Canon 2005 Annual Report Download - page 70

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
CANON INC. AND SUBSIDIARIES
(10) Goodwill and Other Intangible Assets
Intangible assets acquired during the year ended December 31,
2005 totaled ¥42,393 million ($359,263 thousand), which are
subject to amortization and, in addition to those recorded from
acquired businesses, primarily consist of internal use software
of ¥23,383 million ($198,161 thousand) and license fees of
¥1,116 million ($9,458 thousand). The weighted average
amortization period for internal use software and license fees is
approximately 4 years and 8 years, respectively.
The components of acquired intangible assets subject to
amortization included in other assets at December 31, 2005
and 2004 were as follows:
December 31 2005 2004
Gross Carrying Accumulated Gross Carrying Accumulated
Millions of yen Amount Amortization Amount Amortization
Software ¥121,729 70,535 ¥121,546 79,517
License fees 20,567 11,329 24,603 14,183
Other 23,291 4,997 6,976 3,585
¥165,587 86,861 ¥153,125 97,285
The cost of equipment leased to customers under operating
leases at December 31, 2005 and 2004 was ¥60,839 million
($515,585 thousand) and ¥67,364 million, respectively. Accu-
mulated depreciation on equipment under operating leases at
December 31, 2005 and 2004 was ¥45,285 million ($383,771
thousand) and ¥52,493 million, respectively.
The following is a schedule by year of the future minimum
lease payments to be received under financing leases and non-
cancelable operating leases at December 31, 2005.
Year ending December 31 Millions of yen Thousands of U.S. dollars
Financing leases Operating leases Financing leases Operating leases
2006 ¥ 81,967 3,691 $ 694,636 31,280
2007 58,998 1,846 499,983 15,644
2008 38,347 1,131 324,975 9,585
2009 18,314 533 155,203 4,517
2010 6,483 40 54,941 339
Thereafter 665 9 5,635 76
¥204,774 7,250 $1,735,373 61,441
(9) Acquisitions
In 2005, the Company acquired two companies for a total cost
of ¥20,205 million ($171,229 thousand), which was paid in
cash. Those companies are engaged in the development, man-
ufacturing and sales of semiconductor manufacturing equip-
ment, factory automation equipment and vacuum equipment
for production of electronic parts, including semiconductors,
flat panel displays, magnetic heads and hard disc drives. In con-
nection with those transactions, the Company recognized
goodwill of ¥4,885 million ($41,398 thousand) and intangible
assets of ¥16,382 million ($138,831 thousand), which were
classified as other assets in the accompanying consolidated
financial statements. Intangible assets consist primarily of
developed technology, and are subject to a weighted average
amortization period of approximately 9 years.
In 2004, the Company acquired all of the outstanding
common shares of a precision plastic mold manufacturer, in an
exchange offering for 577,920 shares of the Company’s
common stock. The aggregate value of the shares exchanged
was approximately ¥2,805 million. In connection with this
transaction, the Company recognized goodwill of ¥1,585 mil-
lion, which was classified as other assets in the accompanying
consolidated financial statements.
Canon has included the results of operations of these trans-
actions prospectively from the respective dates of transactions.
Canon has not presented the pro forma results of operations of
the acquired businesses because the results are not material to
its consolidated results of operations on either an individual or
an aggregate basis.