Canon 2006 Annual Report Download - page 90

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88
December 31 Millions of yen Thousands of U.S. dollars
2006 2005 2006
Carrying Estimated Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value Amount Fair Value
Long-term debt, including current installments
¥(31,052) (32,795) (32,074) (35,194) $ (260,941) (275,588)
Foreign exchange contracts:
Assets 307 307 2,250 2,250 2,580 2,580
Liabilities (17,534) (17,534) (10,062) (10,062) (147,345) (147,345)
The following methods and assumptions are used to
estimate the fair value in the above table.
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 instru-
ment discounted using Canon’s current borrowing rate for
similar debt instruments of comparable maturity.
Foreign exchange contracts
The fair values of foreign exchange contracts, all of which are
used for purposes other than trading, are estimated by obtaining
quotes from brokers.
Limitations
Fair value estimates are made at a specific point in time, based
on relevant market information and information about the
financial instruments. These estimates are subjective in nature
and involve uncertainties and matters of significant judgment
and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
Concentrations of credit risk
At December 31, 2006 and 2005, one customer accounted for
approximately 14% and 12% of consolidated trade receivables,
respectively. Although Canon does not expect that the customer
will fail to meet its obligations, Canon is potentially exposed to
concentrations of credit risk if the customer failed to perform
according to the terms of the contracts.
(21) Disclosures about the Fair Value of Financial Instruments and Concentrations of Credit Risk
Fair value of financial instruments
The estimated fair values of Canon’s financial instruments at
December 31, 2006 and 2005 are set forth below. The following
summary excludes cash and cash equivalents, trade receivables,
finance receivables, noncurrent receivables, short-term loans,
trade payables, accrued expenses for which fair values
approximate their carrying amounts. The summary also
excludes marketable securities and investments which are
disclosed in Note 4.
(22) Supplemental Cash Flow Information
For the years ended December 31, 2006, 2005 and 2004,
aggregate common stock and additional paid-in capital
arising from conversion of convertible debt amounted to
¥331 million ($2,782 thousand), ¥1,147 million and ¥9,938
million, respectively.
(23) Subsequent Event
On February 15, 2007, the Board of Directors of the Company
approved a plan to repurchase up to 17 million shares of the
Company’s common stock at a cost of up to ¥100,000 million
($840,336 thousand) for the period from February 16, 2007 to
March 16, 2007. Such repurchases are intended to improve
capital efficiency and ensure flexible capital strategy. Common
stock repurchased in the Tokyo Stock Exchange between
February 16, 2007 and March 6, 2007 under the aforemen-
tioned plan was 15,423,300 shares at a cost of ¥100,000 mil-
lion ($840,336 thousand).
On March 8, 2007, the Board of Directors of the Company
approved an additional plan to repurchase up to 17 million
shares of the Company’s common stock at a cost of up to
¥100,000 million ($840,336 thousand) for the period from
March 9, 2007 to April 9, 2007.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
CANON INC. AND SUBSIDIARIES