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CANON ANNUAL REPORT 2007
Fiscal Year Ended December 31, 2007

Table of contents

  • Page 1
    CANON ANNUAL REPORT 2007 Fiscal Year Ended December 31, 2007

  • Page 2
    ...2010, while maintaining a high profit margin structure. Canon will make every effort to join the ranks of the global top 100 companies by 2010 in terms of key performance indicators. The Company's goals for 2010 include net sales of ¥6 trillion and a net income to sales ratio of 10% or more. Cover...

  • Page 3
    ...,634,526 Notes: 1. Canon's consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. 2. U.S. dollar amounts are translated from yen at the rate of JPY114=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December...

  • Page 4
    2

  • Page 5
    ...to Asia, China continued to boast remarkable growth rates and ASEAN countries grew steadily. Japan's moderate but stable growth continued, supported by robust exports, dynamic capital investment and strong employment conditions. Fiscal 2007 Performance Results Canon recorded sales and profit growth...

  • Page 6
    ... more. Our strategies for joining the global top 100 companies include boosting sales in high-growth emerging markets. At the same time, we will work toward creating new businesses, which in certain cases will entail timely mergers and acquisitions. In the year under review, Canon acquired majority...

  • Page 7
    ... Kyoto University in Japan with the aim of developing innovative diagnostic imaging devices. On a final note, to become a company worthy of admiration and respect worldwide, Canon is strengthening its Groupwide compliance systems and internal controls. In accordance with our corporate philosophy of...

  • Page 8
    ... technologies. Canon is well prepared to further solidify its No. 1 share of the rapidly expanding digital single lens reflex (SLR) camera market, as well as the compact digital camera, copying machine and laser beam printer (LBP) markets in 2008. As for other markets, while we have many products...

  • Page 9
    ... efforts on exploratory research geared toward future market development. Along with these priority goals, we aim to decrease our cost to sales ratio, develop new businesses, implement an information system for Companywide development and production, and reinforce compliance systems. We will do our...

  • Page 10

  • Page 11
    EXCELLENT GLOBAL CORPORATION PLAN- PHASE III Photo: The imagePRESS C7000VP, a digital color press, has been well received by the POD market. Adopted by MicroPage, a New York-based printing company, this system has contributed to greater printing efficiency and quality. The image in the print sample...

  • Page 12
    ... the Company mindset, emphasizing a total optimization strategy and focus on profit underpinned by the selection and concentration of business areas. Canon particularly endeavored to strengthen its financial health, achieving impressive results including improvements in its equity ratio and...

  • Page 13
    ... Establishing new production systems to sustain international competitiveness 5. Nurturing truly autonomous individuals and promoting effective corporate reforms External Ratings • Financial Times Global 500 (June 30/July 1, 2007 issue) Market value ranking: 100 (7th in the Technology Hardware and...

  • Page 14
    ... international accounting and auditing company in Zurich, Switzerland, has decided to use Canon's MFD security systems for document management Canon has achieved global No. 1 market positions for various core products and will strive to further its market leadership. In the office imaging business...

  • Page 15
    ... related to OLED displays will significantly contribute to the Company's future mass production of OLED displays. Canon continues to promote the Group's business expansion. Canon Marketing Japan has been actively expanding its solutions business and has acquired Argo 21 Corporation, a systems...

  • Page 16
    ... to devote attention to global research involving international investigative studies in a number of technical fields. Canon also dispatches researchers to major international universities and research institutes that engage in the development of cutting-edge technologies. Research at the Robotics...

  • Page 17
    ...2006. As a strategy for Phase III of the Excellent Global Corporation Plan, the Institute functions as a development center for future leaders and executives of the Group worldwide. As it continually strives to maintain the integrity of a first-rate global company, Canon holds employee compliance in...

  • Page 18
    ... business growth Governance Structure (as of December 31, 2007) Canon Inc. General Meeting of Stockholders Board of Directors Chairman and CEO President and COO Executive Vice President Board of Corporate Auditors Management Strategy Committee Executive Committee Corporate Audit Center Headquarters...

  • Page 19
    ..., carefully examining documents related to important decisions, and conducting strict audits of the Group's business and assets. Corporate auditors also work closely with accounting auditors and the Corporate Audit Center, which monitors compliance, risk management and internal control systems, and...

