Canon 2002 Annual Report Download - page 75

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73
(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, 2002 and 2001
totaled ¥20,568 million ($171,400 thousand) and ¥21,125
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.
Derivative financial instruments
The fair values of derivative financial instruments, consisting
principally of foreign exchange contracts and interest rate swaps,
all of which are used for purposes other than trading, are
estimated by obtaining quotes from brokers.
At December 31, 2002, commitments outstanding for the
purchase of property, plant and equipment approximated
¥29,539 million ($246,158 thousand).
Canon occupies sales offices and other facilities under lease
arrangements accounted for as operating leases. Deposits made
under such arrangements aggregated ¥18,133 million
($151,108 thousand) and ¥18,700 million at December 31,
2002 and 2001, 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
noncancellable operating leases that have initial or remaining
lease terms in excess of one year as of December 31, 2002 are
as follows:
Millions Thousands of
Year ending December 31: of yen U.S. dollars
2003 ¥10,490 $ 87,417
2004 7,315 60,958
2005 5,798 48,317
2006 4,511 37,592
2007 4,065 33,875
Later years 6,472 53,933
Total future minimum
lease payments ¥38,651 $ 322,092
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. Change in
accrued product warranty cost for the year ended December 31,
2002 is summarized as follows:
Millions Thousands of
of yen U.S. dollars
Balance at beginning of year ¥7,038 $ 58,650
Addition 8,351 69,592
Utilization (7,763) (64,692)
Other (110) (917)
Balance at end of year ¥7,516 $ 62,633