Canon 2007 Annual Report Download - page 56

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Net cash used in financing activities totaled ¥604,383
million (U.S.$5,302 million) in fiscal 2007, mainly resulting from
the ¥450,000 million (U.S.$3,947 million) purchase of treasury
stock with the aim of improving capital efficiency and ensuring
a flexible capital strategy and the dividend payout. The Company
paid dividends in fiscal 2007 of ¥110.00 (U.S.$0.96) per share,
which was an increase of ¥26.67 (U.S.$0.23) per share over
the prior year (after adjusting for the effect of 3 for 2 stock
split in 2006).
Canon seeks to meet its liquidity and capital requirements
principally with cash flow from operations. Consistent with this
objective, Canon continued to reduce its reliance on external
funding for capital investments in favor of relying upon internally
generated cash flows. This approach is supplemented with
group-wide treasury and cash management activities undertaken
at the parent company level. Canon believes that its working
capital is sufficient for its present requirements.
To the extent Canon relies on external funding for its
liquidity and capital requirements, it generally has access to
various funding sources, including issuance of additional share
capital, long-term debt or short-term loans. While Canon has
been able to obtain funding from its traditional financing
sources and from the capital markets, and believes it will
continue to be able to do so in the future, there can be no
assurance that adverse economic or other conditions will not
affect Canon’s liquidity or long-term funding in the future.
Short-term loans (including current portion of long-term
debt) amounted to ¥18,317 million (U.S.$161 million) at
December 31, 2007 compared to ¥15,362 million at December
31, 2006. Long-term debt (excluding current portion) amounted
to ¥8,680 million (U.S.$76 million) at December 31, 2007
compared to ¥15,789 million at December 31, 2006.
Canon’s long-term debt (excluding current portion) generally
consists of lease obligations.
In order to facilitate access to global capital markets, Canon
obtains credit ratings from two rating agencies; Moody’s
Investors Services, Inc. (“Moody’s”) and 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-term), A-1+ (short-
term); and R&I: AA+ (long-term). Canon does not have any
rating downgrade triggers that would accelerate the maturity
of a material amount of its debt. A downgrade in Canon’s
credit ratings or outlook could, however, increase the cost of
its borrowings.
Capital expenditures (purchases of property, plant and
equipment) in fiscal 2007 amounted to ¥428,549 million
(U.S.$3,759 million) compared with ¥379,657 million in fiscal
2006 and ¥383,784 million in fiscal 2005. In fiscal 2007,
capital expenditures were mainly used to expand production
capabilities in both domestic and overseas regions, and to
bolster the Company’s production-technology related infras-
tructure. In addition, Canon has been continually investing in
tools and dies for business machines, in which the amount
invested is generally the same each year. For fiscal 2008,
Canon projects its capital expenditures will be approximately
¥440,000 million (U.S.$3,860 million). The capital expenditures
include investments in new production plants and new facilities
of Canon.
Employer contributions to Canon’s worldwide defined
benefit pension plans were ¥21,720 million (U.S.$191 million)
in fiscal 2007, ¥44,981 million in fiscal 2006, ¥40,059 million
in fiscal 2005. In addition, employer contributions to Canon’s
worldwide defined contribution pension plans were ¥10,262
million (U.S.$90 million) in fiscal 2007, ¥6,233 million in fiscal
2006, and ¥4,878 million in fiscal 2005.
Capital Expenditures
(Millions of yen)
450,000
0
03 04 05 06 07
210,038
318,730
383,784 379,657
428,549