  • Page 20
    ... increase the number of Executive Officers and further solidify its management systems. 1. Directors Currently, the Company's board of directors does not have any director who could be regarded as an "independent director" under the NYSE Corporate Governance Rules for U.S. listed companies. Unlike...

  • Page 21
    ...than half of a company's corporate auditors must be "outside" corporate auditors. These are individuals who are prohibited to have ever been a director, executive officer, manager, or employee of the Company or its subsidiaries. The Company's current corporate auditor system meets these requirements...

  • Page 22

  • Page 23
    ...SALES & MARKETING ...26 CORPORATE SOCIAL RESPONSIBILITY ...28 Photo: The Tsuzuri Project, a collaborative initiative between Canon and the Kyoto International Culture Foundation, aims to preserve and pass on important Japanese cultural properties using the latest digital technologies. Canon's large...

  • Page 24
    ...DIGIC) imaging processors for digital cameras, and iR controllers for multifunction devices (MFDs). Further enhancing and accelerating development, the Company successfully incorporated such key components and devices into new products throughout 2007. To raise product prowess even further, Canon is...

  • Page 25
    ... of life. As an example, the Company is undertaking a joint research project with Kyoto University in Japan. The development of digital SLR cameras using the 3D-CAD system at the Company's Shimomaruko Headquarters, Tokyo Canon announced the development of a 50 million-pixel CMOS sensor prototype...

  • Page 26
    .... Based on this highly successful cell production system, Canon is moving toward fully integrating comprehensive "pull" production, which involves the timely manufacture of the exact number of products that are sold or "pulled" by the market. This new pull production dramatically increases the speed...

  • Page 27
    ... (SLR) lenses at Oita Canon Inc. in Japan. This is in response to the rapidly expanding market for digital SLR cameras. With the addition of lens production, Canon has significantly reduced lead times. New automated toner cartridge production lines were installed at Oita Canon Materials Canon Mold...

  • Page 28
    ... up. Canon also secured the No. 1 market share for digital SLR cameras, compact digital cameras, and both color and monochrome copying machines. An increase in sales of high-value added products, particularly digital SLR cameras and POD machines, contributed significantly to the Company's earnings...

  • Page 29
    ... sales and marketing channels. The Company also took steps to strengthen its own sales and marketing structure for the Middle East by establishing sales companies with a strong focus on the UAE and Turkey. Asia and Oceania Canon reported revenue and profit growth in Japan in fiscal 2007, with sales...

  • Page 30
    ... SOCIAL RESPONSIBILITY Guided by its corporate philosophy of kyosei, Canon actively participates in environmental conservation and social contribution activities around the world. Camera products, shipped from Oita to Shanghai, are sent to Beijing via train. Canon is promoting a modal shift...

  • Page 31
    ... friendly at every stage, from procurement and production to use and recycling. At the development stage, the Company's 3D-CAD systems have reduced waste from the creation of virtual prototypes. In recycling, Canon remanufactures monochrome copying machines and color MFDs with a considerable amount...

  • Page 32
    ... including the camera lens industry. Given the current pace of technological change, the needs of optical engineers have increased, but opportunities for professional training in Japan are in short supply. With Canon's contribution of educational support, utilizing Canon employees acting as...

  • Page 33
    ... sense of responsibility and establish a set of high-quality managerial capabilities. Canon employees in Europe attending a training session on time management-Canon is enhancing its local educational training programs Establishment of Regional Technical Skills Training Center The Company plans to...

  • Page 34
    ...etc. Business Machines BUSINESS INFORMATION PRODUCTS • Computer information systems • Document scanners • Personal information products, etc. CAMERAS ...38 • Digital single lens reflex (SLR) cameras • Compact digital cameras • Interchangeable lenses • Digital video camcorders, etc...

  • Page 35
    ...of digital SLR cameras climbed steadily. In the period under review, Canon successfully increased its market share in compact digital cameras. The Company also experienced sound growth in digital video cameras and other products. 1,089,312 Sales increased 0.5% to ¥107.2 billion. Sales of document...

