Canon 2005 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2005 Canon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 90

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90

83
(20) Commitments and Contingent Liabilities
Commitments
At December 31, 2005, commitments outstanding for the pur-
chase of property, plant and equipment approximated ¥87,244
million ($739,356 thousand), and commitments outstanding
for the purchase of parts and raw materials approximated
¥67,831 million ($574,839 thousand).
Canon occupies sales offices and other facilities under lease
arrangements accounted for as operating leases. Deposits
made under such arrangements aggregated ¥13,790 million
($116,864 thousand) and ¥14,307 million at December 31,
2005 and 2004, respectively, and are reflected under noncur-
rent receivables on the accompanying consolidated balance
sheets. Rental expenses under the operating lease arrange-
ments amounted to ¥38,297 million ($324,551 thousand),
¥41,381 million and ¥42,131 million for the years ended
December 31, 2005, 2004 and 2003, respectively.
Future minimum lease payments required under noncan-
cellable operating leases that have initial or remaining lease
terms in excess of one year at December 31, 2005 are as
follows:
Guarantees
Canon provides guarantees for bank loans of its employees,
affiliates and other companies. The guarantees for the employ-
ees are principally made for their housing loans. The guaran-
tees of loans of its affiliates and other companies are made to
ensure that those companies operate with less financial risk.
For each guarantee provided, Canon would have to per-
form under a guarantee if the borrower defaults on a payment
within the contract periods of 1 year to 30 years, in the case of
employees with housing loans, and of 1 year to 10 years, in the
case of affiliates and other companies. The maximum amount
of undiscounted payments Canon would have had to make in
the event of default is ¥38,550 million ($326,695 thousand) at
December 31, 2005. The carrying amounts of the liabilities rec-
ognized for Canon’s obligations as a guarantor under those
guarantees at December 31, 2005 were not significant.
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.
Changes in accrued product warranty cost for the year ended
December 31, 2005 and 2004 are summarized as follows:
Year ending December 31 Thousands of
Millions of yen U.S. dollars
2006 ¥14,571 $123,483
2007 10,723 90,873
2008 7,970 67,542
2009 5,684 48,169
2010 4,139 35,076
Thereafter 9,502 80,526
Total future minimum lease payments ¥52,589 $445,669
Year ended December 31 Thousands of
Millions of yen U.S. dollars
2005 2004 2005
Balance at beginning of year ¥ 14,264 10,512 $ 120,881
Addition 18,510 13,319 156,864
Utilization (15,580) (9,400) (132,034)
Other (448) (167) (3,796)
Balance at end of year ¥ 16,746 14,264 $ 141,915