Canon 2003 Annual Report Download - page 78

76
CANON INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(20) Disclosures about the Fair Value of Financial
Instruments
Cash and cash equivalents, Trade receivables, Short-term loans,
Trade payables, Accrued expenses
The carrying amount approximates fair value because of the short
maturity of these instruments.
Marketable securities and Investments
The fair values of Canon’s marketable securities and investments
are based on quoted market prices.
Noncurrent receivables
The fair values of Canon’s noncurrent receivables are based on the
present value of future cash flows through estimated maturity,
discounted using estimated market discount rates. Their carrying
amounts at December 31, 2003 and 2002 totaled ¥16,543 million
($154,607 thousand) and ¥20,568 million, respectively, which
approximate fair values because of their short duration.
Long-term debt
The fair values of Canon’s long-term debt instruments are based
on the quoted price in the most active market or the present value
of future cash flows associated with each instrument discounted
using Canon’s current borrowing rate for similar debt instruments
of comparable maturity.
¥55,730 million ($520,842 thousand). 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.
At December 31, 2003, commitments outstanding for the
purchase of property, plant and equipment approximated ¥54,947
million ($513,523 thousand).
Canon occupies sales offices and other facilities under lease
arrangements accounted for as operating leases. Deposits made
under such arrangements aggregated ¥15,092 million ($141,047
thousand) and ¥18,133 million at December 31, 2003 and 2002,
respectively, and are reflected in noncurrent receivables on the
accompanying consolidated balance sheets.
Canon is involved in various other claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have
a material adverse effect on Canon’s consolidated financial position,
results of operations, or cash flows.
Future minimum lease payments required under capital and
noncancellable operating leases that have initial or remaining lease
terms in excess of one year as of December 31, 2003 are as follows:
Year ending December 31: Millions of yen Thousands of U.S.dollars
Capital Operating Capital Operating
Leases Leases Leases Leases
2004 ¥ 5,200 11,769 $ 48,598 109,991
2005 3,986 8,591 37,252 80,290
2006 1,244 6,713 11,626 62,738
2007 561 5,129 5,243 47,934
2008 204 3,926 1,907 36,692
Later years 72 7,302 673 68,243
Total future minimum
lease payments ¥11,267 43,430 $105,299 405,888
Canon also issues contractual product warranties under
which it generally guarantees the performance of products
delivered and services rendered for a certain period or term.
Changes in accrued product warranty cost for the year ended
December 31, 2003 and 2002 are summarized as follows:
Thousands of
Millions of yen U.S. dollars
2003 2002 2003
Balance at beginning of year ¥7,516 7,038 $70,243
Addition 10,919 8,351 102,047
Utilization (7,834) (7,763) (73,215)
Other (89) (110) (832)
Balance at end of year ¥10,512 7,516 $98,243