  • Page 36
    ... digital MFDs, increased considerably to Europe and the Asian region (excluding Japan). In office imaging, Canon upgraded its product lineup of color machines and increased shipments of mid- to highspeed models. Turning to the SOHO business, the Company enjoyed doubledigit growth in unit sales...

  • Page 37
    ...cost performance. Canon Marketing Japan acquired Argo 21 Corporation to expand the document solutions business. Even after subtracting the positive effects of this acquisition, the Company enjoyed double-digit percentage sales growth in this business. In combining technological hardware prowess with...

  • Page 38
    ... and respond to individual market needs. Sales of medium- and high-grade MFPs stayed on course in Japan and Australia, with robust results in the Americas, Europe and Asia for SFPs and low-end MFPs. Turning to the Company's production systems, Canon worked to procure parts locally, step up in-house...

  • Page 39
    ... in the double-digit growth range. While the main markets for color models are Japan, North America and Europe, the Asian market including China and India has increasingly come into play. With the release in recent years of competitively priced models, the shift to color products throughout Asia has...

  • Page 40
    ... the market for compact digital cameras also expanded, supported by the replacement of older- with newer-model digital cameras and growing demand for a second camera. To maintain its leading position in the marketplace, Canon has enhanced its lineups of value-added products for both SLR and compact...

  • Page 41
    .... In compact digital cameras, the Company introduced 16 models, strengthening its lineup. Offering all the basic functions and outstanding design, the PowerShot SD1000 DIGITAL ELPH (DIGITAL IXUS 70) received high market praise worldwide. The PowerShot G9, which successfully addressed the needs of...

  • Page 42
    ... them highly competitive products. In exposure equipment for LCDs, growth in 52-inch large screen LCD TVs and the change in size of PC monitors to accommodate films and moving images have triggered a major rebound in capital investments by LCD panel manufacturers. Canon is taking steps to respond to...

  • Page 43
    ... time. In digital radiography systems, Canon has shipped a total of 6,000 units since 1998. Sales of the portable CXDI-50G have been favorable, especially outside Japan. In the large-format printer market, Canon successively launched nine new models to bolster its product lineup. The Company...

  • Page 44
    ... Ltd. Canon Vietnam Co., Ltd. Canon Electronic Business Machines (H.K.) Co., Ltd. Canon Engineering Hong Kong Co., Ltd. MARKETING & OTHER Canon Marketing Japan Inc. Canon System and Support Inc. Canon System Solutions Inc. Canon Software Inc. Argo 21 Corporation Canon U.S.A., Inc. Canon Canada, Inc...

  • Page 45
    ...Financial Statement Translation ...72 Foreign Operations Marketable Securities and Investments ...73 Trade Receivables ...75 Inventories Property, Plant and Equipment Finance Receivables and Operating Leases ...76 Acquisitions ...77 Goodwill and Other Intangible Assets Short-Term Loans and Long-Term...

  • Page 46
    ...one of the world's leading manufacturers of copying machines, laser beam printers, inkjet printers, cameras, steppers and aligners. Canon earns revenues primarily from the manufacture and sale of these products domestically and internationally. Canon's basic management policy is to contribute to the...

  • Page 47
    ... risk of loss have been transferred to the customer or services have been rendered, the sales price is fixed or determinable, and collectibility is probable. Revenue from sales of consumer products including office imaging products, computer peripherals, business information products and cameras is...

  • Page 48
    ... and the first-in, first-out method for overseas inventories. Market value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make a sale. Canon routinely reviews its inventories for their salability...

  • Page 49
    ...long-term rate of return on plan assets of 3.9% for Japanese plans and 6.0% for foreign plans. In estimating the discount rate, Canon uses available information about rates of return on high-quality fixed-income governmental and corporate bonds currently available and expected to be available during...

  • Page 50
    ... materials, parts and labor used by Canon in the manufacture of its products. A portion of the raw materials used by Canon is imported or includes imported materials. Such raw materials are subject to fluctuations in world market prices and exchange rates that may affect Canon's cost of sales. Other...

  • Page 51
    ... printers, and image scanners. Business information products include mainly computer information systems, document scanners, and personal information products. • The cameras product group includes mainly digital single lens reflex ("SLR") cameras, digital compact cameras, interchangeable lenses...

