PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2006 and 2005 Expressed in rupiah, unless otherwise stated
50
24. DERIVATIVE INSTRUMENTS continued
b. Forward exchange contracts with Standard Chartered Bank, Jakarta Branch entered on February 20, 2006 and August 22, 2006, and ABN AMRO Bank N.V., Jakarta Branch ABN AMRO
entered on February 20, 2006, with notional amounts aggregating to JP¥1,450 million and US2 million which will mature on various dates from November 2006 to February 2007, at fixed
exchange rates ranging from Rp80.32 to Rp87.75 for every JP¥1 and from Rp9,223 to Rp9,360 for every US1.
c. Structured currency option contracts with Standard Chartered Bank entered on November 10, 2005, for the purchase of a total of US500,000 with the following terms:
• If USDIDR spot rate is or above Rp11,500, the Company has the right to buy USD at the rate
of USDIDR spot rate minus Rp810 on the settlement date. •
If USDIDR spot rate is above Rp10,690 but below Rp11,500, the Company has the right to buy USD at the rate of Rp10,690 on the settlement date.
• If USDIDR spot rate is below Rp10,690, the Company is obliged to buy USD at the rate of
Rp10,690 on the settlement date. These contracts have no premium and will be settled in October 2006.
d. Structured currency option contracts with JPMorgan entered on November 11, 2005, for the purchase of a total of US500,000 with the following terms:
• If USDIDR spot rate is or above Rp11,500, the Company will buy USD at the rate of USDIDR
spot rate minus Rp1,000 on the settlement date. •
If USDIDR spot rate is above Rp10,500 but below Rp11,500, the Company will buy USD at the rate of Rp10,500 on the settlement date.
• If USDIDR spot rate is above Rp10,250 but below Rp10,500, the Company will buy USD at the
spot rate on the settlement date. •
If USDIDR spot rate is below Rp10,250, the Company will buy USD at the rate of Rp10,250 on the settlement date.
These contracts have upfront fee at US60,000 and will be settled in October 2006. e. Structured currency option contracts with ABN AMRO entered on May 1, 2006, for the purchase of
a total of JP¥700 million with the following terms: •
If JP¥IDR spot rate is at or above Rp85.00, the Company has the right to buy JP¥ at the rate of JP¥IDR spot rate minus Rp4.50 on the settlement date.
• If JP¥IDR spot rate is above Rp80.50 but below Rp85.00, the Company has the right to buy
JP¥ at the rate of Rp80.50 on the sett lement date. •
If JP¥IDR spot rate is at or below Rp80.50, the Company is obliged to buy JP¥ at the rate of Rp80.50 on the settlement date.
These contracts have no premium and will be settled on various dates from October 2006 to March 2007.
The derivative instruments as mentioned in items b, c, d, and e above can not be designated as hedge activities for accounting purposes and accordingly, changes in the fair value of such
instruments are recorded directly to earnings. As of September 30, 2006, the Company recognized the net liabilities on the above derivative instruments at market value of Rp5,745,458,051 which is
presented as part of “Derivatives Liabilities - Net” in the 2006 consolidated balance sheet.
The loss arising from the derivative transactions amounted to Rp38,069,572,764 and was recorded as part of “Foreign Exchange Gain Loss - Net” presented in the nine months ended
September 30, 2006 consolidated statement of income.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2006 and 2005 Expressed in rupiah, unless otherwise stated
51
25. LITIGATION
