Canon 2006 Annual Report Download - page 52

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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following summarizes Canon’s contractual obligations at December 31, 2006.
Millions of yen
Payments Due By Period
Total Less than 1 year 1–3 years 3–5 years More than 5 years
Contractual obligations:
Long-term debt
Capital lease obligations ¥ 10,585 5,263 4,850 465 7
Other long-term debt 20,467 10,000 10,432 22 13
Operating lease obligations 60,378 16,025 22,565 10,532 11,256
Purchase commitments for
Property plant and equipment 107,685 107,685 — — —
Parts and raw materials 85,403 85,403 — — —
Total ¥284,518 224,376 37,847 11,019 11,276
Thousands of U.S.dollars
Payments Due By Period
Total Less than 1 year 1–3 years 3–5 years More than 5 years
Contractual obligations:
Long-term debt
Capital lease obligations $88,950 44,226 40,756 3,908 60
Other long-term debt 171,991 84,034 87,664 185 108
Operating lease obligations 507,378 134,664 189,622 88,504 94,588
Purchase commitments for
Property plant and equipment 904,916 904,916 — — —
Parts and raw materials 717,672 717,672 — — —
Total $2,390,907 1,885,512 318,042 92,597 94,756
Canon provides warranties generally less than one year
against defects in materials and workmanship on most of its
consumer products. Estimated product warranty related costs
are established at the time revenue is recognized and is
included in selling, general and administrative 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. As of December
31, 2006, accrued product warranty costs amounted to
¥18,144 million (U.S.$152 million).
At December 31, 2006, commitments outstanding for the
purchase of property, plant and equipment approximated
¥107,685 million (U.S.$905 million), and commitments out-
standing for the purchase of parts and raw materials approxi-
mated ¥85,403 million (U.S.$718 million), both for use in the
ordinary course of its business. Canon anticipates that funds
needed to fulfill these commitments will be generated internally
through operations.
Canon’s management believes that current financial
resources, cash generated from operations and Canon’s poten-
tial capacity for additional debt and/or equity financing will be
sufficient to fund current and future capital requirements.
RESEARCH AND DEVELOPMENT, PATENTS
AND LICENSES
Canon kicked off the year 2006, the first year of Phase III
(2006–2010) of the Excellent Global Corporation Plan, with an
objective to realize “Sound Growth” toward “Joining the
World’s Top 100 Companies.”
Canon has established the following as key strategies:
•Realize the overwhelming No.1 position worldwide in all
current core businesses,
•Expand operations through diversification and
•Identify new business domains and accumulate necessary
technological capabilities
Canon is striving to achieve these strategies as follows:
•Realize the No.1 position worldwide in all current core
businesses: Product R&D divisions will work together with
the corporate R&D headquarters to bolster product