  • Page 52
    ... 2007. Sales of office imaging products increased 8.8% in fiscal 2007, to ¥1,290,788 million (U.S.$11,323 million). In the business machine segment, as demand for network digital MFDs shifted toward color models in both the domestic Japanese and overseas markets, the competitively priced iR C2880...

  • Page 53
    ... of cash and cash equivalents, time deposits, marketable securities, investments and corporate properties, are included in "Corporate and Eliminations." 3. The segments are defined under Japanese GAAP. In grouping of segment information by product, Japanese GAAP requires that consideration be given...

  • Page 54
    ..., marketable securities, investments and corporate properties, are included in "Corporate and Eliminations." 3. Segment information by geographic area is determined by the location of the Company or its relevant subsidiary making the sale. The segments are defined under Japanese GAAP. In grouping of...

  • Page 55
    ... the cost of sales is generally in yen. Given Canon's current operating structure, appreciation of the yen has a negative impact on net sales and the gross profit ratio. To reduce the financial risks from changes in foreign exchange rates, Canon utilizes derivative financial instruments, which are...

  • Page 56
    ... Standard and Poor's Rating Services ("S&P"). In addition, Canon maintains a rating from Rating and Investment Information, Inc. ("R&I"), a rating agency in Japan, for access to the Japanese capital market. As of February 18, 2008, Canon's debt ratings are: Moody's: Aa1 (long-term); S&P: AA (long...

  • Page 57
    ...for its requirements for the foreseeable future. Canon's capital requirements are primarily dependent on management's business plans regarding the levels and timing of capital expenditures and investments. The working capital ratio (ratio of current assets to current liabilities) for fiscal 2007 was...

  • Page 58
    ... of the Excellent Global Corporation Plan, which has an objective to realize "Sound Growth" toward "Joining the World's Top 100 Companies." Canon has established the following as key strategies: • Realize an overwhelming No.1 position worldwide in all current core businesses, • Expand operations...

  • Page 59
    ...DEVELOPMENTS Canon Marketing Japan Inc. acquired shares of Argo 21 Corporation (listed on the Tokyo stock exchange), which possesses an advanced IT solution business, through a tender offer and it became a consolidated subsidiary as of June 21, 2007. Subsequently, Canon Marketing Japan Inc. acquired...

  • Page 60
    Equity price risk Canon holds marketable securities included in current assets as short-term investments, which consist generally of highly-liquid and low-risk instruments. Investments included in noncurrent Available-for-sale securities assets are held as long-term investments. Canon does not hold...

  • Page 61
    ... its competitors, and achieve the real global No.1 market positions in all of its core businesses. Additionally, Canon will work to lower its cost rate even further by automating production and moving forward with efforts to produce more key parts in-house through measures like advancing the stable...

  • Page 62
    ... "Canon Scan LiDE 90" incorporating Contact Image Sensor technology were both introduced in fiscal 2007 in order to increase Canon's share of this market. Business information products As for document scanners, adoptions of internal information management systems by corporations, and other factors...

  • Page 63
    ... picture quality of video camcorders with longer battery life, and will likely contribute to further growth for the overall digital video market. Canon will seek continued sales growth with a stronger product line while investing in research and development in order to better respond to new market...

  • Page 64
    ...income Percentage of sales Advertising Research and development Depreciation of property, plant and equipment Capital expenditures Long-term debt, excluding current installments Stockholders' equity Total assets Per share date: Income before cumulative effect of change in accounting principle: Basic...

  • Page 65
    ... Thousands of U.S. dollars (except per share amounts) 2007 ¥ 801,400 2,396,672 3,198,072 108.8% 275,730 8.6% 100,278 259,140 168...U.S. dollar amounts are translated from yen at the rate of U.S.$1 = ¥114, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 28, 2007....

  • Page 66
    ...) Investments (Note 4) Property, plant and equipment, net (Notes 7, 8 and 11) Other assets (Notes 8, 9, 10, 13 and 14) Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term loans and current portion of long-term debt (Note 11) Trade payables (Note 12) Accrued income taxes...

  • Page 67
    ... STATEMENTS OF INCOME CANON INC. AND SUBSIDIARIES Millions of yen 2007 2006 2005 Years ended December 31, 2007, 2006 and 2005 Thousands of U.S. dollars (Note 2) 2007 Net sales Cost of sales (Notes 7, 10, 13 and 20) Gross profit Operating expenses (Notes 1, 7, 10, 13 and 20): Selling, general...

