：MFV3
TITLE / ：Fair value measurements for financial assets and liabilities
FREQUENCY / ： Quarterly

【Overview】

For assets and liabilities that are measured at fair value (for example, trading securities), the reporting entity shall disclose the information that enables the users of its financial statements to assess the inputs used to develop the fair value in accordance with accounting guidanfe for “Fair Value Measurements and Disclosures” (ASC820-10). ASC820-10 required financial assets and liabilities measured and reported as fair value to be presented by Level1, 2 and 3 in the Fair Value Hierarchy. The following information shall be stated in the Form MFV3.

Please fill in MFV1 and MFV 2 in accordance with instruction of each form.

NOTE:

 Please note that this form applies to "Assets and liabilities" reported at fair value only.

 Please note that following assets and liabilities are out of scope of this Form.

- Intercompany assets and liabilities (including the derivatives assets and liabilities with SGTS)

- Inventory pricing

- Vendor specific objective evidence

- Lease

- Nonfinancial assets/liabilities that are initially measured at fair value in a business combination.

 New information for Non financial assets and liabilities valued at fair value on a non recurring basis (e.g. Impairment of fixed assets and goodwill) are included in other Form. So, they should be excluded from this Form MFV.

- Impairment of Long-Lived Assets  Form MYE

- Asset Retirement Obligation (ARO)  Form MYF

- Pension plan assets  Form MLH3

- Other  Form MFV1

  1. How to input the table of “1. Level of Fair Value Measurements”.
  1. Firstly, you identify financial assets and liabilities valued at fair value on your balance sheet and to which Hyperion accounts they are booked. The examples of financial assets and liabilities valued at fair value are, but not limited to, Available-for-sale securities, Derivative assets and liabilities, Short-term investments included in cash equivalents and private equity securities which were impaired and written down during this fiscal year.
  2. Please break down the Hyperion accounts identified above into “those valued at fair value on Recurring basis (at least annually)”, “those valued at fair value on Non recurring basis” and “those NOT valued at fair value (e.g. measured by cost or equity method)”. Please note that “those valued at fair value on a Recurring basis” includes, but not limited to, Trading securities and Available for sale securities. “Those valued at fair value on a Non recurring basis” include, but not limited to, impaired private securities which were written down to fair values this fiscal year. In addition, if there are other financial assets and liabilities reported at fair value, please report those in “Others” lines.
  3. You should report those valued at fair value both on a Recurring and Non recurring basis by fair value hierarchy (Level 1, 2 or 3). As for fair value hierarchy, please refer to the following.

 Level 1 inputs are quoted prices fall under "Level 1" if the following conditions met:

1) Applicable assets/liabilities are traded and listed on the active and public market,

2) There are frequent, usually daily, trading and the prices are fixed and determined.

If the closing prices at the fiscal year end for such brands are not available but most recent prices near the fiscal year end is available, the fair value hierarchy would be downgraded from level 1 to level 2 or 3. With regard to detailed explanation, please refer to CAP (50-07-1:Fair value measurements) and FAS No.157 Q&A.

 Level 2 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and if the asset or liability has a specified (contractual) term, the Level 2 input should be observable for substantially the full term of the asset or liability. Example of Level 2 are as follows:

i) Quoted prices for identical or similar assets/liabilities in markets that are not active.

ii) Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

With regard to detailed explanation, please refer to CAP (50-07-1:Fair value measurements) and FAS No.157 Q&A.

 Level 3 are unobservable inputs for the asset or liability and should be used to measure fair value to the extent that observable inputs are not available. Unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. However, the entity’s own data used to develop the unobservable inputs should be adjusted if information is reasonable available without undue cost and effort that indicates that market participants would use different assumptions.

With regard to detailed explanation, please refer to CAP (50-07-1:Fair value measurements) and FAS No.157 Q&A.

