Canon 2003 Annual Report Download - page 39

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compared with ¥903,134 million in fiscal 2002 and ¥776,111
million in fiscal 2001. This increase was primarily a result of a
decrease in short-term loans. Canon believes its working capital
will be sufficient for its requirements for the foreseeable future.
Canon’s capital requirements are primarily dependent on
management’s business plans regarding the levels and timing of
capital expenditures and investments.
The working capital ratio (current assets to current liabilities)
for fiscal 2003 was 2.33, compared to 2.13 for fiscal 2002 and
1.91 for fiscal 2001.
Return on assets (Net income divided by the average of total
assets as of December 31, 2002 and 2003) increased to 9.0% in
fiscal 2003, compared to 6.6% in fiscal 2002 and 5.9% in fiscal
2001. This increase was due mainly to an increase in net income.
Return on stockholders’ equity increased to 15.9% in fiscal 2003,
compared with 12.5% in fiscal 2002 and 12.2% in fiscal 2001.
Debt to total assets ratio for the past three years was 3.1%, 5.0%
and 10.4%, respectively. Canon had short-term loans and long-
term debt of ¥98,396 million (U.S.$920 million) in fiscal 2003,
¥148,103 million in fiscal 2002 and ¥295,630 million in fiscal
2001.
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.
Canon provides guarantees to third parties of bank loans of its
employees, affiliates and other companies. Canon would have to
perform under a guarantee, if the borrower defaults on a payment
within the contract periods of 1 year to 30 years in the case of
employees with housing loans, and of 1 year to 10 years in the
case of affiliates and other companies. The maximum amount of
undiscounted payments Canon would have had to make in the
event of default by all borrowers was ¥58,299 million (U.S.$545
million) at December 31, 2003. The carrying amounts of the
liabilities recognized for Canon’s obligations as a guarantor under
those guarantees are insignificant. Certain of those guarantees are
secured by guarantees issued to Canon by other parties. Such
third party guarantees amounted to ¥950 million (U.S.$9 million)
at December 31, 2003. The company and its consolidated
subsidiaries provide guarantees to third parties of certain
obligations of their consolidated subsidiaries. At December 31,
2003, these guarantees amounted to ¥55,730 million (U.S.$521
million). To a lesser extent, consolidated subsidiaries provide
guarantees to third parties of obligations of other consolidated
subsidiaries. All intercompany guarantees are eliminated in
consolidation and therefore are not reflected in the above figure.
Working capital ratio
2.5
0
99 00 01 02 03
1.70 1.71
1.91
2.13
2.33
Return on stockholders’ equity
16
0
99 00 01 02 03
6.0%
10.7%
12.2% 12.5%
15.9%