  • Page 68
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY CANON INC. AND SUBSIDIARIES Millions of yen Additional paid-in capital Accumulated other comprehensive income (loss) Total stockholders' equity Common stock Legal reserve Retained earnings Treasury stock Balance at December 31, 2004 Conversion of ...

  • Page 69
    ... provided by operating activities: Depreciation and amortization 341,694 262,294 225,941 Loss on disposal of property, plant and equipment 9,985 16,182 13,784 Deferred income taxes (35,021) (6,945) (766) Increase in trade receivables (10,722) (40,969) (48,391) (Increase) decrease in inventories (26...

  • Page 70
    ... cameras, and optical related products. Office imaging products consist mainly of network multifunction devices and copying machines. Computer peripherals consist mainly of laser beam and inkjet printers. Business information products consist mainly of computer information systems, document scanners...

  • Page 71
    ... and losses are determined on the average cost method and reflected in earnings. Investments in affiliated companies over which Canon has the ability to exercise significant influence, but does not hold a controlling financial interest, are accounted for by the equity method. Non-marketable equity...

  • Page 72
    ... risk of loss have been transferred to the customer or services have been rendered, the sales price is fixed or determinable, and collectibility is probable. Revenue from sales of consumer products including office imaging products, computer peripherals, business information products and cameras is...

  • Page 73
    ... by Canon in the first quarter beginning January 1, 2008. In February 2008, the FASB issued Staff Positions No. FAS157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification...

  • Page 74
    ... The consolidated financial statements presented herein are expressed in Japanese yen and, solely for the convenience of the reader, have been translated into United States dollars at the rate of ¥114=U.S.$1, the approximate exchange rate prevailing on the Tokyo Foreign Exchange Market on December...

  • Page 75
    ...gains Gross unrealized holding losses Fair value 2007: Current: Available-for-sale: Bank debt securities Held-to-maturity: Corporate debt securities Noncurrent: Available-for-sale: Government bonds Corporate debt securities Fund trusts Equity securities ¥ 51 ¥ - - - ¥ - - ¥ - ¥ 51 10...

  • Page 76
    ...investments. Investments in affiliated companies accounted for by the equity method amounted to ¥42,817 million ($375,588 thousand) and ¥40,143 million at December 31, 2007 and 2006, respectively. Canon's share of the net earnings (losses) in affiliated companies accounted for by the equity method...

  • Page 77
    ... dollars 2007 Notes Accounts...Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and are summarized as follows: December 31 Millions of yen 2007 2006 Thousands of U.S. dollars 2007 Land Buildings...for purchases of property, plant and equipment ...

  • Page 78
    ... FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES 8. Finance Receivables and Operating Leases Finance receivables represent financing leases which consist of sales-type leases and direct-financing leases resulting from the marketing of Canon's and complementary third-party products...

  • Page 79
    ... used in the manufacture of organic EL display panels and thin-film solar cells. The other company, which was acquired with cash and share exchange by the subsidiary of the Company, is engaged in providing architecture, management and maintenance services for information systems. In connection with...

  • Page 80
    ... adjustments and other Balance at end of year During the year ended December 31, 2006, Canon recognized ¥1,038 million of deferred tax benefits relating to preexisting net operating tax losses of a company acquired in ¥40,801 13,573 - 2,409 ¥56,783 ¥40,161 2,297 (1,038) (619) ¥40,801...

  • Page 81
    ... trust to meet the debt service requirements of the 2.27% Japanese yen notes of ¥10,000 million ($87,719 thousand). The assets contributed by Canon were debt securities with carrying amounts of ¥10,115 million ($88,728 thousand) at December 31, 2007. Cash flows from such investments will be...

  • Page 82
    ... gain (loss) (4,623) 13,200 Benefits paid (12,888) (11,413) Acquisition 2,474 714 Foreign currency exchange rate changes - - Benefit obligations at end of year 493,478 578,086 Change in plan assets: Fair value of plan assets at beginning of year 520,476 475,344 Actual return on plan assets (15...