  1. Regarding “Derivative assets and liabilities” for the assets and liabilities of the same counterparty , even if these assets and liabilities are offset and the net amount is reported on the B/S, you should disclose these assets and liabilities separately at the gross amount because each asset and liability may be categorized into the different fair value hierarchy. Then, you should fill in the negative amount at the column of “Netting” *3 in order to reconcile the total amount with the B/S amount.
  2. If there is another financial instrument, pleases state a brief description in *2.
  3. Total amount of each Hyperion account should be agreed with the balance on your B/S. If not agreed, please report the reason of the variance between total amount and B/S balance in*6.
  4. If you change the valuation technique (e.g. market approach, income approach, or the cost approach) at measuring level2 or level3 during this fiscal year, please describe the details (change, reason and amount of the assets/liabilities) in *3.
  1. How to input the table of “2. Transfers between Level 1 and 2 on “Recurring basis””.

Please fill in below information on assets and liabilities valued at fair value on recurring basis.

- Transferred amount from Level 1 to Level 2. (During the quarter)

- Transferred amount from Level 2 to Level 1. (During the quarter)

- The major factor of the transfers between Level 1 and 2 on "Recurring basis" if the amount of transfers is USD 1mil or more. (Criteria should be based on asset / liability class accordance with this table.)

Those values are reported as of the beginning balance of the quarter in which the transfer occurs.

  1. How to input the table of “3. Reconciliation for Fair Value of Level 3 on Recurring basis”.

The reporting entity shall disclose the information that enables the users of its financial statements to assess the inputs used to develop the fair values and for recurring fair value measurements using significant unobservable inputs (Level 3), the effect of the measurements on earnings (or changes in net assets) for the quarter. To meet this objective, the reporting entity should disclose a reconciliation of the beginning and ending balances for fair value measurements using Level 3 on a “Recurring” basis (Recurring Level 3 assets and liabilities), separately presenting changes during the quarter attributable to the following.

Please fill in the format on a quarterly basis except for NO.6 (only on year-end).

1. Beginning balance

Please fill in the beginning balance of Recurring Level 3 assets and liabilities. The amount should be agreed with the ending balance in the previous quarter.

2. Total realized / unrealized gains/(losses)

a: Total realized and unrealized gains/(losses) including in earnings

Please fill in the total gains or losses for the quarter (realized and unrealized) from Recurring Level 3 assets and liabilities reported on P/L by each Hyperion account, separately.

b: Total realized and unrealized gains/(losses) including in OCI

Please fill in the total gains or losses for the period (realized and unrealized) from Recurring Level 3 assets and liabilities reported on B/S by each Hyperion account.

3. Purchase, sales, issuances and settlements

The amount of cash receipt or payment at the time of purchase, sales, issuances and settlement

- Increased amount by the purchase or issuance

- Decreased amount by the sales or settlements

4. Transfers in and/ or out of Level 3

- Transferred amount from Level 1 and 2 to Level 3.

- Transferred amount from Level 3 to Level 1and 2.

- Those values are reported as of the beginning balance of the quarter in which the transfer occurs.

5. Ending balance

Please fill in the ending balance of Recurring Level 3 assets and liabilities measured at fair value. The amount should be agreed with the balance of Recurring Level 3 assets and liabilities on “Table 1. Level of Fair value Measurements”.

6. (Year-end only) Please fill the amount of the gains /losses of the fiscal year in "II. 2. a" and ”b” above included in earnings (or OCI) that are attributed to the changes in unrealized gains /losses relating to those assets and liabilities that are still held as of the balance sheet date. Settlements with cash (e.g. dividends and interest received) are recognized gains/losses, so they should be excluded. Although amortization or accretion of premiums and discounts are not settlements with cash, they are treated as “realized gains/losses” on this Form. Also, dividends received are treated as “realized gains” with “settlements”.

（Reference）

-Corporation Accounting Policy

50-07-1 Fair value measurements

- ASC820-10 Fair value measurements and disclosures

- FAS 157 Q&A for financial assets and liabilities

Policy section at

- SFAS157

Statement No. 157 Fair Value Measurements