Canon 2002 Annual Report Download - page 30

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28
FINANCIAL OVERVIEW
Return on sales
0298 99 00 01
7
0
6.5%
4.0%
5.0%
5.8%
2.8%
R&D expenditure
(Millions of yen)
0298 99 00 01
250,000
0
233,669
176,967
177,922
194,552
218,616
GENERAL
The following discussion and analysis provides information that
management believes to be relevant to understanding Canon’s
consolidated financial condition and result of operations.
References in this discussion to the “Company” are to Canon
Inc. and, unless otherwise indicated, references to the financial
condition or operating results of “Canon” refer to Canon Inc. and
its consolidated subsidiaries.
OVERVIEW
Canon is one of the world’s leading manufacturers of copying
machines, laser beam printers, bubble jet printers, cameras,
steppers and aligners. Canon earns revenues mainly from the
manufacture and sale of these products domestically and
internationally.
On a consolidated basis, Canon divides its businesses into
three product groups: business machines, cameras and optical
and other products.
• The business machine product group includes copying
machines, computer peripherals and business systems.
Copying machines include analog, digital, color and
personal models. Computer peripherals include mainly
laser beam printers, bubble jet printers and scanners.
Business systems include fax machines, micrographic
equipment, personal computers and calculators.
• The camera product group includes cameras, video
camcorders and digital cameras.
• The optical and other products product group
includes steppers for semiconductor chip production and
aligners used in the production of liquid crystal displays,
television broadcasting lenses and medical equipment.
Overseas operations are significant to Canon’s operating
results. Overseas operations generated approximately 73% of
total net sales in fiscal 2002. Such sales are denominated in the
applicable local currency and are subject to fluctuations in the
value of the yen in relation to such other currencies. Despite
efforts to reduce the impact of currency fluctuations on
operating results, including by localizing some manufacturing
and by procuring parts and materials from overseas suppliers,
Canon believes such fluctuations have had and will continue to
have a significant effect on results of operations.
Cost of sales reflects principally the cost of raw materials,
parts and labor used by Canon in the manufacture of its
products. A portion of the raw materials used by Canon is
imported or includes imported materials. Such raw materials are
subject to fluctuations in world market prices and exchange
rates that may affect Canon’s cost of sales. Other components
of cost of sales include depreciation expenses from plants,
maintenance expenses, light and fuel expenses and rent
expenses.
The major components of selling, general and administrative
expenses are payroll, advertising expenses and marketing costs.