Canon 2005 Annual Report Download - page 50

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48
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following summarizes Canon’s contractual obligations at December 31, 2005.
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 ¥ 8,784 4,159 4,064 538 23
Other long-term debt 23,290 833 21,605 774 78
Operating lease obligations 52,589 14,571 18,693 9,823 9,502
Purchase commitments for
Property plant and equipment 87,244 87,244 — — —
Parts and raw materials 67,831 67,831 — — —
Total ¥239,738 174,638 44,362 11,135 9,603
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 $ 74,440 35,246 34,440 4,559 195
Other long-term debt 197,373 7,059 183,093 6,560 661
Operating lease obligations 445,669 123,483 158,415 83,245 80,526
Purchase commitments for
Property plant and equipment 739,356 739,356 — — —
Parts and raw materials 574,839 574,839 — — —
Total $2,031,677 1,479,983 375,948 94,364 81,382
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 are
included in selling, general and administrative expenses. Esti-
mates for accrued product warranty costs are primarily based
on historical experience, and are affected by ongoing product
failure rates, specific product class failures outside of the base-
line experience, material usage and service delivery costs
incurred in correcting a product failure. As of December 31,
2005, accrued product warranty costs amounted to ¥16,746
million (U.S.$142 million).
At December 31, 2005, commitments outstanding for the
purchase of property, plant and equipment approximated
¥87,244 million ($739 million), and commitments outstanding
for the purchase of parts and raw materials approximated
¥67,831 million ($575 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.