Canon 2002 Annual Report Download - page 38

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Off-balance sheet arrangements
As part of its ongoing business, Canon does not participate in
transactions that generate relationships with unconsolidated
entities or financial partnerships, such as entities often referred
to as structured finance or special purpose entities, which would
have been established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited
purposes.
Contractual obligations and Commercial
commitments
Canon’s management believes that current financial resources,
cash generated from operations and Canon’s potential capacity
for additional debt and/or equity financing will be sufficient to
fund current and future capital requirements.
The following summarizes Canon’s contractual obligations at
December 31, 2002.
Canon does not have any rating downgrade triggers that
would accelerate the maturity of a material amount of our debt.
A downgrade in our credit rating could however increase the
cost of our borrowings.
Canon provides short-term (generally less than one year)
warranties against defects in materials and workmanship on
most of our consumer products. A liability for the estimated
product warranty related cost is established at the time revenue
is recognized and is included in accrued expenses. Estimates for
accrued product warranty cost are primarily based on historical
experience, and are affected by ongoing product failure rates,
specific product class failures outside of the baseline experience,
material usage and service delivery costs incurred in correcting a
product failure.
Canon provides guarantees to third parties of bank loans of
its employees, affiliated and other companies. For each
guarantee provided, Canon would have to perform under the
guarantee, if they default on a payment within the contract
periods of 1 year to 30 years for the employees with housing
loans and of 1 year to 15 years for the affiliated and other
companies. The maximum amount of undiscounted payments
Canon would have to make in the event of default is ¥49,919
million (U.S.$416 million) at December 31, 2002. The carrying
amounts of the liabilities recognized for Canon’s obligations as a
guarantor under those guarantees are insignificant. Certain of
those guarantees secured by guarantees issued to Canon by
other parties amounted to ¥1,094 million (U.S.$9 million) at
December 31, 2002. Canon Inc. and its consolidated
(Millions of yen)
Payments Due By Period
Total Less than 1 year 1-3 years 3-5 years More than 5 years
Contractual Obligations:
Short-term Debt ¥66,754 66,754 ———
Long-term Debt 100,355 19,006 47,418 11,479 22,452
Operating Leases 36,690 10,033 12,469 8,096 6,092
Total ¥203,799 95,793 59,887 19,575 28,544
Capital expenditure
(Millions of yen) Working capital ratio
0298 99 00 01
2.13
1.60
1.71
1.91
1.70
2
0
Return on stochholder's equity
0298 99 00 01
12.5%
9.7%
10.7%
12.2%
6.0%
12
0
0298 99 00 01
200,000
0
221,401
200,386
170,986
207,674
198,702