Canon 2005 Annual Report Download - page 72

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
CANON INC. AND SUBSIDIARIES
The aggregate annual maturities of long-term debt out-
standing at December 31, 2005 were as follows:
Year ending December 31 Millions Thousands of
of yen U.S. dollars
2006 ¥ 4,992 $ 42,305
2007 13,318 112,864
2008 12,351 104,669
2009 895 7,585
2010 417 3,534
Thereafter 101 856
¥32,074 $271,813
Certain property, plant and equipment with a net book car-
rying value of ¥7,423 million ($62,907 thousand) at December
31, 2005 were mortgaged to secure loans from banks.
Canon entered into an agreement whereby certain assets
were deposited into an irrevocable trust to meet the debt ser-
vice requirements of the: 2.95% Japanese yen notes; and
2.27% Japanese yen notes in the aggregate amount of
¥20,000 million ($169,492 thousand). The assets contributed by
Canon were debt securities with carrying amounts of ¥20,961
million ($177,636 thousand), at December 31, 2005. Cash
flows from such investments will be used solely to satisfy the
principal and interest obligations for the debts. Accordingly, the
debt securities are included in the consolidated balance sheet
under the caption of investments.
Both short-term and long-term bank loans are made under
general agreements which provide that security and guarantees
for present and future indebtedness will be given upon request
of the bank, and that the bank shall have the right to offset
cash deposits against obligations that have become due or, in
the event of default, against all obligations due to the bank.
Long-term agreements with lenders other than banks also gen-
erally provide that Canon must provide additional security upon
request of the lender.
The 1.30% Japanese yen convertible debentures due 2008
are convertible into approximately 434,000 shares of common
stock at a conversion price of ¥1,497.00 ($12.69) per share at
December 31, 2005. The debentures are redeemable at the
option of the Company between January 1, 2006 and Decem-
ber 31, 2007 at declining premiums ranging from 2% to 1%,
and at par thereafter.
(11) Short-Term Loans and Long-Term Debt
Short-term loans consisting of bank borrowings at December
31, 2005 were ¥67 million ($568 thousand). The weighted
average interest rate on short-term loans outstanding at
December 31, 2005 was 2.14%.
Long-term debt consisted of the following:
December 31 Thousands of
Millions of yen U.S. dollars
2005 2004 2005
Loans, principally from banks, maturing in installments through 2018;
bearing weighted average interest of 1.40% and 3.05% at December 31,
2005 and 2004, respectively, partially secured by mortgage of property,
plant and equipment ¥ 2,641 2,949 $ 22,381
1.88% Japanese yen notes, due 2005 —5,000 —
1.71% Japanese yen notes, due 2005 —200 —
2.95% Japanese yen notes, due 2007 10,000 10,000 84,746
2.27% Japanese yen notes, due 2008 10,000 10,000 84,746
1.20% Japanese yen convertible debentures, due 2005 —309 —
1.30% Japanese yen convertible debentures, due 2008 649 1,487 5,500
Capital lease obligations 8,784 8,585 74,440
32,074 38,530 271,813
Less amount due within one year (4,992) (9,879) (42,305)
¥ 27,082 28,651 $229,508