  • Page 83
    ... December 31 and the fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets are as follows: Foreign plans Thousands of U.S. dollars 2007 Millions of yen 2007 2006 Thousands of U.S. dollars 2007 Japanese plans Millions of yen 2007 2006 Plans...

  • Page 84
    ... service credit Actuarial loss Assumptions Weighted-average assumptions used to determine benefit obligations are as follows: December 31 ¥ 722 (13,361) 6,685 $ 6,333 (117,202) 58,640 ¥ - (86) 849 $ - (754) 7,447 Japanese plans 2007 2006 Foreign plans 2007 2006 Discount rate Assumed rate...

  • Page 85
    ... 16.2 100.0% 52.3% 33.4 - - 14.3 100.0% Canon's investment policies are designed to ensure adequate plan assets are available to provide future payments of pension benefits to eligible participants. Taking into account the expected long-term rate of return on plan assets, Canon formulates a "model...

  • Page 86
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES 14. Income Taxes Domestic and foreign components of income before income taxes and minority interests, and the current and deferred Years ended December 31 Japanese income tax expense (benefit) attributable to such ...

  • Page 87
    ...Company and its domestic subsidiaries are subject to a number of income taxes, which, in the aggregate, represent a statutory income tax rate of approximately 40% for the years ended December 31, 2007, 2006 and 2005. Years ended December 31 A reconciliation of the Japanese statutory income tax rate...

  • Page 88
    ... yen 2007 2006 Thousands of U.S. dollars 2007 Deferred tax assets: Inventories Accrued business tax Accrued pension and severance cost Research and development-costs capitalized for tax purposes Property, plant and equipment Accrued expenses Net operating losses carried forward Other Less valuation...

  • Page 89
    ... few exceptions. The tax authorities are currently conducting income tax examinations of Canon's income tax returns for certain years after 2002 in Japan and in major foreign tax jurisdictions. 15. Common Stock Based on the resolution of Board of Directors on May 11, 2006, the Company made a three...

  • Page 90
    ... in accordance with financial accounting standards of Japan. Such amount was ¥1,383,747 million ($12,138,132 thousand) at December 31, 2007. Retained earnings at December 31, 2007 included Canon's equity in undistributed earnings of affiliated companies accounted for by the equity method in the...

  • Page 91
    ... December 31 Before-tax amount Millions of yen Tax (expense) or benefit Net-of-tax amount 2007: Foreign currency translation adjustments Net unrealized gains and losses on securities: Amount...268) 3,779 (489) (3,575) ¥ 46,558 ¥ 53,979 5,113 (6,510) (1,397) (5,479) 4,998 (481) 20,999 ¥ 73,100 89

  • Page 92
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES Before-tax amount Thousands of U.S. dollars Tax (expense) or benefit Net-of-tax amount 2007: Foreign currency translation adjustments Net unrealized gains and losses on securities: Amount arising during the year ...

  • Page 93
    ... fail to meet their obligations, because most of the counterparties are internationally recognized financial institutions and contracts are diversified across a number of major financial institutions. Foreign currency exchange rate risk management Canon's international operations expose Canon to the...

  • Page 94
    ... are made to ensure that those companies operate with less financial risk. For each guarantee provided, Canon would have to perform 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...

  • Page 95
    ... at least quarterly and adjusts these provisions to reflect the impact of the negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Based on its experience, Canon believes that any damage amounts claimed in the specific...

  • Page 96
    ... 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. Foreign exchange contracts The...

  • Page 97
    ... control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management...

  • Page 98
    ...the consolidated financial statements, in 2007 the Company changed its method of accounting for depreciation. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Canon Inc.'s internal control over financial reporting as of December...

  • Page 99
    ...accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight...

  • Page 100
    ... stock exchanges American Depositary Receipts are traded on the New York Stock Exchange (CAJ). Stockholders' Annual General Meeting: March 28, 2008, in Tokyo Further Information: For publications or information, please contact the Public Relations Center, Canon Inc., Tokyo, or access Canon's Website...

  • Page 101

  • Page 102
    This publication is printed on paper certified by the Forest Stewardship Council with ink that uses neither VOCs (Volaile Organic Compounds) nor mineral oil and realizes superior decomposability and deinkability. CANON INC. 30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan PUB. BEP017 ...